EXHIBIT 10.10
PURCHASE AND SALE AGREEMENT
by and between
RIDGELAKE ENERGY, INC.
a Louisiana corporation,
and
PETROREAL MAIN PASS L.L.C.,
a Delaware Limited Liability Company
Main Pass Block 59 Field
Effective March 1, 2004
TABLE OF CONTENTS
ARTICLE 1: PURCHASE AND SALE................................................1
1.1 Purchase and Sale of 5/7ths Assets...............................1
1.2 Treatment of Sale for Tax Purposes...............................2
ARTICLE 2: PURCHASE PRICE...................................................3
2.1 Purchase Price; Method of Payment................................3
2.2 Adjustments to Purchase Price....................................3
2.3 Deposit..........................................................4
2.4 Post-Closing Adjustment..........................................4
ARTICLE 3: OPTION TO PURCHASE...............................................4
3.1 Option to Purchase of 2/7ths.....................................4
3.2 AFE Adjustment to Purchase Price.................................5
3.3 Consideration for Option.........................................5
3.4 Other Conditions Applicable to 2/7ths Interest...................5
ARTICLE 4: TITLE MATTERS....................................................5
4.1 Access to Records and Properties.................................5
4.2 Approvals and Consents...........................................6
4.3 Notice to Holder of Preferential Purchase Rights.................6
4.4 Exercise of Preferential Purchase Rights.........................6
4.5 Risk of Loss.....................................................6
4.6 Title, and Physical and Environmental Condition..................6
ARTICLE 5: REPRESENTATIONS AND WARRANTIES OF SELLER.........................7
5.1 Existence........................................................7
5.2 Power............................................................7
5.3 Authorization....................................................7
5.4 Brokers..........................................................7
5.5 Foreign Person...................................................7
5.6 Environmental Matters............................................8
5.7 Consents.........................................................8
5.8 Imbalances.......................................................8
5.9 Agreements to Sell or Mortgage...................................8
5.10 Schedules and Exhibits...........................................8
5.11 Tools and Spare Parts............................................9
5.12 Permits, Licenses, Etc...........................................9
5.13 No Warranties....................................................9
-i-
5.14 Taxes............................................................9
5.15 Compliance.......................................................9
5.16 Records.........................................................10
5.17 Permits.........................................................10
5.18 Absence of Modifications........................................10
5.19 Absence of Breach...............................................10
5.20 Litigation......................................................10
5.21 To the Best of Knowledge........................................11
5.22 Material Affect or Material Adverse Affect......................11
5.23 Tax Partnership Provisions......................................11
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................11
6.1 Existence.......................................................11
6.2 Power...........................................................11
6.3 Authorization...................................................11
6.4 Brokers.........................................................12
6.5 Further Distribution............................................12
6.6 Matters Affecting Governmental Approval.........................12
6.7 Consents........................................................12
6.8 Inspections; Independent Evaluation.............................12
6.9 Tax Partnership Provisions......................................13
ARTICLE 7: PRE-CLOSING OBLIGATIONS OF SELLER...............................13
7.1 Operations......................................................13
7.2 Permissions.....................................................13
7.3 Exclusivity.....................................................13
ARTICLE 8: PRE-CLOSING OBLIGATIONS OF PURCHASER............................14
8.1 Confidentiality.................................................14
8.2 Return of Data..................................................14
8.3 Indemnity Regarding Access......................................14
ARTICLE 9: SELLER'S CONDITIONS OF CLOSING..................................14
9.1 Representations and Warranties..................................15
9.2 Performance.....................................................15
9.3 Officer's Certificate...........................................15
9.4 Pending Matters.................................................15
9.5 MMS Bonds.......................................................15
ARTICLE 10: PURCHASER'S CONDITIONS OF CLOSING...............................15
10.1 Representations and Warranties..................................15
-ii-
10.2 Performance.....................................................15
10.3 Officer's Certificate...........................................16
10.4 Pending Matters.................................................16
10.5 Litigation......................................................16
10.6 Farmout Production Call Waiver.................................16
10.7 Crude Price....................................................16
10.8 Chevron's Consent..............................................16
ARTICLE 11: CLOSING.........................................................16
11.1 Time and Place of Closing.......................................16
11.2 Closing Obligations.............................................16
ARTICLE 12: ADDITIONAL AGREEMENTS...........................................17
12.1 Calculation of Final Adjusted Purchase Price....................17
12.2 Receipts and Credits............................................18
12.3 Assumption of Liabilities; Cross Indemnity......................19
12.4 Further Assurances..............................................20
12.5 Governmental Approvals..........................................20
12.6 Further Indemnity...............................................20
ARTICLE 13: TERMINATION.....................................................21
13.1 Right of Termination...........................................21
13.2 Effect of Termination...........................................21
13.3 2/7ths Interest Exclusion.......................................21
ARTICLE 14: TAXES...........................................................22
14.1 Sales Taxes.....................................................22
14.2 Other Taxes.....................................................22
14.3 Cooperation.....................................................22
ARTICLE 15: DOCUMENT RETENTION..............................................23
15.1 Inspection......................................................23
15.2 Destruction.....................................................23
ARTICLE 16: INDEPENDENT INVESTIGATION AND DISCLAIMER........................23
16.1 Independent Investigation and Disclaimer........................23
-iii-
ARTICLE 17: ENVIRONMENTAL MATTERS...........................................24
17.1 Physical and Environmental Conditions...........................24
17.2 NORM............................................................25
17.3 General Environmental Indemnity.................................25
ARTICLE 18: MISCELLANEOUS...................................................26
18.1 Governing Law...................................................26
18.2 Entire Agreement................................................26
18.3 Waiver..........................................................26
18.4 Captions........................................................26
18.5 Assignment......................................................26
18.6 Notices.........................................................26
18.7 Expenses........................................................27
18.8 Severability....................................................27
18.9 Publicity.......................................................27
18.10 No Third-Party Beneficiary......................................28
18.11 Survival; Limitation of Liability...............................28
18.12 Counterparts; Exhibits..........................................28
18.13 Conflict With Assignment........................................28
-iv-
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered
into this ____ day of May, 2004, by and between RIDGELAKE ENERGY, INC., a
Louisiana corporation, with a place of business at 0000 Xxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx, 00000 ("Seller") and PETROREAL MAIN
PASS L.L.C., a Delaware limited liability company, with a place of business at
000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxx, 00000 ("Purchaser").
RECITALS
Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain oil and gas properties and related assets on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements contained herein, Seller and Purchaser hereby
agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 Purchase and Sale of 5/7ths Assets. On the Closing Date (as
defined in Article 11 hereinafter), but effective as of 7:00 a.m. Central
Daylight Savings Time, March 1, 2004 (the "Effective Date"), subject to the
terms and conditions of this Agreement, Seller agrees to sell and convey to
Purchaser, and Purchaser agrees to purchase and pay for 5/7ths of Seller's
right, title and interest in and to the following assets (Seller's undivided
5/7ths interest in such assets is hereinafter collectively, the "Assets"):
(a)...The oil, gas and mineral leases described in Exhibit A (the
"Leases"), the xxxxx thereon described on Exhibit A-1 ("Xxxxx") and
pipeline(s) and platforms described on Exhibit A-2 ("Pipelines" and
"Platforms"), together with all of Seller's rights in respect of any
pooled, communitized or unitized acreage of which any such interest is a
part (collectively, the "Leasehold Interests");
(b)...To the extent same are specifically attributable or allocable to
the Leasehold Interests, (i) all equipment and facilities (including
without limitation all tanks, gathering lines, separating facilities,
flowlines, buildings, structures, improvements, warehouses, processing
plants, water lines, gas lines, machinery, separators, compressors,
metering facilities, heater treaters, tools, pumping units and injection
facilities), that, as of the Effective Date, are located on and used solely
and directly in connection with the production or treatment of oil and gas
from the Leasehold Interests (collectively, "Equipment"), (ii) all oil and
gas and other hydrocarbons produced on or after the Effective Date, (iii)
to the extent same are assignable or transferable by Seller without
restriction under applicable law or third-party agreements (without the
payment of any funds or other consideration), all orders, contracts,
agreements and other instruments described in Exhibit B (collectively, the
"Listed Agreements"), (iv) to the extent same are assignable or
transferable by Seller under applicable law or third-party agreements
(without the payment of any funds or other consideration), all easements,
rights-of-way, surface leases, authorizations, permits and similar rights
and interests, and (v) all orders, contracts, and agreements not listed on
Exhibit B (the agreements referred to in subparts (iv) and (v) being
collectively referred to as the "Unlisted Agreements"), and all other
rights, privileges, benefits, and powers and obligations conferred or
imposed upon Seller with respect to the Assets; provided however, the
Purchaser does not expressly or impliedly assume any obligation under any
of the Unlisted Agreements, except to the extent that Purchaser assumes the
benefit of such agreement(s); and
(c)...To the extent same are in the possession of or owned by Seller
and specifically attributable or allocable to the Leasehold Interests,
originals, to the extent available, or copies of the following records
(collectively, the "Records"): (i) lease and land records, (ii) accounting
books and records relating to the Assets, (iii) development geological
records, (iv) operations, production and engineering records, (v) facility
and well records, including without limitation all mud and open and cased
hole well logs, and (vi) to the extent requested by Purchaser and to the
extent Seller is reasonably capable of providing same, certain data base
information.
1.2 Treatment of Sale for Tax Purposes. Seller and Purchaser
acknowledge and agree that Seller's right, title and interest in the Assets
emanate from a Farmout Agreement effective November 30, 1998, between Seller and
Chevron U.S.A. Production Company, a division of Chevron U.S.A., Inc.
("Chevron"), a Pennsylvania corporation, which agreement including exhibit D
thereto and all amendments and modifications ("Farmout Agreement") are attached
in globo as Exhibit C. Pursuant to Section 18 of the Farmout Agreement, Seller
and Chevron have agreed to treat their relationship as a partnership (the "Tax
Partnership") for tax purposes. As a result, for tax purposes, Seller and
Purchaser agree that the sale pursuant to this Agreement shall be a sale of the
partnership interest owned by Seller in the Tax Partnership.
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price; Method of Payment. The purchase price for the
Assets shall be Fifty-four Million and No/100 ($54,000,000.00) Dollars (the
"Purchase Price"), which amount shall be adjusted as provided in Section 2.2 and
paid at Closing by wire transfer of immediately available funds to an account
designated by Seller, which designation shall be made not later than five (5)
business days prior to the Closing.
2.2 Adjustments to Purchase Price. The Purchase Price for the Assets
shall be adjusted as follows (the resulting amount being herein referred to as
the "Interim Adjusted Purchase Price"):
(a)...The Purchase Price shall be increased by the amount of all
expenses (allocable to Seller's gross working interest share) incurred and
2
paid or to be paid by or on behalf of Seller in accordance with Seller's
usual practice applied on a consistent basis that are attributable to the
ownership or operation of the Assets and to the period of time from and
after the Effective Date through Closing, including without limitation,
lease operating expenses, insurance premiums, capital expenditures,
royalties, ad valorem, property and similar taxes and assessments,
severance, sales and production taxes (but excluding income taxes and
franchise taxes), transportation, rentals and similar charges, amounts
billed under applicable operating agreements and prepaid expenses.
(b)...The Purchase Price shall be decreased by the amount of the
Deposit, as defined hereinafter, and all proceeds (allocable to Seller's
gross working interest share) earned and received or to be received by or
on behalf of Seller (other than proceeds from the exercise by third parties
of preferential rights to purchase all or any portion of the Leasehold
Interests) that are attributable to the ownership or operation of the
Assets and to the period of time from and after the Effective Date through
Closing, it being agreed that such amount shall not include proceeds from
the sale subsequent to the Effective Date of merchantable hydrocarbons in
storage above the pipeline connection at the Effective Date.
