FARMOUT AGREEMENT
_________________
This Agreement, made and entered into this 15th day of November,
2000, by and between Americomm Resources Corporation ("Farmor"),
and Empire Petroleum Corporation ("Farmee"), and Xxxxx Xxxxxxx Xxxxxx,
individually and as Trustee of the Xxxx X. Xxxxxx Testamentary Trust,
Xxxxxxx X. Xxxx, A.R. Xxxxxx and Xxxxxx X. Xxxxxxxx ("JBB&T");
WITNESSETH:
WHEREAS, Farmor is the owner of U.S. Federal, State of Wyoming and
Fee Lands Oil and Gas Leases covering approximately 100,000 acres of land
in Niobrara, Weston and Converse Counties, Wyoming, as more particularly
described in the lease schedule attached as Exhibit A hereto and in the
map attached as Exhibit B hereto; and
WHEREAS the net revenue interests owned by Farmor in each of said
leases and the expiration dates thereof are as set forth in Exhibit
A; and
WHEREAS Farmor has drilled no xxxxx on said leases and there is
no production therefrom; and
WHEREAS the lands and leases described in Exhibit A and depicted
in Exhibit B are within an area of mutual interest described in
Exhibit C attached hereto and defined by the outline shown in Exhibit
B hereto and known as the Cheyenne River Prospect; and
WHEREAS Farmor's interest in the Cheyenne River Prospect is subject
to an Agreement dated March 4, 1998 ("Americomm Cheyenne River Prospect
Agreement") and an amendment thereto dated April 9, 1998 ("First Amendment
to Americomm Cheyenne River Prospect Agreement"), which were entered into
by and between Farmor and Xxxx X. Xxxxxx (now deceased), Xxxxxxx X. Xxxx,
A.R. Xxxxxx and Xxxxxx X. Xxxxxxxx ("JBB&T") under the terms of which JBB&T
are entitled to an overriding royalty in all oil and gas leases acquired by
any party to the Agreement within the Cheyenne River Prospect as specified
in paragraph 1E of the Americomm Cheyenne River Prospect Agreement; and
WHEREAS JBB&T were entitled to receive and did receive a total of
500,000 shares (125,000 shares each) of the common stock of Farmor;
and
WHEREAS Xxxx X. Xxxxxx was entitled under Paragraph 1E of the Americomm
Cheyenne River Prospect Agreement to receive $1 per net acre prospect fee for
all leases obtained by any party to the agreements within the Cheyenne River
Prospect as a prospect fee which has been paid as to all leases obtained to
date but as to leases of land obtained in the future, such prospect fee, as
well as the overriding royalty to which Xxxx X. Xxxxxx was entitled, will be
payable to the testamentary devisees of Xxxx X. Xxxxxx, being Xxxxx Xxxxxxx
Xxxxxx (1/2) and Xxxxx Xxxxxxx Xxxxxx, Trustee Under the Last Will and
Testament of Xxxx X. Xxxxxx, Deceased (1/2) and whereas the Agreement between
Farmor and JBB&T contains certain provisions in Paragraphs 6 and 7 thereof
which must be modified to conform to the Agreement between Farmor and Farmee
and
WHEREAS, in order to permit Farmee to earn agreed interests in the
Cheyenne River Prospect, JBB&T have agreed to modify or waive certain of
their rights under said Paragraphs 6 and 7 of the Americomm Cheyenne River
Prospect Agreement; and
WHEREAS, pursuant to an Agreement between Farmor and Xxxxxx Xxxxx
dated March 5, 1998, Xxxxx is entitled to receive an overriding royalty
interest of 0.5% of 8/8ths as to all leases obtained by any party to the
Agreement within the Cheyenne River Prospect, subject to reduction for
excess burdens in the same manner as is the overriding royalty interests
of JBB&T; and
WHEREAS Farmor has caused a federal exploratory unit known as the
Timber Draw Unit, to be formed, which Unit is pending approval by the
Bureau of Land Management, containing approximately 25,000 acres within
the Cheyenne River Prospect and the provisions of the Timber Draw Unit
Agreement require that a well, as more particularly described in Section
9 of the Unit Agreement, be drilled within the Unit within six months
following the approval of the Unit Agreement by the Bureau of Land
Management; and
WHEREAS the parties recognize that such approval and timely drilling
of a well within the Timber Draw Unit are essential to hold certain leases
owned by Farmor which will otherwise expire, especially United States Oil
and Gas Lease WYW-122892 which includes land within the Timber Draw Unit
