EOG RESOURCES
EOG RESOURCES, INC.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxx, XX 00000
December 3, 0000 (000) 000-0000
Fax: (000) 000-0000
Petrosearch Corporation
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Mr. Xxxx Xxxxxxx
President
RE: Farmout with Option Agreement
Starbuck Prospect
Xxxxxxxx and Valley Counties, Montana
Gentlemen:
This Farmout with Option Agreement is made and entered into this 3rd day of
December, 2003, by and between EOG Resources, Inc., a Delaware corporation,
hereinafter referred to as "Farmor", and Petrosearch Corporation, a Texas
Corporation, hereinafter referred to as "Farmee." Farmor and Farmee, when
jointly referred to, shall be known as the "Parties" to this Agreement.
I. RECITALS
--------
Farmor represents, but does not warrant, that it is the owner of certain
oil and gas leases and interests therein as described in Exhibit "A.1", covering
lands as shown in yellow on Exhibit "A.2" both Exhibits attached hereto and by
this reference made a part hereof. Reference is made to those leases and to the
record thereof for all of the terms and conditions thereof. Such leases and
lands described in Exhibits "A.1" will hereinafter be referred to as the
"Contract Acreage", As shown on Exhibit "A.2", the Contract Acreage is divided
into two (2) separate earning blocks.
II. AGREEMENT
---------
For and in consideration of the mutual covenants and agreements hereinafter
set forth to be kept and performed by each of the Parties and other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
the Parties do hereby agree to and adopt the terms and conditions hereinafter
stated.
III. TEST WELL AND OPTION TEST WELL
------------------------------
A. On or before September 1, 2004, Farmee shall commence or cause to be
commenced the actual drilling of a well, hereinafter referred to as the "Test
Well", at a legal location of Farmee's choice on the Contract Acreage.
energy opportunity growth
December 3, 2003
Page 2 of 9
B. Farmee shall prosecute drilling of the Test Well with due diligence and
in a good and workmanlike manner to a depth sufficient to adequately and
conclusively test the Lodgepole formation or to the depth of 5,656 feet,
whichever is the lesser depth, hereinafter referred to as the "Contract Depth."
The Test Well will be drilled to the Contract Depth, tested and completed as a
well capable of producing oil and/or gas in commercial quantities, or the dry
hole will be plugged and abandoned and the premises restored in a good and
workmanlike manner within ninety (90) days from commencement of actual drilling
operations.
C. If the Test Well is drilled and completed in the time and manner
specified in this Agreement, Farmee shall earn the option, but not the
obligation, to drill a second well, hereinafter referred to as the "Option Test
Well" at a legal location of Farmee's choice on the undrilled Block. The Option
Test Well, if drilled, must be actually spudded within one-hundred eighty (180)
days after the date the rotary rig is released from the Test Well. Farmee shall
prosecute drilling of the Option Test Well with due diligence and in a good and
workmanlike manner to the Contract Depth. The Option Test Well will be drilled
to the Contract Depth, tested and completed as a well capable of producing oil
and/or gas in commercial quantities or the dry hole will be plugged and
abandoned and the premises restored in a good and workmanlike manner within
ninety (90) days from commencement of actual drilling operations.
D. If, because of encountering impenetrable substances or because of other
conditions making further drilling impractical, Farmee may discontinue drilling
of the Test Well and/or Option Test Well before reaching the Contract Depth,
Farmee shall have the right to drill a substitute test well at a location
mutually acceptable to Farmor and to Farmee, provided that the drilling of said
substitute test well is commenced not later than thirty (30) days after the
discontinuance of actual drilling of the original Test Well or Option Test Well.
Such substitute test well will be drilled in a good and workmanlike manner and
to the Contract Depth. If such substitute test well is commenced, drilled and
completed as herein provided, Farmee shall have complied with this Agreement to
the same extent as if the Test Well or Option Test Well had been commenced,
drilled and completed in accordance herewith. Each reference herein to the Test
Well or Option Test Well shall include any substitute test well therefor.
E. All costs, expenses and risks incurred or arising out of the drilling,
testing, completing, equipping and/or plugging and abandoning of the Test Well
or Option Test Well, if drilled, and all costs and expenses incurred by Farmee
in complying with the terms, conditions and provisions of this Agreement shall
be borne solely by Farmee.
F. For any well drilled hereunder, Farmee shall provide to Farmor the
geologic information and reports described in Exhibit "B" attached hereto and by
this reference made a part hereof Farmor shall at all times have full access to
the rig floor at its sole cost, risk and expense.
G. In the event the Test Well and/or Option Test Well is completed as a
well capable of producing oil and/or gas, Farmee, within thirty (30) days after
completion thereof, shall furnish Farmor with an itemized statement of the costs
of drilling, testing, completing and equipping such well and disclosing all
credits, including credits for salvage material, and shall also furnish Farmor
with a detailed inventory of the equipment placed in and on the well. During the
period of payout of such well as hereinafter provided, Farmee shall furnish
Farmor each quarter with an itemized statement of the costs of operating and
maintaining the applicable well and with monthly reports of all production,
production sold, production on hand
December 3, 2003
Page 3 of 9
and run tickets disclosing the type, quality and quantity of production from
such well and the disposition thereof.
IV. ASSIGNMENT
----------
In the event Farmee drills and completes the Test Well and/or Option Test
Well in accordance with the terms and conditions of this Agreement, ("Earning
Well") and further provided that Farmee shall have furnished to Farmor evidence
that all bills for labor and materials in connection with Farmee's operations
have been fully paid, and upon receipt of written request within sixty (60) days
following completion of such well, Farmor will, subject to the conditions,
exceptions, reservations, covenants and agreements herein set forth, transfer
and assign to Farmee without representation or warranty of title, either express
or implied, the following:
A. Should Farmee plug and abandon the Earning Well as a dry hole, Farmor
shall assign to Farmee seventy-five percent (75%) of Farmor's working interest
in and to that portion of the Contract Acreage located within the Block in which
the Earning Well is located.