(c) ...No later than seven (7) business days prior to Closing, Seller
shall prepare and furnish to Purchaser a Closing settlement statement
("Closing Statement") reflecting all adjustments and the Interim Adjusted
Purchase Price. Each estimate shall be made in good faith and based on the
best information available. The parties shall negotiate in good faith and
attempt to agree on such estimated adjustments prior to Closing. In the
event any estimated adjustment amounts are not agreed upon prior to
Closing, the estimate of the Interim Adjusted Purchase Price for purposes
of Closing shall be calculated based on Seller's and Purchaser's agreed
upon estimated adjustments and Seller's good faith estimation of any
disputed amounts.
(d) ...A final settlement of the Purchase Price shall take place
between Purchaser and Seller pursuant to and in accordance with the
schedule set forth in Section 12.1 hereinafter.
2.3 Deposit.
(a) Within two (2) business days after execution of this Agreement,
Purchaser will pay by wire transfer to Seller a deposit in the amount of
One Million Seven Hundred Thousand and No/100 ($1,700,000.00), Dollars,
(the "Deposit"), which, subject only to the specific exceptions set out in
subparagraph (b), below, shall be non-refundable in the event that Closing
(as defined in Section 11.1) does not occur.
(b) Exceptions to Non-Refundability of Deposit. The Deposit shall not
be refunded to Purchaser in whole or in part in the event that Closing
fails to occur, unless the failure to close is as a result of one or more
of the following occurrences:
3
(1) As a result of the termination of this Agreement pursuant
to the provisions of Section 4.4 hereof or as a result of
Purchaser's termination of this Agreement pursuant to the provisions
of Sections 4.5 or 13.1(b) the entire Deposit shall be refunded.
(2) As a result of Purchaser's termination of this Agreement
pursuant to the provisions of Sections 10.6, 10.7 or 10.8 one-half
(1/2) of the Deposit shall be refunded.
Any refund pursuant to this Article 2.3(b) shall be effected by wire transfer by
the Seller to the Purchaser within two (2) business days after the termination
of the Agreement pursuant to the provisions of this Section 2.3(b).
2.4 Post-Closing Adjustment. Within five (5) business days after the
final determination of the Adjusted Purchase Price ("Final Adjusted Purchase
Price") in accordance with Section 12.1 or otherwise, Purchaser shall pay to
Seller or Seller shall pay to Purchaser, as the case may be, the amount by which
such Final Adjusted Purchase Price is greater than or less than, respectively,
the Interim Purchase Price, in either case.
ARTICLE 3
OPTION TO PURCHASE
3.1 Option to Purchase of 2/7ths Interest. If Purchaser timely
acquires from Seller the Assets, Purchaser shall have the option ("Option") to
acquire the remaining 2/7ths of Seller's right, title and interest in and to the
assets described in Section 1.1(a), (b) and (c) ("2/7ths Interest") for the sum
of Eighteen Million and No/100 ($18,000,000.00) Dollars at a Closing to be held
on or before March 31, 2005. Purchaser shall notify Seller no less than twenty
(20) days before the date Purchaser desires to take title to the 2/7ths
Interest. Purchaser's failure to timely exercise the Option, including payment
of its Purchase Price, shall result in the Option lapsing and ceasing to have
any further force and effect. Purchaser may elect to acquire the 2/7ths Interest
at the Closing as defined in Section 11.1 hereof subject to the applicable
provisions of this Article 3.
3.2 AFE Adjustment to Purchase. In addition to other adjustments to
the Purchase Price for the 2/7ths Interest, in the event Chevron issues any
Authorization for Expenditures ("AFE") for drilling xxxxx and/or for facilities,
other than for the construction of that certain pipeline ("Proposed Pipeline")
in the Mass Pass 59 Field more fully described on Exhibit D and Seller elects to
participate therein, Seller shall pay its proportionate share thereof relative
to the 2/7ths Interest and such sum(s) shall be added to the Purchase Price for
the 2/7ths Interest.
3.3 Consideration for Option23.3 Consideration for Option.
Purchaser, in consideration for the Option, hereby agrees to and shall pay any
and all costs relative to the 2/7ths Interest attributable to the Proposed
Pipeline, and, such costs shall not be applied as a reduction to the Purchase
Price to be paid for the 2/7ths Interest.
3.4 Other Conditions Applicable to 2/7ths Interest. Except as
specified herein, the terms and conditions of this Agreement relative to the
sale of the Assets shall apply to Purchaser's acquisition of the 2/7ths
Interest, including without limitation, the Effective Date, the adjustments to
4
the Purchase Price reflected in Sections 2.2 and 2.4, the waiver of all title,
physical and environmental defects, and the provisions of Article 10. Reference
to the Deposit shall not apply to the 2/7ths Interest nor shall the provisions
of Section 7.1. The provisions of Section 4.5 shall apply to the 2/7ths
Interest, but only in respect to the period from Seller's receipt of Purchaser's
notice of exercising the Option to the Option Closing. Additionally, Seller
shall only notify Chevron about the Option in connection with giving the notice
provided for in Section 4.3 hereof either by providing Chevron a copy of this
Agreement, or including a reference to the Option in such notice.
Notwithstanding anything contained herein to the contrary, the parties hereto
recognize and acknowledge that in the event Purchaser exercises the Option,
Seller shall notify Chevron pursuant to Section 4.3, unless Chevron has waived
in writing such notice.
ARTICLE 4
TITLE MATTERS
4.1 Access to Records and Properties. Within five (5) business days
from the date hereof, Seller shall make available to Purchaser during Seller's
normal business hours access to the Assets within Seller's possession or
control, including all Records (excluding all financial information Seller may
consider proprietary). Seller will contact the Operator of the Leasehold
Interests to attempt to arrange access to Operator's records and the Leasehold
Interests not under Seller's control. Seller's Records and Operator's records,
if made available by Operator, shall be made available at their present
location.
4.2 Approvals and Consents. The only approvals, consents, notices
and preferential rights of purchase affecting the transfer of the Assets by
Seller to Purchaser, other than governmental approvals normally obtained after
Closing, is the consent to assign from and preferential right of Chevron. Seller
shall be responsible for attempting to obtain the release or waiver of Chevron's
rights. Purchaser shall assist Seller in obtaining such release or waiver. In
the event Chevron's consent to assign is not obtained by the Closing, the
Closing Date shall be automatically extended for a period of thirty (30)
calendar days. The obtaining of the approval by the Mineral Management Service
("MMS") to the transfer will be the responsibility of Purchaser after Closing;
however, Seller shall cooperate and coordinate with Purchaser in such process.
4.3 Notice to Holder of Preferential Purchase Rights. Seller shall
send to Chevron a notice offering to sell to it in accordance with the
contractual provisions applicable to such right, the Assets on the terms hereof,
subject to adjustments in price in the same manner that the Purchase Price is
adjusted pursuant to Article 2 of this Agreement.
4.4 Exercise of Preferential Purchase Rights. If Chevron timely
notifies Seller that it intends to consummate the purchase of the Assets
pursuant to its preferential purchase right, then Seller shall return to
Purchaser the Deposit and this Agreement shall be terminated and the parties
hereto shall have no further rights hereunder, except that the confidentiality
provisions contained herein shall remain in force and effect.
5
4.5 Risk of Loss. No adjustment to the Purchase Price shall be made
if, after the Effective Date and prior to the Closing, any part of the Assets
shall be destroyed or harmed by fire or any other cause or shall be taken by
condemnation or the exercise of eminent domain, provided Purchaser shall be
entitled to receive and is paid applicable insurance proceeds or condemnation
awards (to the extent actually received by Seller). Notwithstanding the
foregoing, if the value of such loss or taking equals or exceeds twenty (20%)
percent of the Purchase Price for the applicable portion of the Assets (5/7ths
or 2/7ths interest, as the case may be), Purchaser shall have the right and
option to terminate this Agreement by notice to Seller given at or prior to
Closing, in which event, Purchaser shall be entitled to a full refund of the
Deposit pursuant to Section 2.3(b). If Purchaser terminates this Agreement
pursuant to this Section 4.5, Purchaser shall not be entitled to any portion of
the aforementioned insurance proceeds. Seller hereby agrees to maintain in force
and effect the insurance scheduled as Exhibit E hereto until the Agreement is
terminated or Purchaser assumes operations of the Assets.
4.6 Title and Physical and Environmental Condition. Prior to
entering into this Agreement, Purchaser has satisfied itself as to title to the
Assets and their physical and Environmental condition and hereby accepts them
"AS IS, WHERE IS" and waives any and all defects with respect thereto.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that:
5.1 Existence25.1 Existence. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Louisiana
and is duly qualified, with the United States Minerals Management Service
("MMS") and other governmental entities with jurisdiction, to hold title to the
Assets.
5.2 Power. Seller has the corporate power and authority to enter
into and perform this Agreement and the transactions contemplated hereby.
Subject to Chevron's rights or actions by governmental entities where the same
are customarily obtained subsequent to the assignment of oil and gas interests
and leases, the execution, delivery and performance of this Agreement by Seller,
and the transactions contemplated hereby, will not violate (a) any provision of
the certificate of incorporation or by-laws of Seller, (b) any material
agreement or instrument to which Seller is a party or by which Seller or any of
the Leasehold Interests are bound, (c) any judgment, order, ruling, or decree
applicable to Seller as a party in interest, or (d) any law, rule or regulation
applicable to Seller.
5.3 Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly executed and delivered on behalf of Seller, and at the
Closing all documents and instruments required hereunder to be executed and
delivered by Seller shall have been duly executed and delivered. This Agreement
does, and such documents and instruments shall, constitute legal, valid and
binding obligations of Seller enforceable in accordance with their terms,
subject, however, to the effect of bankruptcy, insolvency, reorganization,
6
moratorium and similar laws from time to time in effect relating to the rights
and remedies of creditors, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.4 Brokers. Seller has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the matters
provided for in this Agreement that will be the responsibility of Purchaser; and
any such obligation or liability that might exist shall be the sole obligation
of Seller.
5.5 Foreign Person. Seller is not a "foreign person" within the
meaning of the Internal Revenue Code of 1986, as amended, (hereinafter called
the "Code"), Section 1445 and 7701 (i.e. Seller is not a nonresident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate as
those terms are defined in the Code and any regulations promulgated thereunder).
5.6 Environmental Matters. Seller has not received any notice of any
legal or administrative proceeding against Seller, and to the best of Seller's
knowledge, neither has the Operator of the Assets, with respect to the ownership
or operation of the Assets prior to the Effective Date which alleges the
violation of, or non-compliance with, any laws, rules or regulations of the
United States or other governmental entity with jurisdiction pertaining to the
protection of the environment (collectively, "Environmental laws"), nor any
notice threatening any such proceeding. To the best of Seller's knowledge, the
Assets have been operated in compliance with all such Environmental Laws.
5.7 Consents. No consent, approval, permit, license or authorization
of any governmental body is required in connection with the execution, delivery
and performance of this Agreement by Seller other than with respect to approvals
relating to Assets where title thereto is in the United States of America. No
litigation, claims, administrative proceedings or other proceedings or
governmental investigations are pending, or, to the best of Seller's knowledge,
threatened, which would prevent or delay the execution, delivery or performance
of this Agreement by Seller.
