EXHIBIT 10.2
LEASE ACQUISITION AND DRILLING AGREEMENT DATED
AS OF SEPTEMBER 30, 2002
LEASE ACQUISITION AND DRILLING AGREEMENT
This Lease Acquisition and Drilling Agreement is made and entered into the day
and year hereinafter stated, effective September 30, 2002 except as otherwise
provided, stated by and between Pioneer Oil, a Montana limited liability
company, Billings, Montana, party of the first part, ("Pioneer"), and Dolphin
Energy Corporation, a Nevada corporation, party of the second part ("Dolphin").
Pioneer and Dolphin may be collectively referred to as a "party" or the
"parties".
I
RECITALS
A. Pioneer represents but does not warrant that it owns the working
interest and net revenue interest in certain oil and gas leases located
in Sheridan County, Wyoming, more particularly described on Exhibit A
attached hereto and incorporated herein by reference ("Subject
Leases").
B. Dolphin desires to acquire an interest in the Subject Leases by
drilling oil and gas xxxxx thereon, and by paying certain sums for the
privilege to do so.
C. Each of the Subject Leases provides for certain drilling obligations,
which must be met to maintain the lease in effect.
D. Pioneer desires to allow Dolphin to earn and will transfer and assign
its interest in the Subject Leases to Dolphin on and subject to the
terms and conditions hereinafter stated.
E. In furtherance of the foregoing objectives of both parties, Pioneer
desires to sell and Dolphin desires to purchase the interest of Pioneer
in certain natural gas xxxxx set forth on Exhibit B incorporated herein
by reference, and the equipment, rights of way and personal property
rights associated therewith, ("Well Assets"), also on the terms and
conditions hereinafter stated. It is understood that Well Assets
includes only the xxxxx identified on Exhibit B, and shall not include
the right to drill additional xxxxx except as provided in Article VII
E. hereof.
II
AGREEMENT
Now, for and in consideration of the mutual rights and benefits and obligations
and legal detriments afforded the parties hereunder, the Pioneer and Dolphin do
hereby agree to, ratify and adopt the following terms.
III
FURTHER CONSIDERATION AND DUE DILIGENCE
A. Subject to the other provisions hereof, Dolphin shall have the
reasonable opportunity for a period of sixty (60) days from the date
hereof, to review all land files, gas contracts, contract files,
production files, records, charts, projections, reports, well files,
logs, technical data pertaining in any way to the Subject Leases and
the Well Assets, to include all instruments reasonably requested by
Dolphin pertaining to ownership of the Subject Leases and Well Assets,
the production and mechanical viability of the Well Assets, existing or
potential environmental discrepancies, and any further information or
data relevant in any way to the reservoir engineering analysis to be
performed by Dolphin. Dolphin shall also have reasonable access for the
same time period to inspect and test the Well Assets at its sole cost,
risk and expense.
B. Dolphin will conduct its own investigation as to the Well Assets and
the Subject Leases, and may elect to accept or reject this project in
its entirety. Dolphin will, no later than five (5) days from the close
of the investigation provided for above, notify Pioneer of its
acceptance or rejection of the Well Assets and the Subject Leases.
Dolphin shall exercise such election in good faith based upon, and only
upon, title defects which Dolphin believes cannot be cured to its
satisfaction in a reasonable period of time.
C. If Dolphin elects to accept the Well Assets and the Subject Property,
it shall deliver to Pioneer with such election the sum of One Hundred
Thousand Dollars ($100,000), to be tendered by cashier's check or wire
transfer or other immediately available funds, which amount shall be in
addition to all other amounts payable hereunder.
IV
PURCHASE OF EXISTING XXXXX
A. Pioneer desires to sell and Dolphin desires to purchase the entire
right, title and interest of Pioneer in the Well Assets as set forth on
Exhibit B for the cash sum of Five Hundred Thousand Dollars ($500,000).
