EXHIBIT 2.3
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT dated this 25th day of November, 1997, between AMERADA
XXXX CORPORATION, a Delaware corporation (hereinafter referred to as
"Seller"), and XXXXXX OIL CORPORATION, a Michigan corporation (hereinafter
referred to as "Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns certain oil and gas properties in eleven (11)
areas of mutual interest ("AMI") in the Mississippi Salt Basin in
Xxxxxxxxx, Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx and Xxxxxxxx Counties,
Mississippi, established pursuant to a certain Mississippi/Louisiana Salt
Dome Joint Venture Agreement dated March 1, 1993 between Seller and Buyer,
a certain Joint Venture Agreement dated June 1, 1996 between Seller and
Buyer, and a certain Joint Venture Agreement dated June 1, 1996 among
Seller, Buyer, Key Production Company, Liberty Energy Corporation and
Bonray, Inc., all as amended; and
WHEREAS, Seller desires to sell and Buyer desires to acquire all of
Seller's oil and gas interests, both producing and non-producing, and
related assets in said AMIs; and
WHEREAS, Seller is the operator of the oil and gas properties included
within the Assets to be sold by Seller to Buyer;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:
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ARTICLE I
PURCHASE AND SALE
1.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, Seller shall sell and Buyer shall purchase at Closing (as
hereinafter defined) the following assets of Seller (except those items on
the list of excluded property set forth on Exhibit 1.1 attached hereto),
hereinafter referred to as the "Assets:"
(a) All oil, gas and/or mineral leases, leasehold estates, mineral
fees, royalty and overriding royalty interests, and all other interests of any
nature whatsoever in the eleven (11) AMIs described in the Recitals hereto and
outlined on the exhibit attached hereto as Exhibit 1.1(a), whether currently
owned by Seller or acquired by Seller prior to Closing, regardless of whether
Seller owns record title or a beneficial or contractual interest (all of said
interests being hereinafter collectively referred to as "Mineral Interests"),
together with each and every kind and character of right, title, claim or
interest which Seller has in and to the Mineral Interests and the lands covered
by the Mineral Interests;
(b) Present and future participation in any xxxxx, units,
fields, or additional oil and gas interests, which participation is derived
from and limited to the Mineral Interests, including, but not limited to,
all right, title and interest of Seller derived from any unitization,
pooling, operating, area of mutual interest, communitization or other
agreement, or from any declaration or order of any governmental authority;
(c) All xxxxx, equipment, facilities, improvements, salt water
disposal xxxxx, compressors, compressor stations, dehydration facilities,
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treating facilities and plants (including desulfurization facilities),
pipelines, gathering systems, flow lines, transportation lines, field
offices and yards (both owned and leased), valves, meters, separators,
tanks, tank batteries, and other fixtures and appurtenances pertaining to
the Mineral Interests;
(d) Oil, gas and other hydrocarbons (including all components thereof)
produced from, or attributable to the Mineral Interests subsequent to the
Effective Date (as hereinafter defined), including "line fill" and inventory
below the pipeline connection in tanks;
(e) Personal property located on or used in connection with the
development, operation, maintenance, and/or safeguarding of any of the Mineral
Interests, including, but not limited to, cores, cuttings, supplies, inventory,
pipe, equipment, compressors, tools and contents of the field offices
(including, but not limited to, computers utilized for Scadix monitoring of
xxxxx, furniture, fixtures and supplies);
(f) Contracts and contractual rights, obligations and interests
including, but not limited to, unit agreements, farmout agreements, farmin
agreements, drilling contracts, operating agreements, well service contracts,
seismic licenses, software licenses, storage or warehouse agreements, supplier
contracts, service contracts, marketing contracts, construction agreements,
division orders and transfer orders, relating to the Mineral Interests; except
licenses which Seller is prohibited from selling or assigning under the terms of
a contract existing on the Effective Date;
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(g) All lease files, land files, well files, well data and records,
engineering studies, gas and oil sales contract files, gas processing files,
division order files, abstracts, title opinions, geophysical data, files, tapes,
maps, and licenses, and all other books, files and records, information and data
(including, but not limited to, engineering and geological data, files and maps)
of Seller, insofar as the same relate to the Mineral Interests, except for
licenses and data which Seller is prohibited from selling or assigning under the
terms of a contract existing on the Effective Date;
(h) Hydrocarbon sales, purchase, exchange and processing contracts and
agreements, and all other contracts and agreements, insofar as the same affect
or relate to the production from the Mineral Interests, including, but not
limited to, any rights Seller has to market the production of other current
working interest owners who are subject to Joint Operating Agreements among
Seller, as Operator, and Buyer et al., as Non-Operators, covering the Mineral
Interests;
(i) All claims of Seller against gas purchasers for "take-or-pay"
obligations and similar obligations, with respect to the Mineral Interests to
the extent such claims have not been paid to or settled by Seller as of the
Effective Date, all obligations and benefits with respect to gas production or
processing imbalances which are to be assumed or received by Buyer pursuant to
this Agreement, and all obligations and benefits with respect to severance tax
abatements with respect to the Mineral Rights attributable to periods of time
after the Effective Date;
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(j) Easements, licenses, authorizations, permits, and similar rights
and interests applicable to, used or useful in connection with, any or all of
the Mineral Interests; and
(k) Accounts receivable under joint interest xxxxxxxx with respect to
expenses incurred after the Effective Date, and subject to Section 1.6 and to
the extent transferable, Seller's right to act as operator under all agreements
relating to the Assets, and all funds held by Seller in suspense with respect to
the Assets.
1.2 PURCHASE PRICE. The purchase price ("Purchase Price") for the Assets
shall be the sum of Fifty Million Five Hundred Thousand Dollars ($50,500,000)
cash, payable as follows:
(a) Two Million Five Hundred Thousand Dollars ($2,500,000) upon
execution of this Agreement;
(b) Subject to the adjustments provided herein, Forty-five Million
Dollars ($45,000,000) at Closing;
(c) Five Hundred Thousand Dollars ($500,000) on the first anniversary
date of Closing;
(d) One Million Dollars ($1,000,000) on the second anniversary date of
Closing; and
(e) One Million Five Hundred Thousand Dollars ($1,500,000) on the third
anniversary date of Closing
All funds shall be by wire transfer of United States federal funds to
accounts designated by Seller.
1.3 PURCHASE PRICE ADJUSTMENT. For the purposes of making the
adjustments to the Purchase Price required by the provisions of this
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Agreement, Seller and Buyer have allocated the Purchase Price to the Assets as
set forth in Exhibit 1.3 attached hereto. Except as provided in Sections 8.1 and
8.4, in the event that any provision in this Agreement specifies a reduction or
increase in the Purchase Price, and in the event the parties hereto cannot, at
Closing, agree on the amount of such adjustment, then, in such event, either
party may submit the amount representing the disagreement to arbitration as
provided in Section 10.10 hereof. In such event the amounts eventually paid
shall bear interest from February 23, 1998, to the date of payment at a rate per
annum equal to the Prime Lending Rate (i.e., the base rate on corporate loans)
of Citibank, N.A., New York, New York, but in no event shall such rate of
interest exceed the maximum legal rate of interest. Amounts not in dispute shall
be paid at Closing as required by Section 6.2(c).
1.4 ASSUMPTION OF CERTAIN OBLIGATIONS. Subject to Closing and except as
otherwise provided herein, Buyer agrees to assume and will discharge all
obligations of Seller pertaining to the Assets which are attributable to the
ownership of the Assets, from and after the Effective Date.
1.5 CLOSING. The purchase and sale of the Assets ("Closing") shall
take place at the offices of Seller, on February 23, 1998 or such earlier
date as may be agreed upon by Buyer and Seller ("Closing Date"). Subject
to the terms and conditions of this Agreement, Buyer shall deliver to
Seller at Closing the Closing Amount calculated pursuant to Section 6.2(f),
Seller shall deliver to Buyer the executed and acknowledged Assignment and
Xxxx of Sale attached hereto as Exhibit 6.2(a), and Seller shall cause the
Assets to be delivered to Buyer. In the event the Closing occurs after
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February 23, 1998 as a result of a delay not caused by Seller, Buyer shall pay
Seller per diem interest on the Purchase Price computed from February 23, 1998
to the Closing Date at a rate per annum calculated at the Prime Lending Rate of
Citibank, N.A., New York, New York, but in no case in excess of the maximum
legal rate of interest. The conveyance of the Assets and assumption of
obligations shall be effective as of 7:00 a.m., Central Standard Time, on
September 1, 1997 ("Effective Date").
