Exhibit 10.3
PARTICIPATION AGREEMENT
XXXXXXXX PROSPECT
XXXXX XXXXX XXXXXX XXXX, XXXXX 000, XXX-X 26014
OUTER CONTINENTAL SHELF, GULF OF MEXICO
This Agreement is entered into effective September 1, 2005, by and between
Stone Energy Corporation ("Stone"), whose address is 000 Xxxx Xxxxxxx Xxxxxx
Xxxx, Xxxxxxxxx, XX 00000, and Ridgewood Energy Corporation, Manager Ridgewood
Energy P Fund, LLC. ("Ridgewood"), whose address is 00000 Xxx Xxxx Xxxx, Xxxxx
000, Xxxxxxx, XX 00000, concerning the drilling and evaluation of the OCS-G
26014, South Xxxxx Island Block 231, Outer Continental Shelf, Gulf of Mexico.
Whereas, Stone owns one hundred percent (100%) record title interest in
OCS-G 26014 (hereinafter defined as "Lease"),
Whereas, Ridgewood desires to earn an undivided thirty percent (30%)
Operating Rights Title Interest (as hereinafter defined) from Stone in the Lease
by participating in and bearing a disproportionate fifty percent (50%) of all of
the costs, of drilling an Initial Test Well (as hereinafter defined) to Casing
Point (as hereinafter defined), subject to the limitations set forth in Article
3.1 and conducting all other testing and logging operations as set forth in the
AFE (as hereinafter defined) for the Initial Test Well (as hereinafter defined);
and
Whereas, Ridgewood desires to earn an assignment of the above described
interest in the Lease in accordance with the further terms and conditions of
this Agreement, and the Parties (as hereinafter defined) hereto desire to set
forth their agreement concerning the obligations of Ridgewood with respect to
earning such interest from Stone.
Now, Therefore, for $510,000 cash in hand representing reimbursement to
Stone by Ridgewood of thirty percent (30%) of Stone's leasehold costs in the
Lease and in consideration of the premises and the mutual benefits set forth'
herein and other good and valuable consideration, the Parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
1.1 "AFE" means the Authorization for Expenditure #1533-D submitted by
Stone dated July 1, 2005 in the gross amount of $15,876,000.00 to cover
the estimated costs to drill the Initial Test Well and/or other
operations conducted under the attached JOA (as hereinafter defined),
which is attached as Exhibit "A".
1.2 "Affiliate" means a company or partnership or other legal entity which
controls, or is controlled by, or which is controlled by an entity
which controls a Party. Control means the ownership directly or
indirectly of more than fifty percent (50%) of the voting rights in a
company, partnership or legal entity.
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Objective Depth and all other approved logging and testing operations
have been conducted.
4.2 The interest assigned will be without warranty of title except by,
through and under Stone and shall' be made without recourse or
warranty, express, implied or statutory, except as to actions by
through or under Stone, but not otherwise. Stone will represent that
there are no existing encumbrances on production from the Leases other
than the Lessor's royalty. Such assignment shall be made effective as
of the first day of the month in which Objective Depth is reached.
ARTICLE V
LEASE OWNERSHIP AND SHARING OF COSTS AFTER EARNING
5.1.1 In the event Ridgewood earns an assignment of the Operating Rights
Title Interest, then the joint working interest ownership in the
Initial Test Well, or Substitute Well therefor, and in the Lease shall
be in the proportions of seventy percent (70%) Stone and thirty percent
(30%) Ridgewood or as otherwise agreed to pursuant to the JOA.
The cost, risk, expense and liability of all subsequent approved
operations, including but not limited to, the cost of setting casing
and completing and equipping the Initial Test Well for production, as
well as all other approved operations conducted on the Lease, shall be
borne in accordance with those working interest percentages set forth
immediately above in this Article 5.1 or as otherwise agreed to
pursuant to the JOA.
ARTICLE VI
OPERATING AGREEMENT AND CONDUCT OF OPERATIONS
6.1 All operations on the Initial Test Well, or Substitute Well, and the
Leases will be conducted under the terms and conditions of the Joint
Operating Agreement. Simultaneously with the execution of this
Agreement, the Parties will execute a Joint Operating Agreement
utilizing the form attached hereto as Exhibit "B", which will reflect
working interest percentages of Stone and Ridgewood as established by
this Agreement.