B. Subject to the other provisions hereof, closing of the recited purchase
will occur at a mutually agreeable time and place, but no later than
March 31, 2003. At closing, Pioneer will deliver an Assignment and
Xxxx of Sale on form acceptable to counsel for each party, conveying
the working interest and net revenue interest in the Subject Leases to
extent identified on Exhibit B for each respective well, and the
Well Assets, together with such certificates or other documents as are
required or convenient to effect the transfer thereof, or subsequent
operations thereon, and Dolphin will pay to Pioneer by cashier's check
or wire transfer or other immediately available funds, the sum of Five
Hundred Thousand Dollars ($500,000).
C. The Effective Date of the purchase and sale provided for in this
Article IV shall be 7 o'clock a.m. local time on January 1, 2003.
D. Production of natural gas shall be allocated between the parties as of
the Effective Date, and all natural gas produced from the Well Assets
before the Effective Date and proceeds from the sale thereof shall
belong to Pioneer and natural gas produced from the Well Assets after
the Effective Date and proceeds from the sale thereof shall belong to
Dolphin. All expenses incurred to operate and maintain the Well Assets
prior to the Effective Date shall be the responsibility of Pioneer and
all such expenses incurred subsequent to the Effective Date shall be
the responsibility of Dolphin.
E. Notwithstanding the provisions of the preceding paragraph, Wyoming
severance and conservation taxes shall be allocated between the parties
as of the Effective Date. Wyoming severance and conservation taxes on
production prior to the Effective Date shall be the responsibility of
Pioneer, and Wyoming severance and conservation taxes on production
subsequent to the Effective Date shall be the responsibility of
Dolphin. Wyoming ad valorem taxes on gas production shall be similarly
allocated based upon the date of production for valuation purposes, not
upon the date of reporting, assessment or collection. The parties shall
cooperate to timely and accurately file all applicable tax reports,
shall communicate one to the other to verify that such taxes are in
fact timely paid, and, subject to the allocation provisions provided
for herein, that any dispute pertaining to them is resolved to the
reasonable satisfaction of both parties.
F. The parties do hereby agree to indemnify and hold one another harmless
from the liability imposed upon the indemnifying party under the
provisions of this Article IV, including reasonable court costs and
attorneys fees.
G. Adjustments to the purchase price provided for in Article IV A. shall
be made at closing and within one hundred eighty days subsequent to
closing to reflect the foregoing allocations, even if estimates of
taxes and expenses are relied upon to facilitate such closing. Any
adjustment to the purchase price based upon production valuation,
expenses, taxes or otherwise, which are not claimed by either party
within such one hundred and eighty day period shall be deemed waived
and the accounting for closing shall be deemed final even if estimates
of taxes and expenses are relied upon to facilitate such closing even
if estimates of taxes and expenses are relied upon to facilitate such
closing.
V
DRILLING OF PILOT XXXXX
Dolphin shall participate in a pilot project to develop the Subject Leases
for natural gas production from coal bed seams, as follows:
A. Subject to the other terms hereof, Dolphin will, at its sole cost, risk
and expense, commence actual drilling up to sixty (60) natural gas
xxxxx at locations of its choice on the Subject Leases. Each well will
be diligently drilled to penetrate and adequately test the one or more
coals of the Fort Union Formation or to a depth of 2000 feet, whichever
is shallower ("Pilot Xxxxx"). Upon reaching the total depth so drilled,
each well will be completed to produce to the pipeline or gathering
system to which it may be connected, or plugged and abandoned as a dry
hole in accordance with applicable laws and regulations. The location
on which Pilot Xxxxx will be drilled, and the timing by which they will
be drilled will be in the sole and complete discretion of Dolphin,
provided that Dolphin will no later than May 1, 2003, (1) pay to
Pioneer, by cashier's check or wire transfer or other immediately
available funds, the sum of One Million Five Hundred Thousand Dollars
($1,500,000) (less any amounts previously paid by Dolphin to Pioneer
pursuant to paragraph V D. below), and (2) pay into a mutually
acceptable escrow account, estimated costs to drill and complete thirty
(30) Pilot Xxxxx. Dolphin will in any event drill at least twenty-five
(25) Pilot Xxxxx no later than October 1, 2003, and the escrowed funds
will be disbursed as necessary to costs and expenses associated with
such xxxxx.
