July 11, 2007
Exhibit
10.1
July
11,
2007
Clarion
Finance Pte Ltd.
00
Xxxxxxx Xxxxx #00-00
Xxx
Xxxxx, Xxxxxxxxx 000000
|
RE:
|
Powder River Basin Xxxxx Project Area |
| T45-48N, R68-71W, 6th PM | |
| Campbell, Crook, Xxxxxxx & Weston Counties, Wyoming |
Gentlemen:
By
virtue
of that certain letter agreement with American Oil and Gas, Inc. (“AOGI”), dated
July 22, 2005, as amended by a letter agreement dated July 14, 2006 (as amended,
the “AOGI Agreement”) attached hereto as Exhibit “A,” Tatonka Oil and Gas, Inc.
(“Tatonka”) is the owner of interests in certain oil and gas leases described on
Exhibit “B” attached hereto (collectively, the “Leases”) covering or affecting
the lands described in Exhibit “B” (collectively, the
“Lands”). Clarion Finance Pte Ltd. (the “Company”) wishes to acquire
a portion of Tatonka’s interest in the Leases and Lands, and to participate with
Tatonka and with AOGI and North Xxxx, LLC (“North Xxxx”) in the exploration and
development of the Leases and Lands. This letter agreement (this “Agreement”),
when executed by the Company, shall evidence the agreement between the parties
by which the Company shall acquire from Tatonka the right to earn 50% of the
interests owned by Tatonka in the Leases and Lands, subject to the terms and
conditions set forth below.
1.
Acquisition of Interest in Leases. At the Closing (as herein
defined), the Company will pay Tatonka, by certified funds or by wire transfer
to Tatonka’s designated account, the sum of $339,453.60 (the “Lease Acquisition
Fee”) and Tatonka shall execute and deliver to the Escrow Agent (as herein
defined) an assignment in the form of Assignment, Xxxx of Sale and Conveyance
attached hereto as Exhibit “C” (the “Assignment”) assigning to the Company 50%
of Tatonka’s right, title and interest in and to the Leases and Lands and to the
AOGI Agreement (which the Company shall ratify and confirm upon its receipt
of
the Assignment). The instructions for wiring the Lease Acquisition
Fee to Tatonka are as follows:
Credit
to
Tatonka Oil & Gas Company, Inc.
0000
Xxxxxxxx Xxxxxx, Xxxxx 0, 00xx Xxxxx
Xxxxxx,
XX 00000
(000)
000-0000
TO:
Colorado
Business Bank
000
00xx
Xxxxxx
Xxxxxx,
XX 00000
(000)
000-0000
Routing
#000000000
Account
#
0000000
2.
Escrow Agent. The Assignment shall be delivered by
Tatonka to Kendor X. Xxxxx (the “Escrow Agent”) of the law firm of Xxxxxxx
Xxxxxxxx Xxxx & Xxxxxx, P.C., who shall hold such Assignment in escrow until
he receives written instructions to deliver such Assignment to the Company
or to
return the Assignment to Tatonka pursuant to Section 5
below.
3.
Participation in Commitment Xxxxx. AOGI, North
Xxxx and Tatonka have agreed to spend $15,000,000 to drill vertical and
horizontal xxxxx on the Leases and Lands with the target depth the Xxxxx
formation (the “Commitment Xxxxx”). The Company hereby agrees to pay
to the operator that drills the Commitment Xxxxx (the “Operator”) $9,000,000,
representing Tatonka’s 60% share of the costs to drill and complete the
Commitment Xxxxx. To the extent that Tatonka’s 60% share of the costs
to drill and complete the Commitment Xxxxx exceeds $9,000,000, the Company
shall
have no obligation to pay such excess costs and Tatonka shall pay the Operator
its share of such costs in excess of $9,000,000.
4.
Closing. The closing of the transaction between the
parties (the “Closing”) shall be held at Tatonka’s offices at 10:00 a.m., MDT,
on July 11, 2007 (the “Closing Date”). At the Closing, the Company
shall pay Tatonka the Lease Acquisition Fee and Tatonka shall deliver the
Assignment to the Escrow Agent.
5.
Release of the Assignment from Escrow. If the Company
satisfies the requirements of Section 3 above, Tatonka shall instruct the Escrow
Agent to deliver the Assignment to the Company. If the Company fails
to satisfy the requirements of Section 3, the Company shall instruct the Escrow
Agent to return the Assignment to Tatonka.
6.
Interests In Revenues From Commitment Xxxxx Until
Payout. Until Payout (as defined in Section 8 below) of the
Commitment Xxxxx, the Company shall be entitled to receive 45% of the net
revenues from the sale of production from such Commitment Xxxxx and Tatonka
shall be entitled to receive 15% of the net revenues from the sale of production
from the Commitment Xxxxx.
7.
