EXPLORATION AGREEMENT
This Agreement is made and entered into this 1st day of November, 1997, by
and between PARALLEL PETROLEUM CORPORATION ("Parallel"), XXX-XXX PRODUCTION
COMPANY ("Xxx-Xxx"), TAC RESOURCES, INC. ("TAC"), ALLEGRO INVESTMENTS, INC.
("Allegro"), (said Parties being sometimes hereinafter collectively referred to
as "Parallel/Xxx- Xxx"), BETA OIL & GAS, INC. ("Beta"), XXXXX OIL & GAS COMPANY
("Xxxxx"), XXXXX FINANCIAL SERVICES, INC. ("Xxxxx"), and FOUR-WAY TEXAS, L.L.C.
("Four-Way") (said parties being sometimes hereinafter collectively referred to
as "Beta/Xxxxx");
WITNESSETH:
WHEREAS, Parallel/Xxx-Xxx have identified the lands outlined on the map
attached as Exhibit "A" hereto, except the lands and depths covered by the
Leases described on Exhibit "B" hereto (the "Excluded Lands") , as an area that
they desire to jointly explore for the production of oil and gas;
WHEREAS, Parallel/Xxx-Xxx have acquired the Leases and Seismic Options
(as those terms are defined below) described in Exhibits "C-1" and "C-2" hereto
(such Leases and Options being collectively referred to as the "Existing Leases
and Options") covering the interests in the lands described in such agreements;
WHEREAS, Parallel/Xxx-Xxx desire to conduct 3-D Seismic Operations
across most of the Contract Lands; and
WHEREAS, Beta, Xxxxx, Xxxxx and Four-Way desire to acquire the
undivided interests in the Existing Leases and Options and participate in the
3-D Seismic Operations to be conducted by Parallel/Xxx-Xxx, all as described
below;
NOW, THEREFORE, in consideration of the premises, the mutual covenants,
agreements and obligations set forth herein, and the mutual benefits to be
received hereunder, the Parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings designated below:
1.1 "3-D Seismic Operations" means all operations which are necessary
to produce a three-dimensional seismic data grid over the portion of the
Contract Lands on which the Parties conduct such operations, including the
processing and interpretation of such data.
1.2 "Contract Lands" shall mean the lands lying within the area
outlined by the bold, solid line on Exhibit "A" hereto, except the Excluded
Lands; provided, however, the "Contract Lands" may be enlarged or contracted to
the same extent that all of the Parties agree to expand or contract the 3-D
Seismic Operations to be conducted pursuant to Section 4.2 hereof.
1.3 "Existing Leases and Options" means those Leases and Seismic
Options (as such terms are defined below) which are described in Exhibits "C-1"
and "C-2" hereto, including any such Leases and Options which are renewed or
extended pursuant to Article 2.3 hereof.
1.4 "Initial Interest" means a Party's initial interest hereunder as
set forth in Article 3.1 hereof.
1.5 "Jointly-Owned Lease" means a Lease (as defined below) in which two
or more of the Parties own an interest pursuant to the terms of this Agreement.
1.6 "Lease" means oil and gas lease, oil, gas and mineral lease,
unleased mineral interest, or sublease thereof, operating rights or other rights
or partial interest therein, which authorize the owner thereof to explore any
portion of the Contract Lands for (and/or produce) oil and/or gas therefrom, and
the right to acquire any of the foregoing. This term also includes top leases,
farmout agreements or any other type of agreement under which the right to
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explore and/or develop a portion of the Contract Lands can be earned including
Seismic Options (as defined below).
1.7 "Lease Burden" means any production sale contract, lien,
encumbrance, royalty, overriding royalty interest, net profits interest,
production payment, carried interest, reversionary working interest or other
charge upon a leasehold interest or the production therefrom.
1.8 "Net Mineral Acres" are calculated by multiplying the undivided
interest in the minerals covered by a Lease or Seismic Option times the number
of gross acres covered by such Lease or Seismic Option times a Party's undivided
interest in such Lease or Seismic Option.
1.9 "Party" means either Parallel, Xxx-Xxx, TAC, Allegro, Beta, Xxxxx,
Xxxxx or Four- Way or any other person or entity which hereafter becomes a party
hereto or is otherwise subject to the terms hereof.
