Exhibit 10.1
New Frontier Energy, Inc. 0000 X. Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000
Tel: 000-000-0000 Fax: 000-000-0000
July 11, 2006
LRS Group, LLC
0000 X Xxxxxx Xx
Xxxxxxxxxx, Xxxxxxxx 00000
X.X. Xxxxxxx Manager
Dear Xx. Xxxxxxx:
This Letter agreement outlines the terms and conditions under which New Frontier
Energy, Inc. (hereinafter referred to as NFEI) shall license approximately 335
miles of 2D seismic data from LRS Group, LLC and R & R Exploration Fund, LLC
(hereinafter collectively referred to as LRS & R & R); the data identifies over
150 drillsite locations in the Denver Julesberg Basin.
The following points summarize the understanding reached by the parties:
1. SEISMIC LICENSE LRS and R & R represent and warrant that they are the
owners of approximately 335 miles of 2D seismic data within the Area of
Mutual Interest as outlined below and as the licensor have the
authority to grant participation and license rights to NFEI which are
set forth in the Seismic Data Participation And License Agreement
hereby attached as Exhibit "A" of this Letter agreement.
2. RIGHTS AND DUTIES The parties agree that the principals of LRS
(Xxxxxxx, Xxxxxxxx and Xxxxxxxxxxxxx) have contributed their rights,
title and interest in the data to LRS and that LRS has the authority to
act in their behalf and that X.X. Xxxxxxx is the managing member of LRS
and has the authority to act in its behalf.
3. PAYMENT TERMS NFEI hereby agrees to pay LRS and R & R $650,000 to
license the aforementioned seismic data within the Area of Mutual
Interest. NFEI shall pay said $650,000 as follows: $325,000 upon
execution of this Letter Agreement, $162,500 six months from the
execution date of this Letter agreement, and $162,500 one year from the
execution date of this Letter Agreement.
4. EXCLUSIVE RIGHT NFEI is hereby granted from LRS and R & R, the
exclusive right to work the seismic data in the subject AMI for the
purpose of identifying drilling locations. LRS and R & R, X.X. Xxxxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxxxxxxx, their affiliates, related
corporations, companies, partnerships, or any other affiliated person
or entity. The exclusive right will not restrict the above parties from
performing potential new shooting and reprocessing within the AMI.
5. AREA OF MUTUAL INTEREST The parties hereby establish an Area of Mutual
Interest (AMI) located in the following Townships: Township 0 Xxxxx
Xxxxx 00X, Xxxxxxxx 0 Xxxxx Xxxxxx 62,63,64,65 West, Township 5 North
Ranges 59, 60, 61, 62, 63, 64, 65 West, Township 6 North Ranges 56, 57,
58, 59, 60, 61, 62, 63, 64, 65 West, Township 7 North Ranges 56, 57,
58, 59, 60, 61, 62, 63, 64, 65 West, Township 8 North Ranges 58, 59,
60, 61, 62, 63, 64, 65 West, Township 9 North Ranges 58, 59, 60, 61,
62, 63, 64, 65 West, Township 10 North Ranges 58, 59, 60, 61, 62, 63,
64, 65, West
6. ASSIGNMENT OF ROYALTIES Subject to NFEI's evaluation of the data, NFEI
shall begin acquiring land for potential drillsites within the AMI. LRS
shall receive an assignment of 5% of 8/8ths overriding royalty interest
for each 87.5% NRI lease acquired within the AMI. In the event that the
NRI of the lease(s) acquired is less than 87.5%, then LRS's overriding
royalty shall be scaled back proportionally. However, in no case shall
the overriding royalty interest be less than 3% for any lease acquired
within the AMI. The stated AMI shall remain in force and effect as long
as there are active leases within the boundaries of the AMI.
7. INITIAL TEST WELL NFEI shall drill one initial test well within the
first year of this agreement and two additional xxxxx within the first
thee years of this Agreement. Thereafter, NFEI shall either drill at
least one well per year, shoot additional seismic or acquire additional
acreage within the AMI in order to keep this agreement in force and
effect. In the event NFEI fails to drill the initial test well or
fulfill any of the additional obligations stated in Section 6 this
Agreement, then this agreement shall terminate on the anniversary date
of the agreement in which the triggering event occurs unless extended
my mutual written consent of the parties to this agreement.
8. ADDITIONAL SEISMIC Any additional seismic data shot or acquired within
the AMI during the term of this agreement shall be the sole property of
NFEI. R & R agrees to use its best efforts to assist in the
coordination and implementation of the seismic shooting and NFEI agrees
to compensate R & R commensurate with R & R's normal fee structure in
effect at the time.
9. GOVERNING LAW This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of
Colorado, without reference to the choice of law principles thereof.
This Agreement shall be subject to the exclusive jurisdiction of the
courts of the state of Colorado. The parties to this Agreement agree
that any breach of any term or condition of this Agreement shall be
deemed to be a breach occurring in the State of Colorado by virtue of
a failure to perform an act required to be performed in the State of
Colorado and irrevocably and expressly agree to submit to the
jurisdiction of the courts of the State of Colorado for the purpose of
resolving any disputes among the parties relating to this Agreement or
the transactions contemplated hereby. The parties irrevocably waive,
to the fullest extent permitted by law, any objection which they may
now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in the State
of Colorado, and further irrevocably waive any claim that any suit,
action or proceeding brought in the State of Colorado has been brought
in an inconvenient forum.