B. Provided Farmee completes the Earning Well as a well capable of
producing oil and/or gas in commercial quantities, Farmor shall assign to Farmee
one hundred percent (100%) of Farmor's working interest in the Wellbore subject
to the reservation by Farmor of an overriding royalty interest equal to the
difference between existing lease burdens and twenty percent (20%) of 8/8ths of
all oil, gas, other minerals, condensate, and casinghead gas produced and saved
from the Earning Well. Said overriding royalty interest shall be inclusive of
the landowner's royalty and any overriding royalty or other burdens which now
exist provided, however, that as to federal leases the overriding royalty
retained may be reduced to the extent required by the applicable regulations.
Farmor's reserved overriding royalty interest shall be delivered free and clear
of all liens and all costs of development and operation. In addition to the
assignment covering the wellbore, Farmor shall assign to Farmee seventy-five
percent (75%) of Farmor's working interest in that portion of the Contract
Acreage located within the Block in which the Earning Well is located.
C. The overriding royalty interest reserved herein to Farmor shall be
reduced proportionately if the Oil and Gas Lease(s) to be assigned to Farmee
cover(s) less than the full undivided interest in the oil, gas, and associated
hydrocarbons in the assigned premises, if Farmor does not own all leasehold
rights in said lease(s), and/or if all or any part of the assigned premises is
pooled or communitized with other lands. Said pooling or communitization shall
only be done with Farmor's consent.
D. Farmor shall have the right to use any rights-of-way, easements or roads
which Farmee may obtain or build in connection with its operations hereunder;
and if Farmor actually uses said rights-of-way, easements, or roads, then Farmor
will reimburse upon being billed by Farmee for a proportionate share of the cost
of maintaining same.
E. Any interest earned by Farmee hereunder shall be subject to its
proportionate share of all leasehold burdens existing as of the date of this
Agreement, all agreements affecting such interest as of the date of this
Agreement and the terms and provisions of this Agreement.
F. Upon receipt of any assignment earned by Farmee hereunder, Farmee agrees
to file same with the governmental agency having authority (if applicable),
record same in the
December 3, 2003
Page 4 of 9
county records and furnish Farmor with a copy of the approved (if applicable)
and recorded assignment as soon as it is available.
V. PAYOUT
------
A. For purposes of this Agreement, "Payout" shall be defined individually
for each Earning Well as the day when the proceeds or revenue received from the
sale of production from the Earning Well, after deducting the payment of all
taxes, royalties and overriding royalties, including the applicable overriding
royalty retained by Farmor pursuant hereto, shall equal the total costs of
drilling, testing, completing and equipping the Earning Well plus the costs of
operating and maintaining same during the payout period. If Farmee should
receive a cash contribution toward the drilling of Earning Well, such
contribution shall be applied against the cost of such drilling and the costs
which Farmee shall be entitled to recoup with respect to such well under the
provisions of this paragraph shall be reduced accordingly. Further, in the event
Farmee drills a substitute test well as provided herein, then it is understood
that only the cost of the substitute test well and not any abandoned well may be
included in the Payout account. Farmee shall so notify Farmor that Payout has
been reached in the Earning Well in writing within thirty (30) days thereof.
VI. CONVERSION AT PAYOUT
--------------------
A. At such time Farmee notifies Farmor that Payout has been reached, then
Farmor shall have thirty (30) days after receipt of such notice in which to
elect to convert Farmor's applicable reserved overriding royalty interest to a
working interest equal to percent (25%) of the working interest within the
Wellbore originally assigned to Farmee by virtue of the well which has now paid
out pursuant to the terms of this Agreement. If Farmor does not make a formal
election pursuant to this Article, then the absence of an election shall be
deemed an election by Farmor to convert Farmor's reserved overriding royalty
----------
interest to the working interest described in this Article. Said working
interest shall be owned by Farmor free and clear of all encumbrances not
existing on the date of this Agreement. The conversion, if exercised, will be
effective as of 7:00 a.m. the day following Payout. If Farmor elects to convert
its applicable reserved overriding royalty as provided herein, then the Parties
agree they will prepare, execute and deliver to each other the necessary
conveyances and/or assignments and will execute all necessary transfer and
division orders so as to carry out the intent and purpose of this paragraph.
VII. EXTENSIONS AND RENEWALS
-----------------------
A. All of Farmor's present rights and all of the reservations and rights to
which Farmor will be entitled pursuant to this Agreement shall extend and be
applicable to (1) any extension of a portion or all of any lease covering the
Contract Acreage and (2) any renewal lease covering a portion or all of any
lease covering the Contract Acreage which may be acquired directly or indirectly
by Farmee within one (1) year from the date of expiration or termination of any
current lease covering the Contract Acreage. All acquisition costs of any such
extension or renewal lease acquired by Farmee shall be borne by Farmee. Farmee
shall execute and deliver to Farmor an assignment conveying to Farmor the
interests in such acquisition to which Farmor is entitled pursuant to this
Agreement within thirty (30) days following such acquisition.
December 3, 2003
Page 5 of 9
VIII. OPERATING AGREEMENT
-------------------
All operations conducted by Farmee hereunder shall be performed pursuant to
and under the provisions of the "Operating Agreement" attached hereto as Exhibit
"C" and by this reference made a part hereof. The terms and provisions of such
operating agreement shall be in full force and effect as to all operations
conducted hereunder including the drilling of the Test Well and/or Option Test
Well, if drilled, by Farmee, except to the extent a specific provision is
contained in this Agreement to the contrary, in which event the terms and
provisions hereof shall control.
IX. INSURANCE AND INDEMNITY
-----------------------
At all times while conducting operations on the Contract Acreage and/or
Option Acreage, Farmee shall:
A. Conduct said operations strictly in accordance with the terms and
provisions of the Oil and Gas Leases covering the Contract Acreage.