B. Notwithstanding the foregoing, the Pilot Xxxxx will be drilled and
operated in such a manner as to fully comply with the drilling
obligation provisions of the Subject Leases and, subject to the other
provisions hereof, in such a manner as to maintain the Subject Leases
in full force and effect.
C. In the event that Dolphin does not drill and complete to produce to the
pipeline or gathering system, or plug and abandon, at least 25 xxxxx on
or before May 1, 2003, Pioneer, or its assignee, shall have the right,
but no the obligation, to drill such xxxxx as may be required in order
for Pioneer to comply with its drilling obligations under the Subject
Leases.
D. No later than the end of the month following that in which casing has
been cemented in any particular pilot well, Dolphin will tender to
Pioneer by cashier's check or wire transfer or other immediately
available funds, the sum of $25,000 for the first well on each drill
site spacing unit. The parties recognize that an additional well may be
drilled on each drill site spacing unit by penetrating to different
coals under current spacing regulations, with no additional well fee
paid to Pioneer.
VI
ASSIGNMENT OF DRILLED ACREAGE
In the event that Dolphin shall have drilled and completed, either as a producer
or a dry hole, any of the Pilot Xxxxx, Pioneer will, upon written request,
assign, and convey to Dolphin all of its right, title and interest in and to the
Subject Leases insofar as they pertain to the eighty acre drill site spacing
unit for any well so drilled to all depths covered by the Subject Leases. Such
assignment and conveyance shall be on such form as is acceptable to counsel for
each party, and shall convey the working interest and net revenue interest not
less than that identified on Exhibit A.
VII
ADDITIONAL OPTION ACREAGE
A. In the event that Dolphin shall have fully and timely complied with the
terms and provisions hereof, Dolphin shall have the right, but not the
obligation, to drill additional xxxxx on the Subject Leases. Such
additional drilling will occur at the sole option and election of
Dolphin. Any xxxxx so elected to be drilled by Dolphin shall be drilled
and completed, or plugged an abandoned as a dry hole, no later than
October 31, 2005.
B. The Subject Leases represent additional drill sites (approximately 164
under current spacing rules). Commencing on November 1, 2003, or sooner
if so elected by Dolphin, Dolphin shall notify Pioneer of any election
to drill it might wish to exercise during the month following the first
of the month by which such election must be made. In the event that
Dolphin elects to drill fewer than sixty (60) xxxxx between October 1,
2003 and October 1, 2004, and fewer than sixty (60) additional xxxxx
between October 1, 2004 and October 1, 2005, Pioneer, or its assignees,
may elect to drill xxxxx on the Subject Leases for their own account,
not to exceed the total number of xxxxx necessary for sixty (60) xxxxx
to be drilled by the parties between October 1, 2003 and October 1,
2004 and an additional sixty (60) xxxxx to be drilled by the parties
between October 1, 2004 and October 1, 2005. In that event, Pioneer
shall notify Dolphin of its election to do so within five (5) days
after receipt of Dolphins well list. The location and anticipated depth
of Pioneers xxxxx shall be within the sole discretion of Pioneer or its
assignees, provided that no xxxxx shall be drilled on any spacing unit
previously assigned to Dolphin or previously identified on Dolphin's
well list.
C. For each option well it elects to drill under the terms of this
Article, Dolphin shall tender the sum of Twelve Thousand Five Hundred
Dollars ($12,500) per well, as
opposed to per spacing unit, and otherwise in the same manner provided
for above as to payment for Pilot Xxxxx.
D. For each option well it elects to drill under the terms of this
Article, and if Dolphin is otherwise in full compliance with the terms
hereof, Pioneer shall assign and convey to Dolphin its interest in the
eighty-acre drill site for the well so elected and drilled, in the same
manner provided for above for the Pilot Xxxxx.