and expires December 31, 2000; and
WHEREAS all parties have agreed that Farmee will commence drilling of
the Initial Earning Well (as hereafter defined) by December 15, 2000, or
as soon thereafter as a drilling rig is available; and
WHEREAS Farmee has agreed to drill one well in the Timber Draw Unit
sufficient to validate the Timber Draw Unit so as to earn 50% of Farmor's
interest in part of the Cheyenne River Prospect and the parties have further
agreed that Farmee shall have the right, at its option, to drill a second well
as herein specified to earn 50% of Farmor's interest in the remainder of the
Cheyenne River Prospect; and the parties have entered into this Agreement to
define their rights and duties in connection with said xxxxx and transfers of
ownership;
NOW THEREFORE, in consideration of the payment of $10 and other good
and valuable considerations, receipt of which is acknowledged, and the
mutual promises herein contained, the parties agree as follows:
1. Approval of Timber Draw Unit
____________________________
Farmor agrees that it will use its best efforts to obtain approval
of the Timber Draw Unit Agreement by the Bureau of Land Management
prior to December 1, 2000.
2. Initial Earning Well - Validating Timber Draw Unit
__________________________________________________
Farmee agrees that it will, at its sole cost, risk and expense,
but with the assistance of Farmor, which shall be reimbursed by
Farmee for expenses incurred, take all actions necessary to obtain
drilling permits and other orders from the United States Bureau of
Land Management and the Wyoming Oil and Gas Conservation Commission
and will drill a well in the Timber Draw Unit as required by Section
9 of the Timber Draw Unit Agreement at a location approved by Farmor
initial Earning Well"). Said well shall be drilled, and if
productive in paying quantities, completed for production, within
such time and in such manner as to satisfy the requirements of
Section 9 of the Unit Agreement and validate the Unit. Drilling will
commence by December 15, 2000 or as soon thereafter as a drilling rig
becomes available.
3. Unavoidable Delays - Substitute Xxxxx
_____________________________________
If, during the drilling of the Initial Earning Well, circumstances
arise which prevent the drilling of said Well in such a manner as
to comply with Section 9 of the Unit Agreement and Farmee can
satisfy the Bureau of Land Management of that fact and obtain
appropriate extensions of time and other consents necessary to
permit substituted performance to satisfy the requirements of
Section 9 of the Unit Agreement, Farmee may drill a substitute
well or substitute such other performance as may satisfy the
Bureau of Land Management; provided, however, that a well with a
horizontal borehole at least 2,000 feet in length in the Newcastle
and/or Xxxxx Formations, or such other formation or formations
as may be agreed upon by Farmor and Farmee, shall be required for
Farmee to earn rights under this Agreement. Because Farmor will
be the Unit Operator of the Timber Draw Unit while the Initial
Earning Well is being drilled and completed, Farmee will drill
the well as a sub-operator, subject to the requirements for
indemnity and bonding hereinafter set forth.
4. Rights Earned by Farmee From Drilling of Initial Earning Well
_____________________________________________________________
Prior to commencement of drilling of the Initial Earning Well,
Farmor will assign to Farmee all of Assignor's operating rights
in the oil and gas leases covering a 600 acre area which the
parties estimate will comprise the Initial Participating Area
under Section 11 of the Timber Draw Unit Agreement if the well
is deemed to be a Paying Well, reserving, however, to Farmor, an
overriding royalty interest until Payout (as hereinafter
defined) equal to the difference between a net revenue interest of
75% and all existing burdens of royalty, overriding royalty
and other payments out of production including the overriding
royalty interests of JBB&T, Xxxxxx Xxxxx and overriding royalty
interests reserved by owners or their predecessors from whom
assignment of leases may have been or may be obtained. Such
assignment will cover operating rights to all depths.