B. Observe and comply with all applicable laws, ordinances, regulations
and orders of all government authorities and agencies, whether
Federal, State, County, or municipal.
C. Keep the Test Well and Option Test Well and the equipment used in
connection therewith free from all liens and encumbrances.
D. Comply with all provisions concerning insurance in Exhibit "D" of
the Operating Agreement.
Such insurance shall be maintained in a form which protects the
interest of all Parties hereto by having Farmor named as an additional
insured if necessary under the policies providing such insurance. All
insurance shall be subject to approval of Farmor, and Farmee shall
submit certificates of insurance and evidence of its coverage to
Farmor upon request.
E. Protect, defend, indemnify and hold harmless Farmor and its officers,
directors and employees from and against any and all losses, claims,
demands, liabilities or causes of action of every kind and character,
including costs of litigation, attorneys' fees, without limit and
without regard to the cause or causes thereof, in favor of any person
or party, on account of damage to their property or on account of
bodily injury or death, arising out of or in any way connected with
Farmee's operations pursuant to the terms of this Agreement.
X. ENVIRONMENTAL INDEMNITY
-----------------------
Farmee shall assume all responsibility for, including control and removal
of, and protect, defend, hold Farmor and its officers, directors and employees
harmless from and against all claims, fines, expenses, demands, and causes of
action of every kind and character, including costs of litigation, attorneys'
fees, arising out of any federal, state or local laws, rules, orders and
regulations applicable to any waste material or hazardous substances on the land
or the presence, disposal, release or threatened release of waste material or
hazardous substance from the land into the atmosphere or into or upon the land
or any water
December 3, 2003
Page 6 of 9
course or body of water, including ground water, attributable to Farmee's
operations under the terms of this Agreement.
XI. DELAY RENTALS, MINIMUM ROYALTIES AND SHUT-IN WELL PAYMENTS
----------------------------------------------------------
Farmee shall bear seventy-five percent (75%) of Farmor's share of all delay
rentals which may become due and payable concerning the Contract Acreage during
the term of this Agreement. Farmee shall pay Farmor upon being billed therefor
for seventy-five percent (75%) of such delay rentals. Farmor shall not be liable
for erroneous payment or inadvertent failure to pay any such delay rental.
Farmee, at its sole cost and expense, agrees to timely pay any and all shut-in
well payments and minimum royalties which may be required under the terms of the
leases covering the Contract Acreage. Farmee agrees to notify Farmor at any time
a well is completed on the Contract Acreage which is capable of producing but is
not produced, and at any time production ceases for any reason within ten (10)
days of such occurrence. Said notice shall include the date of shut-in and/or
cessation of production, the reason therefor, the location of the well and
Farmee's estimate of when the well will be returned to production. Farmee
further agrees to furnish to Farmor a photostatic copy of any and all
instruments served upon Farmee which evidence a change in the ownership of delay
rentals and/or royalties.
XII. ASSUMPTION OF WELL
------------------
In the event Farmee determines that the Test Well or Option Test Well is
incapable of producing oil and/or gas in commercial quantities, and should
Farmee desire to plug and abandon such well as a dry hole, Farmee shall not
commence to abandon such well until Farmee has furnished Farmor with all
information available which has been derived from the drilling, testing, coring,
surveying and logging of the well, and thereafter Farmee has given Farmor
forty-eight (48) hours (exclusive of Saturday, Sunday and/or legal holidays)
notice of its intention to abandon. During the forty-eight (48) hour period,
Farmor shall have the right, insofar as Farmee is able to grant the right, to
take over the well to be abandoned by Farmee ("Assumed Well") and attempt
completion thereof and/or to conduct such further operations as Farmor sees fit,
in which event Farmee shall deliver the hole and rig to Farmor for such further
operations. Failure to notify Farmee within the aforesaid forty-eight (48) hour
period shall constitute Farmor's concurrence in such well being plugged and
abandoned. If Farmor takes over a well in accordance with this Article, then
Farmee will bear and assume all cost, expense and liability incurred for the
Assumed Well prior to the time Farmor takes over the well, and Farmor will pay,
assume and bear all cost, obligation, risk and expense after its assumption. If
Farmor does take over the well in accordance with this Article, then Farmor will
pay Farmee the reasonable salvage value for pipe and equipment in or on the
Assumed Well less the estimated cost of salvaging such material which is taken
for the further operations contemplated herein. If the Assumed Well is plugged
and abandoned, Farmor shall pay all costs of plugging and abandoning the Assumed
Well, BUT Farmee shall nevertheless continue to be liable for restoration of the
surface upon which the Assumed Well is located. However, any additional costs
for restoration of the surface which are the result of Farmor's operations in
assuming such well shall be borne by Farmor. If Farmor assumes the well, it is
understood that Farmee shall not be entitled to an assignment of Farmor's
working interest in and to the Contract Acreage or Option Acreage within a nine
section spot surrounding the well.
December 3, 2003
Page 7 of 9
XIII. SURRENDER
---------
A. In the event Farmee should, at any time after the date of any assignment
made by Farmor under the terms of this Agreement, elect to surrender, release,
forfeit or allow to terminate for any reason a portion or all of the interest
assigned, Farmee shall notify Farmor in writing of such election no less than
sixty (60) days prior to said action. Farmor shall have, for twenty (20) days
after receipt of such notice, the option to reacquire from Farmee by
reassignment all of such interest together with all of Farmee's interest in all
xxxxx, material and equipment attributable to such interest. Said reassignment
shall be executed and delivered to Farmor within ten (10) days after Farmee's
receipt of Farmor's written notice to reacquire such interest and shall be free
and clear of any liens, adverse claims overriding royalty interest, production
payments or other encumbrances of whatsoever nature which have been created or
caused by Farmee or by any party claiming by, through or under Farmee. Farmor
shall pay Farmee, in consideration therefor, the reasonable salvage value for
pipe and equipment in or on all xxxxx attributable to such interest, less the
estimated cost of salvaging same after its receipt from Farmee of a complete
inventory of the equipment and material in said well(s).
