EXHIBIT 10.78
OVERRIDING ROYALTY AGREEMENT
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THIS AGREEMENT is dated the 16th day of February, 2007, by and between FOREST
ALASKA OPERATING, LLC, a Delaware limited liability company ("Forest") and
PIONEER NATURAL RESOURCES ALASKA, INC., a Delaware corporation ("Pioneer").
WHEREAS, Forest has agreed to sell and Pioneer has agreed to purchase all of
Forest's right title and interest in and to certain properties (the
"Properties") pursuant to the Asset Sale Agreement between Forest and Pioneer
dated the date hereof (the "Sale Agreement") which is attached hereto, for
reference purposes only, as Exhibit "A"; and
WHEREAS, the Sale is subject to a reservation by Forest of an overriding royalty
interest that is described on Exhibit "B" to the Sale Agreement (the "ORRI");
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Forest and Pioneer agree as follows:
1. DEFINITIONS
The following terms shall have the meanings set forth below:
1.1 "Effective Date" shall mean the Effective Date as set forth in the
Sale Agreement.
1.2 "Overriding Royalty Payments" shall mean the payments made on the
Overriding Royalty Interest; the value of which shall be determined and
paid in the same manner as royalties are payable under the underlying oil
and gas leases.
1.3 "Overriding Royalty Interest" shall mean the ORRI as described on
Exhibit "B" to the Sale Agreement.
1.4 "Properties" shall mean those leases as are identified in Exhibit "A"
to the Sale Agreement.
1.5 "Substances" shall mean all hydrocarbon substances produced from the
Properties.
1.6 "Working Interest" shall mean all of the interest owned by Forest in
and to the Unit.
2. ORRI PAYMENTS AND TAXES
2.1 PERIOD OF PAYMENT. Overriding Royalty Payments shall commence on the
Effective Date, and shall continue, as to each lease, until termination
of such lease.
2.2 PAYMENTS. Accompanying each payment, Pioneer shall furnish to Forest
the same information supporting the calculation of the Overriding Royalty
Interest payment that Pioneer regularly provides to other parties who
receive royalty or overriding royalty payments from Pioneer. If the
amount of the ORRI payment for such month is greater than $1000, then
contemporaneously with the delivery of such statement, Pioneer shall pay
to Forest such amount by certified check or wire transfer to an account
that shall be designated in writing from time to time by Forest. If the
amount of the ORRI payment for such month is less than $1000, then the
amount to be paid to Forest shall rollover to the next month until the
cumulative amount exceeds the value of $1000.
2.3 TAXES. Forest shall be responsible for income taxes, gross receipt
taxes, or other similar taxes assessed against, measured by, or related
to the interests to be conveyed to Forest pursuant to this Agreement.
3. AUDIT RIGHTS
3.1 AUDIT RIGHTS. Forest may initiate an audit of the books and records
of Pioneer pertaining to the calculation and payment of the ORRI at any
time and from time to time (not to exceed once per year). Such audits
shall be conducted at Forest's expense in Pioneer's offices during normal
business hours. Pioneer shall make all of the books and records relevant
to the calculation of the ORRI available to Forest and its
representatives, and Pioneer shall fully cooperate with Forest and its
representatives during the course of any such audits. The parties shall
attempt in good faith to resolve any differences or make any necessary
adjustments.
4. GOVERNING LAW
4.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the state of Colorado, without regard to the conflict
of laws principles thereof; and the value of any action brought by either
Pioneer or Forest in regard hereto or arising out of the terms or
conditions hereof shall be exclusively in the state or federal courts of
Colorado.
5. MISCELLANEOUS
5.1 NOTICES. All notices and other communications required, permitted, or
desired to be given hereunder must be in writing and sent by first class,
registered or certified mail, or by courier or overnight delivery,
properly addressed as shown below, and with postage or charges fully
prepaid or by hand delivery. Date of service by mail or hand delivery is
the date on which such notice or other communication is received by the
addressee, or if such date is on a weekend or federal or state holiday,
then on the next date which is not Saturday, Sunday or such a holiday.
Each Party may change its address by notifying the other party in
writing.
If to Forest by mail: If to Pioneer by mail:
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Forest Alaska Operating LLC Pioneer Natural Resources Alaska, Inc.
000 X Xxxxxx 000 X Xxxxxx
Xxxxx 000 Xxxxx 000
Xxxxxxxxx, Xxxxxx 00000 Xxxxxxxxx, Xxxxxx 00000
Attn: Land Manager Attn: Manager Land and External Affairs
Tel.: (000) 000-0000 Tel.: (000)000-0000
Fax.: (000) 000-0000 Fax.: (000) 000-0000
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5.2 AMENDMENTS, SEVERABILITY AND CONFLICT. No alterations, modifications,
amendments, or changes in this Agreement shall be effective or binding
unless the same shall be in writing and signed by both Forest and
Pioneer. The invalidity of any one or more covenants or provisions of the
Agreement shall not affect the validity of the Agreement as whole, and in
case of such invalidity, this Agreement shall be construed as if such
invalid provision had not been included herein.
5.3 SUCCESSORS AND ASSIGNS. The terms, covenants and conditions hereof
shall be binding upon and shall inure to the benefit of Forest its
successors an assigns, and upon Pioneer and its partners and their
successors, heirs and assigns.
5.4 CONFIDENTIALITY. Any technical and commercial information, data,
records, documents, reports, and valuations ("Confidential Information")
which may be provided to Forest pursuant to this Agreement shall be kept
strictly confidential and shall not be sold, traded, published, or
otherwised disclosed to anyone in any manner whatsoever, including by
means of photocopy or reproduction, without Pioneer's prior written
consent.
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IN WITNESS WHEREOF, the Parties have executed this agreement on the day and year
set forth above, but effective as of the Effective Date.
FOREST ALASKA OPERATING LLC PIONEER NATURAL RESOURCES ALASKA,
INC.
By: /s/ Xxxx Xxxxxxx By: /s/ J. Xxxxxxx Xxxxx
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Name: Xxxx Xxxxxxx Name: J. Xxxxxxx Xxxxx
Title: Vice President, Business Title: Attorney in Fact
Development
THE UNITED STATES OF AMERICA ) Qualification File # 2307
) SS.
STATE OF COLORADO )
This certifies that on the 15th day of February, 2007, before me, a notary
public in and for the State of Colorado, duly commissioned and sworn, personally
appeared, Xxxx X. Xxxxxxx, Vice President, Business Development of Forest Alaska
Operating LLC, to me known and known to me to be the person described in, and
who executed the foregoing assignment, who then after being duly sworn according
to law, acknowledged to me under oath that he executed same freely and
voluntarily for the uses and purposes therein mentioned. WITNESS my hand and
official seal the day and year in this certificate first above written.
[SEAL] /s/ signature
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Notary Public
My Commission expires Jan 14, 0000
XXX XXXXXX XXXXXX XX XXXXXXX ) Qualification File # 2255
) SS.
STATE OF ALASKA )
This certifies that on the 16th day of February, 2007, before me, a notary
public in and for the State of Alaska, duly commissioned and sworn, personally
appeared, J. Xxxxxxx Xxxxx, Attorney in Fact, to me known and known to me to be
the person described in, and who executed the foregoing assignment, who then
after being duly sworn according to law, acknowledged to me under oath that he
executed same freely and voluntarily for the uses and purposes therein
mentioned. WITNESS my hand and official seal the day and year in this
certificate first above written.
[SEAL] /s/ Xxxxx X. Xxxxxxxx
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Notary Public
My Commission expires 6/17/2008
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