Exhibit 10.01
VENTURE AGREEMENT OF
MID-POWER SERVICE CORPORATION AND XXXXXX XXXX XXXXX
This Venture Agreement ("Agreement") is entered into this 10th day of
May, 2002 by and between Mid-Power Resource Corporation, a Nevada Corporation
("MPRC") and Xxxxxx Xxxx Xxxxx ("Xxxxx"), collectively the Parties.
I. PARTIES
By this Agreement the parties herein agree to develop gas prospects under
contract to Xxxxx within the Arbuckle Gas Field in Colusa County, California
("Prospects"). Each Prospect shall be defined by seismograph to determine the
land allocated to each Prospect. There is approximately ten prospects available
to drill on lands covered by this Farmout, as outlined on Exhibit "A" attached
hereto.
II. DEVELOPMENT
The Parties agree to develop the Prospects pursuant to the terms of the
following Farmout Agreement whereby MPRC agrees to provide the capital for Xxxxx
to attempt to drill the initial well, being the Xxxxxx 2A-14 well, to an
approximate depth of 6,800 feet to test the Forbes Formation and for Xxxxx to
attempt to drill each Prospect under this Agreement as designated by Xxxxx and
defined by seismograph. MPRC shall carry Xxxxx free through all drilling,
completion and pipelines to market gas. Only upon such well becoming
commercially productive, MPRC shall earn a 50% working interest based on an 80%
net revenue interest, which MPRC would own a 40% net revenue interest on each
well drilled on the Farmout acreage. MPRC agrees to drill four xxxxx each year
on the Farmout acreage, or MPRC shall no longer earn beyond what MPRC has
already earned.
Before the test well is commenced on each prospect, the Parties shall enter into
a mutually acceptable AAPL 610-1989 Operating Agreement naming Xxxxx or his
designee, as operator. This Operating Agreement shall provide for a One hundred
percent (100%) non consent penalty and any other modifications to be mutually
agreed upon by the Parties hereto. There will also be attached to the Operating
Agreement, a XXXXX 1995 Onshore Accounting Procedure providing for a $1,250.00
per month producing well charge for the xxxxx drilled pursuant to this
Agreement.
Upon completion of each well as a producer of gas, Xxxxx shall assign to MPRC
the above working and net revenue interest in the lands and leases allocated to
the Prospect where such well is located as defined above and shall cover all
depths under contract or controlled by Xxxxx below the surface of the ground. If
Xxxxx is unable to give an assignment directly to MPRC, then MPRC shall operate
by, through and under Xxxxx, the same as if MPRC had an assignment. It is
understood by the Parties hereto, then Xxxxx shall not make any warranty of any
kind, either expressed or implied, on the lands and leasehold interests being
assigned to MPRC.
III. CAPITAL
MPRC shall contribute all capital necessary to comply with the terms of the
above Farmout agreement. MPRC shall escrow $600,000.00 by bank wire
simultaneously upon the signing of this Agreement in a special account of Xxxxx'
at the Bank of America, Las Vegas, Nevada, under an escrow agreement, attached
hereto as Exhibit "B," for the initial well and then MPRC shall escrow
$600,000,00, the same as provided for above, before the commencement of each
additional well for the costs of drilling and completion. The escrow funds shall
be paid directly to the purveyors performing the work for the exact amount.
Should the costs exceed the $600,000,00 escrowed for each well, then MPRC agrees
to immediately escrow the needed funds for the additional costs. Should the
costs be less than the $600,000.00 escrowed for each well, then MPRC will be
refunded the difference after the completion.
In addition there are seven (7) additional Prospects with the anomalies outlined
on said Exhibit "A". The oil and gas leases located on these Prospects will
expire between July 7, 2002 through January 2003. These leases must be extended
or renewed. The cost to extend the approximately 2,110.50 net acres covered by
such leases is projected to be $57,395.00 plus broker and title costs. Upon
signing of this Agreement, MPRC shall immediately bank wire to Xxxxx' bank
account in Las Vegas, Nevada these funds so that such lease extensions or
renewals can be timely completed. All leases will require yearly rentals
totaling the above amount during the term of this Agreement unless production is
established. Any funds not used by Xxxxx shall be refunded to MPRC, however,
should additional funds be needed to accomplish the above lease extensions and
renewals, then MPRC will immediately tender such amount to Xxxxx pursuant to his
invoices.
IV. DISTRIBUTIONS AND ALLOCATIONS
The Parties shall receive distributions and allocations pursuant to the terms of
the above Farmout Agreement and the Operating Agreement.
V. GENERAL PROVISIONS
All Prospects. All Lands and Leases under contract to Xxxxx at this time in the
Arbuckle Field in Colusa County, California shall be covered by this Agreement
as provided herein.
Time of the Essence. All times and dates in this Agreement shall be of the
essence.
Entire Agreement. This Agreement, which includes the Exhibits, contains all
representations and the entire understanding and agreement between the Parties.
Correspondence, memoranda or agreements, whether written or oral, originating
before the date of this Agreement with respect to the Prospects or the
Partnership are superseded in total by this Agreement.
Governing Law. This Agreement shall be covered by and construed in accordance
with the laws of the State of California.
Attorneys' Fees. In the event that any arbitration or court proceeding is
brought under or in connection with this Agreement, the prevailing party in such
proceeding (whether on trial or on appeal) shall be entitled to recover from the
other party all costs, expenses and actual attorneys' fees incidental to any
such court proceeding and only the actual attorneys' fees incidental to any such
arbitration proceeding. The term "prevailing party" as used herein shall be
taken and deem to mean the party to whose favor a final judgment or award is
entered in any such proceeding; provided, however, that if such proceeding is
resolved prior to a final judgment or award on the merits, the party in whose
favor the proceeding is settled may, by motion, apply to the court, or the
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person(s) or board in charge of the proceeding for an award of the
aforementioned costs, fees and expenses, and may take judgment therefore. As
used herein, the term "attorneys' fees" shall be deemed to mean the full and
actual cost of any legal services actually performing such services.
IN WITNESS WHEREOF, the Partners have signed this Agreement effective
as of the date set forth above.
PARTIES:
Mid-Power Resource Corporation
/s/ Xxxxx Xxxxx
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By Xxxxx Xxxxx President CEO
/s/ Xxxxxx Xxxx Xxxxx
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Xxxxxx Xxxx Xxxxx
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