B. In the event Farmor elects to exercise any reassignment option reserved
by it in any provision of this Agreement, such reassignment into Farmor shall be
free and clear of any liens, adverse claims, overriding royalty interest,
production payments or other encumbrances of whatsoever nature which may have
been created or caused by any action by Farmee.
XIV. TERM OF AGREEMENT
-----------------
A. If Farmee fails to drill the Test Well as herein provided, or drills
said Test Well to a depth less than Contract Depth and does not timely exercise
its right to drill a substitute test well as provided above, this Agreement
shall terminate in its entirety and, notwithstanding anything in this Agreement
to the contrary, any interest which Farmee might otherwise be entitled to earn
under this Agreement in or to the Contract Acreage or Test Well shall terminate
and revert to Farmor.
B. If Farmee fails to drill the Option Test Well as herein provided, or
drills said Option Test Well to a depth less than Contract Depth and does not
timely exercise its right to drill a substitute test well as provided above,
this Agreement shall terminate and, notwithstanding anything in this Agreement
to the contrary, any interest which Farmee might otherwise be entitled to earn
under this Agreement in or to the unearned Block shall terminate and revert to
Farmor.
C. If Farmee defaults in the timely and proper performance of any of its
obligations/covenants contained herein, this Agreement shall terminate in its
entirety and, notwithstanding anything in this Agreement to the contrary, any
interest which Farmee might otherwise be entitled to earn under this Agreement
in or to the Contract Acreage shall terminate and automatically revert to
Farmor.
D. Such automatic termination described above, however, shall not operate
to relieve Farmee of the obligations and liabilities incurred hereunder by
Farmee, its successors and assigns, prior to such termination.
December 3, 2003
Page 8 of 9
XV. GENERAL PROVISIONS
------------------
A. This Agreement, as to the rights, duties and obligations hereunder, may
not be assigned without the express written consent of Farmor, such terms and
conditions being particular and peculiar to the Farmee hereunder.
B. This contract constitutes the entire agreement between Farmor and Farmee
and there are no other terms or provisions, either written or oral.
C. Upon written request, Farmor shall furnish to Farmee copies of the Oil
and Gas Lease(s) covering the drillsite tract for any well drilled hereunder and
title data relating thereto in its possession, including copies of any
assignments, contracts, rental receipts and agreements relating thereto and any
other title data in its possession, including title opinions, provided that
Farmor shall not be responsible for the accuracy of any such title opinion.
Farmee, at its sole cost and expense, shall obtain any additional title data
desired and furnish Farmor with copies of all title opinions and pertinent
materials obtained by Farmee covering the Contract Acreage.
D. Farmee, at its sole cost, risk and expense, shall maintain the Contract
Acreage in a clean and orderly condition, remove all waste products and fill in
all pits dug in connection with Farmee's operations thereon. Farmee shall
restore the Contract Acreage to its original condition as nearly as possible and
settle all claims for surface damages. If Farmee fails to perform any
restoration or clean-up operations within a reasonable time after completion or
abandonment, or fails to settle any claims in connection with surface damages
within sixty (60) days after written demand from Farmor then, in such event,
Farmor may do so and Farmee agrees to reimburse Farmor for all expenses so
incurred.
E. Farmor and Farmee shall each have the right to take and dispose of its
proportionate share of any and all of the production from or attributable to the
Contract Acreage.
F. Any provision hereof which is inconsistent with any law, rule,
regulation or order is hereby modified so as to conform therewith; and this
Agreement, as so modified, shall continue in full force and effect.
G. Should Farmee drill and complete the Test Well and/or Option Test Well
as a well capable of production, Farmee shall place of record in the appropriate
County's records an proper affidavit of production describing the lease(s)
covering the applicable drillsite tract.
H. If this Agreement is not executed by Farmee and returned to Farmor
within thirty (30) days from the date hereof, then and thereupon at the option
of Farmor this Agreement shall be null and void and of no effect.
December 3, 2003
Page 9 of 9
Executed as of the day and year first written above. This Agreement may be
executed in any number of counterparts, each of which shall be considered an
original for all purposes.