5.8 Imbalances. As of the Effective Date, to the best of Seller's
knowledge, the Assets are not overproduced or under-produced in any respect, and
Seller has not received any "take-or-pay" or similar payments which obligate
Seller to deliver any gas produced from or attributable to the Assets after the
Effective Date without receiving full payment therefor at some time subsequent
to the Effective Date. If, prior to the Closing, Seller actually receives any
"take-or-pay" or similar payments which obligate Seller (or Purchaser) to
deliver any gas produced from or attributable to the Assets after the Closing
without receiving full payment therefor at some time subsequent to the Closing,
Seller shall deliver the same to Purchaser at Closing. Any such payments
received after the Closing attributable to gas produced after the Closing shall
be paid to Purchaser promptly upon receipt.
5.9 Agreements to Sell or Mortgage. Except for preferential rights
to purchase, Seller has not agreed to sell or encumber the Assets to any party
other than Purchaser, and Seller has not created, nor caused to be created,
during the period February 26, 2004 to Closing, any liens (excluding any
unasserted or inchoate materialmen's, mechanics' or similar liens or charges
arising in the ordinary course of business and operation of the Assets),
mortgages, encumbrances or other burdens in, on or affecting the Assets.
7
5.10 Schedules and Exhibits. Without limiting Purchaser's right to
object to material changes made therein, all schedules and exhibits attached or
which may later be attached shall be updated to Closing.
5.11 Tools and Spare Parts. Seller and Purchaser have agreed that
the Assets include all of Seller's interest in any tools and spare parts on the
Assets and that Seller will not remove therefrom any such items located thereon.
5.12 Permits, Licenses, Etc. To the best of Seller's knowledge,
Seller, and/or Operator holds all permits, approvals, bonds, licenses or other
consents of any governmental authority necessary to operate such Assets, in the
manner presently operated by it where the failure to do so would have a material
adverse effect on the Assets. Seller does not represent or warrant that
Purchaser has any right to become Operator of the Assets.
5.13 No Warranties. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
THE ASSETS ARE TO BE SOLD AS IS, AND Seller MAKES NO WARRANTY, EXPRESS OR
IMPLIED, IN FACT OR BY LAW, WHETHER OF OPERATING CONDITION, SAFETY, COMPLIANCE
WITH GOVERNMENT REGULATIONS, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSES, CONDITION OR OTHERWISE, CONCERNING ANY OF SUCH ASSETS. ALL XXXXX,
PERSONAL PROPERTY, MACHINERY, EQUIPMENT AND FACILITIES THEREIN, THEREON AND
APPURTENANT THERETO TO BE CONVEYED BY Seller AND ACCEPTED BY PURCHASER PRECISELY
AND ONLY "AS IS, WHERE IS" AND Seller DOES NOT WARRANT THEM TO BE FREE FROM
REDHIBITORY VICES OR DEFECTS NOR WILL Seller WARRANT AGAINST EVICTION THEREFROM.
The Assets shall be conveyed without any warranties or representation by Seller,
express or implied, with respect to title, condition, fitness for any purpose or
otherwise, except Seller shall warrant its title to the Leasehold Interests
against anyone asserting an adverse claim against such Leasehold Interests, by,
through or under Seller's own acts, but not otherwise and with full substitution
and subrogation in and to all covenants and warranties of Seller's predecessors
in title.
5.14 Taxes. To the best of Seller's knowledge, the Assets are not
subject to liens for taxes other than taxes not due and payable or being
contested in good faith. Seller has filed when due all income, excise and other
tax returns and reports with respect to the Assets. Seller has paid all taxes
reflected as due on all returns filed with respect to the Assets. Seller has no
knowledge of any pending, threatened or proposed tax audits, assignments or
claims from taxing authorities for deficiencies, penalties or interests against
Seller or the Operator of the Assets. Except as set forth on Schedule 5.14,
Seller knows of no basis for any such audit, assessment or claim.
5.15 Compliance. The Assets operated by Seller have been operated in
accordance with all material rules and regulations of all governmental
authorities having or asserting jurisdiction relating to the ownership and
operation of the Assets, including the production of hydrocarbons attributable
thereto, and to the best of Seller's knowledge, Operator has likewise as to the
Assets operated by Operator. There are no calls on Seller's share of production,
except as may be disclosed by the Leases described on Exhibit A and any
agreement described on Exhibit B hereto.
8
5.16 Records. The Records include all applicable written agreements,
correspondence, reports, required safety plans, compliance statements or other
documents of which Seller is aware that affect the Assets; all orders, contracts
and agreements that materially affect the Assets are listed on Exhibit B hereto,
including, but not limited to, applicable operating agreements, joint venture
agreements, tax partnership agreements, product purchase and sale agreements,
farmout agreements and "area of mutual interest" agreements. Seller's working
and associated revenue interests in the Leases are not subject to reduction by
reversionary or back-in interests held by others except to the extent as
described by agreements listed on Exhibit B hereto. Seller is not aware of any
Unlisted Agreement which would have a material affect on the ownership or
operation of the Assets, or commit Seller to making any payment not typically
made in the historical practice of operating the Assets.
5.17 Permits. Seller obtained all permits, licenses and other
authorizations which are presently required under federal, state and local laws
for the operation of the Assets operated by Seller, or with respect to pollution
or protection of the environment relating to the Assets operated by Seller,
including laws relating to actual or threatened emissions, discharges or
releases of pollutants, raw materials, products, contaminants or hazardous or
toxic materials, surface water, ground water or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes, except to the extent the failure to obtain or file such
permits, licenses and other authorizations would not result in, or reasonably be
expected to result in any material liability or loss to Purchaser or the Assets
or materially adversely affect the ability to operate same. To the best of
Seller's knowledge, the foregoing representations would be true with respect to
the Assets operated by Operator.
5.18 Absence of Modifications. Seller has not received notice of any
proposed or contemplated modifications of any existing drilling or production
unit or units or the establishment of new drilling or production units affecting
the Assets or amendments to or modifications or revisions of the unit agreement
or order establishing same.
5.19 Absence of Breach. Neither Seller and, to the best of its
knowledge, nor Operator is in breach under the Leases, the Listed Agreements,
the Unlisted Agreements, or Assets or any laws, regulations, rules, decrees or
orders relating thereto, except for possible minor oversights which would not
result in, or reasonably be expected to result in, any material liability or
loss to Purchaser or the Assets or adversely affect the ability to operate same.
5.20 Litigation. There is no claim, demand, legal action,
administrative proceeding, lawsuit, governmental inquiry or investigation
relating to the Assets pending or, to the best of Seller's knowledge,
threatened. There are no bankruptcy, reorganization or arrangement proceedings
pending or threatened against Seller or, to the knowledge of Seller being
contemplated.
5.21 To the Best of Knowledge. As used herein, the phrase "to the
best of Seller's knowledge" or words of like import shall mean that no present
officer, director, or shareholder or employee (with management or supervisory
responsibility over the subject matter qualified by that phrase) of Seller has
any knowledge inconsistent with the statements qualified by that phrase.
9
5.22 Material Affect or Material Adverse Affect. As used in this
Agreement, unless expressly indicated otherwise, the phrase "material affect" or
"material adverse affect" or phrases of similar import including the word
"material", shall mean, in respect to the events or conditions qualified
thereby, resulting in, or reasonably expected to result in, an aggregate loss,
cost, expense or economic consequence in excess of $1 million).
5.23 Tax Partnership Provisions. Seller represents that the sale
contemplated by this Agreement may cause the Tax Partnership existing between
Seller and Chevron under the Farmout Agreement to terminate pursuant to Section
708(b)(1)(B) of the Internal Revenue Code ("IRC").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
6.1 Existence. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, its
domicile and its principal place of business and at or prior to the Closing
Date, Purchaser will be duly qualified with the United States MMS and other
governmental entities with jurisdiction over the Assets to own federal leases in
and carry on its business in the OCS Gulf of Mexico.
6.2 Power. Purchaser has the power and authority to enter into and
perform this Agreement and the transactions contemplated hereby. Subject to
consent by, required notices to, and filings with or other actions by
governmental entities where the same are customarily obtained subsequent to the
assignment of oil and gas interests and leases, the execution, delivery and
performance of this Agreement by Purchaser, and the transactions contemplated
hereby, will not violate (a) any provision of the Articles or by-laws of
Purchaser, (b) any material agreement or instrument to which Purchaser is a
party or by which Purchaser is bound, (c) any judgment, order, ruling, or decree
applicable to Purchaser as a party in interest, or (d) any law, rule or
regulation applicable to Purchaser.
6.3 Authorization. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all requisite action on the part of Purchaser. This Agreement has
been duly executed and delivered on behalf of Purchaser, and at the Closing all
documents and instruments required hereunder to be executed and delivered by
Purchaser shall have been duly executed and delivered. This Agreement does, and
such documents and instruments shall, constitute legal, valid and binding
obligations of Purchaser enforceable in accordance with their terms, subject,
however, to the effect of bankruptcy, insolvency, reorganization, moratorium and
similar laws from time to time in effect relating to the rights and remedies of
creditors, as well as to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
6.4 Brokers. Purchaser has incurred no obligation or liability,
contingent or otherwise, for investment banker's, brokers' or finders' fees in
10
respect of the matters provided for in this Agreement which will be the
responsibility of Seller; and any such obligation or liability that might exist
shall be the sole obligation of Purchaser.
6.5 Further Distribution. Purchaser is not acquiring the Leasehold
Interests with a view to, or for offer of resale in connection with, a
non-exempt distribution thereof within the meaning of the Securities Xxx 0000,
as amended, and the rules and regulations pertaining to it or a distribution
thereof in violation of any applicable Securities laws.
6.6 Matters Affecting Governmental Approval. Purchaser has no
knowledge of any matter or circumstance which would preclude or inhibit
unconditional MMS approval of the assignment of the Assets from Seller to
Purchaser.
6.7 Consents. No consent, approval, permit, license or authorization
of any governmental body is required in connection with the execution, delivery
and performance of this Agreement by Purchaser other than with respect to
approvals relating to Assets where title thereto is in the United States of
America or other governmental agency. No litigation, claims, administrative
proceedings or other proceedings or governmental investigations are pending, or
to the best of Purchaser's knowledge threatened, which would prevent or delay
the execution, delivery or performance of this Agreement by Purchaser.
6.8 Inspections; Independent Evaluation. Purchaser has made an
inspection of the Assets. At Closing Purchaser shall accept all Assets in "as is
and where is" condition with an express acceptance and understanding of the
representations and disclaimers contained herein. Purchaser acknowledges that
Seller has made no statements or representations concerning the present or
future value or the anticipated income, cost or profits, if any, to be derived
by Purchaser from the Assets, including without limitation, the existence or
extent of oil, gas or other minerals reserves, the pricing thereof and the
recoverability of or the cost of recovering any such reserves. Purchaser further
acknowledges that, in entering into this Agreement, it has relied solely on its
independent examination and analysis of the Assets. Purchaser acknowledges that
certain of the Assets have been used for oil and gas drilling and producing
operations and related oil field operations, and that physical changes in the
Assets may have occurred as the result of such uses, including without
limitation the presence of hazardous or toxic substances, pollutants or other
contaminants, environmental hazards and naturally occurring radioactive
materials ("NORM").