1.6 TRANSFER OF OPERATOR STATUS. Seller shall use its best efforts and take
all reasonable actions before and after Closing to effect election or
appointment of Buyer as Operator under all joint venture agreements and all
operating agreements to which any of the Assets are subject.
ARTICLE II
REPRESENTATIONS AND WARRANTIES BY SELLER
2.1 REPRESENTATIONS AND WARRANTIES. Seller represents and warrants
that:
2.1.1 Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The execution,
delivery and performance of this Agreement are within the corporate power, have
been duly authorized by all necessary corporate action and do not contravene or
constitute a default or require the further consent of any person under any
provision of applicable law or regulation or of Seller's certificate of
incorporation or bylaws or of any agreement, judgment, injunction, order, decree
or other instrument binding upon Seller or to which any of the Assets are
subject, other than those set forth on
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Exhibit 4.6. This Agreement has been duly executed and delivered, and
constitutes a valid and binding agreement of the Seller enforceable in
accordance with its terms.
2.1.2 There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by, or to the knowledge of Seller,
threatened against Seller, which could adversely affect Seller's ability to
perform its obligations hereunder.
2.1.3 No broker or finder has acted for or on behalf of Seller in
connection with this Agreement or the transactions contemplated by this
Agreement, and no broker or finder is entitled to any brokerage or finder's fee
or commission in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Seller.
2.1.4 Seller has not been served with any process or written demand
with respect to any suits, actions or other proceedings pending or threatened
before any court or governmental agency against Seller and pertaining to the
Assets, which might result in a material impairment or loss of title to any
material part of the Assets or the value thereof or which might materially
hinder or impede the operation of the Assets.
2.1.5 There have been no advanced, take-or-pay, take-and-pay or
other payments made to Seller or any other party which would in any way reduce
the price or value to be received for the production from the Assets after the
Effective Date, and the Mineral Interests were not subject to any gas imbalances
as of the Effective Date.
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2.1.6 To the best of its knowledge, Seller is not in default under
any agreement or obligation to which it is a party or by which it is bound and
to which the Assets may be subject.
2.1.7 Insofar as pertinent to the Assets, Seller has timely filed or
caused to be filed all federal, state, local and foreign tax and information
returns required under all applicable statutes, rules and regulations, Seller
has not received any notices of delinquency, deficiency or assessment with
respect to federal, state, local or foreign taxes, and there are no actions or
proceedings pending with respect to federal, state, local or foreign taxes.
2.1.8 To the extent that there are any contractually binding
arrangements that are applicable to the Assets and to which Buyer is not
currently a party, the contractually binding arrangements which are applicable
to the Assets and which, if the Assets are purchased by Buyer, will be assumed
(in whole or in part) by Buyer are of the type generally found in the oil and
gas industry, do not (individually or in the aggregate) contain unusual or
unduly burdensome provisions which may operate in a materially adverse manner
with respect to the Assets or to Buyer, are in form and substance considered
conventional within the oil and gas industry and do not give rise to title
defects or breaches of the representations or warranties of Seller herein.
2.1.9 To the best of its knowledge, Seller has complied in all
material respects with all applicable laws and with all applicable rules,
regulations, and orders of governmental agencies while operating the
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Assets, and has obtained all material governmental licenses and permits
required to own and operate the Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants
that:
3.1.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan. The execution, delivery
and performance by Buyer of this Agreement are within the corporate power, have
been duly authorized by all necessary corporate action and do not contravene or
constitute a default or require the further consent of any person under any
provision of applicable law or regulation or of Buyer's certificate of
incorporation or bylaws or of any agreement, judgment, injunction, order, decree
or other instrument binding upon Buyer. This Agreement has been duly executed
by, and constitutes a valid and binding agreement of Buyer enforceable in
accordance with its terms.
3.1.2 There are no bankruptcy, reorganization or arrangement
proceedings pending, being contemplated by, or to the knowledge of Buyer,
threatened against Buyer, which could adversely affect Buyer's ability to
perform its obligations hereunder.
3.1.3 No broker or finder has acted for or on behalf of Buyer in
connection with this Agreement or the transactions contemplated by this
Agreement, and no broker or finder is entitled to any brokerage or finder's
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fee or commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Buyer.
3.1.4 Buyer has no knowledge of any demand or suit, action or
proceeding pending or threatened before any court or governmental agency which
could adversely affect Buyer's ability to perform its obligations under or in
connection with this Agreement.
ARTICLE IV
TITLE AND ENVIRONMENTAL
4.1 TITLE TO ASSETS. Seller warrants that its ownership of the Assets
consists of good and marketable title, free and clear from all title defects, as
defined in Paragraph 4.4 below, and Seller agrees to defend title to the Assets
against every person claiming by, through and under Seller, but not otherwise,
all of which shall be set forth in the Assignment and Xxxx of Sale attached
hereto as Exhibit 6.2(a). In addition, Seller represents and warrants: (1) with
respect to each of the well units described in Exhibit 4.1, that Seller's title
to the Mineral Interests in such unit entitles Seller to receive not less than
the net revenue interest of Seller set forth in Exhibit 4.1 for such unit of all
oil and gas produced, saved and marketed from or attributable to the lands
within such unit and obligates Seller to bear the costs and expenses relating to
the maintenance, development and operation of such unit in an amount not greater
than the working interest of Seller set forth in Exhibit 4.1 for such unit; (2)
with respect to each undeveloped oil and gas lease set forth on Exhibit 4.1,
that Seller owns the percentage of the working
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interest in such lease set forth in Exhibit 4.1; and (3) that Seller has not
created any burdens on such leases except as disclosed in the agreements listed
on Exhibit 10.1.
4.2 TITLE FILES. Promptly after the execution of this Agreement and until
January 13, 1998, Seller shall permit Buyer and its representatives at
reasonable times during normal business hours to examine, in Seller's offices,
all abstracts of title, title opinions, title files, ownership maps, lease
files, assignments, division orders and agreements pertaining to the Assets
insofar as the same may now be in existence and in the possession of Seller and
all other records of Seller reasonably necessary for Buyer to verify Seller's
representations and warranties under Articles II and IV.
4.3 BUYER'S TITLE REVIEW.
(a) Immediately upon execution by both parties hereto of this
Agreement, Buyer shall at Buyer's sole cost and expense commence and diligently
pursue examination of title to the Mineral Interests. Seller shall fully
cooperate with Buyer and shall provide Buyer with all documents, records and
material in Seller's possession and all assistance reasonably necessary to
assist Buyer in determining the validity of Seller's title in and to the Mineral
Interests. Buyer shall conclude Buyer's title review and give notice to Seller
of asserted title defects and any other matters which could give rise to a
reduction in the Purchase Price as soon as practical, but in no event later than
January 13, 1998; provided, however, that Buyer shall give notice of title
defects as to any Oil and Gas Property only to the extent that the value of such
title
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defects exceed one percent (1%) of the value allocated to such Oil and Gas
Property pursuant to Section 1.3. For purposes of Section 4.3(a) and (b), "Oil
and Gas Property" means each well and each undeveloped lease block to which a
separate value is allocated on Exhibit 1.3.
(b) Upon receipt of the notice set forth under Section 4.3(a) Seller
shall have until ten (10) days prior to the Closing Date, but not less than five
(5) days from receipt of notice, to cure all or any portion of asserted title
defects, such curative costs to be borne solely by Seller. If Seller within the
time provided above is unable or refuses to cure such asserted title defects,
Buyer may elect (i) not to accept that portion of the Mineral Interests and
related Assets with respect to which title has failed and to reduce the Purchase
Price by the amount attributable to such Mineral Interests to which title has
failed as determined pursuant to Section 1.3, or (ii) to accept the Mineral
Interests with respect to which title has failed and reduce the Purchase Price
by the value of such title defect. Provided that there shall be no price
adjustment to an Oil and Gas Property until the title defect threshold is met as
provided in the third sentence of Section 4.3(a).
4.4 TITLE DEFECTS. For the purposes of this Agreement, a portion of the
Assets shall be deemed to have a title defect if Buyer, in good faith and using
reasonable and prudent legal standards, based upon title opinions or other title
materials which a knowledgeable purchaser of oil and gas properties would
consider conclusive in such determination, determines that any one or more of
the following statements is untrue on or after the Effective Date with respect
to such portion of the Assets:
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(i) Seller has defensible title thereto.