1.10 "Proportionate share", except as otherwise provided for
hereinbelow, shall be calculated by dividing a Party's Initial Interest
percentage by the aggregate of the Initial Interests of all of the Parties who
are to share an interest or an obligation pursuant to the terms hereof. In
circumstances where one or more Parties do not participate in a project or
acquisition, "proportionate share" shall be determined with reference to the
Parties who participate in such project or acquisition.
1.11 "Prospect" means an area, designated as a Prospect pursuant to
Article 5.1 hereof, within which there is expected to occur, based upon the
information developed as a result of 3-D Seismic Operations, a commercial
accumulation of oil and/or gas in a specific structural or stratigraphic trap.
1.12 "Seismic Option" or "Option" means an agreement which entitles a
Party to conduct 3-D Seismic Operations on a portion of the Contract Lands with
an option to acquire a Lease covering all or a portion of such lands.
1.13 "Subsequently Created Burden" means a Lease Burden which is
created by a Party subsequent to its acquisition of the interest which is
subject to the burden.
1.14 Other terms are defined elsewhere in this Agreement.
ARTICLE 2. ACQUISITION OF INTEREST IN EXISTING LEASES AND OPTIONS
2.1 Initial Acquisition. Beta, Xxxxx, Xxxxx and Four-Way agree to
acquire from Parallel the following interest set forth opposite their name in
the Existing Leases and Options:
Beta ............................................... 20%
Xxxxx ...............................................12.5%
Xxxxx ............................................. 2%
Four-Way .......................................... 1%
For such interests, Beta, Xxxxx, Xxxxx and Four-Way agree to pay Parallel the
sum of One Hundred Thirty-Three and 33/100 Dollars ($133.33) per Net Mineral
Acre covered by the respective undivided interests in the Existing Leases and
Options so acquired by such Parties. Parallel has represented to Beta, Xxxxx,
Xxxxx and Four-Way that the Existing Leases and Options described in Exhibits
"C-1" and "C-2" hereto cover at least 17,654 Net Mineral Acres. Accordingly,
Beta, Xxxxx, Xxxxx and Four-Way initially shall pay Parallel the sum set forth
opposite their name for the interest each acquires under this Article 2.1:
Beta ....................................... $470,773.00
Xxxxx ..................................... $294,216.00
Xxxxx ..................................... $47,077.00
Four-Way .................................. $23,539.00
Beta, Xxxxx, Xxxxx and Four-Way shall pay Parallel such sums upon the complete
execution hereof. Upon receipt of such payment, each such Party will be assigned
its respective percentage interest (as set forth above in this Article 2.1) in
the Existing Leases and Options. In the event it is determined
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that the Existing Leases and Options cover less than 17,654 Net Mineral Acres,
Parallel shall refund to Beta, Xxxxx, Xxxxx and Four-Way the amounts that such
Parties overpaid for their respective Initial Interests acquired under this
Article 2.1. If it is determined that the Existing Leases and Options cover more
than 17,654 Net Mineral Acres, Beta, Xxxxx, Xxxxx and Four-Way shall pay
Parallel an additional sum equal to their proportionate share of the number of
Net Mineral Acres covered by the Existing Leases and Options in excess of 17,654
Net Mineral Acres.
2.2 Subsequently-Acquired Leases and Options. All of the Parties hereto
agree to acquire and pay their proportionate share (as provided hereinbelow) of
the cost of any Leases or Seismic Options, including a Lease or an option in
renewal of an expiring Lease or Option as provided in Article 2.3 (a
"Subsequently-Acquired Lease or Option"), which are acquired by a Party from an
unaffiliated third party prior to the conclusion of 3-D Seismic Operations. For
the purposes of this Article 2.2, the proportionate shares of the interests and
costs of a Subsequently-Acquired Lease or Option of the Parties comprising
Parallel/Xxx-Xxx shall be as follows:
Parallel............................................... 79.125%
Xxx-Xxx................................................ 16.875%
TAC.................................................. 1.000%
Allegro.............................................. 3.000%
Beta, Xxxxx, Xxxxx and Four-Way agree to purchase their proportionate share of
such Subsequently- Acquired Leases or Options from Parallel for a price equal to
the actual total cost thereof plus one-third (1/3) of such total cost thereof.