If the foregoing meets with your approval please so indicate by signing in the
space provided below.
Sincerely,
/s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
President & CEO
Approved this 7th day of July, 2006 by X.X. Xxxxxxx Manager LRS Group, LLC
/s/ X.X. Xxxxxxx
--------------------
X.X. Xxxxxxx Manager
Approved this 7th day of July, 2006 by R & R Exploration Fund, LLC
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxxx, Managing Partner
R & R EXPLORATION FUND, LLC
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx XX 00000
July 6, 2006
New Frontier Energy, Inc.
Attention: Xxxx X. Xxxxx
P. 0. Xxx 000
Xxxxxxxxx, XX 00000-0000
RE: Seismic License Agreement Exhibit A
Gentlemen:
R & R Exploration Fund, LLC (R&R) grants right of access to New Frontier Energy,
Inc. (NFEI) of certain geophysical data obtained in Weld and Xxxxxx Counties.
Colorado as shown on the attached map and under terms outlined below:
Description of Seismic Data:
Area, Township and Range; Denver Julesberg Basin Area
T3-10N, R65W to T3-10N, R58W
Line No. SP Range Line No. SP Range...
--------------------------------------------------------------------
3B SP 5-590 8 SP 415-2110
3 SP 5-820 10 SP 5-1925
4 SP 5-1245 10A SP 5-515
4B SP 255-625 10C SP 105-240
5 SP 5-1025 11 SP 5-205
5 Ext SP 1550-2260 11 SP 600-1480
6 SP 5-2030 13 SP 105-1520
7 SP 5-2110
1. R & R represents that it has the right and authority to license the
above named seismic data to NFEI and that such seismic data was obtained for R &
R by either its own crew of by a competent geophysical contractor using normal
operating procedures, but R & R does net guarantee the accuracy, quality, or
suitability of the seismic data. No warranties, express or implied shall apply
to this data.
2. R & R agrees to grant right of access to NFEI to the seismic
information obtained from all of the approximate 335 miles of CDP data as
selected by NFEI and shown on the map hereby attached as Exhibit "A".
3. Upon the execution of this agreement,) R & R agrees to furnish to NFEI
blacklines of the processed sections and shotpoint location maps designated by
XXXX.
0. XXXX shall have rights to obtain copies of available raw data with
respect to the approximate 335 miles of data, such as survey notes, observers
sheets, magnetic tapes and survey floppy for a period of one (1) year from the
date of this agreement. This agreement is contingent upon the deliverability of
all information necessary to reprocess the said data, should, any part of it be
unavailable this agreement shall be void. NFEI shall be responsible for all
costs incurred for reproduction of said seismic data.
5. Immediately following the receipt of the materials referred to in
paragraph 3 above, NFEI will agree to the terms of the contract with NFEI and
LRS,LLC dated 07/07/06 covering the 335 miles of seismic data in the Denver
Jnlesberg Basin.
6. NFEI agrees that said data, and copies thereof shall be for its own
internal use only, and that said data shall not be sold, traded, disposed of,
encumbered or liened, or otherwise made available to other parties except under
the following conditions:
a. Said data may be shown to, but not released to or be copied by, a
consultant for analysis and interpretation only if such
consultant agrees that said data and the consultant's analysis
and interpretation made from said data will not be divulged to
others.
b. Said data may be shown to, but not released to or be copied by,
other parties in the event NFEI wisbes to interest other parties
to enter an agreement to explore, operate,, or develop the area
involved, In such event such other patties shall agree that said
data is confidential and is not to be divulged to others.
7. In the event of a merger or complete buyout of NFEI, MFEI shall be
allowed to transfer and assign its rights or obligations under this agreement,
to the surviving entity. Any asset sales, or acquisitions less than whole, shall
require consent by R & R, such consent could be conditioned on a transfer fee.
8. If NFEI should reprocess the data, NFEI shall continue to display R &
R's name on the new reprocessed sections License Agreement
9. Except as provided in paragraph 6 above, R & R shall continue to have
the sole and exclusive right to license, leases sell trade, loan, use or
otherwise make available said seismic data and information to other parties.
10. R &R has taken die position that the transfer of seismic data pursuant
to this agreement does not constitute a transaction on which federal, state or
local transaction taxes are imposed, including, but not limited to sales tax,
use tax, or transfer tax. However, if federal, state or local transaction taxes
are imposed on this transaction at any time, NFEI hereby agrees to indemnify,
reimburse and hold harmless R & R from any liability for such tax including any
interest or penalties which are determined to be due and owning.
If the foregoing sets forth your understanding of our agreement, please so
indicate by accepting this letter in the space provided.
ACCEPTED and AGREED to this ACCEPTED and AGREED to this
7th day of July, 2006 7th day of July, 2006
R & R Exploration Fund, LLC New Frontier Energy, Inc.
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxx
------------------------------------ ------------------------
Xxxxxxx X. Xxxxxxxx, Managing Partner Xxxx X. Xxxxx, President