6.2 In the event of a conflict between a provision of this Agreement and a
provision of the Joint Operating Agreement, then the applicable
provision of this Agreement shall prevail and control.
ARTICLE VII
ASSIGNMENT OF AGREEMENT
7.1 Until such time Ridgewood has earned an assignment as set forth in
Article IV above, Ridgewood shall not have the right to assign any
portion of its rights and obligations pursuant to this Agreement
without the prior written consent of Stone. Any such assignment
consented to by Stone shall be made subject to this Agreement and shall
not be binding on Stone until Stone has been furnished a copy of the
assignment(s). Notwithstanding any assignment that Ridgewood may make,
as between Stone and Ridgewood, Stone shall have the right to continue
to look solely to Ridgewood for the performance of all of the cost
obligations undertaken and the satisfaction of all liabilities
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documents are necessary or desirable to carry out its purposes, the
Parties shall take or cause to be taken all such necessary action or
execute and deliver such deeds and documents.
13.8 This Agreement is the entire agreement of the Parties with respect to
the subject matter contained herein and supersedes all prior written
and verbal understandings and negotiations of the Parties including
that certain "Offer to Participate-Xxxxxxxx Prospect" between Stone
Energy Corporation and Ridgewood Energy Corporation dated August 31,
2005.
ARTICLE XIV
EFFECT OF AGREEMENT
14.1 The terms, covenants and conditions of this Agreement shall be binding
upon, and shall inure to the benefit of, the Parties hereto and their
respective heirs, successors and assigns; and the terms, covenants and
conditions shall be covenants running with the leases covered hereby
and the leasehold estate therein and with each transfer or assignment
of the land or leasehold estate.
In Witness Whereof, this Agreement is executed in the presence of
competent witnesses by the Parties to this Agreement as of the dates set out
below, but is made effective as of date first above written.
WITNESSES: RIDGEWOOD ENERGY CORPORATION,
MANAGER RIDGEWOOD ENERGY
P FUND, LLC
[SIGNATURE ILLEGIBLE] By: /s/ W. Xxxx Xxxxx
------------------- ------------------------------------
Name: W. Xxxx Xxxxx
---------------------------------
[SIGNATURE ILLEGIBLE] Title: Executive Vice President
------------------- --------------------------------
Date: 12-15-05
STONE ENERGY CORPORATION
[SIGNATURE ILLEGIBLE] By: /s/ X.X. Xxxxxxxx
------------------- -----------------------------------
Name: X.X. Xxxxxxxx
---------------------------------
[SIGNATURE ILLEGIBLE] Title: Senior Vice President - Land
------------------- --------------------------------
Date: December 9, 2005
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ACKNOWLEDGMENT
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STATE OF TEXAS
COUNTY OF XXXXXX
On this 15th day of December, 2005, before me, appeared W. Xxxx Xxxxx, to me
personally known, who, being by me duly sworn, did say that he is the Executive
Vice President for Ridgewood Energy Corporation, Manager Ridgewood Energy P
Fund, LLC. and that the foregoing instrument was signed in behalf of said
corporation by authority of its Board of Directors, and said appearer
acknowledged said instrument to be the free act and deed of said corporation.
/s/ Xxxxx Xxxxx
---------------
NOTARY PUBLIC
My Commission expires: October 1, 2008
[SEAL] XXXXX XXXXX
Notary Public,
State of Texas
My Commission Expires
October 01, 2008
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF LAFAYETTE
On this 9th day of December, 2005, before me, appeared, X. X. Xxxxxxxx to me
personally known, who, being by me duly sworn, did say that he is a Senior Vice
President, Land of Stone Energy Corporation, and that the foregoing instrument
was executed in behalf of said corporation by authority of its Board of
Directors, and said appearer acknowledged said instrument to be the free act and
deed of said corporation.
/s/ Xxxxxx X. Xxxxx
--------------------
NOTARY PUBLIC
My Commission expires: ____________
OFFICIAL SEAL
XXXXXX X. XXXXX
NOTARY PUBLIC NO. 00000
XXXXX XX XXXXXXXXX
XXXXXX XX XXXXXXXXX
My Commission Is For Life
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Ridgewood Energy Corporation,
Manager Ridgewood Energy P Fund, LLC.
__________________________________ By: _______________________________
__________________________________ Title: _____________________________
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