EXHIBIT 10.7
PURCHASE AND SALE AGREEMENT
(▇▇▇▇▇, Equipment, and Well Bore Leasehold Assignments)
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is dated October 1, 2010, and is
entered into by and between PETROLEUM EXPLORATION AND MANAGEMENT, LLC ("PEM"), a
Colorado limited liability company whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and SYNERGY RESOURCES CORPORATION ("Synergy") a
Colorado corporation whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
RECITALS
A. PEM wishes to transfer the ▇▇▇▇▇ and equipment described in Exhibit 1
attached hereto, and its respective 100% working interest and 80% net
revenue interest in the oil and gas leases described in Exhibit 2 attached
hereto, insofar and only insofar as such leases pertain to the ▇▇▇▇▇ bores
listed in such Exhibit 1.
B. Synergy has conducted an independent investigation of the nature and
extent of these oil and gas leasehold interests, ▇▇▇▇▇ and equipment and
wishes to purchase the interests of PEM in these assets.
C. By this instrument, Synergy and PEM set forth their agreement concerning
the purchase and sale of these oil and gas leasehold interests, ▇▇▇▇▇ and
equipment.
AGREEMENT
In consideration of the mutual promises contained herein, PEM and the Synergy
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE ASSETS
1.1 Purchase and Sale. PEM hereby agrees to sell and Synergy hereby agrees to
purchase the Assets pursuant to the terms of this Agreement.
1.2 The Assets. As used herein, the term "Assets" refers to all of PEM's
right, title and interest in and to the following:
(a) The oil and gas ▇▇▇▇▇ and equipment specifically described in Exhibit
1 (collectively, the "▇▇▇▇▇"), together with all personal property,
fixtures, improvements, permits, rights-of-way and easements used or
held for use in connection with the production, treatment,
compression, storing, sale or disposal of Hydrocarbons or water
produced from the properties and interests described in Section
1.2(b).
(b) The leasehold estates created by the oil and gas leases specifically
described in Exhibit 2, insofar and only insofar as they pertain to
the well bores described in Exhibit 1 (collectively, the "Leases"),
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and the oil, gas, coalbed gas and all other hydrocarbons whether
liquid, solid or gaseous (collectively, the "Hydrocarbons") produced
or to be produced through such well bores, and all contract rights and
privileges, surface, reversionary or remainder interests and other
interests associated with the Leases, insofar as they pertain to
production of Hydrocarbons through such well bores.
(c) The pooling and communitization agreements, declarations and orders,
and the units created thereby (including all units formed under
orders, regulations, rules or other acts of any federal, state or
other governmental agency having jurisdiction), as well as all other
such agreements relating to the properties and interests described in
Sections 1.2(a) and (b) and to the production of Hydrocarbons, if any,
attributable to said Leases and ▇▇▇▇▇.
(d) All existing and effective sales, purchase, exchange, gathering,
transportation and processing contracts, operating agreements,
balancing agreements, farmout agreements, service agreements, and
other contracts, agreements and instruments, insofar as they relate to
the Leases and ▇▇▇▇▇ described in Sections 1.2(a) through (c) above,
with the exception of any agreements pertaining to the remediation of
the Environmental Defects listed on Exhibit 4 (collectively, the
"Contracts"), and which Contracts are shown on Exhibit 3.
(e) The files, records and data relating to the items described in
Sections 1.2(a) through (d) maintained by PEM and relating to the
interests described in Sections 1.2(a) through (d) above (including
without limitation, all lease files, land files, well files,
accounting records, drilling reports, abstracts and title opinions,
seismic data, geophysical data and other geologic information and
data), but only to the extent not subject to unaffiliated third party
contractual restrictions on disclosure or transfer and only to the
extent related to the Assets (the "Records").
1.3 Purchase Price. The purchase price (the "Purchase Price"), for the Assets
shall be $830,093.69. The parties agree that PEM will transfer the ad
valorem taxes referred to in Section 1.4. If the ad valorem taxes payable
by PEM are more than the transferred amount, PEM will promptly pay the
additional amount to Synergy. If the ad valorem taxes payable by PEM are
less than the transferred amount, Synergy will promptly remit to PEM the
difference.
1.4 Effective Time and Date. The purchase and sale of the Assets shall become
effective at 7:00 a.m. on October 1, 2010. Revenues and expenses shall be
prorated as of the Effective Date; provided, however, that the rights to
any amounts withheld from previous production proceeds for the purpose of
paying then unpaid ad valorem taxes for 2009 production assessed in 2010
(due in 2011) or for 2010 production assessed in 2010 (due in 2012) will
be assigned to Synergy at Closing. If any purchaser of production has not
withheld any amounts from 2009 production proceeds for the purpose of
paying ad valorem taxes assessed in 2010 (due in 2011) or for 2010
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production assessed in 2011 (due in 2011), then (i) the actual amount
necessary to pay the then unpaid 2009 and 2010 ad valorem taxes and (ii)
the estimated amount that should have been withheld based upon
pre-Effective Date production for 2009 and 2010 ad valorem taxes (at the
rate indicated by Weld County, being an approximately 9% rate) will be
determined, and both amounts will be credited to Synergy at closing. The
assignment of, and credit for, these amounts shall serve as a final
settlement for ad valorem taxes. PEM shall pay all severance taxes on
production obtained from the Assets prior to the Effective Date and
Synergy shall pay all severance taxes on production obtained from the
Assets after the Effective Date.
1.5 Excluded Assets. The parties agree that the Assets will not include any
claim that the Eddy Oil Company has against ▇▇▇▇-▇▇▇▇▇ or any other party
with respect to the ▇▇▇▇▇▇▇ 26-6 well, specifically but without
limitation, any claim that another party was responsible for "sanding in"
the Well, and thus reducing its value.
ARTICLE II
PEM'S REPRESENTATIONS AND WARRANTIES
2.1 General Representations. With respect to itself, and/or the Assets which
it owns and has agreed to sell under this Agreement, PEM, makes the
following representations and warranties:
(a) Incorporation/Qualification. PEM represents that it is a Colorado
limited liability compan y, duly organized, validly existing and in
good standing under the laws of the State of Colorado.
(b) Power and Authority. PEM has all requisite power and authority to own
its interest in the Assets, to carry on its businesses as presently
conducted, to execute and deliver this Agreement, and to perform its
obligations under this Agreement.