Interests in Revenues From Commitment Xxxxx After
Payout. Following Payout of the Commitment Xxxxx, the Company and
Tatonka shall each be entitled to receive 30% of the net revenues from the
sale
of production from the Commitment Xxxxx. In addition, each party
shall be responsible for 30% of the operating costs of the Commitment Xxxxx
both
before and after Payout and shall be responsible for 30% of the costs and shall
be entitled to 30% of the net revenues attributable to drilling, completing
and
operating any other xxxxx drilled on the Leases and Lands pursuant to the
Operating Agreement referred to in Section 7.
8.
Payout. For all purposes hereunder, the term “Payout” shall
mean that time, if ever, when the Company shall have recovered from the proceeds
of 45% of production from the Commitment Xxxxx, after deducting the lessor’s
royalty and any overriding royalties and similar burdens on production with
respect to which the Leases and Lands are encumbered on the date of this
Agreement, and all applicable taxes, all of the costs of the Company incurred
in
drilling, testing, completing and equipping the Commitment
Xxxxx. Within sixty (60) days following completion of the last of the
Commitment Xxxxx, the Company shall furnish Tatonka with a detailed statement
of
the actual costs incurred in the drilling, testing, completing and equipping
of
the Commitment Xxxxx.
9.
Operating Agreement In the AOGI Agreement, Tatonka and AOGI
agreed to enter into a mutually agreeable Joint Operating Agreement (the “JOA”)
covering the Leases and Lands. The Company also agrees to enter into
the JOA.
10. Area
of Mutual Interest. In the AOGI Agreement, Tatonka and AOGI
created an area of mutual interest (the “AMI”) encompassing Townships 45-49
North, Ranges 68-71 West, 6th P.M., Xxxxxxxx
County, Wyoming. The Company hereby agrees to be bound by the terms
and conditions governing the AMI as if it were an original party to the AOGI
Agreement.
11. Notices. Except
as herein otherwise expressly provided, any notice or other communication
required or permitted hereunder shall be in writing and shall be deemed given
only when received by the party to whom the same is directed as
follows:
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Tatonka
Oil and Gas, Inc.
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0000
Xxxxxxxx Xxxxxx
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||
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Tower
0, 00xx
Xxxxx
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Xxxxxx,
XX 00000
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Attn:
Xxxxx X. Xxxxx
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Telephone:
(000) 000-0000
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Fax:
(000) 000-0000
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E-Mail:
XXxxxx@xxxxxxxxxx.xxx
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Clarion
Finance Pte Ltd.
|
||
|
00
Xxxxxxx Xxxxx #00-00
|
|
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Xxx
Xxxxx, Xxxxxxxxx 000000
|
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Attn:
_____________________
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Telephone:
________________
|
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Fax:
______________________
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E-Mail:
___________________
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||
12. Term. The
term of this Agreement (the “Term”) shall commence as of the date hereof and it
shall end the later of (i) the termination of the AOGI Agreement, (ii) the
termination of the JOA, or (iii) when one of the parties, or its successors
and
assigns, no longer own an interest in the Leases and Lands.
13. Amendments. No
amendments or other changes to this Agreement shall be effective or binding
on
either of the parties unless the same shall be in writing and signed by both
parties.
14. Applicable
Law; Venue. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Colorado, without reference to
its
conflict of laws provisions. Forum and venue shall be exclusively in
state or federal court in Denver, Colorado.
15. Assignability;
Binding on Successors. Either party may assign its rights and/or
obligations under this Agreement, provided that it provides notice of such
assignment to the other party. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and assigns.
16. Severability. If
a court of competent jurisdiction determines that any clause or provision of
this Agreement is void, illegal or unenforceable, the other clauses and
provisions of the Agreement shall remain in full force and effect, and the
clauses and provisions that are determined to be void, illegal or unenforceable
shall be limited so that they shall remain in effect to the extent permissible
by law.
17. Counterparts. This
Agreement may be executed by the parties in counterparts, each of which shall
be
deemed to be an original instrument, but which together shall constitute one
and
the same instrument. Execution may be evidenced by faxed signatures
with original signature pages to follow promptly.
18. Relationship
of Parties. This Agreement shall not create, and shall not be
construed as creating, a mining or other partnership or association, nor does
this Agreement render the parties liable as partners. The liability
of the parties shall be several and not joint or collective.
19. No
Third Party Beneficiaries. Except for AOGI and North Xxxx, this
Agreement is not intended to accrue to the benefit of any third
party.
20. Entire
Agreement. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the subject matter
hereof. This Agreement supersedes all prior oral and written
discussions, agreements and understandings relating to such subject
matter.
If
you
agree that the foregoing accurately reflects the agreement between the parties,
please so indicate by signing and returning to the attention of the undersigned
the enclosed duplicate original of this Agreement.
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Sincerely,
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|||
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TATONKA
OIL & GAS, INC.
|
|||
| By: /s/ XXXXX X. XXXXX | |||
|
Xxxxx
X. Xxxxx
|
|||
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President
and Chief Executive Officer
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|||
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AGREED
TO AND
|
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ACCEPTED
this 12th
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day
of July, 2007
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CLARION
FINANCE PTE LTD.
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By:
/s/ XXXXX XXXXX
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Name:
Xxxxx Xxxxx
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Its: Principal
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