The Party initially acquiring such interest shall promptly notify the other
Parties comprising Parallel/Xxx-Xxx of the acquisition of such interest. Such
notice shall contain the same information as is required in Article 6.3 for an
AMI Interest. The other Parties comprising Parallel/Xxx-Xxx shall promptly
reimburse the acquiring Party for their proportionate share of the actual total
cost thereof. Upon receipt of a Party's proportionate share of the costs of
acquiring such interest, the acquiring party shall promptly assign to such Party
its proportionate share of such interest (as set forth above in this Article
2.2). Upon Parallel's acquisition of its proportionate share of a
Subsequently-Acquired Lease or Option, it shall notify Beta, Xxxxx, Xxxxx and
Four-Way of such acquisition and invoice them for their proportionate share
thereof at a price equal to the total cost of acquiring such Lease or Option
plus one-third (1/3) of such total cost. Upon receipt of the purchase price from
such Party Parallel shall promptly assign to such Party its proportionate share
of such interest.
2.3 Expiring Options. If any Leases or Options covered hereby will
expire prior to the completion of the 3-D Seismic Operations contemplated herein
and the exercise of the Options to acquire Leases under such Options, the Party
originally acquiring such expiring Lease or Option shall use its best efforts to
renew such Leases or Options for a sufficient period of time to complete the
proposed 3-D Seismic Operations thereon and exercise any such Options
thereunder. All such renewals shall be treated in the same manner as set forth
in Article 2.2, above, pertaining to Subsequently-Acquired Leases and Options.
ARTICLE 3. INTERESTS OF THE PARTIES
3.1 Initial Interests of the Parties. The Initial Interests of the
Parties hereunder will be as follows:
Parallel.......................................... 43.625%
Xxx-Xxx........................................... 16.875%
TAC.............................................. 1.000%
Allegro.......................................... 3.000%
Beta.............................................. 20.000%
Xxxxx............................................. 12.500%
Xxxxx .......................................... 2.000%
Four-Way ....................................... 1.000%
All Existing Leases and Options will be owned by the Parties in accordance with
their respective Initial Interests. All Subsequently-Acquired Seismic Options
will be owned in the same proportions as the Parties' Initial Interests,
provided that each Party has paid its proportionate share of the cost thereof as
provided in Section 2.2. If a Party fails to pay for its proportionate share of
a Subsequently-Acquired Seismic Option, such Seismic Option will be owned by the
Parties who paid their original proportionate share of the costs thereof.
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Such Parties will pay their proportionate share of the total cost thereof and
such interests shall be owned by such Parties in the proportions that their
respective Initial Interests hereunder bear to the aggregate of such Parties'
Initial Interests.
3.2 Existing Burdens. Each Party's interest under this Agreement, in
the Leases and Seismic Options covered hereby and the Leases acquired and to be
acquired pursuant hereto, shall be subject to and burdened by its proportionate
share of all existing operating agreements, existing and pending pooling and
spacing orders and all Lease Burdens other than Subsequently Created Burdens.
Each Party hereto hereby assumes and agrees to perform its proportionate share
of the obligations under all Leases and Seismic Options and the Leases acquired
pursuant to this Agreement and the other obligations described in this Article,
but only to the extent that such obligations arise after the acquisition of such
Leases and Seismic Options by such Party.
ARTICLE 4. SEISMIC OPERATIONS
4.1 Existing Seismic, Geologic and Other Subsurface Data. Except as
prohibited by law or by agreements with third parties, upon request, each Party
owning existing seismic data pertaining to the Contract Lands shall furnish
copies of all of such data to any Party requesting such data, together with any
geologic or other subsurface data that could be useful in the interpretation of
such seismic data. The Party requesting such data shall bear the expense of
copying it. The Party owning any seismic or other data which may not be copied
shall, upon request, make such data available to the Party requesting such data
during normal business hours.