(c) No Lien, No Violation. The execution and delivery of this Agreement
does not, and the fulfillment of and compliance with the terms and
conditions hereof will not, as of Closing, (i) create a lien or
encumbrance on the Assets or trigger an outstanding security interest
in the Assets that will remain in existence after Closing, (ii)
violate, or be in conflict with, any material provision of any
statute, rule or regulation applicable to PEM, or any agreement or
instrument to which PEM is a party or by which it is bound, or, (iii)
to its knowledge, violate, or be in conflict with any statute, rule,
regulation, judgment, decree or order applicable to PEM.
(d) Authorization and Enforceability. This Agreement is duly and validly
authorized and constitutes the legal, valid and binding obligation of
PEM, enforceable in accordance with its terms, subject, however, to
the effects of bankruptcy, insolvency, reorganization, moratorium and
other laws for the protection of creditors, as well as to general
principles of equity, regardless whether such enforceability is
considered in a proceeding in equity or at law.
(e) Liability for Brokers' Fees. PEM has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement for which Synergy shall
have any responsibility whatsoever.
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(f) No Bankruptcy. There are no bankruptcy proceedings pending, being
contemplated by or threatened against PEM.
(g) Litigation. There are no actions, suits, ongoing governmental
investigations, written governmental inquiries or proceedings pending
against PEM, or the Assets in any court or by or before any federal,
state, municipal or other governmental agency that would affect any
PEM's ability to consummate the transaction contemplated hereby, or
materially adversely affect the Assets or PEM's ownership or operation
of the Assets.
2.2 PEM's Representations and Warranties with Respect to the Assets. PEM makes
the following representations and warranties regarding the Assets to be
sold and assigned hereunder:
(a) Liens. Except for the Permitted Encumbrances, or as otherwise agreed
to in writing by Synergy, the Assets will be conveyed to Synergy free
and clear of all liens, restrictions and encumbrances created by,
through or under PEM. As used in this Agreement, "Permitted
Encumbrances" means any of the following matters to the extent the
same are valid and subsisting and affect the Assets:
(1) all matters not created by, through or under PEM, including
without limitation any matters created by, through or under their
predecessors in title;
(2) any liens for taxes and assessments not yet delinquent or, if
delinquent, that are being contested in good faith in the
ordinary course of business and for which PEM has agreed to pay
pursuant to the terms hereof or which have been prorated pursuant
to the terms hereof;
(3) the terms, conditions, restrictions, exceptions, reservations,
limitations and other matters contained in the agreements,
instruments and documents that create or reserve to PEM its
interests in the Assets, provided the same do not result in a
decrease in the Net Revenue Interest associated with the ▇▇▇▇▇ or
Leases;
(4) any obligations or duties to any municipality or public authority
with respect to any franchise, grant, license or permit, and all
applicable laws, rules, regulations and orders of the United
States and the state, county, city and political subdivisions in
which the Assets are located and that exercises jurisdiction over
such Assets, and any agency, department, board or other
instrumentality thereof that exercises jurisdiction over such
Assets (collectively, "Governmental Authority");
(5) any (i) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations,
pipelines, grazing, hunting, logging, canals, ditches, reservoirs
or the like and (ii) easements for streets, alleys, highways,
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pipelines, telephone lines, power lines, railways and other
similar rights-of-way;
(6) all landowner royalties, overriding royalties, net profits
interests, carried interests, production payments, reversionary
interests and other burdens on or deductions from the proceeds of
production relating to the Assets if the net cumulative effect of
such burdens does not operate to reduce the Net Revenue Interest
of the PEM in any Asset to less than an 80% net revenue interest;
(7) all rights to consent by, required notices to, filings with,
or other actions by Governmental Authorities in connection with
the sale or conveyance of oil and gas leases or interests therein
that are customarily obtained subsequent to such sale or
conveyance;
(8) all defects and irregularities affecting the Assets which
individually or in the aggregate do not operate to reduce the net
revenue interests of PEM, increase the proportionate share of
costs and expenses of leasehold operations attributable to or to
be borne by the working interest of PEM, or otherwise interfere
materially with the operation, value or use of the Assets.
(b) ▇▇▇▇▇, Leases and Equipment. To the best of the PEM's knowledge, (i)
the Leases are in full force and effect and are valid and subsisting
covering the entire estates that they purport to cover; (ii) they have
not been advised by the lessor of any Lease of a default under a Lease
or of any demand to drill an additional well on a Lease; (iii) all
royalties, rentals and other payments due under the Leases have been
fully, properly and timely paid; (iv) PEM has a 100% Working
Interest/80% Net Revenue Interest in the ▇▇▇▇▇ and Leases, and (v) the
equipment associated with the ▇▇▇▇▇ is functional and in good working
order, with the exception of the ▇▇▇▇▇▇▇ 26-6 well, which is sanded-in
and not currently capable of production. PEM will use commercially
reasonable efforts to take all action necessary to keep the Leases in
force and effect until the Closing.
(c) Prepayments and Wellhead Imbalances. PEM is not obligated, by virtue
of a production payment, prepayment arrangement under any contract for
the sale of Hydrocarbons and containing a "take or pay," advance
payment or similar provision, gas balancing agreement or any other
arrangement to deliver Hydrocarbons produced from the Assets at any
time after the Effective Time without then or thereafter receiving
full payment therefor. None of the ▇▇▇▇▇ have been produced in excess
of applicable laws, regulations or rulings.
(d) Taxes. All due and payable production, severance and similar taxes and
assessments based on or measured by the ownership of the Assets or the
production of Hydrocarbons or the receipt of proceeds from the Assets
have been fully paid.
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(e) Maintenance of Interests. PEM has maintained, and will continue from
date of this Agreement until the Closing maintain, the Assets in a
reasonable and prudent manner, in full compliance with applicable law
and orders of any governmental authority, and will maintain insurance
and bonds now in force with respect to the Assets, to pay when due all
costs and expenses coming due and payable in connection with the
Asset, and to perform all of the covenants and conditions contained in
the Leases, Contracts and all related agreements. The parties
understand and acknowledge that the ▇▇▇▇▇ are currently shut for lack
of a gas sales contract, and such fact shall not be construed to be a
breach of this paragraph or this Agreement.
(f) Access. To the same extent PEM has such right, at all times prior to
the Closing, Synergy and the employees and agents of Synergy shall
have access to the Assets at Synergy's sole risk, cost and expense at
all reasonable times, and shall have the right to conduct equipment
inspections, environmental audits, and any other investigation of the
Assets on one day's prior notice to PEM and upon agreement with PEM as
to time and place of such actions.
