FARM- OUT ASSIGNMENT
Exhibit
10.2
FARM-
OUT
ASSIGNMENT
THIS
FARM-OUT ASSIGNMENT made and entered into this the 4th day of October, 2007,
by
and between K & D ENERGY, a Kentucky Partnership, by Partners, Xxxxx
Xxxxxxxxx, of P. O. Xxx 000, Xxxxxx, Xxxxxxxx 00000, and Xxxxx Xxxx, 00 Xxxxx
Xxxx, Xxxxxxx, Xxxxxxxx 00000, being all partners in the partnership,
hereinafter ASSIGNOR and KY USA ENERGY, INC., X/X Xxxxx Xxxxxxxx, 000 Xxxxxxxx
Xxxx, Xxxxxx, Xxxxxxxx 00000, hereinafter ASSIGNEE;
WITNESSETH:
Whereas, ASSIGNOR owns certain oil and gas leases in West Central, Kentucky,
more specifically described hereinafter and desire to do this Farm-Out
Assignment to ASSIGNEE to form a core basis for a publicly traded company so
that money can be raised to fully develop the project from which ASSIGNOR will
receive a carried working interest and by their signatures below the parties
agree to this Assignment on the following terms and conditions:
1.
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ASSIGNOR
does hereby Farm-Out Seventy-Five Percent Net Revenue Interest (75%
N.R.I.) In and to 2099 acres, comprised of nine (9) separate mineral
leases, to ASSIGNEE. The farm-out interest is hereby granted as One
Hundred Percent Working Interest (100% W.I.); thereby ASSIGNEE will
pay
100% of the drilling, completion, and operation costs to earn their
75%
NRI.
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2.
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The
purchase price for the subject leaseholds shall be delivered to ASSIGNOR’S
Bank Account of choice via wire-transfer
(EFT).
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3.
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ASSIGNEE
shall drill to the New Albany Shale or acquire an extension of the
Xxxxxx
Lease and the Lakefield/Xxxxxx Lease before the expiration of the
current
leases.
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4.
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ASSIGNEE
must continue drilling to retain their Farmed-In rights. They must
drill a
minimum of twelve (12) New Albany Shale xxxxx per year, until all
locations have been developed on the available acreage, to maintain
their
rights.
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5.
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Should
commercially producible quantities of oil and/or gas be encountered
in any
formation other than the New Albany Shale, then ASSIGNEE shall have
first
right to drill a twin well to produce said hydrocarbons. Should ASSIGNEE
decline to drill such a twin well, and should ASSIGNOR wish to drill
that
twin well to zones other than the New Albany Shale, then ASSIGNOR
may do
so at their own discretion and
expense.
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6.
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ASSIGNEE
will have the option to contract ASSIGNOR for management of drilling
and
completion operations, and shall receive $10,000.00 per well for
this
service, due at the commencement of drilling
activities.
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7.
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ASSIGNOR
shall have the right to sell gas from any of its pre-existing gas
xxxxx on
the project acreage, including the new Xxxxxxx #1 well, into the
natural
gas gathering line network that ASSIGNEE will construct without being
assessed any fees, including but not limited to transportation,
compression, or scrubbing of said gas. This right shall also extend
to any
twin gas xxxxx that ASSIGNOR may drill at its own expense per Item
4.
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8.
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ASSIGNEE
shall maintain General Liability Insurance at all times during the
project, and shall name as Additionally Insured: ASSIGNOR and its
successors and assigns in these leases, as well as Xx. Xxxxx Xxxxxxxxx
and
Xx. Xxxxxx X. Xxxx as individuals. The General Liability Insurance
policy
shall provide the following minimum coverage limits: General Aggregate
$2
Million; General Liability $1 Million; Products and Completed Operations
$1 Million; Environmental Spills & Cleanup $1 Million; and Medical
Payments $10,000.
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9.
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ASSIGNEE
shall be responsible for all legal work associated with obtaining
a Title
Opinion for the subject leaseholds.
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10.
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ASSIGNEE
shall assume responsibility for all land and crop damages arising
from
drilling or production activities such as road & location
construction, spills, etc.
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11.