(ii) All royalties, (but only to the extent that failure to pay will
result in loss of working interest), delay rentals, payments in lieu of
operation of xxxx clauses, shut-in gas payments and other payments in the
absence of which title failure would occur with respect to any portion of the
Mineral Interests have been properly and timely paid, except for payments held
in suspense for title or other reasons which are customary in the industry, or
which otherwise will not result in grounds for cancellation or termination of
Seller's rights in such portion of the Mineral Interests.
(iii) Seller (including any third party operating on Seller's behalf) is
not in default under the terms of any leases, farmout agreements or other
contracts or agreements respecting such portion of the Mineral Interests which
would materially reduce the value thereof.
(iv) Seller's representations and warranties in Section 4.1 are
accurate.
4.5 BEST EFFORTS TO CONVEY. Seller and Buyer each shall use its best
efforts to take or cause to be taken all such actions as may be necessary or
advisable to consummate and make effective the sale by the Seller of its
interests in the Assets and the transactions contemplated by this Agreement and
to assure that as of the Closing Date Seller will not be under any material,
legal or contractual restriction that would prohibit or delay the timely
consummation of such transactions.
4.6 PURCHASE RIGHTS AND CONSENTS. All leases and agreements affecting the
Mineral Interests containing consent to assignment
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obligations and preferential right to purchase or bid provisions that must be
complied with prior to the assignment of the Mineral Interests to Buyer are set
forth in Exhibit 4.6 attached hereto (except such agreements with respect to
which all necessary consents to assignment or waivers of preferential rights to
purchase or bid have already been obtained by Seller). Seller and Buyer each
shall use its best efforts to obtain such remaining consents to assignment and
waivers or expiration of preferential right to purchase or bid prior to Closing.
If a third party (1) exercises a preferential right to purchase any portion of
the Assets; or (2) pursuant to a preferential right to bid, submits a bid for
any portion of the Assets which is greater in amount than the Purchase Amount
allocated to such portion of the Assets pursuant to Section 1.3 and which Seller
is obligated to accept, then in either event at Buyer's sole option, either (a)
such portion of the Assets shall be excluded from the sale, and the Purchase
Price shall be reduced by the amount equal to the higher of (i) the amount of
the Purchase Price allocated to such portion of the Assets pursuant to Section
1.3 or (ii) the amount of such bid for such portion of the Assets; or (b) Buyer
may terminate this Agreement.
4.7 SELLER'S REVIEW. In the event Seller determines, in good faith and
using reasonable prudent legal standards, based upon title opinions or other
title material which a knowledgeable seller of oil and gas property would
consider conclusive in such determination, that with respect to the well units
described in Exhibit 4.1, Seller's net revenue interest in such unit is more
than that stated in Exhibit 4.1 or Seller's working interest in such unit is
less than that stated in Exhibit 4.1, Seller shall give
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notice to Buyer of such determination as soon as practical, but in no event
later than January 13, 1998. If Buyer agrees with Seller's notice, and Buyer's
agreement shall not be unreasonably withheld, the Purchase Price shall be
increased by the amount attributable to the additional interest being acquired
by Buyer as determined pursuant to Section 1.3. If Buyer does not agree with
Seller's notice, the dispute shall be submitted to arbitration pursuant to
Section 10.10.
4.8 ENVIRONMENTAL INSPECTION. Buyer will have until January 13, 1998 to
complete its environmental inspection report and notify Seller of any
Environmental Defects. Seller will have thirty (30) days after receiving the
written report from Buyer to notify Buyer in writing of its intended action for
each Environmental Defect. Buyer will have the option to allow Seller to: (a)
pay for the remediation; (b) completely indemnify Buyer from the Environmental
Defect; or (c) exclude the applicable Asset from the sale and reduce the
Purchase Price by the amount attributable to such Asset as determined pursuant
to Section 1.3. For the purposes of this Section 4.8, the Assets will only be
considered as having an Environmental Defect if (1) it is required to be
remediated under applicable environmental laws, regulations, rules, orders or
other directives of any federal, state or other governmental or judicial entity
having jurisdiction thereof ("applicable environmental laws") and (2) the cost
to remediate said Environmental Defect condition to levels required by
applicable environmental laws exceeds one percent (1%) of the Purchase Price
allocated to the affected Asset. Buyer shall treat all information regarding any
Environmental Defect as confidential.
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ARTICLE V
TAXES
5.1 SALES AND OTHER TRANSFER TAXES. Buyer shall bear the cost of all
applicable sales taxes, real property transfer taxes and other taxes
payable as a result of the transfer of the Assets.
5.2 OTHER TAXES. All other taxes on the ownership or operation of
the Assets including real estate taxes other than transfer taxes, which are
imposed with respect to periods or portions of periods prior to the
Effective Date shall be paid by Seller and all such taxes imposed with
respect to periods or portions of periods after the Effective Date shall be
paid by Buyer.
5.3 TAX PURCHASE PRICE ALLOCATIONS. Seller and Buyer agree that the
allocation of the consideration given for the transfer of the Assets among
the Assets will be in accordance with Section 8.4 and shall apply for
purposes of Section 1060 of the Internal Revenue Code of 1986, as amended,
if that section applies to this transaction. The Seller and Buyer further
agree that, if said Section 1060 applies to this transaction and if Exhibit
8.3 does not otherwise state, the total amount of that consideration has
been allocated to "Class III Assets" within the meaning of that Section
1060 and the Treasury Regulations promulgated thereunder.
ARTICLE VI
CLOSING
6.1 CONDITIONS OF CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of
Buyer to be performed on the Closing Date are subject to the satisfaction
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of the following conditions, any one or more of which may be waived in
whole or in part by Buyer:
(i) The representations and warranties of Seller set forth
in this Agreement (except those for which a title defect notice is given
under Article IV) shall be true and correct in all material respects as of
the Closing Date.
(ii) Seller shall have applied for and obtained all material
governmental or other required third party consents to assignment, waivers
of preferential rights to purchase or bid and other actions necessary to
the consummation of the transactions contemplated by this Agreement.
(iii) Seller shall have performed in all material
respects all agreements required to be performed by it prior to or on the
Closing Date.
(iv) There shall have been no material adverse change in the
condition of the Assets except depletion through normal production within
authorized allowables and rates of production and depreciation of equipment
through ordinary wear and tear.
(v) Buyer shall have been elected or appointed as operator
of the eleven AMI's and as operator under all operating agreements to which
the Assets are subject.
(vi) No explosion, fire, blowout, earthquake or other
catastrophic event has occurred that would materially affect the operation
or value of the property.
(b) CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller to be performed on the Closing Date are subject to the satisfaction
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of the following conditions, any one or more of which may be waived in
whole or in part by Seller.
(i) The representations and warranties of Buyer set forth
in this Agreement shall be true and correct in all material respects as of
the Closing Date.
(ii) Buyer shall have performed in all material respects all
agreements required to be performed by it under this Agreement prior to or
on the Closing Date.
6.2 CLOSING OBLIGATIONS. At the Closing, the following events shall
occur, each being a condition precedent to the others and each being deemed
to have occurred simultaneously with the others:
(a) The Seller shall execute, acknowledge and deliver an
Assignment and Xxxx of Sale in the form set forth in Exhibit 6.2(a) to this
Agreement and such other instruments of transfer and assignment necessary
to convey to Buyer the Assets in the manner contemplated by this Agreement.
(b) The Seller shall deliver to Buyer possession of the Assets
and Buyer shall take possession of the Assets.
(c) Buyer shall deliver to Seller the amount calculated pursuant
to Section 6.2(f) by wire transfer to Seller's account as set forth in
Section 1.2.
(d) The Seller and Buyer shall execute, acknowledge, and deliver
transfer orders or letters in lieu thereof directing all purchasers of
production to make payment of proceeds attributable to production from the
Assets to Buyer from the Effective Date.
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(e) Seller and Buyer shall execute, acknowledge and deliver such
other instruments and take such other action as may be necessary to carry
out their respective obligations under this Agreement.