6.9 Tax Partnership Provisions. Purchaser represents and warrants
that it has had the opportunity to review the Farmout Agreement including
exhibit D thereto containing the tax partnership provisions of the Tax
Partnership existing between Seller and Chevron. Purchaser acknowledges that it
understands that it will become a partner with Chevron in a newly constituted
partnership for tax purposes pursuant to the operation of IRC Section
708(b)(1)(B) and the regulations thereunder. Purchaser represents that it has
not relied on any representation or warranty of Seller with respect to the tax
consequences or attributes applicable either to Purchaser as a partner in such
reconstituted partnership or to the said partnership itself, and Purchaser has
relied on its own advisors to analyze and understand said tax consequences.
11
ARTICLE 7
PRE-CLOSING OBLIGATIONS OF SELLER
7.1 Operations. From the date of this Agreement until Closing (the
"Interim Period"), Seller (a) shall use reasonable efforts to provide Purchaser
access to the Assets not operated by Seller and access to any of the same that
are operated by Seller, (b) shall operate the Assets for which it is the
operator in accordance with past practices, and shall not, without Purchaser's
prior approval, enter into any agreement or transaction in relation to any of
the Assets operated by Seller, excepting those with unaffiliated third parties
which (i) create an obligation with a value of less than $100,000.00; (ii) are
entered into a manner consistent with past practices; or (iii) are expressly
authorized by this Agreement, (c) not approve, without Purchaser's prior
approval, any expenditure request made by the Operator of the Assets not
operated by Seller, other than those relating to the normal day to day
operations thereof consistent with past practices which are not in excess of
$100,000.00, unless expressly authorized by this Agreement, (d) shall exercise
reasonable diligence in safeguarding and maintaining secure and confidential all
geological maps, confidential reports and data in its possession relating to the
Assets, (e) shall not transfer, sell, hypothecate, encumber or otherwise dispose
of any of the Assets (other than in the ordinary course of business or as
required in connection with the exercise by third parties of preferential rights
to purchase any of the Assets), and (f) shall maintain all open accounts,
payables and obligations current in accordance with industry standards.
Purchaser hereby agrees that its approval to any request by Seller for approval
to enter into any such agreement or transaction, as Operator, as referred to in
subpart (b) above, or to approve an Operator's expenditure request as referred
to in subpart (c) above, will not be unreasonably withheld.
7.2 Permissions. During the Interim Period Seller will use
reasonable efforts to obtain the permissions of Chevron to consummate the sale
contemplated hereunder, but not governmental permissions, approvals and consents
which are customarily obtained after the consummation of transactions of the
type contemplated hereunder.
7.3 Exclusivity. From the date of execution of this Agreement until
Closing, Seller shall not, directly or indirectly, initiate or participate in
discussions with, or otherwise solicit from, any person or entity any proposals
or offers relating to, or deliver information to any person or entity for
purposes of evaluating, one or more transactions of the type contemplated
hereunder involving the Assets, except as may be contemplated by this Agreement
or required by applicable law.
ARTICLE 8
PRE-CLOSING OBLIGATIONS OF PURCHASER
8.1 Confidentiality. Purchaser shall cause (a) any information relating to
the terms of the transactions contemplated hereunder and (b) the information and
data furnished or made available by Seller to Purchaser and its officers,
employees, and representatives in connection with this Agreement or Purchaser's
investigation of the Assets, in each case to be maintained in confidence and not
to be used for any purpose other than in connection with this Agreement or
Purchaser's investigation of the Assets; provided, however, that the foregoing
obligation shall terminate on the earlier to occur of (i) the Closing, or (ii)
such time as the information or data in question becomes generally available to
12
the oil and gas industry other than through the breach of the foregoing
obligation. The obligations of Purchaser under this Section 8.1 shall be in
addition to, and not in lieu of, Purchaser's obligations under any
confidentiality agreements previously executed by Seller and Purchaser that
relate to the Assets.
8.2 Return of Data. Purchaser agrees that if this Agreement is
terminated for any reason whatsoever, Purchaser shall, at Seller's request,
promptly return to Seller all information and data furnished by or on behalf of
Seller to Purchaser, its officers, employees, and representatives in connection
with this Agreement or Purchaser's investigation of the Assets, and Purchaser
shall deliver to Seller or destroy all copies, extracts or excerpts of such
information and data and all documents generated by Purchaser that contain any
portion of such information or data.
8.3 Indemnity Regarding Access. Purchaser agrees to protect,
indemnify, defend and hold harmless Seller and Operator, their respective
directors, officers, employees, agents and representatives ("Seller Indemnified
Parties") from and against any and all claims, liabilities, losses, costs and
expenses (including, without limitation, court costs and reasonable attorneys'
fees) in connection with personal injuries, including death, or property damage
arising out of or relating to the access of Purchaser, its officers, employees,
and representatives to the Assets and to the records and other information
related thereto except to the extent such injuries, death or damages are caused
in whole by the strict liability, willful misconduct, gross negligent act or
material omission of Seller.
ARTICLE 9
SELLER'S CONDITIONS OF CLOSING
Seller's obligation to consummate the transactions provided for
herein is subject to the satisfaction or waiver on or before the Closing Date of
the following conditions:
9.1 Representations and Warranties. The representations and
warranties of Purchaser contained in Article 6 and as may be contained elsewhere
in this Agreement shall be true and correct in all material respects on the date
of Closing as though made on and as of that date.
9.2 Performance. Purchaser shall have performed in all material
respects each of the obligations, covenants and agreements required hereunder to
be performed by it at or prior to the Closing.
9.3 Officer's Certificate. Purchaser shall have delivered to Seller
a certificate of a corporate officer, dated the date of Closing, certifying on
behalf of Purchaser that the conditions set forth in Sections 9.1 and 9.2 have
been fulfilled.
9.4 Pending Matters. No suit, action or other proceeding by a third
party or a governmental authority against Purchaser shall be pending or
threatened which seeks to restrain, enjoin or otherwise prohibit, the
consummation of the transactions contemplated by this Agreement.
9.5 MMS Bonds. Purchaser shall have delivered to Seller a copy of
all area-wide and supplemental bonds maintained by Purchaser with the MMS with
respect to Purchaser's ownership or operation of oil and gas leases in the OCS
13
Gulf of Mexico. Should Purchaser be exempt from any such bonding requirements,
it shall have delivered to Seller documentation reasonably satisfactory to
Seller evidencing such exemption. Should any bonds be required of Purchaser
subsequent to Closing, Purchaser shall provide a copy of same to Seller.
ARTICLE 10
PURCHASER'S CONDITIONS OF CLOSING
Purchaser's obligation to consummate the transactions provided for
herein is subject to the satisfaction or waiver on or before the Closing Date of
the conditions set forth in this Article 10. Purchaser acknowledges and agrees
that notwithstanding anything contained in this Agreement to the contrary, in no
event shall Purchaser's obligation to consummate the transactions provided for
herein be subject to the condition that Purchaser receive financing with respect
to all or any part of the Purchase Price.
10.1 Representations and Warranties. The representations and
warranties of Seller contained in Article 5 and as may be contained elsewhere in
this Agreement shall be true and correct in all material respects on the date of
Closing as though made on and as of that date.
10.2 Performance. Seller shall have performed in all material
respects each of the obligations, covenants and agreements required hereunder to
be performed by it at or prior to the Closing.
10.3 Officer's Certificate. Seller shall have delivered to Purchaser
a certificate of a corporate officer, dated the date of Closing, certifying on
behalf of Seller that the conditions set forth in Sections 10.1 and 10.2 have
been fulfilled.
10.4 Pending Matters. No suit, action or other proceeding by a third
party or a governmental authority against Seller shall be pending or threatened
which seeks to restrain, enjoin or otherwise prohibit, the consummation of the
transactions contemplated by this Agreement.
10.5 Litigation. There shall be no legal or arbitration proceeding
against Seller or directly involving the Assets, in either case with respect to
which Seller has received service of process or other written notice, that
reasonably is expected to materially and adversely affect the value of the
Assets taken as a whole after the Effective Date.
10.6 Farmout Production Call Waiver. Purchaser shall have obtained
prior to Closing a written waiver satisfactory to Purchaser from "Chevron" of
all calls on production ("Call Waiver") attributable to the Farmoutee's
interests (including successors and assigns) provided for under the Farmout
Agreement ("Chevron" and "Farmout Agreement" being defined in Section 1.2
hereof).
10.7 Crude Price. The current daily oil price quotes for West Texas
Intermediate Crude, as published in the "Ups and Downs" portion of the Money
section of the New Orleans Times-Picayune newspaper, shall not have fallen below
$28 per barrel for five (5) consecutive days (excluding Saturdays, Sundays and
14
holidays) during the period between the date of this Agreement and the date
fixed for Closing under Section 11.1. Purchaser's proceeding with Closing is
deemed to be a waiver of this condition).
10.8 Chevron's Consent. Any and all consents to assignments of
interests in the Assets required from Chevron under applicable agreements have
been obtained on terms acceptable to Purchaser.
ARTICLE 11
CLOSING
11.1 Time and Place of Closing. Subject to the conditions stated in
this Agreement, the consummation of the transactions contemplated hereby (the
"Closing") shall occur at 10:00 a.m., C.S.T., on July 1, 2004; provided however,
the Purchaser may require in writing an earlier Closing, in which event the
Closing shall occur within two (2) business days of the date specified, subject
however, to the provisions of Section 4.2. The date Closing actually occurs is
herein called the "Closing Date." The Closing shall be held at the offices of
Seller, or at such other location as may be mutually agreed upon by Seller and
Purchaser.
11.2 Closing Obligations. At the Closing, the following events
shall occur:
(a)...Seller shall execute, acknowledge and deliver to
Purchaser the Assignment, Xxxx of Sale and Conveyance in the form of
Schedule 11.2 conveying the Assets to Purchaser;
(b)...Seller and Purchaser shall each execute, acknowledge and
deliver transfer orders or letters in lieu thereof directing all parties
paying for production to make the appropriate payment to Purchaser of
production proceeds attributable to the Assets;
(c)...Seller shall, as soon as is reasonably possible after
the Closing, but in no event later than thirty (30) days thereafter,
deliver to Purchaser, at Seller's offices, the Records (it being
understood and agreed that Seller shall be entitled to retain a copy of
the Records and shall grant access to the Records to Purchaser on the same
basis as provided in Article 4 until same are delivered to Purchaser);
(d)...Seller shall execute such other instruments and take
such other action as may be necessary to carry out its obligations under
this Agreement;
(e)...Purchaser shall make the cash payment of the Purchase
Price as adjusted pursuant to Section 2.2;
(f)...Seller and Purchaser shall exchange the certificates
described in sections 9.3 and 10.3; and
15
(g)...Seller and Purchaser shall execute such other
instruments and take such other action as may be necessary to carry out
their obligations under this Agreement.
ARTICLE 12
ADDITIONAL AGREEMENTS
12.1 Calculation of Final Adjusted Purchase Price.
(a) Within ninety (90) calendar days after the Closing Date,
Purchaser shall prepare and deliver to Seller a statement reflecting the Final
Adjusted Purchase Price and the calculations thereof (the "Final Statement").
The Final Statement shall be prepared in accordance with Purchaser's normal
accounting practices and procedures. Purchaser shall provide Seller with access
to copies of all work papers and other relevant documents to verify the entries
contained in the Final Statement. Seller shall have a period of thirty (30)
calendar days after delivery to it of the Final Statement to review it and make
any objections Seller may have in writing to Purchaser. If written objections to
the Final Statement are timely delivered to Purchaser, then Purchaser and Seller
shall attempt in good faith to resolve the matter or matters in dispute. If no
written objections are made within the time period provided above, any such
objection shall be waived and Purchaser shall reimburse Seller the aggregate
amount, if any, by which the Final Adjusted Purchase Price exceeds the Interim
Adjusted Purchase Price and Seller shall reimburse Purchaser the aggregate
amount, if any, by which the Interim Adjusted Purchase Price exceeds the Final
Adjusted Purchase Price, in each case within five (5) calendar days after the
end of such thirty (30) day period.
