Exhibit 10.1
RIO EXPLORATION COMPANY
January 15, 2003
Xx. Xxxx X Xxxxxxxxxxx, Chairman
Houston American Energy Corporation
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Re: Tambaqui Association Contract
Rio Exploration Company/Hupecol, LLC
State of Casanare, Colombia
Effective Date: December 31, 1997
Dear Xx. Xxxxxxxxxxx,
This letter, when fully executed, shall constitute an agreement and binding
contract effective January 1, 2003 (the agreement), between Rio Exploration
Company, a Texas Corporation, 0000 Xxxxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxxxx,
Xxxxx 00000, represented and acting by and through and under its President, Xxxx
X. Xxxxxxxx, Xx. (hereinafter referred to as "Rio"), and Houston American Energy
Corporation,. a Texas Corporation, 000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
acting under its Chairman, Xxxx X. Xxxxxxxxxxx (hereinafter referred to as
"HAEC"). Rio and HAEC are herein collectively referred to as the "parties," and
each of the terms Rio and HAEC shall also be deemed to include their respective
parents or affiliates, if any.
Upon execution of this agreement, Rio being the equitable and forthcoming legal
owner of a 16.38102% of one hundred percent (100%) interest in Hupecol, LLC, who
is the legal owner of the Cara Cara Association Contract conveyed to Hupecol by
ECOPETROL, the state-owned oil company of the Country of Colombia, dated
December 31, 1997, in the State of Casanare, Colombia, has agreed to convey,
transfer, and assign and by these presents has conveyed, transferred, and
assigned to HAEC a twelve and one-half percent (12 %) of one hundred percent
(100%) interest in Hupecol, LLC, and the Tambaqui Association Contract, composed
of 36,000 hectares more or less, and to be known as the Tainbaqui Association
Contract, issued by ECOPETROL and the State of Casanare.
It is also understood by the parties hereto that Hupecol, LLC, a Texas limited
liability company, is in the process of forming a new limited liability company,
which will be the sole owner of the Tambaqui Association Contract, of which Rio
will be assigned, and be the owner of a 16.38102% of one hundred percent (100%)
share of the new "Tambaqui Limited Liability Company." Upon assignment to Rio of
the "Tambaqui Limited Liability Company," Rio agrees to assign to HAEC a twelve
and one-half percent (12 %) of one hundred percent (100%) interest in the
Tambaqui LLC, within five working days of the date assigned to Rio.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx 00000-0000
4
For and in consideration of three hundred and twelve thousand five hundred and
no/100 U.S. dollars ($312,500.00), the receipt and sufficiency of which is
hereby acknowledged and the commitment and obligation of HAEC to assume twelve
and one-half percent (12 %) of the drilling and completion cost of the Tambaqui
#2 well, to be commenced on or about March 15, 2003, as outlined in the AFE
attached as Exhibit "A" hereto, the estimated cost of the HAEC twelve and
one-half percent (12 %) interest to be one hundred and sixty eight thousand five
hundred and seventy nine and 38/100 U.S. dollars ($168,579.38), Rio hereby makes
this assignment.
Upon execution of this agreement by the parties hereof on or before February 1,
2003, HAEC agrees to forward a check, made payable to Rio Exploration Company,
in the amount of three hundred and twelve thousand five hundred and no/100 U.S.
dollars ($312,500.00), as consideration for purchasing the Rio interest. In
addition, HAEC agrees to forward to Hupecol the amount of one hundred and sixty
eight thousand five hundred and seventy nine and 38/100 U.S. dollars
($168,579.38) upon cash call from Hupecol.
Rio agrees to furnish HAEC with copies of all data pertinent to the Tambaqui
Block, including, but not limited to, contracts, geophysical data, log data, or
data requested by HAEC that is currently available to Rio and Hupecol, LLC, or
generated for the benefit of the parties and shall be owned by the parties in
proportion to their interest in the contract and any such party shall be
entitled to copy such data. The party or parties requesting such data shall pay
all cost of reproduction of such data.
This agreement shall be supplemented by a (mutually agreeable by all parties
subject to the contract) Joint Development and Operating Agreement that will be
attached to the new "Tambaqui Limited Liability Company" incorporating the
principal terms, conditions, and provisions set forth in this agreement and such
other provisions as are essential to the management and operation of the
proposed LLC and Association Contract.
This agreement shall be construed and interpreted by the parties to be pursuant
to the laws of the State of Texas, irrespective that all operations are being
conducted in the Republic of Colombia. Jurisdiction and venue shall be
applicable to the "Tambaqui Association Contract" as if the same were within the
boundaries of the State of Texas and governed by the laws and statutes of the
State of Texas.
Rio makes no warranties, express or implied, as to the reserves in place or the
viability of the existing wellbores, or the success of the well to be drilled
under said agreement The interest is sold "as is" subject to all terms,
conditions, and provisions pertaining thereto.
Effective January 1, 2003, HAEC agrees to bear twelve and one-half percent (12
%) of the monthly overhead being paid by Hupecol and its owners on a
month-to-month basis to cover operations and overhead attributable to this
agreement. Presently, the monthly overhead to Hupecol is thirteen thousand five
hundred and no/100 U.S. dollars ($13,500.00) per month, resulting in a monthly
contractual overhead to HEAC effective January 1,, 2003, of one thousand six
1
hundred eighty seven and 50/100 U.S. dollars ($1,687.50) per month, plus any
additional overhead expenses incurred, which shall remain in force and effect
until the monthly overhead rates are adjusted by agreement between the parties.