4.2 3-D Seismic Operations. Parallel shall serve as Operator in
conducting all 3-D Seismic Operations. All Parties agree to conduct such
operations on all or substantially all of the Contract Lands. The Parties may,
by unanimous agreement, reduce the number of sections on which such operations
will be conducted (for example, where technical, legal or operational
considerations indicate that such reduction is warranted). Beta and Xxxxx desire
to participate in such 3-D Seismic Operations. The Parties shall bear the
following proportions of the total cost of all 3-D Seismic Operations:
Parallel........................................ 31.79166%
Xxx-Xxx......................................... 16.87500%
TAC............................................ 1.00000%
Allegro....................................... 3.00000%
Beta............................................ 26.66667%
Xxxxx........................................... 16.66667%
Xxxxx.......................................... 2.66667%
Four-Way ..................................... 1.33333%
Subject to Article 5.1.1, the data that is obtained from such 3-D Seismic
Operations shall be owned by the Parties in the proportions of their Initial
Interests hereunder. The Parties agree to work together in a spirit of
cooperation and in good faith in planning and causing the 3-D Seismic Operations
to be conducted as contemplated and provided herein, as well as in sharing the
data collected therefrom and the interpretations thereof. Such interpretations
shall in no way be deemed a representation that such interpretations are
accurate or correct. Such interpretations shall be given merely as a means of
sharing such Party's analysis and ideas regarding such data.
4.3 Confidentiality of Seismic Data. Except as provided below, each
Party agrees to keep all seismic data obtained pursuant to Article 4.2
confidential for a period of seven (7) years from the date hereof. After the
expiration of seven (7) years from the date hereof, any Party may sell the data
it acquired pursuant to Article 4.2. Each Party owning an interest in such data
shall receive its proportionate share of the proceeds of any such sale. Any data
acquired from another Party pursuant to Article 4.1 shall forever be kept
confidential by the Parties; provided, however, that the Party who originally
contributed such data may share, sell or otherwise dispose of such data that
does not pertain to a Prospect to a third party after the expiration of one (1)
year from the date hereof, and the other Parties shall have no interest in the
proceeds from such sale. Notwithstanding the foregoing, a Party may disclose
seismic data to a prospective purchaser or farmee of such Party's interest,
provided (i) such disclosure is limited to the Prospect under consideration for
sale or farmout, (ii) the prospective purchaser or farmee must review such data
in the affected Party's offices and may not copy such data, and (iii) such
prospective purchaser or farmee must execute a confidentiality agreement to
prevent further disclosure and unauthorized use of such data.
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4.4 Review of Seismic Data. The Parties agree to cooperate in good
faith in reviewing the seismic data obtained hereunder. Such data should be
reviewed by the Parties as soon as practicable after the data for a particular
area is available so that the Parties can make a decision as to whether or not
to exercise any of the Options to acquire Leases under any of the Seismic
Options pertaining to such area.
ARTICLE 5. EXERCISE OF OPTIONS
5.1 Designation of Prospects. The Parties shall cooperate in good faith
to establish Prospects within the Contract Lands as soon as practicable after
the data for an area has been processed and interpreted. Any Party may designate
a Prospect within seven (7) years from the date hereof by giving the other
Parties written notice of such designation. Such notice shall contain a map
which reflects the outline of the lands to be included within such Prospect,
together with a description of the seismic data, prospective feature and any
interpretative data or maps upon which such Prospect is based. The Parties
receiving notice of the designation of a Prospect shall have fourteen (14) days
after receipt of such notice in which to elect in writing whether or not they
will participate in such Prospect. Any Party which has not furnished the Party
designating a Prospect with its written election to participate in a Prospect
within said fourteen-day period conclusively shall be presumed to have elected
not to participate in the Prospect so designated. Any Party not participating in
a Prospect shall promptly assign all of its interest in the Options or Leases
covering lands lying within such Prospect to the Parties participating in such
Prospect, in the proportions of their respective interests therein.
5.1.1 Extension; Additional Seismic Operations. In the event a
Prospect includes lands lying on the border of the Contract Lands, one
or more of the Parties participating in such Prospect may propose the
conducting of additional 3-D Seismic Operations to obtain seismic data
on lands lying outside of the Contract Lands but reasonably anticipated
to be underlain by the feature for which such Prospect was designated.
In the event all Parties participating in such Prospect agree to
participate in the additional seismic operations, the Prospect shall be
enlarged to cover the lands included in such proposed additional
shooting and all such Parties shall bear their proportionate share of
the costs of such additional seismic operations. A Party participating
in the original Prospect may elect not to participate in expanding the
Prospect by conducting additional 3-D Seismic Operations, in which
event the lands covered by the additional 3-D Seismic Operations shall
constitute a separate Prospect in which only the Parties conducting
such operations will participate. Notwithstanding the foregoing, the
expanded Prospect shall not include any lands on which (i) the Parties
electing to participate in the expanded Prospect are unable to obtain a
Lease or an Option from a third party or (ii) a Party owns a Lease or
Option which has been committed to an agreement with a third party
prior to the date hereof.