(b) If disputes with respect to the Final Statement cannot be
resolved by Seller and Purchaser within fifteen (15) calendar days after the
delivery of the objections to the Final Statement, then the specific matters in
dispute shall be submitted to Ernst & Young L.L.P., or such other independent
accounting firm as may be approved by Seller and Purchaser, which firm shall
render its opinion as to such matters. Based on such opinion, such independent
accounting firm will then send to Seller and Purchaser its determination on the
specific matters in dispute, which determination shall be final and binding on
the parties hereto. Within five (5) calendar days after delivery of such opinion
to Seller and Purchaser, Purchaser shall reimburse Seller the aggregate amount,
if any, by which the Final Adjusted Purchase Price exceeds the Interim Adjusted
Purchase Price and Seller shall reimburse Purchaser the aggregate amount, if
any, by which the Interim Adjusted Purchase Price exceeds the Final Adjusted
Purchase Price. The fees and other costs charged by such independent accounting
firm shall be borne by Seller and Purchaser equally.
12.2 Receipts and Credits. Subject to the terms hereof and except to the
extent same have already been taken into account as an adjustment to the
Purchase Price, all monies, proceeds, receipts, credits and income attributable
to the Assets (a) for all periods of time subsequent to the Effective Date,
shall be the sole property and entitlement of Purchaser, and, to the extent
received by Seller, Seller shall fully disclose, account for and transmit same
to Purchaser promptly and (b) for all periods of time prior to the Effective
Date, shall be the sole property and entitlement of Seller and, to the extent
received by Purchaser, Purchaser shall fully disclose, account for and transmit
same to Seller promptly. Subject to the terms hereof and except to the extent
16
same have already been taken into account as an adjustment to the Purchase
Price, all costs, expenses, disbursements, obligations and liabilities
attributable to the Assets (i) for periods of time prior to the Effective Date,
regardless of when due or payable, shall be the sole obligation of Seller and
Seller shall promptly pay, or if paid by Purchaser, promptly reimburse Purchaser
for and hold Purchaser harmless from and against same and (ii) for periods of
time subsequent to the Effective Date, regardless of when due or payable, shall
be the sole obligation of Purchaser and Purchaser shall promptly pay, or if paid
by Seller, promptly reimburse Seller for and hold Seller harmless from and
against same. Except to the extent same have already been taken into account as
an adjustment to the Purchase Price, all uncollected accounts receivable as of
the Closing Date attributable to the Assets after the Effective Date shall be
assigned to Purchaser, and all uncollected accounts receivable as of the Closing
Date attributable to the Assets prior to the Effective Date shall be retained by
Seller. Seller shall be entitled to receive all payments from purchasers for
production attributable to the Assets for the production months prior to the
month in which Closing occurs, and Seller shall distribute such payments
received by Seller to the royalty and working interest owners in accordance with
Seller's division of interest for such months, after deducting and paying taxes
and other charges paid out of production proceeds consistent with Seller's
practice prior to the Effective Date; provided however that, except to the
extent same have already been taken into account as an adjustment to the
Purchase Price, after Closing Seller shall not pay any third party expenses for
non-operated assets, but shall send all statements for same to Purchaser for
payment. Seller shall continue to pay expenses for operated properties in
accordance with the applicable Joint Operating Agreement and Accounting
Procedures. Seller agrees to use the degree of care in distributing such
payments as it uses in distributing similar payments under its own leases.
12.3 Assumption of Liabilities; Cross Indemnity. If the Closing
occurs, (a) Purchaser hereby assumes and agrees to pay, perform and discharge
the following liabilities and obligations in respect to Seller's interests
(5/7ths or 7/7ths Interest) in the Assets as acquired by Purchaser from Seller
(collectively, the "Assumed Obligations"):
(i)...Subject to the terms of Article 17, all liabilities and
obligations of Seller that are attributable to the ownership or operation
of the Assets on or after the Effective Date; (including, without
limitation;
(ii) Subject to the terms of Article 17, all liabilities and
obligations of Seller that are attributable to the ownership and operation
of the Assets prior to the Effective Date; provided, however, Seller shall
retain the liability with respect to damage to property or injury to or
death of persons attributable to the ownership and operation of the Assets
prior to the Effective Date insofar and insofar only as to any such claims
which are asserted in writing within nine (9) months after the Effective
Date);
(iii) Subject to the terms of Article 17, all liabilities and
obligations of Seller to properly plug and abandon the Xxxxx, disassemble
and remove the Platforms, the Equipment and the Pipelines and all xxxxx,
platforms and related facilities and equipment and pipelines now or
hereafter located on the Leasehold Interests and clean up and restore the
Leasehold Interests in accordance with applicable laws (regardless of
17
whether any such obligation to plug, abandon, disassemble, remove, clean
up and restore is attributable to periods of time prior to, on or after
the Effective Date);
(iv) Seller's obligations under or by virtue of the Listed
Agreements and Unlisted Agreements, which relate to the ownership or
operation of the Assets from and after the Effective Date, except as
otherwise expressly provided in this Agreement as to Purchaser's
assumption of such obligations in respect to prior periods.
(b) Subject to the terms of Article 17, which shall control with
respect to the matters covered thereby, Purchaser agrees to indemnify, defend
and hold harmless the Seller Indemnified Parties from and against any and all
claims, liabilities, losses, costs and expenses (including, without limitation,
court costs and reasonable attorneys' fees, but excluding any amounts reimbursed
from third party insurance) (collectively, "Losses") that are attributable to
(i) the Assumed Obligations or (ii) a breach by Purchaser of its
representations, warranties, covenants and agreements hereunder, in each case
without regard to the sole, partial or concurrent negligence of the Seller
Indemnified Parties;
(c) Subject to the terms of Article 14, which shall control with
respect to the tax matters covered thereby, and Article 17, which shall control
with respect to the matters covered thereby, Seller agrees to indemnify, defend
and hold harmless Purchaser and its agents and representatives (the "Purchaser
Indemnified Parties") from and against any and all Losses that are attributable
to (i) a breach by Seller of its representations, warranties, covenants and
agreements hereunder or (ii) the ownership or operation of the Assets before the
Effective Date (excluding any matters and related Losses with respect to which
Purchaser has agreed to indemnify, defend and hold harmless the Seller
Indemnified Parties pursuant to clause (b) above), in each case without regard
to the sole, partial or concurrent negligence of the Purchaser Indemnified
Parties; and
(d) The indemnity, defense and hold harmless obligations set forth
in Sections 12.3(b) and (c) above shall not apply to (i) a claim for
indemnification by a party that relates to any amount or item for which such
party received credit as an adjustment to the Purchase Price pursuant to the
provisions hereof, but only to the extent of such adjustment received or (ii)
either party's costs and expenses with respect to the negotiation and
consummation of this Agreement and the transactions contemplated hereby.
12.4 Further Assurances. After Closing, Seller and Purchaser agree
to take such further actions and to execute, acknowledge and deliver such
additional documents and instruments as may be necessary or useful in carrying
out the purposes of this Agreement or of any document delivered pursuant hereto.
12.5 Governmental Approvals. Purchaser shall take any and all action
necessary in order to obtain MMS and unconditional approval of the assignment of
the Assets from Seller to Purchaser. Such action by Purchaser shall include, but
not be limited to, the posting of any supplemental bonds required by such
governmental agencies and the providing of any and all documentation evidencing
Purchaser's financial position which is reasonably requested by such
governmental agency. Seller shall cooperate and coordinate in such process.
18
12.6 Further Indemnity. Pursuant to Purchaser's request, Seller
granted Purchaser permission to discuss with Chevron Purchaser's proposed
acquisition of the Assets. Chevron required Seller "to indemnify and hold
Chevron and its affiliates harmless from any and all claims brought or sought to
be brought against Chevron by" Purchaser "against Chevron related to the"
Seller-Purchaser relationship as reflected in that certain letter agreement
dated April 6, 2004 between Seller and Chevron. Purchaser does hereby agree to
hold Seller harmless and indemnify it against any and all claims made against
Seller by Chevron arising out of or in any way relating to the aforementioned
indemnification and agreement to hold Chevron harmless.
ARTICLE 13
TERMINATION
13.1 Right of Termination. This Agreement and the transactions
contemplated hereby may be terminated:
(a)...At any time on or after the date fixed for Closing under
Section 11.1, at the option of Seller, by the delivery of written notice
to Purchaser, if the Closing shall not have occurred by such date solely
as a result of a breach or default by Purchaser of its obligations under
this Agreement; or
(b)...At any time on or after the date fixed for Closing under
Section 11.1, at the option of Purchaser, by the delivery of written
notice to Seller, if the Closing shall not have occurred by such date
solely as a result of a breach or default by Seller of its obligations
under this Agreement.
13.2 Effect of Termination. (a) If this Agreement is terminated
pursuant to Section 13.1, this Agreement shall become void and of no further
force or effect (except for the provisions of Sections 5.4, 6.4, 8.2, 8.3, 18.1
through 18.8, 18.11 and 18.12, which shall survive such termination and continue
in full force and effect).
(b) Notwithstanding anything to the contrary contained in this
Agreement, upon any termination of this Agreement pursuant to Section 13.1,
Seller shall be free immediately to enjoy all rights of ownership of the Assets
and to sell, transfer, encumber or otherwise dispose of the Assets to any party
without any restriction under this Agreement; and Purchaser shall be liable for
all actual, incidental and consequential damages (including, without limitation,
lost profits) if it attempts to interfere in any way with any such enjoyment or
action by Seller. If this Agreement is terminated for any reason by Seller or
upon any breach or default by Seller hereunder, Purchaser shall have no right to
specific performance or any claim for damages, but, except as specified to the
contrary herein, shall have the right to the prompt return of the Deposit, plus
payment to Purchaser by Seller of an amount equal to one-half (1/2) the Deposit,
as liquidated damages. Seller waives any rights to specific performance or
incidental or consequential damages resulting from the termination of this
Agreement based on a breach thereof by Purchaser, but in such event shall retain
the Deposit as liquidated damages.
19
13.3 2/7ths Interest Exclusion. Notwithstanding anything to the
contrary contained in this Agreement, if Purchaser proceeds with Closing and
thereafter timely exercises the Option pursuant to Article 3 of this Agreement,
and either party fails to close the sale on the 2/7 interests on the date set
for the closing of that transaction as a result of a breach or default by such
party of its obligations under this Agreement, then the non-breaching party
shall be entitled to pursue all remedies in law or in equity against the
breaching party, including actual, incidental and consequential damages
(including, but not limited to, lost profits) and/or specific performance, on
account thereof, together with all court costs and reasonable attorneys fees
incurred in pursuing such remedies.
ARTICLE 14
TAXES
14.1 Sales Taxes. The Purchase Price provided for hereunder excludes
any sales taxes or other taxes required to be paid in connection with the sale
of the Assets pursuant to this Agreement. Purchaser, however, shall be liable
for any sales and use taxes, conveyance, transfer and recording fees and real
estate transfer stamps or taxes that may be imposed on any transfer of the
Assets pursuant to this Agreement.