Very truly yours,
EOG RESOURCES, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
-----------------------------------
J. Xxxxxxx Xxxxxxx
Title: Agent and Attorney-in-Fact
AGREED TO AND ACCEPTED this day of December, 2004
-----
PETROSEARCH CORPORATION
By:
------------------------------------
Xxxx Xxxxxxx
Title: President
Exhibit 'A.1'
Recording
Lease Number Lessor Name Description Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
Xxxxx X Xxxxx
0000000-000 XXX MTM-92276 T37N-R34E 12-11-2002 2238.36
SEC 1: XXXX 0, 0, 0, 0, X0X0, X0
SEC 2: XXXX 0, 0, 0, 0, X0X0
XXX 11: ALL
SEC 12: X0, XX, X0XX, XXXX
XXXXXXXX XXXXXX, XXXXXXX
0077021 -000 USA MTM-92277 T37N-R34E 12-11-2002 440.00
SEC 10: XX, X0X0
SEC 12: SESE
SEC 13: E2NE
XXXXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92278 T37N-R34E 12-11-2002 40.00
SEC 10: SWNW
XXXXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92279 T37N-R34E 12-11-2002 2440.00
XXX 00: X0XX, XX, X0
XXX 00: ALL
SEC 23: ALL
SEC 24: X0, XX, X0XX, XXXX
XXXXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92280 T37N-R34E 12-11-2002 480.00
SEC 15: S2
SEC 22: E2E2
XXXXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92281 T37N-R34E 12-11-2002 920.00
XXX 00: XXXX, X0XX, XX, X0
XXX 00: X0
XXXXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91732 T3SN-R35E 05-31-2002 2249.32
SEC 1: XXXX 0, 0, 0, 0, X0
XXX 2: XXXX 0, 0, 0, 0, X0
XXX 11: ALL
SEC 12: ALL
VALLEY COUNTY. XXXXXXX
0000000-000 XXX MTM-91733 T3SN-R35E 05-31-2002 1940.64
SEC 3: XXXX 0,0,0,0,X0
XXX 0: XXXX 0,0,0,0,X0
XXX 9: S2NE, XXXX, X0
SEC 10: NE, SWNW, X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91734 T36N-R35E 05-31-2002 2164.01
SEC 5: XXXX 0,0,0,0, X0
XXX 0: XXXX 0,0,0,0, X0XX, XX
SEC 7: XXXX 0,0,0,0, X0, X0X0
SEC 8: ALL
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92345 T36N-R35E 05-31-2002 1260.00
SEC 13: ALL
SEC 14: ALL
VALLEY COUNTY, MONTANA
1 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
0000000-000 XXX MTM-92346 T3SN-R35E 05-31-2002 320.00
SEC 15: NE, N2NW, S2SW
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92347 T36N-R35E 05-31-2002 1265.32
SEC 17: ALL
SEC 18: XXXX 0,0,0,0, X0, X0X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91742 T37N-R35E 05-31-2002 1262.32
SEC 4: XXXX 0,0,0,0, X0XX, X0XX
SEC 9: X0, X0XX
SEC 10: X0, X0X0, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91743 T37N-R35E 05-31-2002 1156.60
SEC 7: XXXX 0,0,0, X0X0
SEC 8: E2E2
SEC 17: X0, X0X0, X0XX
SEC 18: XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91744 Insofar as lease covers: 05-31-2002 360.00
T37N-R35E
SEC 15: XXXX, X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91745 T37N-R35E 05-31-2002 958.69
SEC 19: XXXX 0,0,0, XX, X0XX, XXXX,
X0XX, SESE
XXX 00: X0
XXX 00: W2SW, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91746 Insofar as lease covers: 05-31-2002 160.00
T37N-R35E
SEC 22: E2SW
SEC 23: X0XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91747 Insofar as lease covers: 05-31-2002 560.00
T37N-R35E
Xxx 00: X0XX
Xxx 00: NE, E2NW, SW, W2SE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91748 T37N-R3SE 05-31-2002 1360.00
XXX 00: X0XX, X0XX, XXXX, X0
XXX 00: ALL
SEC 30: X0X0, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91749 T37N-R35E 05-31-2002 1080.16
XXX 00: XXXX 0,0,0,0, X0, X0X0
XXX 00: X0, X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91750 T37N-R35E 05-31-2002 1840.00
SEC 33: ALL
XXX 00: X0XX, X0, XX
XXX 00: ALL
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91768 T36N-R35E 05-31-2002 672.51
SEC 6: XXXX 0,0
XXX 0: X0X0, XXXX
XXX 00: X0XX
XXX 00: S2NW, N2SW, SE
VALLEY COUNTY, MONTANA
2 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
0000000-000 XXX MTM-91773 T37N-R35E 05-31-2002 640.00
XXX 0: X0XX, XX, X0XX
XXX 0: XX, X0XX
SEC 10: SWNW, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91774 T37N-R35E 05-31-2002 1835.10
SEC 5: XXXX 0,0,0,0, X0X0, X0
SEC 6: XXXX 0,0,0,0,0,0,0, X0XX, XXXX,
X0XX, XX
SEC 7: XXX 0, X0
XXX 0: X0X0
XXXXXX XXXXXX, XXXXXXX
0076989-000 USA MTM-91775 T37N-R35E 05-31-2002 996.75
XXX 00: X0XX
XXX 00: XXXX 0,0,0,0, XX, X0X0
SEC 19: XXX 0, XXXX, XXXX
XXX 00: W2
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91776 T37N-R35E 05-31-2002 1440.00
SEC 21: X0, X0XX, XXXX, X0XX
XXX 00: X0, XX, X0XX
SEC 23: SWNE, NW, E2SW, W2SE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91777 Insofar as lease covers: 05-31-2002 600.00
T37N-R35E
SEC 26: X0, X0XX
XXX 00: X0XX
XXX 00: E2NE, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XX XX 34,813-02 T36N-R35E 09-04-2002 640.00
SEC 16: ALL
VALLEY COUNTY, MONTANA
0077004-000 ST MT 34,819-02 T37N-R35E 09-04-2002 640.00
SEC 16: ALL
VALLEY COUNTY. MONTANA
0077008-000 VALLEY COUNTY OF MONTANA Insofar as lease covers: 08-19-2002 320.00 79 359
T37N-R35E
SEC 26: SW
SEC 27: E2SE
SEC 34: E2NE
VALLEY COUNTY, MONTANA
0077011-001 DEER VALLEY RANCH, INC Insofar as lease covers: 08-13-2002 40.00 79 364
T37N-R35E
SEC 10: NWNW
VALLEY COUNTY, MONTANA
0077011-002 XXXX RANCH, INC. Insofar as lease covers: 08-13-2002 40.00 79 362
T37N-R35E
XXX 00: XXXX
XXXXXX XXXXXX, XXXXXXX
0 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