5.2 Acquisition of Leases Within Prospects. The Parties participating
in a Prospect will acquire and pay for Leases covering lands within such
Prospects upon the terms provided for in the applicable Seismic Options or upon
such other terms as the Parties can mutually agree upon if some Leases are not
governed by the terms of a Seismic Option.
5.3 Minimum Acreage Obligation. In the event the Leases acquired by
Parties electing to participate in Prospects do not satisfy the minimum acreage
selection requirements under one or more of the Seismic Options, then each Party
must acquire and pay for its proportionate share of the Leases which must be
acquired in order to fulfill any such minimum acreage selection requirements.
ARTICLE 6. AREA OF MUTUAL INTEREST
6.1 Establishment of Area of Mutual Interest. The Contract Lands are
hereby established as an Area of Mutual Interest for a term of seven (7) years
from the date of this Agreement. Thereafter, those lands lying within a Prospect
which has been designated as provided in Article 5.1 shall be established as an
Area of Mutual Interest for the Parties then owning an interest in such Prospect
for as long as any Jointly-Owned Lease covering lands within such Prospect is in
force and effect as to such land.
6.2 Acquisition of Interest. After all of the 3-D Seismic Operations
have been completed (through the interpretation of the data obtained therefrom),
except as otherwise provided in this
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Article 6, if during the term of the Area of Mutual Interest a Party (the
"Acquiring Party") acquires from an unaffiliated third party a Lease covering
lands lying within such Area of Mutual Interest (an "AMI Interest"), the other
Parties (the "Non-Acquiring Parties") shall have the first and prior right to
acquire their proportionate share of such interest upon the terms set forth
below. If an AMI Interest covers lands lying within a Prospect in which a Party
has elected not to participate pursuant to Articles 5.1 or 8.4 hereof, such
Party shall offer one hundred percent (100%) of such interest to the Parties
participating in such Prospect.
6.3 Notification. The Acquiring Party shall notify the Non-Acquiring
Parties in writing of the acquisition of an AMI Interest. Such notice shall set
forth (i) a description of the interest acquired, (ii) the total cost of the
interest, including all land and legal costs associated with the acquisition
thereof, (iii) the proportionate share of such interest that the Non-Acquiring
Parties are entitled to acquire, and (iv) any other pertinent terms of such
acquisition, including copies of such Leases, assignments, bank drafts or other
evidence of payment for such interest.
6.4 Election Period. The Non-Acquiring Parties shall have ten (10) days
from the receipt of such notice to elect to acquire. If any Non-Acquiring Party
elects to acquire its proportionate share of the AMI Interest, such election
shall be given in writing to the Acquiring Party within ten (10) days after
receipt of notice of the acquisition of the interest. If the Acquiring Party has
not received an election in writing from a Non-Acquiring Party within said
ten-day period, such Non- Acquiring Party conclusively shall be presumed to have
elected not to acquire its proportionate share of the AMI Interest.
6.5 Binding Obligation. An election by a Non-Acquiring Party to acquire
its proportionate share of a AMI Interest shall constitute a binding obligation
of such Non-Acquiring Party to pay its proportionate share of the total cost of
the AMI Interest within thirty (30) days from the date that the Non-Acquiring
Party receives notice of the acquisition of such interest. If the Non- Acquiring
Party elects to acquire its proportionate share of an AMI Interest, the notice
of acquisition shall be deemed to be an invoice for the Non-Acquiring Party's
proportionate share of the total cost of such interest. If a Party fails to pay
its proportionate share of the cost of such an AMI Interest within said
thirty-day period, such Party shall then be conclusively deemed to have elected
not to acquire its proportionate share of such interest and the Acquiring
Parties shall have the right to acquire their proportionate share of such
interest.
6.6 Assignment of AMI Interest. The Acquiring Party shall execute and
deliver an Assignment to each Non-Acquiring Party which elects to acquire its
proportionate share of an AMI Interest as soon as practical after receiving the
Non-Acquiring Party's proportionate share of the total cost thereof.