At Payout, as hereinafter defined, or when the Initial Earning
Well is plugged and abandoned, whichever occurs first, the
overriding royalty reserved to Farmor shall terminate and Farmee
shall reassign to Farmor 100% of the operating rights in the 600
acre drillsite tract previously assigned by Farmor to Farmee.
Farmor will thereupon, upon proof that all costs of the Initial
Earning Well have been paid and provided that a written request
for assignment is delivered to Farmor within six months
following the completion or plugging of the Initial Earning Well,
assign to Farmee 50% of Farmor's record title interest in and to
all oil and gas leases in which Farmor owns an interest within
that part of the Cheyenne River Prospect south of a line running
East and West along the north boundary of the Timber Draw Unit
and extended East and West to the east and west boundaries
of the Cheyenne River Prospect as depicted in Exhibit B hereto
("South Block"). This assignment shall extend to and cover
record title to all depths and shall be subject to its
proportionate share of all existing lease burdens, including
royalties, overriding royalties (including those of JBB&T, Xxxxxx
Xxxxx and those to which the leases were subject when acquired by
Farmor) and payments out of production to which the leases out
of which the interests are assigned are subject. "Payout" means
the point in time at which Farmee has recovered out of production
all costs of site preparation, drilling, completing and operating
the well.
5. North Block Optional Earning Well
_________________________________
Farmee shall have no obligation to drill any xxxxx under this
Agreement other than the Initial Earning Well, but Farmee shall
have the right, at its option, within six months after the release
of the drilling rig from the Initial Earning Well, to drill an
additional well ("North Block Optional Earning Well") to earn an
assignment of 50% of Assignor's interest in the oil and gas leases
owned by Farmor in that part of the Cheyenne River Prospect outside
the South Block ("North Block"), subject to existing lease burdens.
The North Block Optional Earning Well may be drilled at any
location in the Cheyenne River Prospect, including the South Block
and the Timber Draw Unit, but must be drilled to and depth
sufficient to test the Xxxxxx or a deeper formation and have a
horizontal wellbore in a potentially productive formation at least
2000 feet in length.
6. Rights Earned by Farmee by Drilling North Block Earning Well
____________________________________________________________
Prior to the commencement of drilling of the North Block Earning Well,
Farmor will assign to Farmee all of Farmor's operating rights in the
640 acre tract which the parties estimate will comprise the
participating area or expansion (if within the Timber Draw Unit, any
enlargement of the Timber Draw Unit or another federal unit) or
drilling and spacing unit for the Well, reserving, however, to the
Farmor, an overriding royalty interest until Payout (as defined in
Section 4 above) equal to the difference between a net revenue
interest of 75% and all existing burdens of royalty, overriding
royalty and other payments out of production. If the North Block
Earning Well is drilled in the South Block, the overriding royalty
interest reserved by Farmor shall not be reduced by reason of the
ownership interest of the Farmee in the South Block.
At Payout, as defined in Section 4 above, or plugging and abandonment,
whichever occurs first, of the North Block Optional Earning Well, the
overriding royalty interest received by Farmor shall terminate and
Farmee shall reassign to Farmor 100% of the operating rights in the
640 acre drillsite previously assigned by Farmor to Farmee, and,
provided that a written request for assignment is delivered to Farmor
within six months following completion or plugging of the North Block
Optional Earning Well, and upon proof that all of the costs of the
said Well have been paid, Farmor shall assign to Farmee 50% of
Farmor's interest in the oil and gas leases in which Farmor owns an
interest in the South Block. This assignment shall cover record title
to all depths and shall be subject to its proportionate share of all
rentals, royalties, overriding royalties and other payments out of
production burdening said leases.