14.2 Other Taxes. All taxes (other than income taxes) attributable
to the Assets that are imposed on or with respect to the production of oil,
natural gas or other hydrocarbons or minerals or the receipt of proceeds
therefrom (including but not limited to severance, production, and excise taxes)
shall be apportioned between the parties based upon the respective shares of
production taken by the parties. All such taxes that have accrued with respect
to the period prior to the Closing Date have been or will be properly paid or
withheld by Seller (although such taxes for the period between the Effective
Date and the Closing Date will be taken into account as an adjustment to the
Purchase Price pursuant to Section 2.2 (a) (i)) and all statements, returns and
documents pertinent thereto have been or will be properly filed. Purchaser shall
be responsible for paying or withholding or causing to be paid or withheld all
such taxes which have accrued after the Closing Date and for filing all
statements, returns, and documents incident thereto.
14.3 Cooperation. Each party to this Agreement shall provide the
other party with reasonable access to all relevant documents, data and other
information (other than that which is subject to an attorney-client privilege)
which may be required by the other party for the purpose of preparing tax
returns, filing refund claims and responding to any audit by any taxing
jurisdiction. Each party to this Agreement shall cooperate with all reasonable
requests of the other party made in connection with contesting the imposition of
taxes. Notwithstanding anything to the contrary in this Agreement, neither party
to this Agreement shall be required at any time to disclose to the other party
any tax return or other confidential tax information. Except where disclosure is
required by applicable law or judicial order, any information obtained by a
party pursuant to this Section 14.4 shall be kept confidential by such party,
except to the extent disclosure is required in connection with the filing of any
tax returns or claims for refund or in connection with the conduct of an audit,
or other proceedings in response to an audit, by a taxing jurisdiction.
20
ARTICLE 15
DOCUMENT RETENTION
15.1 Inspection. As used in this Article 15, "Documents" shall mean
all files, documents, books and records delivered to Purchaser by Seller
pursuant to the provisions of this Agreement, including, but not limited to:
financial and tax accounting records; land, title and division of interest
files; contracts; engineering and well files; and books and records related to
the operation of the Assets during the Interim Period. Subject to the provisions
of Section 15.2, Purchaser agrees that the Documents shall be open for
inspection by representatives of Seller at reasonable times and upon reasonable
notice during regular business hours for a period of 10 years following the date
of Closing Date (or for such longer period as may be required by law or
governmental regulation), and that Seller may during such period at its expense
make such copies thereof as it may reasonably request.
15.2 Destruction. For a period of 10 years after the Closing Date
(or for such longer period as may be required by law or governmental
regulation), Purchaser shall not destroy or give up possession of any original
or final copy of the Documents without first offering Seller the opportunity (by
delivery of written notice to Seller as provided in Section 15.1, with an
additional copy of such notice delivered to the attention of Seller's
Controller), at Seller's expense (without any payment to Purchaser), to obtain
such original or final copy or a copy thereof. After the conclusion of such
period, and upon receipt of Seller's written request made within sixty (60) days
thereof, Purchaser shall deliver copies of the Documents to Seller, at Seller's
expense (without any payment to Purchaser except copying and delivery costs);
otherwise, Purchaser shall be free to dispose of or, destroy the same.
ARTICLE 16
INDEPENDENT INVESTIGATION AND DISCLAIMER
16.1 Independent Investigation and Disclaimer. Purchaser
acknowledges that (a) it has pursuant to this Agreement had access to the Assets
and the employees of Seller and (b) in making the decision to enter into this
Agreement and consummate the transactions contemplated hereby, Purchaser has
relied solely on the basis of its own independent investigation of the Assets
and upon the representations, warranties, covenants and agreements set forth in
this Agreement. Accordingly, Purchaser acknowledges that, except as expressly
set forth herein, Seller has not made, AND Seller HEREBY EXPRESSLY DISCLAIMS AND
NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE, OR OTHERWISE RELATING TO (i) THE CONDITION OF THE ASSETS (INCLUDING
WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR
ENVIRONMENTAL CONDITION), (ii) ANY INFRINGEMENT BY Seller OF ANY PATENT OR
21
PROPRIETARY RIGHT OF ANY THIRD PARTY, AND (iii) ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO PURCHASER BY OR ON BEHALF OF Seller
(INCLUDING, WITHOUT LIMITATION, IN RESPECT OF GEOLOGICAL, GEOPHYSICAL AND
SEISMIC DATA, THE EXISTENCE OR EXTENT OF OIL, GAS OR OTHER MINERALS RESERVES,
THE RECOVERABILITY OF OR THE COST OF RECOVERING ANY SUCH RESERVES, THE VALUE OF
SUCH RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR
GAS PRODUCTION AFTER CLOSING AND THE ABILITY OF PURCHASER TO BECOME OPERATOR OF
THE ASSETS UNDER THE APPLICABLE OPERATING AGREEMENT); AND PURCHASER WILL HAVE
SOLE RESPONSIBILITY FOR ANY ACTION TAKEN BY PURCHASER, OR BY OTHERS RELYING ON
PURCHASER'S ADVISE, BASED ON THE GEOLOGICAL MAPS, RECORDS, LOGS AND OTHER DATA,
IF ANY, TRANSFERRED UNDER THIS AGREEMENT; provided, however, that the foregoing
disclaimer and negation of representations and warranties shall not affect or
impair the representations and warranties of Seller expressly set forth in
Article 5 or elsewhere in this Agreement. As used in this Section 16.1, "Seller"
shall include Seller's agents and representatives.
ARTICLE 17
ENVIRONMENTAL MATTERS
17.1 Physical and Environmental Conditions. (i) Purchaser agrees and
acknowledges that (a) it has had access to and the opportunity to inspect the
Assets for all purposes, including without limitation, for the purposes of
detecting the presence of hazardous or toxic substances, pollutants or other
contaminants, environmental hazards, naturally occurring radioactive materials
(NORM) and produced water contamination of the surface and/or subsurface, (ii)
it has, or prior to the Closing will have, satisfied itself as to the physical
and environmental condition of the Assets, except as set forth herein, agrees to
accept an assignment of the Assets at the Closing on an "AS IS, WHERE IS" basis,
"WITH ALL FAULTS," and (iii) in making the decision to enter in this Agreement
and consummate the transactions contemplated hereby, Purchaser has relied solely
on the basis of its own independent investigation of the Assets and the records
related thereto (including the Environmental Reports (as defined below)).
Accordingly, Purchaser further acknowledges that with respect to any tests,
evaluations or reports that have been conducted or prepared by or on behalf of
Seller pertaining to the environmental condition or operation of the Assets and
that are delivered to Purchaser prior to the date hereof (the "Environmental
Reports"), Seller EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY
RESPECTING THE ACCURACY OR THOROUGHNESS THEREOF AND DISCLAIMS ANY LIABILITY IN
CONNECTION THEREWITH.
(b) Additionally, Purchaser agrees and acknowledges that it had
access to environmental data in Seller's files for the Assets to be sold herein.
Purchaser specifically acknowledges that such access is given as an
accommodation only, that Seller makes no representations whatsoever as to the
accuracy, completeness, or reliability of any such environmental information so
or otherwise disclosed to or obtained by Purchaser and that Purchaser relies and
depends on and uses any and all such environmental information exclusively and
entirely at its own risk and without any recourse whatsoever.
17.2 NORM. Any assignment shall have the following provisions:
It is expressly recognized that the water bottoms, along with
surface facilities and production equipment located thereon, having been used in
connection with oil and gas production activities, may contain naturally
occurring radioactive materials (NORM) as a result of these operations.
Accordingly, water bottoms, surface facilities, and production equipment
22
transferred herein are transferred with the restriction that they will be used
only in connection with oil and gas producing activities associated with this
lease, and will not be subsequently transferred for unrestricted use unless the
concentrations of NORM associated therewith are below the levels specified as
allowable for unrestricted transfer as set forth in the Louisiana Radiation
Regulations, and subsequent amendments thereto, as adopted by the Louisiana
Department of Environmental Quality. Additionally, transferee agrees to comply
with all provisions of the Louisiana Radiation Regulations and all subsequent
amendments thereto applicable to said water bottoms, surface facilities, and
production equipment. Transferee further agrees to include the provisions of
this clause in any subsequent sale or assignment of any interest in the leases
therein transferred.
17.3 General Environmental. If the Closing occurs, and without
limiting Purchaser's obligations under Section 11.3, Purchaser hereby assumes
and shall be responsible for and agrees to indemnify, defend and hold harmless
the Seller Indemnified Parties from and against any and all Losses attributable
to damage to property, injury to or death of persons or other living things,
natural resource damages, CERCLA response costs, environmental remediation and
restoration costs, or fines or penalties (collectively, "Claims") occurring
after the Effective Date arising out of or attributable to, in whole or in part,
either directly or indirectly, the environmental condition or operation of the
Assets at any time before, on or after the Effective Date (including, without
limitation, any Claims relating to any environmental condition existing on, in
or under, or resulting from operation of, the Assets as of the Effective Date).
The purpose of this provision is not to require (and it does not require) the
Purchaser to indemnify or reimburse Seller for any fines, penalties or
assessments which Seller has agreed to pay or has paid prior to the Effective
Date and/or for losses on account of Claims asserted and/or pending prior to the
Effective Date, or for any matter as to which Seller has expressly agreed to
indemnify Purchaser under this Agreement.
ARTICLE 18
MISCELLANEOUS
18.1 Governing Law This Agreement and all instruments executed in
accordance with it shall be governed by and interpreted in accordance with the
laws of the State of Louisiana, without regard to conflict of law rules that
would direct application of the laws of another jurisdiction, except to the
extent that it is mandatory that the law of some other jurisdiction, wherein the
Assets are located, shall apply.
18.2 Entire Agreement. This Agreement, including all exhibits
attached hereto and made a part hereof, together with the Prior Confidentiality
Agreements, constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties with respect to same. No supplement, amendment, alteration,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the parties hereto.
18.3 Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
23
18.4 Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
18.5 Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Purchaser shall not assign any right hereunder until after Closing has occurred.
18.6 Notices. Any notice provided or permitted to be given under
this Agreement shall be in writing, and may be served by personal delivery,
facsimile transmission or by depositing same in the mail, addressed to the party
to be notified, postage prepaid, and registered or certified with a return
receipt requested. Notice deposited in the mail in the manner hereinabove
described shall be deemed to have been given and received on the date of the
delivery as shown on the return receipt. Notice served in any other manner shall
be deemed to have been given and received only if and when actually received by
the addressee (except that notice given by telecopier shall be deemed given and
received other than during normal business hours shall be deemed received as of
the opening of business on the next business day). For purposes of notice, the
addresses of the parties shall be as follows:
For Seller:
Ridgelake Energy, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
ATTENTION: Xx. Xxxxx X. Xxxxxxxxx, Xx.
Telephone: 000-000-0000
Facsimile No.: 000-000-0000
For Purchaser:
PetroReal Main Pass L.L.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
ATTENTION: Mr. Xxxxx Xxxxxxxxx
Telephone No. 000-000-0000
Facsimile No. 000-000-0000
Each party shall have the right, upon giving ten (10) days' prior notice to the
other in the manner hereinabove provided, to change its address for purposes of
notice.
18.7 Expenses. Except as otherwise provided herein, each party shall
be solely responsible for all expenses incurred by it in connection with this
transaction (including, without limitation, fees and expenses of its own counsel
and consultants). Purchaser shall pay for all documentary, filing and recording
fees required in connection with the filing and recording of the Assignment,
24
Xxxx of Sale and Conveyance by Seller to Purchaser. Within forty-five (45) days
following Closing, Purchaser shall furnish Seller with a statement setting forth
the recording information for each county or parish wherein such conveyances was
recorded as well as any related MMS recording information.
18.8 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced under any rule of law, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in a materially adverse manner
with respect to either party.