6.7 Renewal and Extension Leases. Except as required in Article 2.3, if
a Party shall at any time acquire a renewal or extension of a Jointly-Owned
Lease (a "Renewal or Extension Lease"), each Non-Acquiring Party shall have the
first and prior right to acquire its proportionate share thereof. The
acquisition of a Renewal or Extension Lease pursuant to this Article 6.7 shall
be treated just as if it was an AMI Interest under Article 6.3 hereof. For the
purposes of this provision, the term "Renewal or Extension Lease" shall mean any
Lease which is acquired before the expiration of a prior Jointly-Owned Lease or
taken or contracted for within one (1) year from the expiration of a
Jointly-Owned Lease, but shall not include an Option acquired in renewal of an
Expiring Option as provided in Article 2.3.
ARTICLE 7. SALE, FARMOUT OR OTHER DISPOSITION
OF AN INTEREST TO A THIRD PARTY
Any Party may farm out or otherwise dispose of all or a portion of its
interest in any Jointly- Owned Lease to a third party. The Party desiring to
sell, farm out or otherwise dispose of such interest must notify the other
Parties in writing of all of the terms of such trade.
ARTICLE 8. SUBSEQUENT OPERATIONS
8.1 Operator. Xxx-Xxx shall have the first and prior right to be the
Operator for all operations conducted on the Contract Lands except the 3-D
Seismic Operations, provided that it has elected to participate in the
acquisition of the Leases covering the portion of the Contract Lands on which
such operations are to be conducted. Except as otherwise hereinabove provided, a
majority in interest of the Parties participating in a well may mutually agree
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that any of them or some third party may serve as Operator for any such well.
Except as otherwise agreed by the Parties, any Party participating in a Prospect
may, by forty-five (45) days' prior written notice to the other participating
Parties, cause the commencement of drilling operations on the Initial Well to be
drilled on such Prospect; subject, however, to the provisions of Article 8.3.
8.2 Operating Agreement. Except as provided herein, all operations
conducted on the Contract Lands shall be conducted in accordance with the terms
of an Operating Agreement substantially in the form attached as Exhibit "D"
hereto. A separate Operating Agreement shall be executed for each Prospect, with
the first well drilled in such Prospect to be designated as the Initial Well. A
commencement date for such Initial Well will be included in the Operating
Agreement upon execution only if agreed to by all participating Parties at that
time; otherwise, the commencement date will be determined pursuant to Article
8.1. The share of costs which each Party must bear and the interest of each
Party in the production from each well drilled under the Operating Agreement
will be determined on a well-by-well basis.
8.3 Limitation on Number of Xxxxx Drilling. Only two (2) exploratory
xxxxx shall be drilling on the Contract Lands at any time unless it is necessary
to commence a well while another well is being drilled in order to perpetuate a
Lease or otherwise satisfy the terms of a continuous drilling obligation.
8.4 Non-Consent Election on the Drilling of a Well. If a Party elects
not to participate in the drilling of any well in a Prospect established under
Section 5.1 hereof, such Party shall relinquish all of its rights and interests
in that Prospect proportionately to the other Parties who elect to participate
in the drilling of such well save and except such non-consenting Party's
interest in any xxxxx in such Prospect in which such Party participated in
drilling and the proration unit or spacing unit therefor, provided that the well
in which such Party elected not to participate is commenced within the time
prescribed provided in the applicable Operating Agreement.
ARTICLE 9. REMEDIES FOR NON-PAYMENT
All of the payments required to be made by a Party hereunder shall be
made on or before such payments are due. The failure of any Party to pay an
amount due hereunder by the date that it is due shall constitute a breach of
this Agreement. The remedies for failure to make the payments required by
Article 6.5 (pertaining to the acquisition of an AMI Interest), Article 6.7
(pertaining to Renewal and Extension Leases) and the payments required under an
applicable Operating Agreement shall be governed by the provisions of such
Articles or the Operating Agreement (as the case may be). For all other payments
to be made hereunder, the Party to whom such a payment is not made when due
shall have the right to make written demand on the Party from whom such payment
is past due. If the Party receiving such written demand fails to make the
required payment within sixty (60) days from the date that it receives such
written demand, such Party shall relinquish all of its interest under this
Agreement (including, but not limited to all of the interest that it acquired
pursuant to the terms hereof in any Leases, Options, seismic data and xxxxx
drilled on the Contract Lands) to the Party to whom such payment is owed. The
Party so relinquishing its interest hereby designates the Party to whom such
payment is owed as its agent and attorney-in-fact for the limited purpose of
such instrument of conveyance as is necessary to convey the relinquished
interests to the Party to whom the payment is owed. The Party receiving such
relinquished interest shall then offer the other Parties their proportionate
share of such relinquished interest. Each of the other Parties who pay their
proportionate share of the sum of money that was owed by the Party relinquishing
its interest to the Party offering such interest within fourteen (14) days from
its receipt of such offer, shall be entitled to their proportionate share of
such relinquished interests and the Party offering such interest shall, as soon
as practicable, execute an instrument conveying such interest to such Parties.