(f) Seller shall prepare a settlement statement (herein called
the "Preliminary Settlement Statement") that shall set forth that portion
of the Purchase Price due at Closing pursuant to Section 1.2(b), any
adjustment to the Purchase Price, including any Post-Closing adjustments as
provided for in Section 8.1 herein to the extent that such adjustments are
known at the time the Preliminary Settlement Statement is prepared
("Closing Amount"), and the calculations used to determine the Closing
Amount. The Closing Amount shall be determined using for such adjustments
the best information then available. Seller and Buyer shall attempt to
arrive at an agreement relative to all items to be contained in such
Preliminary Settlement Statement prior to the Closing. In the event the
parties are unable to reach such agreement prior to the Closing, then
settlement at the Closing shall be based upon all undisputed amounts, with
all disputed amounts to be deferred to the final settlement. Any sums
payable to a party hereto as a result of the deferral to the final
settlement of such sums shall bear interest from the Closing Date to date
of payment at a rate per annum based on the Prime Lending Rate of Citibank,
N.A., New York, New York; but in no case in excess of the maximum legal
interest.
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ARTICLE VII
TRANSACTIONS PRIOR TO CLOSING
7.1 OPERATION OF ASSETS. Prior to the Closing Date, Seller agrees,
unless specifically waived by Buyer in writing, to:
(a) Notify Buyer of any notice or threatened notice of which
Seller becomes aware relating to any default, inquiry into any possible default,
or action to alter, terminate, rescind or procure a judicial reformation of any
Mineral Interest or any provision thereof or relating to, in the case of any
production sales contract, any intent to exercise any "market-out," "FERC-out,"
price re-negotiation or other option available to the purchaser thereunder, to
alter pricing, delivery or other material provisions thereof, or to contest or
dishonor any "take-or-pay" or other material provisions thereof;
(b) Except as permitted under subparagraph (f) of this Section 7.1, not
enter into any material new agreements or amend or terminate any material
existing agreements relating to the Assets;
(c) Not encumber, sell, or otherwise dispose of any of the Assets;
(d) Not abandon any well included in the Assets or release or
abandon any portion of the Mineral Interests included in the Assets;
(e) Not waive, compromise or settle any right or claim that would
materially adversely affect the ownership or operation of the Assets after the
Closing Date;
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(f) Participate with Buyer in acquisitions covering any and all mineral
interests in the AMIs pursuant to the joint venture agreements referenced in the
Recitals hereto; and
(g) Propose operations under the terms of a joint operating agreement
covering any of the AMIs or agreements listed in the Recitals hereto, only
pursuant to mutual agreement with Buyer.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.1 POST-CLOSING ADJUSTMENTS. Within ninety (90) days after the Closing, a
final settlement statement will be prepared by Seller and submitted to Buyer,
with appropriate supporting information and documentation, showing income and
expenses for the Assets between the Effective Date and Closing Date and other
charges and credits provided in this Agreement ("Settlement Statement").
Seller shall be credited with:
(a) The value of all merchantable, clean, dry oil in sales tanks at
the Effective Date that is credited to the Assets, such value to be the market
or contract price in effect as of the Effective Date, less any taxes withheld
properly by the purchaser of such.
(b) The amount of all costs and expenses, including, without
limitation, royalties, rentals and other charges, ad valorem, property,
production, excise, severance, windfall profit and other taxes based upon or
measured by the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom, expenses paid under
-22-
applicable operating agreements or joint venture agreements and, in the absence
of such an agreement, expenses of the sort customarily billed under such
agreements, not including income taxes, paid by or on behalf of Seller, in
connection with the operation of the Assets during the period after the
Effective Date.
(c) An amount equal to all prepaid expenses attributable to the
Assets that are paid by or on behalf of Seller prior to the Closing Date and
that are, in accordance with generally accepted accounting principles,
attributable to the period after the Effective Date, including, without
limitation, prepaid ad valorem, property, production, severance, and similar
taxes (but not including income taxes) based upon or measured by the ownership
of proceeds therefrom and equipment and related costs. Any refund of ad valorem
tax attributable to the period before the Effective Date received by Buyer shall
be paid to Seller.
Buyer shall be credited with:
(a) Proceeds received by Seller that are, in accordance with
generally accepted accounting principles, attributable to the Assets for the
period of time after the Effective Date.
(b) An amount equal to all unpaid ad valorem, property, production,
severance, and similar taxes and assessments (but not including income taxes),
based upon or measured by the ownership of property or the production of
hydrocarbons or the receipt of proceeds therefrom, accruing to the Assets prior
to the Effective Date, which amount shall be computed based upon such taxes
assessed against the applicable portion of the Assets for the preceding calendar
year or, if such taxes are assessed on other
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than a calendar year basis, for the tax related year last ended, including an
amount equal to any windfall profit tax liability attributable to any period
prior to the Effective Date.
In addition to the matters mentioned above, the Settlement Statement
shall include any other debits and credits, either cash or accrued, but
excluding income and franchise taxes, which under generally accepted accounting
principles would reflect transfer of ownership of the Assets on the Effective
Date.
The net amount to be paid by the owing party shall be paid ten (10) days
after receipt of the Settlement Statement. Buyer and Seller each shall have the
right for a period of two years following receipt of the Settlement Statement in
which to audit the other's books and records related to the matters covered by
the Settlement Statement and any other matters related to the Assets. In the
event that such audit reveals that any amounts are due and owing to any party,
that party shall have the right to recover such amounts. In the event the
parties cannot agree on the Post Closing Adjustments specified in this Section
8.1, the parties agree to submit such dispute to an accounting firm selected by
Buyer from a list of four accounting firms selected by Seller which do no
business with Seller or Buyer, and the determination made by such accounting
firm shall be final and binding. Any amount awarded in such arbitration shall
bear interest from ten (10) days after the submittal of the final Settlement
Statement in accordance with this Article VIII at a rate per annum based on the
Prime Lending Rate of Citibank N.A., but in no case in excess of the legal rate
of interest.
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8.2 FILES AND RECORDS. Within thirty (30) days after the Closing Date,
Seller shall deliver to Buyer at the locations specified by Buyer all of the
material documents in its possession pertaining to the Assets.
8.3 TAX PURCHASE PRICE ALLOCATIONS. Within one hundred twenty (120) days
after the Closing, Buyer and Seller agree that (a) Buyer shall complete Exhibit
8.3 in accordance with Section 5.3 and submit it to Seller for Seller's
approval, and (b) Buyer and Seller shall acknowledge their approval of the
completed Exhibit 8.3 in a writing executed by both parties. In the event the
parties cannot agree on the allocations, they shall submit such dispute to an
accounting firm selected in the same manner as provided in Section 8.1 and the
determination made by such accounting firm shall be final and binding.
8.4 FURTHER ASSURANCES. After Closing, Seller agrees to execute and deliver
to Buyer all such instruments, notices, division or transfer orders, and other
documents, and to do all such other acts not inconsistent with this Agreement as
may reasonably be necessary or advisable to carry out its obligations under this
Agreement or to more fully assure Buyer, its successors and assigns, of the
respective rights, title, interests and estates herein provided to be sold,
assigned and conveyed by Seller to Buyer at Closing.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All warranties of Seller and
Buyer contained in this Agreement shall survive the Closing and
-25-
continue in full force and effect for a period of one (1) year after the Closing
Date, but no longer, except that the warranty by Seller under Section 4.1 shall
terminate immediately after Closing; however, the parties agree that any
warranty given under the Assignment and Xxxx of Sale attached hereto as Exhibit
6.2(a) shall remain applicable.
9.2 INDEMNIFICATION. After the Closing, Buyer and Seller shall indemnify
each other with respect to claims of third parties, as follows:
9.2.1 Buyer shall defend, indemnify and save and hold harmless Seller
against all claims, costs, expenses, liability and obligations with respect to
the Assets, which accrue after the Effective Date, including but not limited to
(a) the liability to properly plug and abandon all xxxxx included in the Assets,
(b) claims by royalty owners, working interest owners and/or vendors for
improper or non-payment of royalty, revenue or invoices pertaining to production
from or operation of the Assets after the Effective Date, (c) those that are
attributable to the violation of any environmental or other law or regulation
after the Effective Date and (d) those arising from Buyer's operations of the
Assets after the Effective Date, but not including (a) those incurred by Seller
with respect to the sale of the Assets to Buyer or the negotiations leading to
such sale, (b) those that result from or are attributable to any representation
or warranty of Seller contained in this Agreement being untrue to a material
extent or a breach of any warranty or covenant of Seller contained in this
Agreement, and (c) those as to which Seller agrees to indemnify Buyer under
Section 9.2.2.