(g) Environmental Matters. Except as shown on Exhibit 4, to PEM's best
knowledge, it is not in material violation of any Environmental Laws
applicable to the Assets, or any material limitations, restrictions,
conditions, standards, obligations or timetables contained in any
Environmental Laws. No notice or action alleging such violation is
pending or, to PEM's knowledge, threatened against the Assets. For
purposes of this Agreement "Environmental Laws" means any federal,
state, local, or foreign statute, code, ordinance, rule, regulation,
policy, guidelines, permit, consent, approval, license, judgment,
order, writ, decree, injunction, or other authorization, including the
requirement to register underground storage tanks, relating to (a)
emissions, discharges, releases, or threatened releases of Hazardous
Materials into the natural environment, including into ambient air,
soil, sediments, land surface or subsurface, buildings or facilities,
surface water, groundwater, pub1icly owned treatment works, septic
systems, or land, (b) the generation, treatment, storage, disposal,
use, handling, manufacturing, transportation, or shipment of Hazardous
Materials, or (c) otherwise relating to the pollution of the
environment, solid waste handling treatment, or disposal, or operation
or reclamation of mines or oil and gas ▇▇▇▇▇.
"Hazardous Material" means (a) any "hazardous substance," as defined
by CERCLA, (b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, as amended, (c) any hazardous,
dangerous, or toxic chemical, material, waste, or substance within
the meaning of and regulated by any Environmental Law, (d) any
radioactive material, including any naturally occurring radioactive
material, and any source, special, or byproduct material as defined
in 42 U.S.C. ss.2011 et seq. and any amendments or authorizations
thereof, (e) any asbestos-containing materials in any form or
condition, or (f) any polychlorinated biphenyls in any form or
condition.
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(h) Obligation to Close. PEM shall take or cause to be taken all actions
necessary or advisable to consummate the transactions contemplated by
this Agreement and to assure that as of the Closing it will not be
under any material, corporate, legal, governmental or contractual
restriction that would prohibit or delay the timely consummation of
such transactions.
(i) No Third Party Options. There are no existing agreements, options, or
commitments with, of or to any person to acquire the Assets.
(j) Production Sale Contracts. To the best of PEM's knowledge, and except
as shown on Exhibit 3, no Hydrocarbons produced from the Assets are
subject to an oil or natural gas sales contract or other agreement
relating to the production, gathering, transportation, processing,
treating or marketing of Hydrocarbons and no person has any call upon,
option to purchase or similar rights with respect to production from
the Assets.
(k) Material Contracts. To the best knowledge of PEM, it is not in default
under any material Contract related to ownership or operation of the
Assets.
(l) Accuracy of Data. To PEM's best knowledge, it has provided Synergy
with accurate information relating to the Assets including, without
limitation, production history and characteristics, operating revenue
and prices currently being received for production.
(m) Preferential Purchase Rights and Consents. There are no preferential
purchase rights in respect of any of the Assets.
ARTICLE III
SYNERGY'S REPRESENTATIONS AND WARRANTIES
Synergy makes the following representations and warranties:
3.1 Organization and Standing. Synergy is a Colorado corporation duly
organized, validly existing and in good standing under the laws of the
State of Colorado.
3.2 Power. Synergy has all requisite power and authority to carry on its
business as presently conducted and to execute and deliver this Agreement
and perform its obligations under this Agreement. The execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby and the fulfillment of and compliance with the terms
and conditions hereof will not violate, or be in conflict with, any
material provision of its governing documents or any material provision of
any agreement or instrument to which it is a party or by which it is
bound, or, to its knowledge, any judgment, decree, order, statute, rule or
regulation applicable to it.
3.3 Authorization and Enforceability. The execution, delivery and performance
of this Agreement and the transaction contemplated hereby have been duly
and validly authorized by all requisite corporate action on behalf of
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Synergy. This Agreement constitutes Synergy's legal, valid and binding
obligation, enforceable in accordance with its terms, subject, however, to
the effects of bankruptcy, insolvency, reorganization, moratorium and
similar laws for the protection of creditors, as well as to general
principles of equity, regardless whether such enforceability is considered
in a proceeding in equity or at law.
3.4 Liability for Brokers' Fees. Synergy has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement for which PEM shall have any
responsibility whatsoever.
3.5 Litigation. There is no action, suit, proceeding, claim or investigation
by any person, entity, administrative agency or governmental body pending
against Synergy before any governmental authority that impedes or is
likely to impede its ability (i) to consummate the transactions
contemplated by this Agreement or (ii) to assume the liabilities to be
assumed by it under this Agreement.
3.6 Evaluation. In entering into this Agreement, Synergy acknowledges and
affirms that it has relied and will rely solely on the terms of this
Agreement and upon its independent analysis, evaluation and investigation
of, and judgment with respect to, the business, economic, legal, tax or
other consequences of this transaction, including without limitation, its
own estimate and appraisal of the extent and value of the Assets, and the
petroleum, natural gas and other reserves associated with the Assets.
ARTICLE IV
TITLE MATTERS
4.1 Examination of Files and Records. PEM has made available to Synergy its
existing Lease, Well and title files, accounting records, production
records, easements, Contracts, division orders and other information, to
the extent not subject to confidentiality agreements, available in its
files relating to the Assets. If Closing does not occur, Synergy shall
promptly return all such data and other to PEM.
4.2 Title Review. Synergy has reviewed title to the Assets; has agreed to
accept title in its current condition; and has decided to proceed with
Closing.
ARTICLE V
ENVIRONMENTAL MATTERS
Synergy has had access to and the opportunity to inspect the Assets for all
purposes, including without limitation, for the purposes of detecting the
presence of hazardous or toxic substances, pollutants or other contaminants,
environmental hazards, naturally occurring radioactive materials ("NORM"),
produced water, air emissions, contamination of the surface and subsurface and
any other Environmental Defects. PEM understands that its is responsible for
notifying appropriate government agencies of any Environmental Defects, and
potentionally for any clean-up or remediation with respect to any Environmental
Defects. Nothing contained in this Article V limits the provisions of Section
9.1 of this Agreement.
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ARTICLE VI
COVENANTS OF PEM PRIOR TO CLOSING
6.1 Affirmative Covenants. Until Closing, PEM, shall do the following:
(a) Continue to pay any shut in royalties which may be due and take any
and all other actions necessary to keep the Leases in full force and
effect;
(b) Maintain insurance now in force with respect to the Assets;
(c) Comply with all other terms of all Leases and Contracts;
(d) Notify Synergy of any claim or demand which might materially
adversely affect title to or operation of the Assets; and
(e) Pay costs and expenses attributable to the Assets as they become
due.