18.9 Publicity. Seller and Purchaser shall consult with each other
with regard to all publicity and other releases issued at or prior to the
Closing concerning this Agreement and the transactions contemplated hereby and,
except as required by applicable law or the applicable rules or regulations of
any governmental body or stock exchange, neither party shall issue any such
publicity or other release without the prior written consent of the other party.
18.10 No Third-Party Beneficiary. Except as expressly provided
herein, this Agreement is not intended to create, nor shall it be construed to
create, any rights in any third party under doctrines concerning third-party
beneficiaries.
18.11 Survival; Limitation of Liability. Absent an express provision
in this Agreement to the contrary, the representations, warranties, covenants
and obligations of the parties under this Agreement shall survive the Closing
for a period of two (2) years from the Closing; provided, however that any claim
with respect to the breach of Section 5.6 may be made only if the party claiming
a breach thereof shall have notified the breaching party on or before the 12th
month following the Closing Date.
18.12 Counterparts; Exhibits. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. All exhibits
attached hereto are hereby made a part of this Agreement and incorporated herein
by this reference.
18.13 Conflict With Assignment. Seller and Purchaser acknowledge and
agree that in the event of any conflict or inconsistency between the terms and
provisions of this Agreement and the terms and provisions of the Assignment,
Xxxx of Sale (or any other assignments relating to the Assets) executed and
delivered at Closing by Seller and Purchaser, the terms and provisions of this
Agreement shall control.
25
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first set forth above.
SELLER:
RIDGELAKE ENERGY, INC.
By:
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice-President
PURCHASER:
PETROREAL MAIN PASS L.L.C.
By:____________________________
Name: _________________________
Title: __________________________
26
EXHIBIT "A"
LEASES
Attached to and made a part of that certain
Purchase and Sale Agreement dated Effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
LEASES:
1. OCS-G 31941:......Oil and Gas Lease of Submerged Lands Under the Outer
Continental Shelf Lands Act dated effective July 1, 1975,
from the United States of America, as Lessor, to Amoco
Production Company, Texasgulf, Inc. and Northern Natural
Gas Company, as Lessees, and bearing Serial No. OCS-G 3194,
covering the S/2; NE/4 of Block 59, Main Pass Area, that
portion located in Zone 3 as that zone was defined in the
agreement between the United States and the State of
Louisiana, dated October 12, 1956, and landward of the
Third Supplemental Decree Line (404 U.S. 388 (December 20,
1971)), OCS Official Leasing Map, Louisiana Map No. 10,
containing approximately 1406 acres.
2. OCS-G 84612:......Oil and Gas Lease of Submerged Lands Under the Outer
Continental Shelf Lands Act dated effective July 1, 1986,
from the United States of America, as Lessor, to Xxxxxx Oil
USA, Inc., Elf Aquitaine, Inc., Odeco Oil & Gas Company and
BelNorth Petroleum Corporation, as Lessees, and bearing
Serial No. OCS-G 8461, covering that portion of Block 59,
Main Pass Area, OCS Leasing Map, Louisiana Map No. 10,
specifically described as follows:
INTERSECTIONS
X Y
1) 2 766 210.300' 263 330.000'
2) 2 767 760.400' 251 214.540'
3) 2 760 725.000' 255 452.000'
4) 2 759 561.000' 255 955.000'
5) 2 753 350.000' 255 955.000'
6) 2 753 350.000' 248 580.000'
-------------------------
1 OCS-G 3194 is burdened with a 1/6th royalty to the Minerals Management
Service and a 1/16 of 5/6 of 50% overriding royalty payable to Amoco
Production Company. (Ridgelake bears 25% of the overriding royalty.)
2 OCS-G 8461 is burdened with a 1/6th royalty to the Minerals Management
Service.
7) 2 768 100.000' 248 580.000'
8) 2 768 100.000' 263 330.000'
9) 2 766 210.300' 263 330.000'
containing approximately 2339.91 acres.
UNITS:
1. 6050' Sand Reservoir C3
------------------------
3 As established by Minerals Management Service "Unit Agreement No.
754300007" dated effective April 1, 2000.
2
EXHIBIT "A-1"
XXXXX
Attached to and made a part of that certain
Purchase and Sale Agreement dated effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
NO. ...... XXXXX
------------------------------------------------
1) ...... OCS-G 3194 A-1
2) ...... OCS-G 3194 A-2
3) ...... OCS-G 3194 A-4
4) ...... OCS-G 3194 A-4D
5) ...... OCS-G 3194 A-5 S/T
6) ...... OCS-G 3194 A-6
7) ...... OCS-G 3194 A-6D
8) ...... OCS-G 3194 A-7
9) ...... OCS-G 3194 A-7D
10) ...... OCS-G 3194 A-8
11) ...... OCS-G 8461 A-9
12) ...... OCS-G 8461 A-10
13) ...... OCS-G 8461 A-12
14) ...... OCS-G 8461 A-13
15) ...... OCS-G 8461 A-13D
16) ...... OCS-G 3194 A-14
17) ...... OCS-G 8461 #1 S/T
18) ...... OCS-G 8461 A-16
19) ...... OCS-G 8461 #3
EXHIBIT "A-2"
Pipelines and Platforms
Attached to and made a part of that certain
Purchase and Sale Agreement dated Effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
Structures:
1) MP 59 "A" six-pile production platform with test separator, bulk and test
manifold, and gas life manifold.
2) MP 59 "AA" satellite 2 well caisson.
Pipelines:
1) 8" bulk flow line from MP 59 "A" to MP 41 "B"
2) 4" gas lift line from MP 41 to MP 59 "A"
3) 4" flowline from MP 59 "AA" to MP 59 "A"
4) 3" gas lift line from MP 59 "A" to MP 59 "AA"
EXHIBIT "B"
CONTRACTS, AGREEMENTS AND OTHER INSTRUMENTS
Attached to and made a part of that certain
Purchase and Sale Agreement dated Effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
1) FARMOUT AGREEMENT dated November 30, 1998, by and between CHEVRON U.S.A.
PRODUCTION COMPANY, a division of CHEVRON U.S.A. INC. and RIDGELAKE
ENERGY, INC.
1) MEMORANDUM OF UNDERSTANDING dated November 30, 1998, by and between
CHEVRON U.S.A. PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
2) LETTER AGREEMENT AMENDMENT AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated December 14, 1998, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
3) LETTER AGREEMENT AMENDMENT NO. 2 AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated April 6, 1999, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
4) LETTER AGREEMENT AMENDMENT NO. 3 AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated May 12, 1999, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
5) LETTER AGREEMENT AMENDMENT NO. 4 AND ADDENDUM TO THE FARMOUT AGREEMENT
DATED NOVEMBER 30, 1998, dated April 14, 2000, by and between CHEVRON
U.S.A. PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
6) COMPRESSION AGREEMENT dated May 22, 2000, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC.
7) UNIT AGREEMENT FOR OUTER CONTINENTAL SHELF DEVELOPMENT AND PRODUCTION
OPERATIONS ON THE 6050' SAND, RESERVOIR "C" UNIT, dated effective April 1,
2000, MMS Unit Agreement No. 754300007.
8) OFFSHORE UNIT OPERATING AGREEMENT, 6050' SAND RESERVOIR "C" UNIT, dated
effective April 1, 2000, by and between RIDGELAKE ENERGY INC. and CHEVRON
U.S.A. PRODUCTION COMPANY.
9) OFFSHORE OPERATING AGREEMENT dated effective May 16, 1999, by and between
RIDGELAKE ENERGY, INC. and CHEVRON U.S.A. PRODUCTION COMPANY and covering
portions of OCS-G 3194 and XXX-X 0000, Xxxx Xxxx Xxxxx 00.
00) OIL GRAVITY DIFFERENTIAL ADJUSTMENT LETTER AGREEMENT dated September 23,
1999, by and between CHEVRON U.S.A. PRODUCTION COMPANY and RIDGELAKE
ENERGY, INC.
11) LETTER AGREEMENT dated June 19, 2001, amending that certain OIL GRAVITY
DIFFERENTIAL ADJUSTMENT LETTER AGREEMENT dated September 23, 1999, by and
between CHEVRON U.S.A. PRODUCTION COMPANY and RIDGELAKE ENERGY, INC.
12) ASSIGNMENT OF OPERATING RIGHTS dated June 22, 2000, but effective May 16,
1999, from CHEVRON U.S.A. INC. to RIDGELAKE ENERGY, INC., covering
portions of XXX-X 0000, Xxxx Xxxx Xxxxx 00.
00) ASSIGNMENT OF OPERATING RIGHTS dated June 12, 2000, but effective May 16,
1999, from CHEVRON U.S.A. INC. to RIDGELAKE ENERGY, INC., covering
portions of XXX-X 0000, Xxxx Xxxx Xxxxx 00.
00) ASSIGNMENT OF OPERATING RIGHTS dated June 15, 2001, but effective April 1,
2001, from RIDGELAKE ENERGY, INC. to CHEVRON U.S.A. INC., covering
portions of OCS-G 3194, Main Pass Block 59.
15) ASSIGNMENT OF OPERATING RIGHTS dated June 15, 2001, but effective April 1,
2001, from RIDGELAKE ENERGY, INC. to CHEVRON U.S.A. INC., covering
portions of OCS-G 8461, Main Pass Block 59.
16) MINERALS MANAGEMENT SERVICE letter dated March 23, 1999, to CHEVRON U.S.A.
INC., permitting Chevron to produce the OCS-G 8461 Well No. 1 S/T #1 in
the 5500' sand reservoir within 500' of the lease line between OCS-G 8461
and OCS 0000, Xxxx Xxxx Xxxxx 59.
17) CRUDE OIL PURCHASE CONTRACT (PMPL Contract No. 4568-1001) by and between
Ridgelake Energy, Inc. and Plains Marketing, LP, effective Janaury 1,
2002.
18) AMENDMENT TO CRUDE OIL PURCHASE COTNRACT (PMPL Contract No. 4568-1001)
effective March 1, 2002,by and between Ridgelake Energy, Inc. and Plains
Marketing L.P.
2
EXHIBIT "C"
Farmout Agreement, Amendments and Modifications
Attached to and made a part of that certain
Purchase and Sale Agreement dated Effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
1) FARMOUT AGREEMENT dated November 30, 1998, by and between CHEVRON U.S.A.
PRODUCTION COMPANY, a division of CHEVRON U.S.A. INC. and RIDGELAKE
ENERGY, INC.(See Document #C-1 attached.)
19) MEMORANDUM OF UNDERSTANDING dated November 30, 1998, by and between
CHEVRON U.S.A. PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See
Document #C-2 attached.)
20) LETTER AGREEMENT AMENDMENT AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated December 14, 1998, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See Document #C-3
attached.)
21) LETTER AGREEMENT AMENDMENT NO. 2 AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated April 6, 1999, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See Document #C-4
attached.)
22) LETTER AGREEMENT AMENDMENT NO. 3 AND ADDENDUM TO FARMOUT AGREEMENT DATED
NOVEMBER 30, 1998, dated May 12, 1999, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See Document #C-5
attached.)
23) LETTER AGREEMENT AMENDMENT NO. 4 AND ADDENDUM TO THE FARMOUT AGREEMENT
DATED NOVEMBER 30, 1998, dated April 14, 2000, by and between CHEVRON
U.S.A. PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See Document #C-6
attached.)
24) COMPRESSION AGREEMENT dated May 22, 2000, by and between CHEVRON U.S.A.
