Re: Letter Agreement Tidewater’s Iron County, Utah acreage
Exhibit 10.1
November 14, 2013
Xx. Xxx Xxxxxx
Virtus Oil & Gas
The Gas Tower
000 X. 0xx Xx. 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
| Re: | Letter Agreement Tidewater’s Iron County, Utah acreage |
Xx. Xxxxxx,
This Letter Agreement (the “Agreement”) sets forth our mutual agreement regarding the sale to Virtus Oil & Gas (“VOG”) of Tidewater Oil & Gas Company, LLC’s (“Tidewater”) working interest in Iron County, Utah, which has approximately 36,787 net acres (see Landmap “Exhibit A – Iron County Leases, Iron County, Utah,” for specific leasehold descriptions of Tidewater’s interest in Iron County, Utah), and “VOG’s” purchase 87.5% of Tidewater’s Working Interest with Tidewater retaining a 12.5% Working Interest and a 12.5% carried interest in the initial well in its Iron County, Utah acreage position, which is subject to Bankruptcy Court approval. This Agreement shall not be effective and shall be null and void unless it is approved by the Bankruptcy Court in the Tidewater Chapter 11 bankruptcy case. While Tidewater will proceed to gain approval of the Agreement, it will retain the right to withdraw its Motion for approval as it deems appropriate in the exercise of its duties in the Chapter 11 case. Once this Letter Agreement is approved by the Bankruptcy court, the $290,000 non-refundable acquisition cost will be paid as described in i-iv below.
WHEREAS,VOG is agreeing to provide $290,000 as non-refundable acquisition cost payable in the following manner:
| i. | The first payment of $45,000 is due within 10 days of the approval, by the Bankruptcy Court, of this Letter Agreement. |
| ii. | The Second payment of $45,000 payable 55 days after the Bankruptcy Court Approval of this Letter Agreement. |
| iii. | An additional payment, the Third payment of $100,000 payable within 145 days after the Bankruptcy Court approval of this Letter Agreement. |
| iv. | Then the last payment, the Forth payment, an amount of $100,000 payable within 235 days after the Bankruptcy Court approval of this Letter Agreement. |
| v. | Commit to drill a 12,000 test of the Jurassic-Navajo, Permian – Kaibab formation, 1 vertical well; approximate drilling and completion cost of $2.5 million. |
| vi. | An AAPL FORM 610-1989 Model Operating Agreement will be signed. This agreement will have a 100 and 300 percent non-consent penalty for tangibles and intangibles. |
| 1.0 | The terms of our agreement with respect to the Iron County Prospect interest are as follows: |
| 1.1 | VOG agrees to pay $290,000 to Tidewater for 87.5% of it’s working interest in approximately 36,787 net acres in the area as set forth in “Exhibit A – Iron County Leases, Iron County, Utah,” attached hereto and hereinafter referred to as Exhibit A and such non-refundable payment of $290,000 to Tidewater shall be made as described above and upon final payment, Tidewater shall immediately assign the working interest in the subject leases in Exhibit A to VOG. The leases in Exhibit A are delivered with an 80% NRI (Net Revenue Interest). |
| -1- |
| Tidewater Oil & Gas Company, LLC – Virtus Oil & Gas | Page 2 of 4 |
| 1.2 | Failure of VOG to pre-pay Tidewater for the estimated drilling cost of the Initial Test Well on or before February 3, 2015 shall result in VOG forfeiting all rights to any interest contained in Exhibits A, and Tidewater shall retain the $290,000. |
| 1.3 | Tidewater shall continue to administer and maintain the lease rental payments as shown in Exhibit B and shall invoice VOG for Tidewater’s proportionate share of lease rental payments. |
| 1.4 | Tidewater shall notify VOG ninety (45) days prior to the lease rental due date of the leases subject to this Letter Agreement in Exhibit A, and VOG shall have thirty (30) days to respond to Tidewater as to whether VOG agrees to pay such lease rentals, see Exhibit B. Failure to pay said lease rentals will result in loss of VOG’s right, title and interest to all such lease(s), where lease rentals were not paid. |
| 1.5 | Tidewater shall be the operator of the Initial Test Well. The Initial Test Well, to drill a 12,000 foot test of the Jurassic-Navajo, Permian-Kaibab, carries an estimated cost of $2,500,000 to drill and complete the well. VOG agrees to pre-pay Tidewater for the Initial Test Well Drilling Cost 30 days prior to spud date which is anticipated to be no later than February 3, 2015. Tidewater shall not be responsible for any cost associated with the first well, and will be carried on the initial well drilled in this prospect area for 12.5% through the cost of drilling and completion. |
| 2.0 | Time is of the essence for this Agreement. All of the terms, covenants, conditions and provisions hereof shall inure to, be available to and binding upon the parties hereto, their respective heirs, executors, administrators, assigns and successors. It is not the purpose or intention of this agreement to create, nor shall the same be considered as creating any partnership, commercial venture, or other usual partnership relation, including joint and collective liability. |
| 3.0 | All notices or communications required or permitted under this Agreement shall be in writing and any notices, communications or delivery hereunder shall be deemed to have been fully made if hand delivered, or if mailed by registered or certified mail, postage prepaid, to the address as set forth below: |
To: Virtus Oil & Gas
The Gas Tower
000 X. 0xx Xxxxxx 00xx xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xx. Xxx Xxxxxx
To: Tidewater
Tidewater Oil & Gas Company LLC
000 00xx Xxxxxx Xxxxx #000
Xxxxxx, Xxxxxxxx 00000
Attn: Mr. Xxxxx Xxxxx
| -2- |
| Tidewater Oil & Gas Company, LLC – Virtus Oil & Gas | Page 3 of 4 |
| 4.0 | This Agreement shall be governed by the laws of the State of Colorado without regard to rules regarding conflicts of laws; and the parties agree that proper venue for any disputes rising hereunder shall be in Federal or State courts located in the State of Colorado. |
| 5.0 | The waiver or failure of either party to enforce any provision of this Agreement shall not be construed or considered to be a waiver of any further breach of such provision or of any other provisions of this Agreement. |
Please acknowledge your acceptance of this Agreement by signing this Agreement in the place provided below and returning one fully executed original to Tidewater Oil & Gas Company LLC, 000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
IN WITNESS WHEREOF, the undersigned parties as of this 14th day of November, 2013.
Tidewater Oil & Gas Company LLC
By: ___/s/ Xxxxx X. Jones________________
Name: ___James S. Jones___________________
Title: ___Manager________________________
Virtus Oil & Gas
By: ___/s/ Xxxxxx M Ferris________________
Name: ___Daniel M Ferris__________________
Title: ___CEO___________________________
Tidewater Wire Transfer instructions are as follows:
Routing Number: 000000000
Account Number: 103681814192
SWIFT Number: XXXXXX00XXX
ATTN: Xxxxx X. Xxxxx on the “Tidewater Operating” account
USBank Denver Downtown Office
0000 Xxxxxxxx
Xxxxxx, XX 00000
000-000-0000
| -3- |
| Tidewater Oil & Gas Company, LLC – Virtus Oil & Gas | Page 4 of 4 |
Attachments are as follows:
Exhibit “A”: Landmap
Exhibit “B” : Monthly Rental Detail
| -0- |
| -0- |
| -0- |
| -0- |
| -0- |