6.2 Negative Covenants. Until Closing, PEM shall not do any of the following
with regard to the Assets it has agreed to sell and assign hereunder
without first notifying Synergy:
(a) Abandon any Well unless required to by a regulatory agency;
(b) Release all or any portion of a Lease, Contract or easement;
(c) Commence an operation in a Well if the estimated cost of the
operation exceeds $7,500 net to PEM's interest, except such
operations for which Synergy may provide its consent;
(d) Create a lien, security interest or other encumbrance on the Assets;
(e) Remove or dispose of any of the Assets;
(f) Amend a Lease, Contract or easement or enter into any new contracts
affecting the Assets; or
(g) Waive, comprise or settle any claim that would materially affect
ownership, operation or value of any of the Assets exceeding $3,500
net to PEM's interest.
ARTICLE VII
CLOSING
7.1 Date of Closing. Closing of the transactions contemplated hereby shall be
held at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ at 4:00 p.m. on October 1, 2010.
Absent a timely closing or a written extension signed by both parties,
this Agreement shall conclusively terminate. Time is of the essence in
respect of the Closing.
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7.2 Place of Closing. The Closing shall be held at the offices of Synergy, or
at such other time and place mutually agreed by the parties.
7.3 Closing Obligations. At the Closing, the following shall occur:
(a) PEM shall, execute, acknowledge and deliver an Assignment and ▇▇▇▇
of Sale in the form attached as Exhibit 5, conveying the Assets to
Synergy, and
(b) Synergy shall pay to PEM $830,093.69 (or the Adjusted Purchase
Price) by bank check payable to PEM.
7.4 Simultaneous Closings. An additional condition of the closing of this
Agreement is the simultaneous closing of the separate Purchase and Sale
Agreement (Operations and Leaseholds) of even date between Petroleum
Management, LLC and Synergy. Such other Purchase and Sale Agreement is and
shall remain separate and distinct from this Agreement, but the parties
agree that they may be read together for purposes of interpretation and
determination of the intent of the parties.
ARTICLE VIII
POST-CLOSING OBLIGATIONS
8.1 Delivery of Records. PEM agrees to make the Records available for pick up
by Synergy as soon as is reasonably practical, but in any event on or
before seven (7) days after Closing. PEM may retain copies of the Records
and PEM shall have the right to review and copy the Records during
standard business hours upon reasonable notice for so long as Synergy
retains the Records. PEM at all times will maintain the confidential
nature of the Records in accordance with Article X. Synergy agrees that
the Records will be maintained in compliance with all applicable laws
governing document retention. Synergy will not destroy or otherwise
dispose of Records after Closing, unless Synergy first gives the PEM
reasonable notice and an opportunity to copy the Records to be destroyed.
If and to the extent certain portions of the Records are subject to
unaffiliated third party contractual restrictions on disclosure or
transfer, PEM agrees to use reasonable efforts to obtain the waiver of
such contractual restrictions; provided, however, that they shall not be
required to expend any money in connection with obtaining such waivers.
8.2 Proceeds and Invoices For Property Expenses Received After Closing. PEM
shall be responsible for the payment of all its costs, liabilities and
expenses (including severance taxes) incurred in the ownership and
operation of the Assets prior to the Effective Time and not yet paid or
satisfied. Synergy shall be responsible for payment (at Closing or
thereafter if not reflected on the Closing Settlement Statement) of all
costs, liabilities and expenses (including severance taxes) incurred in
the ownership and operation of the Assets after the Effective Time. After
the Closing, those proceeds attributable to the Assets received by a
party, or invoices for expenses attributable to the Assets, shall be
settled as follows:
(a) Proceeds. Proceeds received by Synergy with respect to sales of
Hydrocarbons produced prior to the Effective Time shall be immediately
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remitted or forwarded to PEM. Proceeds received by PEM with respect to
sales of Hydrocarbons produced after the Effective Time shall be
immediately forwarded to Synergy.
(b) Property Expenses. Invoices received by Synergy that relate to
operation of the Assets prior to the Effective Time shall be forwarded
to PEM by Synergy, or if already paid by Synergy, invoiced by Synergy
to PEM. Invoices received by PEM that relate to operation of the
Assets after the Effective Time shall be immediately forwarded to
Synergy by PEM, or if already paid by PEM, invoiced by them to
Synergy.
8.3 Plugging Liability. From and after the Closing, Synergy will assume the
expenses and costs of plugging and abandoning the ▇▇▇▇▇ and restoration of
operation sites, all in accordance with the applicable laws, regulations
and contractual provisions. Notwithstanding the above, Synergy will not be
responsible for the remediation of the Environmental Defects listed on
Exhibit 4 or reporting the Environmental Defects to any state or federal
agency.
8.4 Assumption of Contracts. From and after the Effective Time, Synergy
assumes, will be bound by, and agrees to perform all express and implied
covenants and obligations of PEM relating to the Assets, whether arising
under (i) the Leases, prior assignments of the Leases, the Contracts, the
easements, the permits or any other contractually-binding arrangements to
which the Assets (or any component thereof) may be subject and which will
be binding on PEM and/or the Assets (or any component thereof) after the
Closing or (ii) any applicable laws, ordinances, rules and regulations of
any governmental or quasi-governmental authority having jurisdiction over
the Assets.
8.5 Access. Synergy shall have the right following Closing to make such
nonexclusive use of roads and other access improvements as may now or
hereafter exist on the Lands as it believes convenient in connection with
its operations on the Leases, subject to its compliance with the Leases or
other instruments creating the rights-of way or easements and its payment
of an appropriate share of maintenance costs based upon its use of such
road or access improvements.
8.6 Further Assurances. From time to time after Closing, PEM and Synergy shall
each execute, acknowledge and deliver to the other such further
instruments and take such other action as may be reasonably requested in
order to accomplish more effectively the purposes of the transactions
contemplated by this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 By the PEM. Except as otherwise provided herein, PEM shall be responsible
for and shall indemnify and hold harmless Synergy, its officers,
directors, employees and agents, from all claims, losses, costs,
liabilities, damages and expenses, including reasonable attorneys' fees
and costs, (collectively, "Claims") arising out of or resulting from (i)
PEM's ownership or operation of the Assets prior to Closing, including
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Claims arising under Environmental Laws, (ii) PEM's disbursement of
production proceeds from the Assets accruing prior to the Effective Time,
and (iii) any breach of any surviving representations, warranties,
covenants or conditions of PEM contained in this Agreement, subject,
however, to the limitations set forth in Sections 11.9 and 11.10.