Xxxxx X Xxxxx
0000000-000 XXX XXX-00000 Insofar as lease covers: 05-31-2002 640.00
T37N-R35E
XXX 00: X0XX, XXXX, XXXX
XXX 00: SWNE, NW, N2SW, SESW, SE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91746 Insofar as lease covers: 05-31-2002 360.00
T37N-R35E
XXX 00: X0XX, X0XX
XXX 00: X0XX, X0XX, SESE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91747 Insofar as lease covers: 05-31-2002 440.00
T37N-R35E
SEC 25: X0, X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92348 T36N-R36E 05-31-2002 880.00
SEC 3: S2SE
SEC 10: ALL
SEC 15: X0X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91753 T36N-R36E 05-31-2002 1323.81
SEC 5: SW
SEC 6: XXXX 0,0,0,0, X0XX, XX
SEC 7: XXXX 0,0,0,0, X0X0, XX
SEC 9: E2NE, NW, S2SE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92349 T36N-R36E 05-31-2002 460.68
SEC 18: XXXX 0,0,0,0, XX, X0X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91757 T37N-R36E 05-31-2002 1369.39
SEC 3: XXXX 0,0,0, XXXX, XXXX
SEC 4: XXXX 0,0,0,0, X0X0, XX, X0XX
SEC 9: XX, XXXX, X0XX
SEC 10: SW, N2SE, SWSE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91758 T37N-R35E 05-31-2002 1022.04
SEC 5: XXXX 0,0, X0XX, XX
XXX 0: XXXX 0,0,0,0,0, XXXX, X0XX
SEC 8: W2, SESE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91759 T37N-R36E 05-31-2002 920.00
XXX 00: XXXX, XXXX
XXX 00: NWNE, S2NE, NW, X0
XXX 00: XXXX, X0XX
SEC 25: X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91760 T37N-R36E 05-31-2002 1200.00
SEC 15: X0XX, X0, XX
XXX 00: XXXX, X0XX, XX
SEC 22: X0, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91761 T37N-R36E 05-31-2002 679.99
SEC 17: X0, X0XX
SEC 18: NENE
SEC 19: XXX 0
XXX 00: X0XX, XXXX, X0XX
XXXXXX XXXXXX, XXXXXXX
4 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
0000000-000 XXX MTM-91762 T37N-R36E 05-31-2002 1840.85
SEC 29: X0, X0XX, X0XX
SEC 30: LOTS, 3,4
XXX 00: XXXX 0,0,0,0, X0, X0X0
XXX 00: W2NW, SENW, SW, NWSE
SEC 33: W2NE, NW, N2SW
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91772 T37N-R35E 05-31-2002 1080.00
SEC 1: XXXX, X0XX
SEC 11: ALL
XXX 00: XX, XXXX
XXX 00: N2NE, SENE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91777 Insofar as lease covers: 05-31-2002 200.00
T37N-R35E
XXX 00: XXXX, XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91785 T36N-R36E 05-31-2002 1120.00
SEC 7: NE
SEC 8: ALL
SEC 9: W2NE, SW, N2SE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92350 T36N-R36E 05-31-2002 480.00
SEC 15: X0X0, X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92351 T36N-R36E 05-31-2002 640.00
SEC 17: NE, W2
XXX 00: XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91790 T37N-R36E 05-31-2002 853.95
SEC 2: XXX 0, XXXX, XX
XXX 0: XXX 0, X0XX, XXXX, XXXX, X0XX
XXX 00: XX
XXX 00: N2NW, SENW, SESE
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91791 T37N-R36E 05-31-2002 1053.56
SEC 4: E2SE
SEC 5: XXXX 0,0, X0XX, XX
SEC 8: NE, N2SE, SWSE
SEC 9: XXXX, X0XX, X0XX, XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91792 T37N-R36E 05-31-2002 1372.89
SEC 6: XXXX 0,0, X0XX, XX
SEC 7: X0
XXX 00: XX, X0XX
SEC 18: XXXX, X0XX, SE
SEC 19: NENE, SESE
SEC 20: X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91793 T37N-R36E 05-31-2002 760.00
XXX 00: XXXX
XXX 00: X0X0
XXX 00: X0, XXXX, XXXX
XXX 00: XXXX
XXX 00: X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
0000000-000 XXX MTM-91794 T37N-R36E 05-31-2002 1040.00
SEC 21: XXXX, X0
XXX 00: XXXX, X0XX, XX
XXX 00: X0XX, X0XX
SEC 30: NE, X0XX
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-92352 T37N-R36E 05-31-2002 320.00
SEC 26: X0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXX MTM-91796 T37N-R36E 05-31-2002 1600.00
SEC 27: S2
SEC 28: S2
XXX 00: X0XX, X0XX, XX
XXX 00: ALL
VALLEY COUNTY, MONTANA
0077003-000 ST MT 34,815-02 T36N-R36E 09-04-2002 640.00
SEC 16: ALL
VALLEY COUNTY, MONTANA
0077005-ODD ST MT 34,820-02 T37N-R35E 09-04-2002 640.00
SEC 36: ALL
VALLEY COUNTY, MONTANA
0077006-000 ST MT 34,821-02 T37N-R36E 09-04-2002 640.00
SEC 16: ALL
VALLEY COUNTY, MONTANA
0077007-000 VALLEY COUNTY OF MONTANA Insofar as lease covers: 08-19-2002 318.72 79 355
T36N-R36E
SEC 4: LOTS 3,4
SEC 5: LOTS 1,2,3,4
SEC 6: XXXX 0,0
XXXXXX XXXXXX, XXXXXXX
0000000-000 XXXXXX XXXXXX OF MONTANA Insofar as lease covers: 08-19-2002 607.03 79 359
T37N-R36E
SEC 2: XXX 0, XXXX, XXXX, X0XX
SEC 11: W2NE
SEC 30: XXXX 0,0, X0X0, X0XX
XXXXXX XXXXXX, XXXXXXX
0077009-000 XXXXXXX RANCH, INC T37N-R36E 06-24-2002 1916.17 00 000
XXX 0: LOTS 1,2,3,4, E2W2
SEC 18: XXXX 0,0, X0XX
XXX 00: XXXX 0,0,0, X0X0, X0X0, SENE,
NESE
SEC 20: X0X0, X0X0
X00X-X00X
SEC 13: XXXX, X0XX, X0XX
SEC 23: SENE
SEC 24: NW, E2SW, S2NE, NESE
VALLEY COUNTY, MONTANA
0077010-001 DEER VALLEY RANCH, INC T36N-R36E 08-13-2002 955.06 00 000
XXX 0: XXXX 0,0,0,0, X0XX, XX
XXX 0: XXXX 0,0, X0
XXX 0: XX
XXXXXX XXXXXX, XXXXXXX
0 of 7
Exhibit 'A.1'
Recording
Lease Number Lessor Name Decription Lease Date Gross Acres Book Page
------------- --------------------------- ------------------------------------------ ----------- ----------- ------ -------
0077010-002 XXXX RANCH, INC T36N-R36E 08-13-2002 955.06 00 000
XXX 0: XXXX 0,0,0,0, X0XX, XX