ARTICLE 10. MISCELLANEOUS
10.1 Term and Applicability of Agreement. Except as otherwise provided
for herein, the provisions of this Agreement shall remain in force and effect
for a term of seven (7) years from the date hereof except that it shall apply to
each Jointly-Owned Lease and the lands included within the Prospect in which the
lands covered by such Jointly-Owned Lease are situated for as long as such
Jointly-Owned Lease remains in force and effect.
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10.2 Governing Law. The laws of the State of Texas shall apply in
all matters concerning this Agreement.
10.3 Entire Agreement. This Agreement, including all of the exhibits
attached hereto, constitute the entire agreement of the Parties concerning the
subject matter hereof, and there are no other understandings, obligations,
relationships or agreements, written or oral, pertaining to the subject matter
of this Agreement. This Agreement supersedes, replaces and shall be in lieu of
that certain Exploration Agreement dated October 22, 1996, between Parallel and
Xxx-Xxx, insofar only as this Agreement covers the lands and depths covered by
the Exploration Agreement dated October 22, 1996. Otherwise, the Exploration
Agreement dated October 22, 1996 shall remain in force as to the lands and
depths covered thereby which are not covered by this Agreement.
10.4 Inurement. This Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the Parties and the terms and
provisions hereof shall constitute covenants running with the lands subject
hereto to the extent that such provisions apply to such lands.
10.5 Notices. All notices required to be given hereunder shall be given
in writing. Any such notice shall be deemed to be given upon receipt thereof by
the Party who is to receive the notice. The receipt of a notice by electronic
facsimile (fax) shall be considered as delivery of such notice. If notice by fax
is received other than during normal business hours, it shall be deemed received
on the next business day. All notices required hereunder shall be given to the
Parties as follows:
If to Parallel: Parallel Petroleum Corporation
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxx
or
Fax No.: 000-000-0000
If to Xxx-Xxx: Xxx-Xxx Production Company
0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Mr. Xxxxxxx Xxxxxxxx
or
Fax No.: 000-000-0000
If to Beta: Beta Oil & Gas, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxx
or
Fax No.: 000-000-0000
If to Xxxxx: Xxxxx Oil & Gas Company
000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxxx Xxxxx, Xx.
or
Fax No.: 000-000-0000
If to TAC: TAC Resources, Inc.
X.X. Xxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Mr. Xxxx Xxxxxx
or
Fax No.: 000-000-0000
-8-
If to Allegro: Allegro Investments, Inc.
0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Mr. Xxxxx Xxxxxxxx
or
Fax No.: 000-000-0000
If to Xxxxx: Xxxxx Financial Services, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxx
or
Fax No.: 000-000-0000
If to Four-Way: Four-Way Texas, L.L.C.
c/o Kissing Bridge Company
00000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Mr. Xxx Xxxxx
or
Fax No.: 000-000-0000
10.6 Transfers Subject to this Agreement. Any sale, agreement, transfer
or other disposition of an interest in the Contract Lands however accomplished,
either voluntarily or involuntarily, by operation of law or otherwise, shall be
subject to the terms of this Agreement. Any instruments which convey any
interest in the Contract Lands shall be made expressly subject to this
Agreement.
10.7 Singular and Plural. When the context requires, the use of a
singular noun or pronoun shall be deemed plural and vice versa.
10.8 Further Assurances. Each of the Parties agrees to perform such
other acts and execute and deliver such other instruments as may be necessary in
order to effectuate the terms of this Agreement.
10.9 Relationship of the Parties. The Parties do not intend to create a
partnership by entering into this Agreement. The Parties agree that for the
purposes of federal income taxation, they are not to be taxed as a partnership
and each Party will elect to be excluded from the application of all of the
provisions of Subchapter "K", Chapter 1, Subtitle "A", of the Internal Revenue
Code of 1986, as amended ("Code"), as permitted and authorized by Section 761 of
the Code and the regulations promulgated thereunder. The liability of the
Parties hereunder shall be several, not joint or collective.