7. Additional Xxxxx
________________
After the Initial Earning Well has been drilled and completed or
Plugged and Farmee has received assignment of 50% of Farmor's
interest in the South Block, additional xxxxx other than the North
Block Optional Earning Well drilled in the South Block shall be
drilled by the parties pursuant to the Timber Draw Unit Operating
Agreement if drilled in the Timber Draw Unit or any approved
enlargement thereof, or if not drilled in the Timber Draw Unit or
any approved enlargement thereof or in any other unit which may be
formed by the parties in the future, shall be drilled pursuant to
an AAPL Form 610 Joint Operating Agreement to be entered into by the
Farmor and Farmee when the need arises. The same procedure shall
apply to the North Block if Farmee earns an interest therein.
In the event of any conflict between the Unit Operating Agreement or
Joint Operating Agreement and this agreement, this agreement shall
prevail.
8. Operatorship
____________
Farmor shall be the initial Unit Operator of the Timber Draw Unit but
at such time as Farmee may have earned and received the assignment
to which it will be entitled as a result of drilling the Initial
Earning Well, Farmee will succeed Farmor as Unit Operator and will
assume all duties as Operator of any well which may be drilled in the
South Block. If Farmee should earn and receive assignment of 50% of
Farmor's interest in the North Block, Farmee will assume all duties as
Operator of any well which may be drilled in the North Block. Upon
succeeding Farmor as Unit Operator, Farmee will post the bonds with
the Bureau of Land Management and State of Wyoming required for a unit
operator so that Farmor's $25,000 cash bond may be replaced.
9. Area of Mutual Interest - New, Renewal and Extension Leases
___________________________________________________________
By entering into this Agreement, Farmee shall be deemed to have
agreed to be bound by the provisions of Paragraphs 1 and 2 of the
Americomm Cheyenne River Prospect Agreement as amended. Any
oil and gas lease obtained by Farmee covering lands in the Cheyenne
River Prospect shall be offered and assigned to Farmor at Farmee's
cost and any oil and gas lease obtained by Farmor covering lands in
the Cheyenne River Prospect shall be offered to Farmee at Farmor's
cost. Farmee shall be deemed to have succeeded to 1/2 of the rights
and duties of Farmor under said Paragraph 1E, and Farmee shall have
the right to share equally in the working interest in all new,
renewal and extension leases covering lands in the Prospect and all
such working interests shall be subject to the overriding royalty
interests of JBB&T and Xxxxxx Xxxxx.
10. Prudent Operations - Indemnity - Insurance
__________________________________________
Farmee agrees to drill and operate all xxxxx in an efficient and
workmanlike manner and in strict compliance with the rules and
regulations of the Bureau of Land Management, the Wyoming
Oil and Gas Conservation Commission, the Wyoming Department of
Environmental Quality and all requirements of applicable drilling
permits and the relevant oil and gas leases, including any special
stipulations attached to such leases.
Farmee agrees to indemnify and hold harmless Farmor, its officers,
directors, employees and shareholders, from any and all loss,
damages and claims, including court costs and attorneys fees incurred
by or awarded against Farmor, arising out of the acts or omissions of
Farmee, its contractors, subcontractors and employees, in carrying out
operations in the Cheyenne River Prospect and Farmee and its
contractors will at all times carry such insurance and bonds as may
be required by the Timber Draw Unit Operating Agreement or any
applicable joint operating agreement with a loss payable clause
extending coverage to Farmor. Such insurance shall include at least
the following minimum coverage:
X. Xxxxxxx'x compensation insurance in an amount equal
to full liability as imposed by the laws of the State of
Wyoming.
B. Employer's liability insurance with a limit of not less
than $1 million per occurrence.
C. Commercial general liability insurance with a single
bodily injury or death limit of not less than $1 million
per occurrence.
D. Automobile liability insurance with a limit not less
than $1 million per occurrence.
E. Well control (blowout) insurance in a minimum
amount of $1.5 million.
11. Preparation for Drilling of Initial Earning Well
________________________________________________
Farmor and Farmee will agree on a drilling block for the Initial
Earning Well. It is anticipated that this drilling block will
Consist of 600 acres of land in Township 39 North, Range 66 West,
6th P.M., Niobrara County, Wyoming, being the E/2 SE/4, SE/4 NE/4
of Section 9, the SW/4, S/2 NW/4 of Section 10, the NW/4 of
Section 15 and the E/2 NE/4 of Section 16 in the Timber Draw
Unit. Because all of this land is leased to Farmor, no working
interest owner other than Farmor will have a right to participate
in the drilling of this well.