XXX 0: XXXX 0,0, X0
XXX 0: XX
XXXXXX XXXXXX, XXXXXXX
0077010-003 XXXX X XXXX XXX XXXXXX XXXX X00X-X00X 08-21-2002 1275.06 00 000
XXX 0: XXXX 0,0,0,0, X0XX, XX
XXX 0: LOTS 1,2, S2
SEC 5: SE
T37N-R36E
SEC 32: XXXX, XX, X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0077010-004 XXXX RANCH, INC T37N-R36E 08-20-2002 320.00 00 000
XXX 00: XXXX, XX, X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0077010-005 DEER VALLEY RANCH, INC T37N-R36E 08-20-2002 320.00 00 000
XXX 00: XXXX, XX, X0XX, XXXX
XXXXXX XXXXXX, XXXXXXX
0077011-001 DEER VALLEY RANCH, INC Insofar as lease covers: 08-13-2002 1503.36 79 364
T37N-R35E
SEC 1: X0XX, X0XX, XXXX
SEC 2: XXXX 0,0,0,0, X0X0, X0
XXX 00: XX, X0, XX
XXXXXX XXXXXX, XXXXXXX
0077011-002 XXXX RANCH, INC. Insofar as lease covers: 08-13-2002 1503.36 79 362
T37N-R35E
SEC 1: X0XX, X0XX, XXXX
SEC 2: XXXX 0,0,0,0, X0X0, X0
XXX 00: XX, X0, XX
XXXXXX XXXXXX, XXXXXXX
7 of 7
[GRAPHIC OMITTED]
EXHIBIT "B"
Attached to and made a part of that certain Farmout with
Option Agreement, dated December 3, 2003, by and between
EOG Resources, Inc., as Farmor, and PetroSearch Corp., as Farmee
GEOLOGIC REQUIREMENTS
EOG RESOURCES, INC.
IN DRILLING THE TEST WELL(S), LESSEE SHALL:
-------------------------------------------
(i) Test as a prudent operator any formation that either before or after
logging as hereinafter provided appears favorable to Lessor for
the production of oil and/or gas.
(ii) Conduct all operations with approved and accepted practices prevailing
in the area where the well is drilled for xxxxx of similar depth
and testing similar formations.
(iii) Make adequate evaluation and tests to Lessor's satisfaction to
determine if the well is capable of producing oil and/or gas from
any formation encountered. This evaluation shall include, but not be
limited to, a Dual Induction and/or Lateral Log, a BHC Sonic Log and a
Compensated Neutron-Density Log over all zones of interest.
(iv) Afford Lessor, at its sole risk and expense, access to the xxxxxxx
floor and full and free access to the well and the records
thereof at any and all times.
(v) Give Lessor notice, pursuant to the notice provisions of this Lease,
to have a representative present before any testing, coring or
logging of a prospective oil or gas zone, or plugging and abandoning
the well.
(vi) Advise Lessor, in writing, before commencing operations, of the name
and address of the geologist and/or engineer servicing the well.
(vii) Furnish Lessor, without cost, the following reports, data and
information:
DURING THE DRILLING OF THE WELL
-------------------------------
(a) Daily telephone and written reports, giving the nature of
all work done, tests conducted, shows encountered, cores taken,
and depth and formations penetrated, beginning with the date
actual work is commenced at the location and continuing until
initial daily potential has been established or, if a dry hole,
the well has been plugged and abandoned.
(b) Lessor shall have the right to request properly labeled well
cuttings or dry samples (if available) and to receive properly
annotated drilling time charts which are to be taken at intervals
of not more than ten (10) feet from the base of the surface
casing continuously to total depth. Lessor further reserves the
right to slab any cores recovered during drilling operations and
to receive all core analyses prepared by or for Lessee. If Lessor
elects not to slab available cores, Lessee will furnish Lessor
properly labeled core chips taken at one foot intervals from all
cores cut.
(c) Water samples, on request.
(d) Three (3) copies of all forms and reports filed with State
and/or Federal agencies.
Page 1 of 3
UPON COMPLETION OF THE WELL
---------------------------
(e) Three (3) copies of the chronological log and history of the well
(well records and information record).
(f) One (1) immediate fax upon logging and three (3) final prints of
all logging surveys undertaken.
(g) A certified copy or photoprint of the plugging record required by
the governmental office or body having jurisdiction over the
premises, if the test well is a dry hole.
(h) Three (3) copies of any core analysis and three (3) copies of any
core report.
(i) Three (3) copies of any bottom hole survey pressure taken,
(j) Three (3) copies of any directional survey, if run.
(k) Three (3) copies of drillstem test charts and analysis, if taken.
(l) Three (3) copies of gas-oil ratio test, if taken.
(m) Three (3) copies of open flow potential and shut-in test, if gas
well.
(n) Three (3) copies of any electrical log analysis.
(o) Three (3) copies of geologic report, if performed.
(p) Three (3) copies of all forms and reports filed with State and/or
Federal agencies.
(q) One (1) copy of the open-hole data in digital LAS format, on a
3.5" disk.
Prior to the commencement of operations and after completion of any well as a
well capable of producing oil or gas, all notices shall be delivered as provided
in Section 19 of this Lease.
Upon the commencement of drilling operations, all notices and reports shall be
made to:
One (1) copy sent to: One (1) copy sent to:
EOG Resources, Inc. EOG Resources, Inc.
