(XXXXXX OIL & GAS CO. LETTERHEAD)
P.O. Box 1068
Casper, WY 82602
(000) 000-0000
May 26, 1995
Double Eagle Petroleum & Mining Company
ATTN: Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xxxx:
This letter, when accepted by Double Eagle Petroleum & Mining Company ("Double
Eagle"), will be an agreement for Xxxxxx Oil & Gas Company ("Xxxxxx") to sell
and Double Eagle to buy certain properties of Xxxxxx on the terms set forth
below.
1. Xxxxxx agrees to sell and Double Eagle agrees to buy all of Xxxxxx'
right, title and interest in and to all oil and gas leases and overriding
royalty interests in following lands located in Sweetwater County, Wyoming:
Township Range
-------- -----
21N 111W
21N 112W
22N 111W
23N 110W
23N 111W
24N 110W, Except Section 32
and an undivided one-half of the interest owned by Xxxxxx in Section
32, T24N, R110W prior to the Farmout Agreement dated September 8, 1994
between Xxxxxx and Double Eagle covering the 20-32 Well located in the
NE/4 of that section ("Farmout Agreement")
(the "Subject Interests"), and all privileges and rights appurtenant to the
Subject Interests; together with all of Seller's corresponding right, title and
interest in and to and under or derived from all presently existing and
effective unitization, pooling and communitization agreements, declarations and
orders to which the Subject Interests are committed, and the properties and the
units created thereby (including but not limited to all units formed under
orders, regulations, rules or other official actions of any federal state or
other government agency having
Double Eagle Petroleum & Mining Company
May 26, 1995
Page 2
jurisdiction) to the extent they are attributable to and allocable to the
Subject Interests (the "Pooled Interests"); EXCEPTING AND RESERVING to Seller a
concurrent right, title and interest to such contracts, agreements and
instruments to the extent attributable and allocable to any rights and interests
retained by Seller in Section 32, T24N, R110W and in any lands and depths not
described above;
2. The parties hereby cancel and nullify the Farmout Agreement in its
entirety.
3. The purchase price to be paid by Double Eagle shall be $71,300 cash and
350,000 shares of Double Eagle stock, subject to a provision and restricting
sale of the stock for a period of two years from the date of issuance.
4. The effective date of the sale shall be May 31, 1995. All production
from and proceeds attributable to the Subject Interests or Pooled Interests as
well as ad valorem, production and severance taxes on oil and gas production
prior to the effective date shall be pro rated as of the effective date. Xxxxxx
shall be entitled to all production and proceeds attributable to the Subject
Interests or Pooled Interests prior to the effective date, while Double Eagle
shall be entitled to all oil and gas produced from the Subject Interests or
Pooled Interests subsequent to the effective date.
5. Notwithstanding the allocation of production provided in Section 4,
Purchaser acknowledges and agrees to the following regarding possible gas
imbalances affecting the Subject Interests or Pooled Interests:
(a) Double Eagle has made an independent investigation into any
gas imbalances (including any underproduced gas or
overproduced gas) and has taken such imbalances into
consideration in the purchase price.
(b) Gas underproduction: In the event Xxxxxx is underproduced as
to any well(s) included in the Subject Interests or Pooled
Interests, Double Eagle agrees not to hold Xxxxxx liable for
such underproduction. Xxxxxx, however, agrees that if closing
occurs, Double Eagle is hereby assigned all of its contractual
rights to make up such underproduction.
(c) Gas overproduction: In the event Xxxxxx is overproduced as to
any well(s) appurtenant to the Subject Interests or Pooled
Interests, Double Eagle acknowledges and agrees that its share
of gas from any such overproduced well(s) included in the
Subject Interests or Pooled Interests may at some
Double Eagle Petroleum & Mining Company
May 26, 1995
Page 3
point be curtailed by underproduced working interest owner(s).
The parties agree that Xxxxxx shall not be liable to Double
Eagle in the event such curtailment occurs, there shall be no
adjustment to the Purchase Price if Xxxxxx is overproduced,
and Double Eagle shall accept the Subject Interests or Pooled
Interests subject to any obligations created by such
overproduction.
6. Closing shall take place in the offices of Double Eagle on or before
June 15, 1995. At closing, Xxxxxx will execute and deliver to Double Eagle an
assignment of the Subject Interests in a form mutually acceptable to both
parties. Double Eagle will pay Xxxxxx $71,300 in cash, and issue to Xxxxxx
350,000 fully paid and non-assessable, restricted shares of common stock in
Double Eagle. Xxxxxx agrees to execute federal form assignments and such other
instruments as are necessary to carry out the intent of this agreement.
7. If closing occurs, Double Eagle hereby agrees and shall agree, in
writing in the instruments conveying the Subject Interests, effective May 31,
1995, to take the Subject Interests subject to and to assume, perform, pay for
and comply with, all of the provisions, duties, liabilities and obligations
(express or implied) that relate to or are attributable to the Subject Interests
or Pooled Interests, whether existing as of the effective date or later arising,
including, but not limited to the following, insofar as they relate to or
pertain to the Subject Interests or Pooled Interests and are binding upon
Xxxxxx: all of the terms and conditions of the leases, agreements, contracts and
instruments described as pertaining to the Subject Interests or Pooled
Interests; all valid unit, pooling and communitization agreements or orders; all
valid and existing lease burdens (including, but not limited to, royalties,
overriding royalties, production payments, net profits interests, carried
working interests or other burdens); all operating agreements; all farmin and
farmout agreements; all area of mutual interest agreements; all preferential
purchase rights, consent to assignment requirements and reassignment
obligations; all other contracts, agreements and instruments; and all duties
imposed by governmental law, rule or regulation.
8. Xxxxxx will specially warrant the title to the Subject Interests to be
free from all liens and encumbrances created by, through or under Xxxxxx, but
not otherwise, except for operating agreements, farmouts, communitization,
pooling, unitization or other similar agreements.
9. Xxxxxx will be entitled to nominate at least one new director to the
board of Double Eagle whose election Double Eagle and its current directors will
recommend and support. In the event of any resignation or retirement of any
current directors, or the addition of a sixth
Double Eagle Petroleum & Mining Company
May 26, 1995
Page 4
director, Xxxxxx will be entitled to nominate a director, whose election Double
Eagle will recommend and support.
If the foregoing correctly sets forth our understanding, please execute and
return to Xxxxxx one copy of this letter.
Sincerely yours,
Xxxxxxx X. Xxxxx
President
WNH/sb
AGREED TO AND ACCEPTED THIS 30th day of May, 1995.
DOUBLE EAGLE PETROLEUM & MINING COMPANY
By
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