With the assistance of Farmor who shall be reimbursed by Farmee
for expenses incurred, Farmee will do the following:
Farmee will have prepared and furnished to Farmor a drilling title
opinion covering the lands and leases in the Drilling Block. If
the drilling Block agreed upon by Farmor and Farmee is other than
as set forth above and contains lands as to which the oil and gas
leasehold or unleased mineral interest is owned by others, such
owners will be offered an opportunity to participate in the well
as required by the Timber Draw Unit Agreement and Unit Operating
Agreement.
Farmee will cause all curative work required by the drilling title
opinion to be completed until title to the Drilling Block is
acceptable to both Farmor and Farmee. Farmee will obtain and
pay for an appropriate surface use agreement and releases of
surface damage claims from the owner of the surface where the
Initial Earning Well will be spudded, and from the owners of the
surface of any land which must be traversed to drill and complete
the well not accessible by public roads.
Farmee will obtain and pay for a drilling water agreement providing
for the supply and delivery of water for drilling the Initial
Earning Well.
Farmee will prepare and furnish a copy to Farmor (and other working
interest owners within the Drilling Block, if any) of an authorization
for expenditure (AFE) for the Initial Earning Well, estimating the
cost of drilling and completing the Initial Earning Well, both as a
producing well and as a dry hole.
Farmee will prepare and submit for approval to the Bureau of Land
Management (Newcastle, Wyoming Field Office) an Application for
Permit to Drill (APD) for the Initial Earning Well.
Farmee will prepare and submit for approval to the Wyoming Oil and
Gas Conservation Commission an application for an order approving an
exception well location for the Initial Earning Well (an exception
well order is necessary for horizontal xxxxx).
12. Site Preparation for Initial Earning Well
_________________________________________
After approval of the Drilling Permit and exception well application
and signature of the Surface Use Agreement, Farmee will cause the
location for the Initial Earning Well to be constructed in strict
compliance with the requirements of the Drilling Permit and the
Surface Use Agreement. Farmee shall be responsible for compliance
with all requirements of the Permit and the Surface Use Agreement if
the Initial Earning Well is not completed for production and is
plugged and abandoned.
13. Drilling of Initial Earning Well - Waiver of Right to Operate by
JBB&T
________________________________________________________________
Section 6 of the Americomm Cheyenne River Prospect Agreement
provided for JBB&T to carry out the functions of Unit Operator for the
drilling and completion of the first well. JBB&T and Farmor waive
this requirement but Farmee agrees that if it decides to employ a
USA-based drilling supervisor for the well, it will use Directional
Petroleum Corporation or another directional drilling supervisor
Approved by Farmor and JBB&T. Sections 6 and 7 of the Americomm
Cheyenne River Prospect require Farmor to act as Unit Operator.
Farmor and JBB&T waive this requirement to the extent that Farmee
earns working interests under this Agreement, i.e., consent to
Farmee becoming Unit Operator or Operator as to any lands in which
Farmee owns an interest under this Agreement.
14. Sharing of Information - Access to Operations and Reports
_________________________________________________________
Farmee shall promptly furnish to Farmor , by fax, or by overnight
delivery, copies of all reports, records, observations and analyses
prepared by Farmee and its contractors, and all run tickets, tank
tables and sales receipts for oil and charts and meter readings for
gas and receipts for sale of gas and liquids pertaining to the
drilling, completion and production from the Initial Earning Well
and the North Block Optional Earning Well until the xxxxx reach
payout or are plugged and abandoned. During the period of time
prior to Payout, Farmee will furnish monthly reports to Farmor
showing the Payout status of each earning well. Farmee shall have
no power to enter into contracts for sale or forward sales of
production without the consent of Farmor. Farmor and its officers,
employees, contractors and consultants, including all individuals
of JBB&T, shall at any time and all times have access to the
drilling and completion facilities for these xxxxx while
drilling and completion operations are underway. In particular,
Xxxxxx X. Xxxxxxxx, a member of JBB&T and Farmor's consulting
geologist, shall have full access and be kept fully informed
while such operations are ongoing. Farmor and all of the individual
members of JBB&T agree to keep all information which they receive or
learn concerning the drilling and completion of and production from
the Initial Earning Well and the North Block Optional Earning Well
strictly confidential until and unless authorized by Farmee in
writing to release or disclose the same to anyone. As to xxxxx and
operations other than for the Initial Earning Well and North Block
Optional Earning Well, the right to access and reports shall be as
set forth in the Unit Operating Agreement for the Timber Draw
Unit or other appropriate unit or the Joint Operating Agreement for
xxxxx not in a unit.