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9.2.2 Seller shall defend, indemnify and save and hold harmless
Buyer against all claims, costs, expenses and liabilities with respect to the
Assets, which accrue prior to the Effective Date, including but not limited to
(a) those which arise from any plugging and abandonment operations prior to the
Effective Date, (b) claims by royalty owners, working interest owners and/or
vendors for improper or non-payment of royalty, revenue or invoices pertaining
to production from or operation of the Assets prior to the Effective Date, (c)
those that are attributable to the violation of any environmental or other law
or regulation prior to the Effective Date (unless Buyer is reimbursed for same
under Section 4.8), and (d) those arising from Seller's operations of the Assets
prior to the Effective Date, except to the extent Buyer may be responsible for a
proportionate share of the liability as co-owner of the properties at the time
the claim accrued, but not including (a) those incurred by Buyer with respect to
the purchase of the Assets by Buyer or the negotiations leading to such
purchase, (b) those that result from or are attributable to any representation
or warranty of Buyer contained in this Agreement being untrue to the material
extent or a breach of any warranty or covenant of Buyer contained in this
Agreement, and (c) those as to which Buyer agrees to indemnify Seller under
Section 9.2.1. Seller shall also defend, indemnify and save and hold harmless
Buyer against all claims, costs, expenses and liabilities which arise from
Seller's willful misconduct or gross negligence as operator of the Assets
between the Effective Date and Closing.
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ARTICLE X
MISCELLANEOUS
10.1 APPLICABLE AGREEMENTS. This Agreement is made subject to all the terms
and conditions of those contracts and agreements to which Buyer is a party and
those set forth in the attached Exhibit 10.1 which Seller has entered into or is
subject to as a result of owning the Assets; to the best of its knowledge,
Seller represents that there are no other contracts and agreements, other than
those to which Buyer is a party, to which the Assets are subject. In addition,
Seller represents that production from the Mineral Interests is not subject to
any contract or commitment, other than those to which Buyer is a party, which
cannot be terminated by Buyer, as successor to Seller's interests, upon notice
of sixty (60) days or less, except as set forth on Exhibit 10.1.
10.2 INTEGRATION; AMENDMENT AND MODIFICATION. This Agreement constitutes the
entire understanding of the parties hereto with respect to the matters referred
to herein and supersedes all prior arrangements or understandings, written or
oral with respect thereto. Except as expressly set forth herein, neither of the
parties makes to the other party any representation or warranty, whether express
or implied, of any kind whatsoever. This Agreement may not be modified,
supplemented or changed in any respect except by a writing duly executed by
Seller and Buyer.
10.3 DESCRIPTIVE HEADINGS. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not constitute a part
hereof.
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10.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
10.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by each of the parties, and
their successors and assigns.
10.6 NOTICES. All notices, disclosures or other communications which are
required or permitted hereunder shall be in writing and shall be delivered as
follows:
IF TO BUYER:
Xxxxxx Oil Corporation
0000 Xxxxx Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx Xxxx, XX 00000-0000
ATTN: Xxxxx Xxxxxx
IF TO SELLER:
Amerada Xxxx Corporation
One Xxxxx Center
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: X. X. Xxxxxxx
10.7 GEOLOGICAL, ENGINEERING AND OTHER TECHNICAL RECORDS. Within thirty (30)
days after the Closing Date, Seller shall deliver to Buyer all maps, logs,
cores, cuttings and other geological data and all engineering data and other
technical data in its possession pertaining to the Assets, except to the extent
Seller is contractually prohibited from doing so under the terms of any
agreement in existence on the Effective Date.
10.8 CONFIDENTIALITY. Seller agrees, for a period of three (3) years from the
Effective Date of this Agreement, to keep confidential all engineering, seismic,
geological, geophysical or other data included in the
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Assets and further agrees not to acquire any interest within one (1) mile of any
AMI during the same time. Seller shall not make any media announcement of the
transaction contemplated by this Agreement without Buyer's prior written
consent. Seller shall further take whatever prospective steps may be reasonably
necessary to ensure that Seller's employees, consultants and agents comply with
the provisions of this paragraph.
10.9 VENUE. Buyer and Seller agree that with regard to any and all matters in
any way related to this Agreement, venue shall be proper only in Xxxxxx County,
Texas.
10.10 ARBITRATION. If a dispute should arise under this Agreement, such
dispute shall, except as provided in Sections 8.1 and 8.4, be settled by
arbitration. Either party may make a demand for arbitration by filing a demand
in writing with the other.
10.10.1 APPOINTMENT OF ARBITRATORS. The parties hereto may agree upon
one arbitrator, but in the event that they cannot so agree, there shall be three
arbitrators, one named in writing by each of the parties within fifteen (15)
days after demand for arbitration is made, and a third to be chosen by the two
so named. Should either party refuse or neglect to join in the appointment of
the arbitrators, they shall be appointed in accordance with the provisions of
Article 226 of the Revised Civil Statutes of Texas.
10.10.2 HEARING. All arbitration hearings conducted hereunder, and all
judicial proceedings to enforce any of the provisions hereof, shall take place
in Xxxxxx County, Texas. The hearing(s) before the arbitrators
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of the matter to be arbitrated shall be at the time and place within said county
as is selected by the arbitrators. Notice shall be given and the hearing
conducted in accordance with the provisions of Article 228, 229, and 230 of the
Revised Civil Statutes of Texas. At the hearing any relevant evidence may be
presented by either party, and the formal rules of evidence applicable to
judicial proceedings shall not govern. Evidence may be admitted or excluded in
the sole discretion of the arbitrators. The arbitrators shall hear and determine
the matter and shall execute and acknowledge their award in writing and deliver
a copy thereof to each of the parties by registered or certified mail.
10.10.3 ARBITRATION AWARD. If there is only one arbitrator, his decision
shall be binding and conclusive on the parties. If there are three arbitrators,
the decision of any two shall be binding and conclusive.
10.10.4 NEW ARBITRATORS. If the arbitrators selected pursuant to
paragraph 10.10.1 hereof shall fail to reach an agreement within thirty (30)
days after conclusion of hearing(s), they shall be discharged, and three new
arbitrators shall be appointed and shall proceed in the same manner, and the
process shall be repeated until a decision is finally reached by two of the
three arbitrators selected.
10.10.5 COSTS OF ARBITRATION. The costs and expenses of arbitration,
including the fees of the arbitrators and the attorneys of the respective
parties, shall be borne by the parties in such proportions as the arbitrators
shall determine.
10.11 XXXXX #2 ST WELL. Seller agrees to commence production of the Xxxxx
#2 ST Well as soon as reasonably possible and to the extent
-31-
consistent with a reasonably prudent operator standard to produce the well at
its maximum efficient rate until Closing. At Buyer's request, Seller shall
acquire a bottom hole pressure test that accurately reflects the reservoir
pressure, and Buyer may obtain a reserve report from Xxxxxx and Xxxxx for the
Xxxxx #2 ST Well using all available pressure and production data. If that
reserve report estimates ultimate economically recoverable reserves to be less
than 7.0 Bcfe as of the date of first production, then the Purchase Price
allocated to the Xxxxx #2 ST Well shall be proportionately reduced in the ratio
that the Xxxxxx and Xxxxx reserve estimate bears to 7.0 Bcfe.
10.12 TERMINATION.
10.12.1 Buyer may terminate this Agreement, and Seller will refund the
deposit only in the event of one or more of the following:
(a) The total adjustments to the Purchase Price made pursuant to the
provisions hereof equal or exceed Nine Million Five Hundred Thousand Dollars
($9,500,000).
(b) Buyer's environmental report reveals the existence of
environmental conditions that require remedial action under applicable laws that
would cost in excess of Two Million Five Hundred Thousand Dollars ($2,500,000).
(c) The pre-closing conditions set forth in Section 6.1 have not been
satisfied or waived prior to Closing.
(d) As provided in Section 4.6.
10.12.2 Seller may terminate this Agreement and keep Buyer's deposit
only in the event that the conditions of Closing are satisfied and
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Buyer refuses to close on or before February 23, 1998. Retention of said deposit
by Seller shall be Seller's only remedy for Buyer's refusal or failure to close.