9.2 By Synergy. Except as otherwise provided herein, Synergy shall be
responsible for and shall indemnify and hold harmless PEM, its officers,
directors, employees and agents, from all Claims arising out of or
resulting from (i) Synergy's ownership or operation of the Assets after
Closing, including Claims arising under Environmental Laws, and (ii) any
breach of any representation, warranties, covenants or conditions of
Synergy contained in this Agreement, subject, however, to the limitations
set forth in Section 11.10.
ARTICLE X
CONFIDENTIALITY
If the Closing does not occur, Synergy will use its best efforts to keep all the
information furnished by PEM to Synergy hereunder or in contemplation hereof
strictly confidential including, without limitation, the Purchase Price and
other terms of this Agreement, and will not use any of such information to
Synergy's advantage or in competition with PEM, except to the extent such
information (i) was already in the public domain, not as a result of disclosure
by Synergy, (ii) was already known to Synergy, (iii) is developed by Synergy
independently from the information supplied by PEM, or (iv) is furnished to
Synergy by a third party independently of Synergy's investigation pursuant to
the transaction contemplated by this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Exhibits. The exhibits to this Agreement are hereby incorporated into this
Agreement by reference and constitute a part of this Agreement.
11.2 Notices. All notices and communications required or permitted under this
Agreement shall be in writing and addressed as set forth below. Any
communication or delivery hereunder shall be deemed to have been duly made
and the receiving party charged with notice (i) if personally delivered,
when received, (ii) if sent by facsimile transmission or electronic mail,
when received (iii) if mailed, five (5) business days after mailing,
certified mail, return receipt requested, or (iv) if sent by overnight
courier, one day after sending. All notices shall be addressed as follows:
If to the Synergy: Synergy Resources Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to PEM: Petroleum Exploration and Management, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
12
Any party may, by written notice so delivered to the other parties, change
the address or individual to which delivery shall thereafter be made.
11.3 Amendments. Except for waivers specifically provided for in this
Agreement, this Agreement may not be amended nor any rights hereunder
waived except by an instrument in writing signed by the party to be
charged with such amendment or waiver and delivered by such party to the
party claiming the benefit of such amendment or waiver.
11.4 Assignment. Synergy and PEM shall not assign all or any portion of their
respective rights or delegate all or any portion of their respective
duties hereunder unless they continue to remain liable for the performance
of their obligations hereunder. Synergy may not assign the benefits of
PEM's indemnity obligations contained in this Agreement, and any permitted
assignment shall not include such benefits. No such assignment or
obligation shall increase the burden on PEM or impose any duty on it to
communicate with or report to any transferee, and PEM may continue to look
to Synergy for all purposes under this Agreement.
11.5 Counterparts; Fax Signatures. This Agreement may be executed by Synergy
and PEM in any number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute but one
and the same instrument. Facsimile signatures shall be considered binding.
11.6 Governing Law. This Agreement and the transactions contemplated hereby and
any arbitration or dispute resolution conducted pursuant hereto shall be
construed in accordance with, and governed by, the laws of the State of
Colorado without reference to the conflict of laws principles thereof.
11.7 Entire Agreement. This Agreement, together with the Purchase and Sale
Agreement (Operations and Leaseholds) of even date, constitute the entire
understanding among the parties, their respective partners, members,
trustees, shareholders, officers, directors and employees with respect to
the subject matter hereof, superseding all negotiations, prior discussions
and prior agreements and understandings relating to such subject matter.
11.8 Binding Effect. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto, and their respective successors and
assigns.
11.9 Survival. The representations and warranties of the parties hereto
contained in Article II (except Section 2.2(a), (b) and (g)) and Article
III and the indemnification of the parties hereto contained in Article
IX, and all claims, causes of action and damages with respect thereto,
and the provision of paragraph 1.5, shall survive the Closing for a
period of twenty-four months thereafter, and then expire and terminate.
The representations and warranties contained in Section 2.2(a), (b) and
(g) shall not survive the Closing, but shall expire and terminate at the
Closing.
13
11.10 Limitation on Damages; Provision for Recovery of Costs and Attorney's
Fees. The parties expressly waive any and all rights to consequential,
special, incidental, punitive or exemplary damages, or loss of profits
resulting from breach of this Agreement. The prevailing party in any
litigation seeking a remedy for the breach of this Agreement shall,
however, be entitled to recover all attorneys' fees and costs incurred in
such litigation.
11.11 No Third-Party Beneficiaries. This Agreement is intended to benefit only
the parties hereto and their respective permitted successors and assigns.
11.12 Severability. If at any time subsequent to the date hereof, any provision
of this Agreement shall be held by any court of competent jurisdiction to
be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
11.13 Waiver. No consent or waiver, express of implied, to or of any breach or
default in the performance of any obligation or covenant hereunder shall
constitute a consent or waiver to or of any other breach or default in the
performance of the same or any other obligations hereunder.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first-above written.