000 00xx Xxxxxx, Xxxxx 0000X P.O. Box 4362
Xxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Xxx Xxxxxxxx Attn: Reservoir Engineering, Xxx Xxxxxx
(000) 000-0000 (fax for logs)
One (1) copy sent to:
EOG Resources, Inc.
X.X. Xxx 000
0000 Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Page 2 of 3
Phone daily drilling reports to:
Attention: Xxxx Xxxxxx
Phone: (000) 000-0000
Fax daily drilling reports to:
Attention: Xxxx Xxxxxx
Phone: (000) 000-0000
Notification for logging, testing, coring, etc.
Name: Xxx Xxxxxxxx
----------------------------------
Office Phone: (000) 000-0000 Home Phone: (000) 0000000
-------------------------- --------------------------
or
Name: Xxxx Xxxxxx
---------------------------------------------------------------------------
Office Phone: (000) 000-0000 Home Phone: (000) 000-0000
-------------------------- ------------------------------
Page 3 of 3
EOG RESOURCES
EOG RESOURCES, INC.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxx, XX 00000
(000) 000-0000
Fax: (000) 000-0000
August 31, 0000
Xxxxxxxxxxx Xxxxxxxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Mr. Xxxx Xxxxxxx
President
RE: Amendatory Letter
Farmout with Option Agreement
Starbuck Prospect
Xxxxxxxx and Valley Counties, Montana
Gentlemen:
Reference is made to that certain Farmout with Option Agreement dated
December 3, 2003, by and between EOG Resources, Inc., as Farmor, and Petrosearch
Corporation, as "Farmee," hereinafter referred to as "Said Agreement."
Said Agreement is hereby amended as follows:
Article III.A, line 1: Change the date "September 1, 2004" to "December 1,
2004."
Except as amended hereunder, all of the terms and conditions of Said
Agreement are hereby said to be in full force and effect.
Please signify your acceptance to the foregoing, by dating, signing and
returning the duplicate letter to the attention of the X. X. Xxxxx, at the
letterhead address.
EOG RESOURCES, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
-------------------------------
J. Xxxxxxx Xxxxxxx
Title: Agent and Attorney-in-Fact
Accepted and agreed to this 31st day of August, 2004
---- ------
PETROSEARCH CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
------------------
Title: President
-------------------
energy opportunity growth
EOG RESOURCES
EOG RESOURCES, INC.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxxx, XX 00000
(303) 572-900O
Fax: (000)000-0000
April 1,2005
Petrosearch Energy Corporation
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxx X. Xxxxxx
Vice President
RE: Second Amendatory Letter
Farmout with Option Agreement
Starbuck Prospect
Xxxxxxxx and Valley Counties, Montana
Gentlemen:
Reference is made to that certain Farmout with Option Agreement dated
December 3, 2003, as amended by Letter Agreement dated August 31, 2004, by and
between EOG Resources, Inc., as Farmor, and Petrosearch Corporation, as
"Farmee," hereinafter referred to as "Said Agreement."
Said Agreement is hereby amended as follows:
Article III.A, line 1: Change the date "December 1, 2004" to "September 15,
2005."
Article III.A: Add the following paragraphs:
"Before May 15, 2005, Farmee shall, at its sole cost, risk and expense,
prosecute and complete a micromagnetic survey ("Survey") over all or a portion
of the Contract Acreage. Farmee and/or its contractor shall be responsible for,
and shall defend, indemnify and hold Farmor and its successors and assigns,
harmless from any and all liability or injuries to property or persons arising
out of, caused by, or related to such operations, including reasonable costs and
attorney's fees.
Upon completion of the Survey Farmee shall, as soon as practical, provide
Farmor, free of cost and any restrictions on its use, all data, including any
supporting data, relating to the Survey. Within thirty (30) days of completion
of the Survey, but not later than July 1, 2005, Farmee shall advise Farmor of
its election to proceed with the drilling of the Test Well. In the event Farmee
elects to drill the Test Well it shall advise Farmor of the drilling depth and
the target formation(s), ("Contract Depth.") In no event may Contract Depth be
above the base of the Eagle Shale.
Article III.B: Replace the first sentence in its entirety with the following:
"Farmee shall prosecute drilling of the Test Well with due diligence and in a
good and workmanlike manner to Contract Depth."
ENERGY OPPORTUNITY GROWTH
Article XI: Add the following sentence:
"Notwithstanding the foregoing, for a period beginning January 1, 2005 and
ending when the Test Well reaches Contract Depth Farmee shall bear one hundred
percent (100%) of Farmor's share of delay rentals which may become due and
payable concerning the Contract Acreage during the term of this Agreement.
Concurrent with deliver of a fully executed original hereof, Farmee shall remit
to Farmor a company check in the amount of $20,116.60 covering delay rentals due
and payable on Contract Acreage for the period beginning January 1, 2005 and
ending June 30, 2005."
Article XIV: Add the following paragraph:
"If Farmee fails to prosecute the micromagnetic survey as herein provided within
the time allowed this Agreement shall terminate in its entirety, and
notwithstanding anything in this Agreement to the contrary, any interest which
Farmee might otherwise be entitled to earn hereunder or in or to the Contract
Acreage shall terminate and revert to Farmor."
Except as amended hereunder, all of the terms and conditions of Said
Agreement are hereby held to be in full force and effect.
Please signify your acceptance to the foregoing, by dating, signing and
returning the duplicate letter to the attention of the X. X. Xxxxx, at the
letterhead address.
EOG RESOURCES, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
--------------------------
J. Xxxxxxx Xxxxxxx
Title: Agent and Attorney-in-Fact
Accepted and agreed to this 12 day of April, 2005
--
PETROSEARCH ENERGY CORPORATION, A NEVADA CORPORATION
successor in interest to Petrosearch Corporation, a Texas Corporation
By: /s/ Xxx X. Xxxxxx
------------------------
Xxx X. Xxxxxx
Vice President