15. Area of Mutual Interest - Preferential Purchase Rights -
Limitations on Assignment
________________________________________________________
All of the parties to the Agreement shall be bound by the provisions
of Paragraphs 1E and 2 of the Americomm Cheyenne River Prospect
Agreement. Prior to Farmee earning all rights which it can earn under
this Agreement, Farmor shall have the right to assign all or a part
of its rights under this Agreement as to all of the Cheyenne River
Prospect or as to the North Block or the South Block, but not as to
any smaller tract. Farmee shall have the right to assign its rights
in this Agreement to no more than three other persons or entities who
must have previously engaged in oil and gas exploration. If Farmee's
interest in this Agreement shall become owned by more than four
persons or entities, such persons or entities will be required to
appoint a trustee to represent them and Farmor shall be entitled to
deal exclusively with such trustee who will be deemed to have been
irrevocably appointed by such owners as their attorney in fact with
regard to all of their rights in this Agreement. Nothing
in this Section shall be deemed a limitation on the right of any owner
of any interest in an oil and gas lease which is the subject of this
Agreement to assign all or part of its interests therein. Such
limitations and preferential purchase rights, if any, will be
contained in the Unit Operating Agreements and Joint Operating
Agreements which may be entered into among the owners of interests
in the Cheyenne River Prospect.
16. Annual Lease Rentals
____________________
Farmee agrees that it will, within thirty days following the date of
this Agreement, reimburse Farmor for all annual and delay rentals
which Farmor has paid covering leases in the Cheyenne River Prospect
beginning with rentals which are due November 1, 2000. Thereafter,
Farmee will, each month, reimburse Farmor for rentals paid in that
month. Such reimbursements shall continue until the following events
shall have occurred:
a. As to the South Block, until Farmee has earned
its 50% interest therein. Thereafter, the parties
shall each be responsible for 50% of the rentals on
leases covering lands in the South Block.
b. As to the North Block, until Farmee has earned its
50% interest therein or until Farmee delivers to
Farmor a release of its rights to earn interest
therein, whichever occurs first. If Farmee earns
assignment of a 50% interest in the North Block, the
parties shall thereafter each be responsible for
50% of the rentals on leases covering lands in the
North Block.
Until such time as Farmee earns assignment of 50% of Farmor's
rights in the entire Cheyenne River Prospect, Farmor will pay annual
and delay rentals and shut-in gas royalty as to all leases in the
Prospect and Farmee will promptly reimburse Farmor as provided above.
Farmee will notify Farmor within seven days of shutting in any well.
the parties agree, however, that Farmor shall have no liability of any
kind or nature whatsoever for the loss of any lease or leases, whether
through failure to pay rentals or shut-in gas royalties, or for any
other reason, even if such a lease is producing or has on it a well
capable of production. At such time as Farmor earns assignment of
50% of Farmor's rights in the entire Prospect, Farmee will become
responsible for payment of rentals and shut-in gas royalty, subject
to reimbursement by Farmor of its proportionate share.
17. No Warranties
_____________
Farmor makes no warranties of any kind or nature whatsoever to
Farmee concerning any matter, including title to oil and gas leases
and rights to drill xxxxx and make use of the surface of the lands
covered by Farmor's oil and gas leases.