PRODUCTION COMPANY and RIDGELAKE ENERGY INC. (See Document #C-7
attached.)
EXHIBIT "D"
Proposed Pipeline
Attached to and made a part of that certain
Purchase and Sale Agreement dated Effective
March 1, 2004, by and between
Ridgelake Energy, Inc. and
Petroreal Main Pass L.L.C.
That certain pipeline designed to carry bulk oil and water
production from the Main Pass Block 59 "A" Platform to Chevron Texaco's
processing facilities.
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RIDGELAKE ENERGY, INC. AND
PETROREAL MAIN PASS, L.L.C.
WHEREAS, Ridgelake Energy, Inc. ("Seller") and PetroReal Main Pass,
L.L.C. ("Purchaser") entered into that certain Purchase and Sale Agreement dated
May 10, 2004 ("Agreement"), concerning the purchase by Purchaser of all of
Seller's right, title and interest in and to Main Pass Block 59 Field more fully
described in the Agreement as the "Assets." All terms used but not defined
herein shall have the meaning given to them in the Agreement; and
WHEREAS, Purchaser and Seller desire to amend the aforementioned
Purchase and Sale Agreement by changing the Effective Date from 7:00 a.m.
C.D.S.T., March 1, 2004 to 7:00 a.m. C.D.S.T., April 1, 2004 and the time for
Closing from 10:00 a.m., C.D.S.T., on July 1, 2004 to 10:00 a.m. C.D.S.T.,
August 1, 2004.
NOW THEREFORE, for and in consideration of the premises, the
receipt and sufficiency of which are hereby acknowledged, the Agreement is
hereby amended to provide that the Effective Date is 7:00 a.m. C.D.S.T.,
April 1, 2004 and the Closing shall take place on or before 10:00 a.m.
C.D.S.T., August 1, 2004.
Except as amended herein all of the terms and conditions contained
in the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment
to Purchase and Sale Agreement this _____ day of July 2004.
SELLER:
RIDGELAKE ENERGY, INC.
By:___________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice-President
PURCHASER:
PETROREAL MAIN PASS L.L.C.
By:____________________________
Name: _________________________
Title: __________________________
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RIDGELAKE ENERGY, INC. AND
PETROREAL MAIN PASS, L.L.C.
WHEREAS, Ridgelake Energy, Inc. ("Seller") and PetroReal Main Pass,
L.L.C. ("Purchaser") entered into that certain Purchase and Sale Agreement dated
May 10, 2004, as amended by instrument dated July 7, 2004 ("Agreement"),
concerning the purchase by Purchaser of all of Seller's right, title and
interest in and to Main Pass Block 59 Field more fully described in the
Agreement as the "Assets." All terms used but not defined herein shall have the
meaning given to them in the Agreement; and
WHEREAS, Purchaser and Seller desire to amend again the
aforementioned Purchase and Sale Agreement by changing the Effective Date from
7:00 a.m. C.D.S.T., April 1, 2004 to 7:00 a.m. C.D.S.T., May 1, 2004, the time
for Closing from 10:00 a.m., C.D.S.T., on July 1, 2004 to 10:00 a.m. C.D.S.T.,
August 13, 2004, and deleting certain provisions relative to forfeiture of the
Deposit and Closing.
NOW THEREFORE, for and in consideration of the premises, the receipt
and sufficiency of which are hereby acknowledged, the Agreement is hereby
amended to provide that the Effective Date is 7:00 a.m. C.D.S.T., May 1, 2004,
the Closing shall take place on or before 10:00 a.m. C.D.S.T., August 13, 2004,
and that Sections 2.3(b)(2), 4.4, 10.6, 10.7 and 10.8 of the Agreement are
hereby deleted and of no further force and effect.
Except as amended herein all of the terms and conditions contained
in the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Second Amendment
to Purchase and Sale Agreement this _____ day of July 2004.
SELLER:
RIDGELAKE ENERGY, INC.
By:___________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice-President
PURCHASER:
PETROREAL MAIN PASS L.L.C.
By:____________________________
Name: _________________________
Title: __________________________
THIRD AMENDMENT TO
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RIDGELAKE ENERGY, INC. AND
PETROREAL MAIN PASS, L.L.C.
WHEREAS, Ridgelake energy, Inc. ("Seller") and PetroReal Main Pass, L.L.C.
("Purchaser") entered into that certain Purchase and Sale Agreement dated May
10, 2004, as amended by instruments dated July 7 and 29, 2004 ("Agreement"),
concerning the purchase by Purchase of all of Seller's right, title and interest
in and to Main Pass Block 59 Field more fully described in the Agreement as the
"Assets"; and
WHEREAS Purchaser and Seller desire to again amend the Agreement;
NOW THEREFORE, for and in consideration of the premises, the receipt and
sufficiency of which are hereby acknowledged, the Agreement is hereby amended as
follows:
1. The Effective Date shall be 7:00a.m. C.D.S.T., September 1, 2004.
2. Section 2.1 of the Agreement is hereby amended to read as follows:
2.1 Purchase Price: Method of Payment. The purchase price for the
Assets shall be Fifty-Seven Million Seven Hundred Fifty Thousand and
No/100 ($57,750,000.00) Dollars (the "Purchase Price"), which amount shall
be adjusted as provided in Section 2.2 and paid at Closing by wire
transfer of immediately available funds to an account designated by
Seller, which designation shall be made not later than five (5) business
days prior to the Closing.
3. Section 3.1 of the Agreement is hereby amended to read as follows:
3.1 Option to Purchase of 2/7ths. If Purchaser timely acquires from
Seller the Assets, Purchaser shall have the option ("Option") to acquire
the remaining 2/7ths of Seller's right, title and interest in and to the
assets described in Section 1.1(a), (b) and (c) ("2/7ths interest") for
the sum of Nineteen Million Two Hundred Fifty Thousand and No/100
($19,250,000.00) Dollars at a Closing to be held on or before March 31,
2005. Purchaser shall notify Seller no less than twenty (20) days before
the date Purchaser desires to take title to the 2/7ths interest.
Purchaser's failure to timely exercise the Option, including payment of
its Purchase Price, shall result in the Option lapsing and ceasing to have
any further force and effect. Purchaser may elect to acquire the 2/7ths
interest at the Closing as defined in Section 11.1 hereof subject to the
applicable provisions of this Article 3.
4. Subject to the provisions of numbered paragraph 5 below, the Closing
shall occur on or before 10:00 a.m C.D.S.T., September 30,2004.
5. In the event Closing does not occur on or before September 13, 2004,
this Agreement shall terminate and be of no further fares and effect unless
prior to 5:00 p.m. C.D.S.T. on that date Purchaser increases the Deposit by an
additional $1 million by paying such sum in cash to Seller. In the event the
Deposit is timely so increased, then Purchaser shall have until September 30,
2004 to close the transaction contemplated herein.
Except as amended herein all of the terms and conditions contained in the
Agreement remain in full force and effect. All terms used by not defined herein
shall have the meaning given to them in the Agreement.
IN WITNESS SHEREOF, the parties have executed this Third Amendment to
Purchase and Sale Agreement this 30th day of August 2004.
SELLER:
RIDGELAKE ENERGY, INC.
By:
--------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice-President
PURCHASER:
PETROREAL MAIN PASS L.L.C.
By:
---------------------------
Name: Xxxxx Xxxxxxxxx
-------------------------
. Title: Manager
-----------------------------
RIDGELAKE ENERGY, INC.
X.X. Xxx 0000 Xxxxxxxx, Xxxxxxxx 00000 - 0000 XXX
Telephone (000) 000-0000 Fax: (000) 000-0000
August 27, 2004
PetroReal Main Pass, L.L.C.
000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
ATTENTION: Xx. Xxxxx X. Xxxxxx
Re: Purchase by PetroReal Main Pass, L.L.C
From Ridgelake Energy, Inc.
Xxxx Xxxx Xxxxx 00 Xxxxx
Xxxxxxxxx:
This is to confirm our understanding that contemporaneously with the
Closing of the captioned transaction that PetroReal Main Pass L.L.C.
("PetroReal") shall grant to Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxx and Xxxxx X.
Xxxxxxx (in the aggregate "Assignees") the option to participate for up to a
thirty(30%) working interest in any well in search of oil and/or gas drilled
and/or to be completed in that certain area located within the Main Pass Block
59 Field cross-hatched on Exhibit A attached hereto and made part hereof
("Option"). The rights granted to Assignees under the Option shall be (i) free
of any liens or encumbrances whatsoever, except that it shall be subject to the
provisions of that certain Operating Agreement to be entered into by PetroReal
and Chevron U.S.A. Inc. ("Chevron") with respect to Main Pass Block 59 Field and
(ii) may be exercised in full by one or more of the Assignees and/or their
respective successors or assigns.
Within no later than one (1) year form Closing, PetroReal shall propose
the drilling of a well in search of oil and/or gas to be completed within the
area subject to the Option. In the event the well is completed as a producer in
paying quantities of oil and/or gas, Assignees shall have the right for a period
of one year from the date of such completion to require PetroReal to propose the
drilling of another well in search of oil and/or gas to be completed within the
area subject to the Option.
Within thirty (30) days after receipt of a written proposal for a well
from either Chevron or PetroReal, Assignees shall advise PetroReal in writing of
the percentage in which Assignees desire to participate in the drilling of said
well up to Assignees' total interest under the Option ("Participating
Interest'). Should the Assignees fail to timely provide PetroReal with a written
designation of the Participating Interest, then Assignees shall be deemed to
have elected not to participate in the well and shall have no further rights or
obligations under this Agreement with respect to said well.
PetroReal Main Pass, L.L.C.
August 27, 2004
Page 2
In the event PetroReal should elect to participate in less than its entire
working interest ownership of the proposed well(s), Assignees shall have the
right to participate in PetroReal's place with respect to the interest that
PetroReal declines to participate in.
If the foregoing correctly sets forth your understanding of our agreement,
please sign the enclosed copy of this letter and return to the writer.
Yours very truly,
-------------------------------
XXXXXXX X. XXXXX
THE FOREGOING CORRECTLY
SETS FORTH OUR AGREEMENT.
PETROREAL MAIN PASS, L.L.C.
By:
--------------------------------
Title: Manager
-----------------------------------
Date: 8-30-04.
------------------------------------
FOURTH AMENDMENT TO
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
RIDGELAKE ENERGY, INC. AND
PETROREAL MAIN PASS, L.L.C.
WHEREAS, Ridgelake Energy, Inc. ("Seller") and PetroReal Main Pass, L.L.C.
("Purchaser") entered into that certain Purchase and Sale Agreement dated May
10, 2004, as amended by instruments dated July 7, July 29 and August 30, 2004
("Agreement"), concerning the purchase by Purchase of all of Seller's right,
title and interest in and to Main Pass Block 59 Field more fully described in
the Agreement as the "Assets"; and
WHEREAS Purchaser and Seller desire to again amend the Agreement;
NOW THEREFORE, for and in consideration of the premises, the receipt and
sufficiency of which are hereby acknowledged, the Agreement is hereby amended to
provide that the Closing shall take place on or before 10:00a.m. C.S.T.,
November 15, 2004.
Except as amended herein all of the terms and conditions contained in the
Agreement remain in full force and effect. All terms used by not defined herein
shall have the meaning given to them in the Agreement.
IN WITNESS SHEREOF, the parties have executed this Third Amendment to
Purchase and Sale Agreement this 7th day of October 2004.
SELLER:
RIDGELAKE ENERGY, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice-President
PURCHASER:
PETROREAL MAIN PASS L.L.C.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Manager