10.13 TRANSITION OPERATIONS. Seller and Buyer will enter into a 90-day
transition operating agreement, generally in the form attached hereto as Exhibit
10.13, providing for Seller to operate the properties and make disbursements for
a period up to ninety (90) days after Closing. In consideration for rendering
these services, Seller shall be reimbursed for its reasonable out-of-pocket
expenses, plus receiving the XXXXX overhead rate applicable to the particular
property.
10.14 FILE COPIES. Subject to the confidentiality requirements of Section
10.8, Seller may retain copies of files and documents included within the Assets
which are necessary for its accounting, tax, land and operator records.
10.15 GRANGE DOME. Notwithstanding the provisions of a certain farmout
agreement dated August 20, 1997 as amended relating to the Centerville Dome,
Buyer may propose any operation it wishes in the Grange Dome AMI; however, such
operations shall be conducted only if Seller and Buyer mutually agree.
10.16 SPECIFIC PERFORMANCE. Buyer shall be entitled to specific
performance of this Agreement.
10.17 LIKE-KIND EXCHANGE: TAXES.
10.17.1 Seller desires to exchange for other property of like-kind and
qualifying use within the meaning of Section 1031 of the Internal Revenue Code
of 1986, as amended and the Regulations promulgated
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thereunder, the Assets, which are the subject of this Agreement. To effect such
an exchange, Seller reserves the right to assign its rights, but not its
obligations, hereunder to a Qualified Intermediary as provided in Treasury
Regulations Section 1.1031(k)-1(g)(4) on or before the Closing Date, and Buyer
hereby agrees to recognize any such assignment. Buyer agrees to cooperate with
Seller and with the Qualified Intermediary to ensure that the formalities of a
like-kind exchange are accomplished. Buyer shall not be obligated to pay any
additional costs or incur any additional obligations in their acquisition of the
Assets, which are the subject of this Agreement, and Seller shall indemnify
Buyer against all claims, expenses, losses and liabilities, if any, resulting
from Buyer's participation in such an exchange.
10.17.2 Buyer desires to acquire in exchange for other property of like-kind
and qualifying use within the meaning of Section 1031 of the Internal Revenue
Code of 1986, as amended, and the Regulations promulgated thereunder, the
Assets, which are the subject of this Agreement. To effect such an exchange,
Buyer reserves the right to assign its rights, but not its obligations,
hereunder to a Qualified Intermediary as provided in Treasury Regulations
Section 1.1031(k)-1(g)(4) on or before the Closing Date, and Seller hereby
agrees to recognize any such assignment. Seller agrees to cooperate with Buyer
and with the Qualified Intermediary to ensure that the formalities of a like-
kind exchange are accomplished. Seller shall not be obligated to pay any
additional costs or incur any additional obligations in its sale of the Assets,
which are the subject of this Agreement, and Buyer shall indemnify Seller
against all claims,
-34-
expenses, losses and liabilities, if any, resulting from Seller's participation
in such an exchange.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date hereof.
"BUYER"
XXXXXX OIL CORPORATION
By:
-----------------------------------
Xxxxx X. Xxxxxx
President
"SELLER"
AMERADA XXXX CORPORATION
By:
-----------------------------------
X. X. Xxxxxxxxx
Vice President
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EXHIBIT 1.2(b)
Attached to and made a part of that Agreement for Purchase and Sale
effective as of September 1, 1997
By and Between Amerada Xxxx Corporation and
Xxxxxx Oil Corporation
NET PROFITS OVERRIDING ROYALTY
The following terms shall apply to determine the Net Profits Overriding
Royalty:
(a) The Net Profits Overriding Royalty does not include any right,
title or interest in and to any of the personal property, fixtures, or
equipment now (or hereafter placed) upon the Assets, and the Net Profits
Overriding Royalty excepted and reserved by Seller is exclusively an interest
in net profits, as hereinafter defined, and Seller shall look exclusively to
the proceeds attributable to the oil, gas and other hydrocarbons produced
from the Mineral Interests for the satisfaction and realization of the Net
Profits Overriding Royalty.
(b) Buyer shall have exclusive charge and control of the marketing
of all oil, gas and other hydrocarbons allocable to the Net Profits
Overriding Royalty, and shall market such production to third parties in
arm's-length transactions proportionately with and on the same terms as
Buyer's share of production from the same well, and shall collect and
receive the proceeds of the sale of all such production.
(c) Buyer shall maintain a separate payout and Net Profits Account
in accordance with the terms of this agreement and good accounting practices
for each well subject to the Net Profits Overriding Royalty Interest. The
books of account and records of the Net Profits Accounts shall at all
reasonable times be open for examination, inspection, copying, and audit by
Seller and its accredited representatives at Seller's expense. The Net
Profits Accounts shall be and remain non-interest bearing accounts.
(d) Each Net Profits Account shall be credited by the following,
insofar and to the extent the same are allocable to the Mineral Interests in
the unit for each well.
(1) an amount equal to the sale proceeds from the sale of all
oil, gas, and other hydrocarbons accruing after payout of each well and
allocable to the Mineral Interests in the unit for such well (but
excluding therefrom those proceeds attributable to all royalties and any
overriding royalty and/or production payment interests now outstanding
in third parties and burdening any of the Mineral Interests) and an
amount equal to the value of all production so allocable, but
-1-
appropriated for Buyer's benefit or other use other than with respect to
the Mineral Interests;
(2) an amount equal to the proceeds of the sale and/or rental of
any of the interests acquired from Seller in any personal property or
equipment, hereafter charged to the Net Profits Account; an amount equal
to the market value at the time of removal of the interest acquired by
Buyer (on account of its interest in the Mineral Interests) in all
personal property and equipment removed by Buyer allocable to the
Mineral Interests; all amounts received by or for Buyer allocable to the
Mineral Interests under any unitization or operating agreement relating
to any such unit on account of the sale or removal of personal property
or equipment from such unit;
(3) an amount equal to the proceeds of all insurance collected by
Buyer (or received by or for it under any operating agreement) on
account of its ownership of the Mineral Interests as a consequence of
the loss of or damage to any one or more of the following: (a) the
Mineral Interests or any part thereof or interest therein; (b) the
personal property or equipment located thereon or used in connection
therewith; or (c) any other property if its cost has been charged to the
Net Profits Account;
(4) an amount equal to the proceeds of all judgments and claims
collected by Buyer on account of its ownership of the Mineral Interests
and involving one or more of the following: (a) the Mineral Interests or
any part thereof or interest therein; (b) the personal property or
equipment located thereon; or (c) any other property if its cost has
been charged to the Net Profits Account;
(5) an amount equal to all other moneys, credits and things of
value received by or inuring to the benefit of Buyer by virtue of its
ownership of the Mineral Interests, excluding always, however, the
proceeds of the sale of all or any part of or interest in any of such
properties should Buyer sell such property, part or interest, subject to
the Net Profits Overriding Royalty; and
(6) an amount equal to any contributions of money (whether as dry
hole or bottom hole contributions or otherwise) or value which Buyer
receives on account of the development of the Mineral Interests;
provided always, however, nothing herein set forth in this Section (d)
shall ever be interpreted or applied in any manner which will ever
require or permit any duplication of all or any part of any credit to
the Net Profits Account with respect to the same transaction or any
credit utilized in determining payout.