PETROLEUM EXPLORATION AND MANAGEMENT, LLC SYNERGY RESOURCES CORPORATION
By: /s/ ▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
------------------------------------ ----------------------------
▇▇ ▇▇▇▇▇▇▇▇, Manager ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇., Vice
President
15
EXHIBIT 1
TO
PURCHASE AND SALE AGREEMENT
(▇▇▇▇▇, Equipment and Well Bore Leasehold interests)
1. ▇▇▇▇▇ 25-10 (NWSE of Section 25, 4N-67W-Weld County, CO)
Equipment: Separator - J&S 250# - Built 1/87 - SN 3009
Wellhead - Lubricator ASM
Controller - EDI/TCS JR SN 13-69831107
Tank - ▇▇▇▇▇ ▇▇▇# - ▇▇▇▇▇ ▇▇▇▇ - ▇▇ ▇▇▇▇-▇
Pit - ▇▇▇▇▇▇▇ 1250 BBL
2. ▇▇▇▇▇▇▇ 23-15 (SWSE of Section 23, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1983 - SN 25122
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ Beauragard SN LIQ98A10
Tank - NELCO 400 BBL - SN 3102 - Built 1988
Pit - Erie 1000 gallon
Other - Line heater
3. ▇▇▇▇▇▇▇ 23-16 (SESE of Section 23, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1983 - SN 25523
Wellhead - Lubricator ASM
Controller - EDI/TSC JR - SN B620004
Tank - ▇▇▇▇▇ ▇▇▇ ▇▇▇ - ▇▇ ▇▇▇▇-▇ - Built 1984
Pit - ▇▇▇▇▇▇▇ 1000 gallon
4. ▇▇▇▇▇▇▇ ▇▇-▇ (▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, CO)
Equipment: Separator - American 250# SN 19056 - Built 1985
Wellhead - Lubricator ASM
Controller - EDI/TSC JR - SN 23861202
Tank - D&L ▇▇▇ ▇▇▇ - ▇▇ ▇▇▇▇▇▇ - Built 1984
Pit - Erie 1000 gallon
5. ▇▇▇▇▇▇▇ 26-2 (NWNE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - No ID plate - 250#
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 004921
Tank - NELCO 300 BBL - SN 205781
Pit - Erie 1000 gallon
Flare Stack - LIBCO - no ID plate
6. ▇▇▇▇▇▇▇ 26-10 (NWSE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1/81 - SN ▇-▇▇▇▇▇▇-▇▇
Wellhead - Lubricator ASM
Controller - EDI-DCSXT JR - No SN
Tank - NELCO 300# - SN 205681
Pit - Erie 1000 gallon
2
7. ▇▇▇▇▇▇▇ 26-16 (SESE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - ▇▇▇▇▇▇▇▇▇▇▇ 250# - Built 3/86 - SN 3714
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ Beauragard ▇▇ ▇▇▇▇
▇▇▇▇ - ▇▇▇▇▇ ▇▇▇# - ▇▇ ▇▇▇▇▇
Pit - Erie 1000 gallon
8. ▇▇▇▇▇▇▇ ▇▇-▇ (▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, CO)
Equipment: Separator - National 1000# HLP 13 - SN 37365
Wellhead - Lubricator ASM - No Controller
Tank - Union 400 BBL - Built 3/56 - SN 3477
Pit - Erie 1000 gallon
Other - Line heater
3
EXHIBIT 2
TO
PURCHASE AND SALE AGREEMENT
(▇▇▇▇▇, Equipment and Well Bore Leasehold interests)
▇▇▇▇▇ 25-10
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981056
Lessor: ▇▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981055
Lessor: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981056
Lessor: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
▇▇▇▇▇▇▇ 23-15 and 16
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
Date: April 1, 19921
Recorded: Book 1299 under Rec. No. 2250760
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: UPRR ROW strip in S1/2SE1/4
Date: June 1, 19921
Recorded: Book 1312 under Rec. No. 2264693
Lessor: Amoco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: Abandoned UPRR ROW strip in S1/2SE1/4
▇▇▇▇▇▇▇ 26-1
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of the Estate of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
2
▇▇▇▇▇▇▇ 26-2
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: February 12, 1991
Recorded: Book 1290 under Rec. No. 2241811
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: UPRR ROW strip in NW1/4NE1/4 only
Date: October 1, 1990
Recorded: Book 1291 under Rec. No. 2242790
Lessor: Moco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: Abandoned UPRR ROW strip in NW1/4NE1/4 only
▇▇▇▇▇▇▇ 26-6
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE3/3NW1/3 only
3
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4NW1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4NW1/4 only
Date: September 11, 1991
Recorded: Book 1323 under Rec. No. 2275064
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: UPRR ROW strip in SE1/4NW1/4 only
▇▇▇▇▇▇▇ 26-10
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: October 26, 1981
Recorded: Book 954 under Rec. No. 1876288
Lessor: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
4
Date: November 5, 1981
Recorded: Book 954 under Rec. No. 1876289
Lessor: ▇▇▇▇▇ ▇. & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: November 5, 1981
Recorded: Book 954 under Rec. No. 1876290
Lessor: ▇▇▇▇▇ ▇. & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: October 1, 1990
Recorded: Book 1292 under Rec. No. 2243412
Lessor: Amoco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: September 6, 1989
Recorded: Book 1243 under Rec. No. 2191647
Lessor: Weld County, Colorado
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
▇▇▇▇▇▇▇ 26-16
Date: April 7, 1970.
Recorded: June 25, 1970 in Book 628 at Reception No. 1549946.
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse, a widow
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: April 7, 1970
Recorded: September 18, 1970 in Book 633 at Reception No. 1554837.
Lessors: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, d/b/a Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
5
Date: October 26, 1981.
Recorded: December 7, 1981 in Book 954 at Reception No. 1876288.
Lessors: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a single man
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: March 21, 1991
Recorded: December 7, 1981 in Book 954 at Reception No. 1876289.
Lessors: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, husband and wife
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: November 5, 1981.
Recorded: December 7, 1981 in Book 954 at Reception No. 1876290.
Lessors: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, wife and husband
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
End of Exhibit
6
EXHIBIT 3
CONTRACTS
DCP gas contract
Suncor Energy crude oil contract
EXHIBIT 4
ENVIRONMENTAL DEFECTS
Any and all environmental defects prior to the date of closing were the
responsibility of Eddy Oil Company under that certain Purchase and Sale
Agreement, dated June 19, 2009, between PM and Eddy Oil Company, Inc.
EXHIBIT 5
ASSIGNMENT, ▇▇▇▇ OF SALE AND CONVEYANCE
(▇▇▇▇▇, Equipment and Well Bore Leasehold Interests)
THIS ASSIGNMENT, ▇▇▇▇ OF SALE AND CONVEYANCE (the "Assignment") is made
this 1st day of October, 2010, by and between, PETROLEUM EXPLORATION AND
MANAGEMENT, LLC ("Assignor"), a Colorado limited liability company, whose
address is ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Synergy Resources
Corporation, (" Assignee") a Colorado Corporation whose address is ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Assignor and Assignee entered into a Purchase And Sale Agreement
dated October 1, 2010 (the "Agreement"), pursuant to which Assignor agreed to
sell and Assignee agreed to purchase all of the Assignor's interests as defined
herein and as described below.
WHEREAS, this Assignment, ▇▇▇▇ Of Sale and Conveyance is to evidence the
transfer of title necessary to consummate the sale and purchase of such
interests in accordance with and pursuant to the Agreement. Terms not otherwise
defined herein shall have the meanings ascribed thereto in the Agreement.
NOW, THEREFORE, Assignor, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, has bargained, sold, granted,
transferred, assigned and conveyed and does hereby BARGAIN, SELL, GRANT,
TRANSFER, ASSIGN and CONVEY unto ASSIGNEE the following:
1. Assignment. Assignor assigns, sells and quitclaims to Assignee all of
Assignor's right, title and interest in the Assets. As used herein, the term
"Assets" refers to all of the Assignee's right, title and interest in and to the
following:
(a) The oil and gas ▇▇▇▇▇ and equipment specifically described in
Exhibit 1 (the "▇▇▇▇▇"), together with all personal property, fixtures,
improvements, permits, rights-of-way and easements used or held for use in
connection with the production, treatment, compression, storing, sale or
disposal of Hydrocarbons or water produced from the properties and
interests described in Section 1.2(b).