18. Well Takeover
_____________
Farmor shall have the right, at its option, to purchase at the
salvage value of casing and equipment, any well drilled and/or
completed by Farmee in the Cheyenne River Prospect which Farmee
desires to plug and abandon. Said option shall continue for 48
hours following receipt by Farmor of a notice from Farmee stating
its intent to plug and abandon a well, which notice shall include
an inventory of the casing and equipment and the Farmee's estimate
of its salvage value. Upon receipt of an assignment of Farmee's
interest in the well, Farmor shall assume all obligations to plug
and abandon and reclaim the drillsite of any well which it elects
to take over.
19. Notices
_______
All notices authorized or required between the parties by any
Provision Of this Agreement shall be given, if feasible, by
facsimile transmission, confirmed forthwith by mail or overnight
delivery, addressed as follows:
If to Farmor: Americomm Resources Corporation
First Place Tower
00 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
If to Farmee: Xxx Xxxxxxxx
000, 000 0xx Xxx. X.X.
Xxxxxxx, Xxxxxx X0X OT9
Fax: (000) 000-0000
Cc: Xxxxxxx X. Xxxx, Attorney at Law
The Windsor
0000 Xxxxxxx Xxxxxx , Xxxxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
20. No Partnership
______________
It is understood that this Agreement is not intended to create a
partnership or joint venture between any of the parties hereto, and
the provisions of this Agreement shall not be construed as creating
such a relationship. For US Federal Income Tax purposes, each of
the parties hereto elect to be excluded from the application of all
provisions of Subchapter K of the Internal Revenue Code as permitted
and authorized by Section 761 of said Code and the regulations
promulgated hereunder. Nothing in this Section, however, shall be
deemed to prevent the Farmor and Farmee from entering into a
partnership for US Federal Income Tax purposes by a separate
instrument, should they deem it advisable to do so.
21. Audits
______
Farmor shall have the right, at its expense and at any reasonable
time, to audit Farmee's accounts, contracts, books and records
for the purpose of ascertaining the amount of production and sales
and the cost of drilling, production and processing production of
oil, gas and liquids from any xxxxx in the Cheyenne River Prospect.
22. Location for the Xxxx X. Xxxxxx #1H Well
________________________________________
Farmor has built a location for the Xxxx X. Xxxxxx #1H Well
(formerly known as the Timber Draw Unit #1H Well) in the
NE/4 SW/4 of Section 8, Township 39 North, Range 65 West,
6th P.M., Niobrara County, Wyoming at a cost of approximately
$25,000. If this location is used in the future by the parties for a
well, Farmee will reimburse Farmor for 50% of these costs, or if used
as an earning well hereunder, 100% of those costs.
23. Sale of 375,000 Shares of Farmor's Stock
_________________________________________
As part of the consideration for this Agreement, Farmor is selling to
Farmee 375,000 shares of its common stock for $.40 per share or a
total of $150,000 US pursuant to the terms of a Common Stock Purchase
Agreement between Farmor and purchaser. These shares will be
unregistered and restricted and the purchaser shall have such rights
to register these shares as are set forth in the Common Stock
Purchaser Agreement.
24. Amendments to Agreement
_______________________
This Agreement constitutes the entire understanding between the
Parties with respect to the subject matter hereof, superceding all
negotiations, prior discussions and prior agreements and
understandings as relating to the subject matter hereof.
25. Counterpart Execution
_____________________
This instrument may be executed in counterparts and delivered by
Facsimile transmission with the same effect as if all parties had
executed and delivered the same instrument in the presence of each
other.
IN WITNESS WHEREOF, the parties have hereunto caused their signatures
to be affixed effective the day and year first above written.
Americomm Resources Corporation
_____________________________________
By: Xxxxxx X. Xxxxxxxxx, Chairman
Farmor
Empire Petroleum Corporation
_____________________________________
By:
Farmee
_____________________________________
/s/Xxxxx Xxxxxxx Xxxxxx
_____________________________________
/s/Xxxxx Xxxxxxx Xxxxxx,
Trustee of the Xxxx X. Xxxxxx
Testamentary Trust
____________________________________
/s/Xxxxxxx X. Xxxx
_____________________________________
/s/A.R. Xxxxxx
____________________________________
/s/Xxxxxx X. Xxxxxxxx
