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EXHIBIT 10.18
[Amerac Energy Corporation Letterhead]
November 17, 1997
Southern Mineral Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Re: South Timbalier 198
Gentlemen:
This letter will confirm our understanding and agreement that Amerac Energy
Corporation ("Amerac") and Southern Mineral Corporation ("Southern") intend to
enter into a farmout agreement covering an undivided one-third of Amerac's
interest in Amerac's South Timbalier 198 property insofar as pertains to an
exploration well proposed by the operator, Union Pacific Resources Corporation
("UPRC"). Terms of the farmout agreement would be consistent with those
outlined in the attached letter setting forth UPRC's farmout proposal to Amerac
concerning this well, i.e., Amerac would retain a 10% overriding royalty
interest (proportionately reduced), without any "back-in" or conversion option.
Amerac intends to farmout the balance of its interest, i.e., a two-third
undivided interest, to UPRC on the same terms. The parties will use their good
faith efforts to agree to a definitive farmout agreement in mutually
satisfactory form, which the parties anticipate would generally follow the
terms of the definitive documentation for the UPRC farmout proposal.
If this letter accurately sets forth your understanding of our agreement
regarding the subject matter hereof, please execute each copy hereof and return
one fully executed copy to the undersigned.
AMERAC ENERGY CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
President and CEO
SOUTHERN MINERAL CORPORATION
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
President and CEO