(b) The leasehold estates created by the oil and gas leases
specifically described in Exhibit 2, insofar and only insofar as they
pertain to the well bores described in Exhibit 1 (the "Leases"), and the
oil, gas, coalbed gas and all other hydrocarbons whether liquid, solid or
gaseous (collectively, the "Hydrocarbons") produced or to be produced
through such well bores, and all contract rights and privileges, surface,
reversionary or remainder interests and other interests associated with the
Leases, insofar as they pertain to production of Hydrocarbons through such
well bores.
(c) The pooling and communitization agreements, declarations and
orders, and the units created thereby (including all units formed under
orders, regulations, rules or other acts of any federal, state or othe
governmental agency having jurisdiction), as well as all other such
agreements relating to the properties and interests described in Sections
1(a) and (b) above, and to the production of Hydrocarbons, if any,
attributable to said Leases and ▇▇▇▇▇.
(d) All existing and effective sales, purchase, exchange, gathering,
transportation and processing contracts, operating agreements, balancing
agreements, farmout agreements, service agreements, and other contracts,
agreements and instruments, insofar as they relate to the Leases and ▇▇▇▇▇
described in Sections 1(a) through (c) above (collectively, the
"Contracts").
(e) The files, records and data relating to the items described in
Sections 1 (a) through (d) maintained by Assignor and relating to the
interests described in Sections 1(a) through (d) above (including without
limitation, all lease files, land files, well files, accounting records,
drilling reports, abstracts and title opinions, seismic data, geophysical
data and other geologic information and data), but only to the extent not
subject to unaffiliated third party contractual restrictions on disclosure
or transfer and only to the extent related to the Assets (the "Records").
2. Limited Warranty. The Assignor warrants that it is transferring 100% of
the leasehold/80% net revenue interest, in the Leases which appear on the
annexed Exhibit 2, insofar and only insofar as the Leases relate to the well
bores of the ▇▇▇▇▇ described in Exhibit 1, free and clear of all liens,
restrictions and encumbrances created by, through or under Assignor. Except as
provided in the Agreement, Assignor makes no warranty of title whatsover,
express or implied, as to any of the items being assigned or sold pursuant to
this instrument. In addition, THE ASSIGNOR MAKES NO WARRANTY, EXPRESS OR
IMPLIED, CONCERNING THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OF ANY
OF THE EQUIPMENT OR OTHER PERSONAL PROPERTY BEING SOLD PURSUANT TO THIS
INSTRUMENT.
3. Effective Date. Assignor shall be entitled to receive all revenues
attributable to Assignor's proportionate interest in production from the Assets
through September 30, 2010 and shall pay its proportionate share of expenses
relating to such Assets including severance taxes and ad valorem taxes which
shall be prorated through the Effective Date (i.e., any amounts now due or shall
become due which are associated with production through the effective date shall
be paid by Assignor or credited to Assignee). Thereafter, Assignee shall be
entitled to such revenue and assume and be responsible for such expenses and
taxes.
4. Further Assurances. Assignor agrees to execute and deliver or cause to
be executed and delivered, upon the reasonable request of Assignee, such other
Assignments, Bills of Sale, Certificates of Title and other matters which are
appropriate to transfer the Assets to Assignee.
5. Indemnification. Except as otherwise provided in the Agreement, Assignor
shall be responsible for and shall indemnify and hold harmless the Assignee, its
officers, directors, employees and agents, from all claims, losses, costs,
fines, liabilities, damages and expenses, including reasonable attorneys' fees
and costs, (collectively, "Claims") arising out of or resulting from (i) the
Assignor's ownership or operation of the Assets prior to the date of this
Assignment, including Claims arising under Environmental Laws, as defined in the
Agreement, (ii) Assignor's disbursement of production proceeds from the Assets
accruing prior to October 1, 2010, and (iii) any breach of any surviving
2
representations, warranties, covenants or conditions of the Assignor contained
in this Agreement, subject, however, to the limitations set forth in the
Agreement. Except as otherwise provided herein, Assignee shall be responsible
for and shall indemnify and hold harmless the Assignor, its officers, directors,
employees and agents, from all Claims arising out of or resulting from (i)
Assignee's ownership or operation of the Assets after the date of this
Assignment, including Claims arising under Environmental Laws as defined in the
Agreement, and rules of the Colorado Oil and Gas Conservation Commission, and
(ii) any breach of any representation, warranty, covenants or conditions of
Assignee contained in the Agreement, subject, however, to the limitations set
forth in the Agreement.
6. Miscellaneous. Exhibits 1 and 2 attached to this Assignment are
incorporated herein and shall be considered a part of this Assignment for all
purposes. The provisions of this Assignment shall be binding upon and inure to
the benefit of the parties hereto, and their respective successors and assigns.
This Assignment is made further subject to the terms and conditions of the
Agreement which are incorporated herewith by reference. If there is a conflict
between the terms and conditions of this Assignment and the Agreement, the terms
and conditions of this Assignment shall control to the extent of such conflict.
(Signatures appear on following page)
3
IN WITNESS WHEREOF, the Assignor has executed this Agreement as of the day
and year first-above written.
ASSIGNOR:
PETROLEUM EXPLORATION AND MANAGEMENT, LLC.
By: /s/ ▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇ ▇▇▇▇▇▇▇▇, Manager
STATE OF COLORADO )
) ss.
WELD COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this 1st day of
October, 2010, by ▇▇ ▇▇▇▇▇▇▇▇, the Manager of Petroleum Exploration and
Management, LLC.