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ASSIGNEE
shall assume responsibility for the maintenance of the leasehold
property
and infrastructure including roads, gates, etc.; insofar as said
maintenance shall extend only to that leasehold infrastructure that
will
be utilized or created as a result of this agreement. This clause
shall
take affect on the date of closing of this agreement and the leasehold
infrastructure, with all pre-existing structures and improvements
shall be
transferred “as-is” on that day.
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NOW,
THEREFORE, for and in consideration of the above terms and conditions, and
one
dollar ($1.00) plus other good and valuable considerations, the receipt and
sufficiency of which are acknowledged, the ASSIGNOR does hereby bargain,
transfer and assign to ASSIGNEE the following described Oil and Gas
Leases:
Lease
Name
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County
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Lease
Book/Page
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Date
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Acreage
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Lakefield/Xxxxxx
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Muhlenberg
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94/83
& 94/452
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3/21/07
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130
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Xxxxx/Xxxx
Xxxxxxxx
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Xxxxxxxxx
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43/340
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10/20/06
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323
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Xxxxx/Xxxx
Xxxxxxxx
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Xxxxxxxxx
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43/347
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10/20/06
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000
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Xxxxx
Xxxxxx (Xxxxxxx Xxxxxx)
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Xxxx
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22/672
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4/25/07
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184
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Xxxxxxx
Xxxxxxx
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Muhlenberg
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94/332
(Lease)
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94/537
(Extension)
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6/30/06
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187
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Xxxxx
Xxxxxxxx
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Xxxxxxxxx
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43/137
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7/1/2004
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130
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Xxxxx
Xxxxxxxx
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Xxxx
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22/430
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7/1/2004
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Golden
Eagle/Xxxxxx
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Xxxx
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22/258
& 22/318
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4/16/2001
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80
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Xxxxxxx/Xxxxx
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Xxxxxxxxx
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41/263
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10/21/92
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200
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Hunter/Xxxxx
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Xxxxxxxxx
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41/23
& 41/19 &
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41/19
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543
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TO
HAVE
AND TO HOLD unto ASSIGNEE, its successors and assigns, a 75% Net Revenue
Interest as the 100% Working Interest in above described leases, subject to
all
the aforesaid terms and conditions, as well as all terms and conditions in
the
original leases with only such Warranty of title as ASSIGNOR actually
possesses.
ASSIGNOR
does warrant that there are no undisclosed material defects in the above leases
of which ASSIGNOR is aware and the ASSIGNOR has taken no action or made no
omissions in actions that would render any of the above leases invalid or of
no
effect.
WITNESS
the signatures of the parties hereto on this the 4th day of October,
2007.
K & D ENERGY | ||
BY:
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XXXXX
XXXXXXXXX, Partner
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BY:
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XXXXX
XXXX, Partner
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ASSIGNOR | ||
KY USA ENERGY, INC. | ||
BY:
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XXXXX
XXXXXXXX
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ASSIGNEE |
COMMONWEALTH
OF KENTUCKY
COUNTY
OF____________________
SIGNED
AND ACKNOWLEDGED to before me by K & D ENERGY, by and through its partner,
XXXXX XXXXXXXXX, who personally appeared before me and known to me or
satisfactorily identified by me, to be his free act and deed, on this the _____
day of October, 2007.
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NOTARY PUBLIC
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My Commission Expires:
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COMMONWEALTH
OF KENTUCKY
COUNTY
OF
______________
SIGNED
AND ACKNOWLEDGED to before me by K & D ENERGY, by and through its partner,
XXXXX XXXX, who personally appeared before me and known to me or satisfactorily
identified by me, to be his free act and deed, on this the _______ day of
October, 2007.
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NOTARY PUBLIC
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My Commission Expires:
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COMMONWEALTH
OF KENTUCKY
COUNTY
OF
______________
SIGNED
AND ACKNOWLEDGED to before me by KY USA ENERGY, INC. by and through XXXXX
XXXXXXXX, who personally appeared before me or satisfactorily identified by
me,
to be his free act and deed, on this the ____ day of October, 2007.
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NOTARY PUBLIC
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My Commission Expires:
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THIS
INSTRUMENT PREPARED BY:
BASIL
LAW
FIRM
000
Xxxx
Xxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx 00000
TELEPHONE:
000-000-0000
FAX:
000-000-0000
BY:_________________________________
XXXXX
X.
XXXXX
My
Documents,GG; Contracts; Farm-Out Assignment, K & D Energy