(e) Against each Net Profits Account shall be charged the following,
insofar and to the extent the same are properly allocable to the Mineral
Interests in the unit for such well after payout:
-2-
(1) an amount equal to the costs to Buyer of all direct labor
(including fringe benefits), transportation, and other services
necessary for developing, equipping, operating, and maintaining the
Mineral Interests; and of all material, equipment, and supplies
purchased by Buyer and used on any of the Mineral Interests (including,
but not limited to, all costs of fluid injection, pressure maintenance,
secondary and tertiary recovery, and recycling); and any of the amounts
charged to Buyer for conformance of investment in connection with the
creation of any unit or units in which any of the Mineral Interests are
or may be included; and of that portion of any other amounts paid to any
operator, or receivable by Buyer as operator, under any operating
agreement relating to any of the Mineral Interests;
(2) an amount equal to the expenses of litigation, liens,
judgments, and liquidated liabilities and claims incurred and paid by
Buyer on account of its ownership of the Mineral Interests or incident
to the development, exploration, operation, or maintenance thereof;
(3) an amount equal to all taxes assessed against or attributable
to the Mineral Interests, except mortgage and income taxes, paid by
Buyer for the benefit of the parties subject thereto;
(4) an amount equal to insurance premiums paid by Buyer on account
of its ownership of the Mineral Interests for insurance carried with
respect to the Mineral Interests or any part thereof, together with all
expenditures incurred and paid in settlement of any and all losses,
claims, damages, judgments, and other expenses, including legal
services, relating to the Mineral Interests or their operations, or any
part thereof;
(5) an amount equal to a reasonable charge for overhead (as
defined by the most recent accounting procedure as approved by the
Council of Petroleum Accounting Society) to cover the portion properly
allocable to the Mineral Interests of compensation or salaries paid to
the managing officers of Buyer and of its employees whose time is not
allocated directly to the Mineral Interests, for the office expense of
Buyer, and for any district and camp expense not allocated directly to
the Mineral Interests;
(6) an amount equal to the expenditures incurred by Buyer in
manufacturing, processing or refining production allocable to the
Mineral Interests, together with all applicable transportation and
extraction costs; and
(7) an amount equal to all other expenditures incurred by Buyer
for the necessary or proper development, exploration, operation,
maintenance, and utilization of the Mineral Interests; provided always,
however, nothing herein set forth in this Section (e) shall ever be
interpreted or applied in any manner which will ever require or permit
-3-
any duplication of all or any part of any charge to the Net Profits
Account with respect to the same transaction or any part of any charge
included in determining payout.
(f) The net profits from the Mineral Interests for each well subject
to the Net Profits Overriding Royalty shall be determined for each calendar
month after the Effective Date by deducting the aggregate of any charge
balance existing in the Net Profits Account for such well at the first of
such month, plus the total charges properly made thereto during such month,
from the sum of any credit balance existing in such Net Profits Account for
such well at the first of such month and total credits properly made to it
during such month, and Seller shall receive net profits from such well, only
in such months when such credits exceed such charges. Credit Items (2), (3),
(4), (5), and (6) in Section (d) shall be taken into account solely for
determining whether net profits exist, and Seller shall have no right, title,
or interest therein, and all payments made to Seller on account of the Net
Profits Overriding Royalty shall be made entirely and exclusively out of the
proceeds attributable to production.
(g) On or before the last day of each calendar month, or as soon
thereafter as reasonably possible, Buyer shall furnish to Seller a detailed
statement clearly reflecting the condition of each Net Profits Account as of
the close of business on the last day of the preceding calendar month. Any
deficit or loss (that is to say, an excess of charges over credits) reflected
by any such statement shall be carried forward for the next and succeeding
months until such deficit or loss has been liquidated. In case a net profit
(that is to say, an excess of credits over charges) is reflected by any such
statement, payment to Seller of the amount of such credit balance shall be
enclosed with the statements rendered to Seller, and such Net Profits Account
shall then be charged with an amount (hereinafter called the "Payment
Charge") equal to the amount so paid to Seller. Notwithstanding the
provisions of this section, the payment herein provided to be made to Seller
with respect to a Net Profits Account for any calendar month may be limited
by the second sentence of Section (f) above so that Seller's said payment may
not exceed the credits to such Net Profits Account pursuant to Section
(d)(1). In such event, the Payment Charge shall only be an amount equal to
the Seller's said limited payment, and the remaining credit balance in such
Net Profits Account shall be carried forward to the succeeding months until
reduced to zero by permitted charges to such Net Profits Account. No change
of ownership of the Net Profits Overriding Royalty shall be binding upon
Buyer, until Buyer is furnished with certified or photocopies, satisfactory
to Buyer, of the original recorded documents evidencing such change.
Notwithstanding any change of ownership in the Net Profits Overriding
Royalty, Buyer shall never be required to make payments nor to render reports
required hereunder with respect to such Net Profits Overriding Royalty to
more than one party, and, in the event the Net Profits Overriding Royalty is
owned by more than one party, Buyer may withhold further payments and reports
with respect to such Net Profits Overriding Royalty until all of such owners
of the Net Profits Overriding Royalty have designated a single party to act
-4-
for all of them hereunder in all respects, including, but not by way of
limitation, the giving and receiving of all notices and the receipt of all
payments and reports. If, at the expiration of two (2) years from the
rendition of a particular statement, Seller has raised no objection to the
items therein reflected nor as to debits or credits upon which such items are
based, such statement shall be conclusively deemed to be correct for all
purposes, and Buyer shall no longer be required to maintain any records in
connection therewith.
(h) Seller shall never personally be responsible for payment of any
part of the costs and expenses charged against the Net Profits Accounts, nor
for any liabilities incurred in connection with the developing, exploring,
equipping, and operating of the Mineral Interests after the Effective Date;
provided, however, all such costs and expenses shall nevertheless be charged
against the Net Profits Accounts as and to the extent herein provided.
-5-
EXHIBIT 2.1.5
Attached to and made a part of that Agreement for Purchase and Sale
effective as of September 1, 1997
By and Between Amerada Xxxx Corporation and
Xxxxxx Oil Corporation
GAS IMBALANCES
There are no gas imbalances.
-1-
EXHIBIT 6.2(a)
Attached to and made a part of that Agreement for Purchase and Sale
effective as of September 1, 1997
By and Between Amerada Xxxx Corporation and
Xxxxxx Oil Corporation
ASSIGNMENT AND XXXX OF SALE
Amerada Xxxx Corporation, a Delaware Corporation, whose address is One Xxxxx
Center, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, hereinafter referred to as
"Assignor", for One Hundred Dollars ($100.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
does hereby CONVEY, ASSIGN and DELIVER unto Xxxxxx Oil Corporation, a Michigan
corporation, whose address is 0000 Xxxxx Xxxxxx Xxxx, X.X. Xxx 000, Xxxxxxxx
Xxxx, XX 00000-0000, hereinafter referred to as "Assignee", all of the following
described properties, rights and interests, hereinafter referred to collectively
as the "Assets":
A. All of the oil, gas and other mineral leasehold interests, royalty and
overriding royalty interests, mineral interest and oil and gas rights described
in Exhibit "A", attached hereto and made a part hereof by reference (hereinafter
collectively referred to as "Mineral Interests");
B. Present and future participation in any xxxxx, units, fields, or
additional oil and gas interests, which participation is derived from and
limited to the Mineral Interests, including, but not limited to, all right,
title and interest of Assignor derived from any unitization, pooling, operating,
area of mutual interest, communitization or other agreement, or from any
declaration or order of any governmental authority;
-1-
C. All xxxxx, equipment, facilities, improvements, salt water disposal xxxxx,
compressors, compressor stations, dehydration facilities, treating facilities
and plants (including desulfurization facilities), pipelines, gathering systems,
flow lines, transportation lines, field offices and yards (both owned and
leased), valves, meters, separators, tanks, tank batteries, and other fixtures
and appurtenances pertaining to the Mineral Interests;
D. Oil, gas and other hydrocarbons (including all components thereof)
produced from, or attributable to the Mineral Interests subsequent to the
Effective Date (as hereinafter defined), including "line fill" and inventory
below the pipeline connection in tanks;
E. Personal property located on or used in connection with the development,
operation, maintenance, and/or safeguarding of any of the Mineral Interests,
including, but not limited to, cores, cuttings, supplies, inventory, pipe,
equipment, compressors, tools and contents of the field offices (including, but
not limited to, computers utilized for Scadix monitoring of xxxxx, furniture,
fixtures and supplies);
F. Contracts and contractual rights, obligations and interests including, but
not limited to, unit agreements, farmout agreements, farmin agreements, drilling
contracts, operating agreements, well service contracts, seismic licenses,
software licenses, storage or warehouse agreements, supplier contracts, service
contracts, marketing contracts, construction agreements, division orders and
transfer orders, relating to the Mineral Interests; except licenses which
Assignor is prohibited from selling or assigning under the terms of a contract
existing on the Effective Date;
-2-
G. All lease files, land files, well files, well data and records,
engineering studies, gas and oil sales contract files, gas processing files,
division order files, abstracts, title opinions, geophysical data, files, tapes,
maps, and licenses, and all other books, files and records, information and data
(including, but not limited to, engineering and geological data, files and maps)
of Assignor, insofar as the same relate to the Mineral Interests, except for
licenses and data which Assignor is prohibited from selling or assigning under
the terms of a contract existing on the Effective Date;
H. Hydrocarbon sales, purchase, exchange and processing contracts and
agreements, and all other contracts and agreements, insofar as the same affect
or relate to the production from the Mineral Interests, including, but not
limited to, any rights Assignor has to market the production of other current
working interest owners who are subject to Joint Operating Agreements among
Assignor, as Operator, and Assignee et al., as Non Operators, covering the
Mineral Interests;
I. All claims of Assignor against gas purchasers for "take or-pay"
obligations and similar obligations, with respect to the Mineral Interests to
the extent such claims have not been paid to or settled by Assignor as of the
Effective Date, all obligations and benefits with respect to gas production or
processing imbalances which are to be assumed or received by Assignee pursuant
to this Agreement, and all obligations and benefits with respect to severance
tax abatements with respect to the Mineral Rights attributable to periods of
time after the Effective Date; and
J. Easements, licenses, authorizations, permits, and similar rights and
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interests applicable to, used or useful in connection with, any or all of the
Mineral Interests.