My commission expires 11-20-2011
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Notary Public
4
EXHIBIT 1
TO
ASSIGNMENT, ▇▇▇▇ OF SALE AND CONVEYANCE
(▇▇▇▇▇, Equipment and Well Bore Leasehold interests)
Cherokee Joint Venture
9. ▇▇▇▇▇ 25-10 (NWSE of Section 25, 4N-67W-Weld County, CO)
Equipment: Separator - J&S 250# - Built 1/87 - SN 3009
Wellhead - Lubricator ASM
Controller - EDI/TCS JR SN 13-69831107
Tank - ▇▇▇▇▇ ▇▇▇# - ▇▇▇▇▇ ▇▇▇▇ - ▇▇ ▇▇▇▇-▇
Pit - ▇▇▇▇▇▇▇ 1250 BBL
Osage Joint Venture
10. ▇▇▇▇▇▇▇ 23-15 (SWSE of Section 23, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1983 - SN 25122
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ Beauragard SN LIQ98A10
Tank - NELCO 400 BBL - SN 3102 - Built 1988
Pit - Erie 1000 gallon
Other - Line heater
11. ▇▇▇▇▇▇▇ 23-16 (SESE of Section 23, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1983 - SN 25523
Wellhead - Lubricator ASM
Controller - EDI/TSC JR - SN B620004
Tank - ▇▇▇▇▇ ▇▇▇ ▇▇▇ - ▇▇ ▇▇▇▇-▇ - Built 1984
Pit - ▇▇▇▇▇▇▇ 1000 gallon
Pawnee Buttes Joint Venture
12. ▇▇▇▇▇▇▇ 26-1 (NENE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - American 250# SN 19056 - Built 1985
Wellhead - Lubricator ASM
Controller - EDI/TSC JR - SN 23861202
Tank - D&L ▇▇▇ ▇▇▇ - ▇▇ ▇▇▇▇▇▇ - Built 1984
Pit - Erie 1000 gallon
Apache Joint Venture
13. ▇▇▇▇▇▇▇ 26-2 (NWNE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - No ID plate - 250#
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ 004921
Tank - NELCO 300 BBL - SN 205781
Pit - Erie 1000 gallon
Flare Stack - LIBCO - no ID plate
14. ▇▇▇▇▇▇▇ 26-10 (NWSE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - NATCO 250# - Built 1/81 - SN ▇-▇▇▇▇▇▇-▇▇
Wellhead - Lubricator ASM
Controller - EDI-DCSXT JR - No SN
Tank - NELCO 300# - SN 205681
Pit - Erie 1000 gallon
2
Gilcrest West Joint Venture
15. ▇▇▇▇▇▇▇ 26-16 (SESE of Section 26, 4N-67W-Weld County, CO)
Equipment: Separator - ▇▇▇▇▇▇▇▇▇▇▇ 250# - Built 3/86 - SN 3714
Wellhead - Lubricator ASM
Controller - ▇▇▇▇▇▇▇▇ Beauragard ▇▇ ▇▇▇▇
▇▇▇▇ - ▇▇▇▇▇ ▇▇▇# - ▇▇ ▇▇▇▇▇
Pit - Erie 1000 gallon
Shawnee Joint Venture
16. ▇▇▇▇▇▇▇ ▇▇-▇ (▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, CO)
Equipment: Separator - National 1000# HLP 13 - SN 37365
Wellhead - Lubricator ASM - No Controller
Tank - Union 400 BBL - Built 3/56 - SN 3477
Pit - Erie 1000 gallon
Other - Line heater
3
EXHIBIT 2
TO
ASSIGNMENT, ▇▇▇▇ OF SALE AND CONVEYANCE
(▇▇▇▇▇, Equipment and Well Bore Leasehold interests)
▇▇▇▇▇ 25-10
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981056
Lessor: ▇▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981055
Lessor: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
Date: September 5, 1984
Recorded: Book 1044 under Rec. 1981056
Lessor: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
Lessee: Mission Oil Corporation
Description: Township 4 North, Range 67 West
Section 25: NW1/4SE1/4 only
▇▇▇▇▇▇▇ 23-15 and 16
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
1
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: S1/2SE1/4 except 2 railroad strips
Date: April 1, 19921
Recorded: Book 1299 under Rec. No. 2250760
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: UPRR ROW strip in S1/2SE1/4
Date: June 1, 19921
Recorded: Book 1312 under Rec. No. 2264693
Lessor: Amoco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 23: Abandoned UPRR ROW strip in S1/2SE1/4
▇▇▇▇▇▇▇ 26-1
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of the Estate of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NE1/4NE1/4 only
2
▇▇▇▇▇▇▇ 26-2
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4NE1/4 only
Date: February 12, 1991
Recorded: Book 1290 under Rec. No. 2241811
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: UPRR ROW strip in NW1/4NE1/4 only
Date: October 1, 1990
Recorded: Book 1291 under Rec. No. 2242790
Lessor: moco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: Abandoned UPRR ROW strip in NW1/4NE1/4 only
▇▇▇▇▇▇▇ 26-6
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4NW1/4 only
3
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4NW1/4 only
Date: October 20, 1981
Recorded: Book 954 under Rec. No. 1876285
Lessor: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.R. of Est. of M. E. ▇▇▇▇▇, deceased
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4NW1/4 only
Date: September 11, 1991
Recorded: Book 1323 under Rec. No. 2275064
Lessor: Union Pacific Resources Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: UPRR ROW strip in SE1/4NW1/4 only
▇▇▇▇▇▇▇ 26-10
Date: April 7, 1970
Recorded: Book 628 under Rec. No. 1549946
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: April 7, 1970
Recorded: Book 633 under Rec. No. 1554837
Lessor: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dba Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: October 26, 1981
Recorded: Book 954 under Rec. No. 1876288
Lessor: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
4
Date: November 5, 1981
Recorded: Book 954 under Rec. No. 1876289
Lessor: ▇▇▇▇▇ ▇. & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: November 5, 1981
Recorded: Book 954 under Rec. No. 1876290
Lessor: ▇▇▇▇▇ ▇. & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Lessee: Aeon Energy Co.
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: October 1, 1990
Recorded: Book 1292 under Rec. No. 2243412
Lessor: Amoco Production Company
Lessee: Eddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
Date: September 6, 1989
Recorded: Book 1243 under Rec. No. 2191647
Lessor: Weld County, Colorado
Lessee: ddy Oil Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: NW1/4SE1/4 only
▇▇▇▇▇▇▇ 26-16
Date: April 7, 1970.
Recorded: June 25, 1970 in Book 628 at Reception No. 1549946.
Lessor: ▇▇▇▇▇ ▇▇▇▇▇ Purse, a widow
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: April 7, 1970
Recorded: September 18, 1970 in Book 633 at Reception No. 1554837.
Lessors: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, d/b/a Scottsdale Ranch
Lessee: ▇.▇. ▇▇▇▇
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
5
Date: October 26, 1981.
Recorded: December 7, 1981 in Book 954 at Reception No. 1876288.
Lessors: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a single man
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: March 21, 1991
Recorded: December 7, 1981 in Book 954 at Reception No. 1876289.
Lessors: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, husband and wife
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
Date: November 5, 1981.
Recorded: December 7, 1981 in Book 954 at Reception No. 1876290.
Lessors: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, wife and husband
Lessee: Aeon Energy Company
Description: Township 4 North, Range 67 West, 6th P.M.
Section 26: SE1/4SE1/4
6