10.10 Memorandum of Operating Agreement. The Parties agree to execute
and record in the Records of Xxxxxxx County, Texas, a Memorandum of this
Exploration Agreement, in the form attached as Exhibit "E" hereto.
IN WITNESS WHEREOF, the Parties have executed this Agreement in
multiple counterparts as of the date first above written.
PARALLEL PETROLEUM CORPORATION
By:
Printed Name:
Title:
-9-
XXX-XXX PRODUCTION COMPANY
By:
Printed Name:
Title:
TAC RESOURCES, INC.
By:
Printed Name:
Title:
ALLEGRO INVESTMENTS, INC.
By:
Printed Name:
Title:
BETA OIL & GAS, INC.
By:
Printed Name:
Title:
XXXXX OIL & GAS COMPANY
By:
Printed Name:
Title:
XXXXX FINANCIAL SERVICES, INC.
By:
Printed Name:
Title:
FOUR-WAY TEXAS, L.L.C.
By:
Printed Name:
Title:
-00-
XXXXX XX XXXXX )
)
COUNTY OF MIDLAND )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Parallel Petroleum Corporation, a Texas corporation,
on behalf of said corporation.
Notary Public, State of Texas
STATE OF TEXAS )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Xxx-Xxx Production Company, a ________________
corporation, on behalf of said corporation.
Notary Public, State of Texas
STATE OF TEXAS )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of TAC Resources, Inc., a _______________ corporation,
on behalf of said corporation.
Notary Public, State of Texas
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Allegro Investments, Inc., a _______________
corporation, on behalf of said corporation.
Notary Public, State of
-11-
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Beta Oil & Gas, Inc., a _______________ corporation,
on behalf of said corporation.
Notary Public, State of
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Xxxxx Oil & Gas Company, a _________________
corporation, on behalf of said corporation.
Notary Public, State of
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Xxxxx Financial Services, Inc., a _______________
corporation, on behalf of said corporation.
Notary Public, State of
STATE OF )
)
COUNTY OF )
This instrument was acknowledged before me this _______ day of
_______________, 1997, by ___________________________________________________,
_______________________ of Four-Way Texas, L.L.C., a _______________ limited
liability company, on behalf of said limited liability company.
Notary Public, State of
-12-
EXHIBIT "A"
(Contract Lands)
EXHIBIT "B"
Gross
Lessor Date Acres Net Acres Vol./Page
------ ---- ----- --------- ---------
*Xxxxxxxx Xxxxxxx, et al ......03/01/33 354 354 86/286
**Xxxxxx Xxxxxx, et vir ......12/03/34 1804.83 1804.83 92/623
*Xxxx Xxxxxxxxx ...............08/04/34 167.5 167.5 90/597
*T.N. Xxxxxxx, et al ("A") ....07/10/35 209.5 209.5 94/436
*T.N. Xxxxxxx, et al ("B") ....12/26/32 110.5 110.5 84/81
*Xxxxxx Xxxxxxxxx, et ux ......07/10/35 200 200 94/429
*Xxxxx Xxxx et al .............07/22/35 143 143 96/246
*A.T. Xxxx, et ux .............12/16/34 100 100 92/224
*Xxxxxxxx X. Xxxxxxx, et al ...08/14/34 909 909 91/540
*Mortgage Land & Investment ...07/10/35 321.25 321.25 94/440
Co ..................................
*Xxxxxxx X. Xxxxxxxx, et vir ..12/10/32 241.25 241.25 83/602
*F. Xxxxx Xxxxxxxx, et ux .....09/13/49 121.25 121.25 189/73
*X.X. Xxxxxxxxx, et al ........12/11/34 200 200 92/218
*Bohus Simicek, et ux .........09/23/40 165 165 No Recording
*X.X. Xxxxxxxxx, et ux ........08/01/47 16 16 171/25
*C.A. Xxxxxx, et ux ...........07/22/54 100 100 244/378
***X.X. XxXxxxx, et ux ........02/06/34 184.5 184.5 71/463
------ ------
5347.58 5347.58
* From the surface down to 8,000 feet.
** From the surface down to 6,620 feet.
*** From the surface down to 7,600 feet (as to 102.5 acres) is
subject to farmout agreement with Xx-Xxxx International.