TO HAVE AND TO HOLD the Assets unto Assignee, its successors and assigns,
forever, and Assignor (1) hereby binds itself, its successors and assigns, to
warrant and forever defend all and singular the Assets unto Assignee, its
successors and assigns, against every person whomsoever lawfully claiming or to
claim the same or any part thereof by, through, or under Assignor, but not
otherwise; and (2) warrants that it has not created any burdens on the Assets in
addition to those burdens which existed when Assignor acquired the Assets.
However, as to all equipment, xxxxx and other personal property herein conveyed,
ASSIGNOR EXPRESSLY DISCLAIMS AND NEGATES (i) ANY IMPLIED OR EXPRESSED WARRANTY
OF MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESSED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, AND (iii) ANY IMPLIED OR EXPRESSED WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, and all such personal property is conveyed "AS
IS" and without warranty of any kind.
To the extent Assignor has received any warranty of whatever nature relating to
the Assets from Assignor's predecessors-in-title, and to the extent such
warranty may be assigned, Assignor subrogates Assignee in and to all of the
rights and actions of warranty which Assignor has or may have against its
predecessors-in-title.
This Assignment and Xxxx of Sale is made subject to all the terms and
conditions of that Agreement for Purchase and Sale by and between Assignor and
Assignee, dated November 25, 1997, and made a part hereof by reference. This
Assignment and Xxxx of Sale shall be effective as of September 1, 1997, at 7:00
a.m. ("Effective Date").
-4-
EXECUTED THIS _____ day of ______________, 1998.
XXXXXX OIL CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
AMERADA XXXX CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
-5-
EXHIBIT 8.3
Attached to and made a part of that Agreement for Purchase and Sale
effective as of September 1, 1997
By and Between Amerada Xxxx Corporation and
Xxxxxx Oil Corporation
ALLOCATION OF CONSIDERATION
ASSETS RELATIVE FAIR MARKET VALUE
Depreciable Assets $
----------------------------
Depletable Assets $
----------------------------
TOTAL VALUE $
----------------------------
_____________________________
Seller and Buyer agree that Total Value is equal to the consideration paid
for the Assets in accordance with the Agreement, and acknowledge that this
is the proper allocation of that consideration in accordance with Section
1060 of the U.S. Internal Revenue Code.
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Xxxxxx Oil Corporation
, 1998
----------------
Page 1
EXHIBIT 10.13
Attached to and made a part of that Agreement for Purchase and Sale
effective as of September 1, 1997
By and Between Amerada Xxxx Corporation and
Xxxxxx Oil Corporation
[AMERADA XXXX CORPORATION LOGO]
One Xxxxx Center
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
(000) 000-0000
, 1998
------------
Xxxxxx Oil Corporation
0000 Xxxxx Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx Xxxx, XX 00000-0000
ATTN: Xxxxx Xxxxxx
Re: Letter Agreement
Mississippi Salt Dome Field
Dear Xx. Xxxxxx:
Reference for all purposes is herein made to that certain Agreement for
Purchase and Sale ("Agreement") dated November 25, 1997, by and between
Amerada Xxxx Corporation ("AHC") and Xxxxxx Oil Corporation ("Xxxxxx"). As
an accommodation to Xxxxxx, AHC agrees to perform the services hereinafter
specified, and Xxxxxx agrees to undertake the obligations herein set forth.
-1-
Xxxxxx Oil Corporation
, 1998
----------------
Page 2
1. FILES
AHC will make reasonable efforts to have all of its files pertaining to the
Assets, including well files on AHC operated properties, available for Xxxxxx
to pick up on or before __________, 1998, or as soon as practical thereafter.
Files will be made available at AHC's Houston office and at its field
offices.
2. OPERATIONS
AHC and Xxxxxx agree that Transfer of Operator Forms bearing a transfer date
of ______________, 1998, will be completed on all AHC operated Assets at or
prior to Closing and same will be forwarded to the Mississippi State Oil Gas
Board ("MSOG") as appropriate by AHC. AHC will turn over operatorship of all
AHC operated properties as soon as practicable after Closing but in no event
later than 7:00 a.m. _____________, 1998. It is understood by both AHC and
Xxxxxx that the MSOG may consider their approval dates as the effective dates
for State and Federal reporting and other regulatory matters. Nevertheless,
Xxxxxx desires and agrees to assume full responsibility for operations not
later than 7:00 a.m. ______________, 1998.
3. LAND MAINTENANCE
AHC shall continue its normal land maintenance of rental and shut-in payments
through the month of __________ 1998 to allow Xxxxxx sufficient time to set
up its land and accounting records. During the months of
_____________________, AHC shall consult with Xxxxxx regarding significant
maintenance items. On _____________, 1998, AHC shall furnish a report of all
maintenance performed on behalf of Xxxxxx and shall no longer perform land
maintenance for Xxxxxx.
4. MARKETING GAS
AHC agrees to market natural gas for the months of __________ 1998. AHC
shall make all required nominations and pipeline communications for the
entire months of _________1998. On or before _____________, 1998 (or such
time as required by pipeline nominations), AHC will transfer all information
required for Xxxxxx to assume gas marketing functions effective with
_________1998 sales including:
1. Details of _________1998 sales transactions;
2. Meter numbers and other relevant information required to make
pipeline nominations; and
3. Contact list of companies to whom AHC typically sells.
-2-
Xxxxxx Oil Corporation
, 1998
----------------
Page 3
Xxxxxx will assume all marketing functions for _________1998 sales and AHC
shall have no responsibility to market gas for Xxxxxx after _________1998.
5. ACCOUNTING
AHC shall assist Xxxxxx with accounting as set forth on the attached Schedule
I. AHC and Xxxxxx will consult with each other regarding significant
accounting items performed. Subsequent to the dates outlined on Schedule I,
AHC shall no longer perform any accounting functions for Xxxxxx. For cash
received or expended by AHC subsequent to the dates outlined on the Schedule,
AHC will remit net cash (revenue received less expenditures paid) due to
Xxxxxx, by the tenth workday, following the month the cash was received or
expended. AHC will forward original documentation or copies of original
documentation as appropriate, supporting cash receipts, expenditures or other
significant accounting activity on a timely basis.
6. COMMUNICATION EQUIPMENT
AHC shall retain voice frequency ______ MHz in ____________________________.
Xxxxxx has right to use this radio frequency until ____________, 1998, at
which time Xxxxxx will cease use of frequency ______ MHz.
7. INDEMNIFICATION
Without implying any obligation on AHC's part to continue conducting the
services set forth in this letter after the Closing, such continued services
by AHC shall be for the account of Xxxxxx, at the sole risk, cost and expense
of Xxxxxx and AHC is hereby released and indemnified by Xxxxxx from all
claims, losses, damages, costs, expenses, causes of action and judgments of
any kind or character (INCLUDING AHC'S NEGLIGENCE) arising out of such
continued services except such claims as may result from AHC's willful
misconduct. In connection with any such continued services, AHC shall be
reimbursed by Xxxxxx for all reasonable out-of-pocket costs and expenses
incurred by AHC with respect thereto, plus receiving the XXXXX overhead rate
applicable to the particular property.
If you are in agreement with the above, please execute one copy of this
letter at the place designated below and return one copy to my attention at
-3-
Xxxxxx Oil Corporation
, 1998
----------------
Page 4
the above address, whereupon this will be an amendment of the Agreement,
binding upon the parties hereto.
Respectfully,
AMERADA XXXX CORPORATION
By:
------------------------------
ACCEPTED AND AGREED TO
THIS ______ DAY OF __________________, 1998
XXXXXX OIL CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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