Nothing contained in this agreement shall be deemed in any way or manner to
prohibit or restrict in any way the right or freedom of any party hereto to
engage in oil and gas activities outside the Tambaqui Block in Colombia, South
America. However, if either party hereto enters into a geological project, such
as geological mapping or other oil and gas activity and decides to go forward
with an oil and gas project and enters into an association contract, both
parties to this agreement agree to offer each other the right to participate for
a twelve and one-half percent (12 %) working interest on or at cost basis,
whether it be with the companies that are subject to this agreement or their
principles or assigns for a period of five years from the date of this
agreement.
If the foregoing terms and conditions are acceptable, please execute your
acceptance hereof by executing duplicate originals of this agreement in the
space provided below and return one original to Rio.
AGREED TO and ACCEPTED this 15th day of January, 2003.
----
RIO EXPLORATION COMPANY HOUSTON AMERICAN ENERGY CORPORATION
By Xxxx X. Xxxxxxxx, Xx. By: ' Xxxx X. Xxxxxxxxxxx
President Chairman
2
HUPECOL
P. 0. DRAWER 669
BEEVITLE, TEXAS
AUTHORITY FOR EXPENDITURE # 2002-02
DATE: 10/31/02
WELL: TAMBAQUI #2
COUNTRY: COLUMBIA
PROSPECT: TAMBAQUI PROSPECT (offset to Tambaqui #1)
PROPOSED DEPTH; 5500'
LOCATION: x=1,288,940 y=1,031,900 (900 Meters NE of Tambaqui #1)
Total
Acct. Drilling Completion Estimated
Intangible Costs (G/L # 6010) Codes Costs Costs Costs
------------------------------ ----- -------- ---------- ---------
LOCATION COSTS:
Survey 105 4,000 4,000
Location & Road (w/damages) 121 52,000 50,000 102,000
Location Cleanup/Environmental 189 17,000 17,000
DRILLING COSTS:
Drilling Overhead 101
Permit Fees/Community
Aid/Security 109 10,000 10,000
Rig Mobilization 119 100,000 100,000
Drilling ft to 129
12 days at $9,960.00 / Day 129 119,520 115,488 235,008
Fuel 248 3,900 3,900 7,800
Water 141 2,400 2,400 4,800
Drilling & Completion
Fluids/chemicals 133 45,028 5,750 50,778
Drill Bits 137 37,388 37,338
Cementing Services 169 25,312 23,357 48,668
Casing Crews/Labor/Inspections 213 11,590 10,728 22,318
Surface Equip. Rental 210 50,993 23,013 74,006
Drillstring & Downhole Rental 211 3,406 1,975 5,381
Directional Drilling Services 139
Hauling & Freight/Air 206 3,600 2,400 6,000
Roustabout & Misc. Services 218 4,250 3,000 7,250
Mud & Cuttings Disposal 193
Communication Expenses 230 3,600 3,600
Gate Guard 215
Tubular / BOP Testing 541
Plugging Costs (if necessary) 175
EVALUATION COSTS:
Electric Logging 149 83,550 83,550
Mud Log Services 145 13,920 4,140 18,060
Core & Paleo Analysis 157
Drill Stem Testing 161
COMPLETION COSTS:
Completion Unit 181
Cased Hole Wireline Services 173 16,409 16,409
Well Testing / DST 266 7,717 51,775 59,492
Well Stimulation Treatments 177
MISC. COSTS:
Supervision 551 25,500 18,000 43,500
Drilling Liability Ins. 573
VAT (Taxes) 576 80,678 80,678
Contingencies 280 62,338 27,958 90,296
HUPECOL
P.0. XXXXXX 000
XXXXXXXX, XXXXX
XXX # 0000-00
Well: TAMBAQUI#2
Total
Acct. Drilling Completion Estimated
TANGIBLE COSTS (G/L #1150) Costs Costs Costs Costs
-------------------------- ----- --------- ----------- ----------
WELLHEAD EQUIPMENT:
Brandenhead 435
Casing Spool 435 2,494 2,494
Tubing Spool 430 6,688 6,688
Christmas Tree 430 11,818 11,818
COMPLETION EQUIPMENT:
Packers 425 1,751 1,751 3,502
Gravel Pack & Equipment 178 50,000 50,000
Downhole Pump 482
TUBULARS:
Conductor 402 2,000 2,000
Surface 500' of 9-5/8", N80 Buttr 404 10,000 10,000
Intermediate 406
Liner 408
Production 5500' of 7", 26# N80 Buttr 410 82,500 82,500
Tubing 5400' of 3-1/2", 9.3# N80 EUE 8rd 415 45,900 45,900
Sucker Rods 481
SURFACE EQUIPMENT:
Line Heaters 455
Heater Treater 455
Tanks 440
Dehydration 470
Separation 450
Gas Mess 475
Flowlines 420
Pump Equipment (Cavity Pump) 480 5,800 5,800
Engines 483
Elec. Equipment & Power lines 462
Misc. Valves, Fittings, Etc. 465
Installation Costs 495
----------------------------------------------------------------------------------------------
Total Tangible Costs $ 16,245 $ 204,457 $ 220,702
----------------------------------------------------------------------------------------------
GRAND TOTAL $ 703,207 $ 645,428 $1,348,635
----------------------------------------------------------------------------------------------
This AFE is an Estimate of Costs only. Approval of same is a commitment to pay
your proportionate share of the actual costs in drilling to the objective depth
specified or complete the work herein specified.