E. Anything herein to the contrary notwithstanding, should Dolphin elect
to drill additional xxxxx on the drill site spacing unit for the Well
Assets purchased under Article IV above, either as Pilot Xxxxx or
additional xxxxx under this Article, it shall pay Pioneer the sum of
Twelve Thousand Five Hundred Dollars ($12,500) in the manner provided
for above as to the Pilot Xxxxx or additional xxxxx as applicable.
VIII
REPRESENTATIONS BY PIONEER
Pioneer represents and warrants to Dolphin that:
1. It is organized and in good standing in the state of Wyoming;
2. It has the corporate power and authority to enter into the
contemplated transaction;
3. Execution and delivery of this document, consummation of this
transaction and performance hereunder will have been duly
authorized, and will not result in conflict with or breach of
or default under any other obligation to which it may be
bound;
4. This Agreement will be binding and enforceable in accord with
its terms;
5. There are no legal proceedings against it with respect to
which it has been notified or served with process that will
affect the Subject Leases or the Well Assets, or hinder,
impede or prevent performance by it hereunder;
6. All operations on the Subject Leases and the Well Assets have
been performed in compliance with all applicable laws, rules
and regulations, are bottomed on the Subject Leases, and have
otherwise been operated in a good and workmanlike manner and
in accord with industry practice;
7. There are no contracts or instruments with respect to the
Subject Leases or Well Assets that are not disclosed on
Exhibit A and it is not in breach of any agreement so
disclosed;
8. Title to the Subject Leases and the Well Assets is vested in
it free and clear of all liens, burdens and encumbrances,
whether or not disclosed;
9. Its working interest is not more than and its net revenue
interest is not less than that set forth on Exhibit A;
10. The Subject Leases are in full force and effect in accord with
their terms, and all obligations arising thereunder have been
fully complied with;
11. All equipment and machinery used by it to operate the Well
Assets have been maintain in accord with standard industry
practice;
12. None of the Well Assets is subject to any over or under
production account or payout account;
13. There are no consents required to assign the Subject Leases or
the Well Assets to Dolphin as provided herein, and there are
no preferential rights to purchase affecting the Subject
Leases or the Well Assets;
14. It has not received any prepayments for xxxxx or equipment on
the Subject Leases;
15. There is no broker, finder or financial advisor involved in
this transaction. On behalf of Pioneer.
IX
REPRESENTATIONS BY DOLPHIN
Dolphin represents and warrants to Pioneer that:
1. It is duly organized and in good standing in the state of
Nevada;
2. It is authorized to do business in Wyoming;
3. It has the corporate power and authority to enter into the
contemplated transaction;
4. Execution and delivery of this document, consummation of this
transaction and performance hereunder will have been duly
authorized, and will not result in conflict with or breach of
or default under any other obligation to which it may be
bound;
5. This Agreement will be binding and enforceable in accord with
its terms;
6. There is no broker, finder or financial advisor involved in
this transaction on behalf of Dolphin.
X
SUBSTITUTE XXXXX
In the event that impenetrable substances are found, necessary government
permits can not be obtained, events of war, acts of God, or other events, except
economic events beyond the control of the parties occurs as to a particular
well, Dolphin may drill a substitute well therefor at a location of its choice
of equal quality and will earn the interest provided for above in both the
initial well and the substitute well. Any substitute well will be treated as an
original well under the terms hereof. Notwithstanding the foregoing, all xxxxx
drilled and operations conducted hereunder will be performed in such a manner as
to comply with and satisfy the drilling obligations contained in the Subject
Leases.
XI
OPERATIONS AND INSURANCE
A. All operations to be conducted by Dolphin will be at its sole cost,
risk and expense, will be conducted in a good and workmanlike manner in
accord with good industry practice.
B. Dolphin may conduct operations provided for hereunder, or may, it its
sole discretion, elect to contract for such operations to be performed
by others. Dolphin, or its designee, will in any event maintain such
bonds and insurance as may be required by law, and as are standard
industry practice for the operations contemplated by this Agreement.
C. In addition to the foregoing, operations hereunder will in any event be
conducted in compliance with the terms of the Subject Leases, and
Dolphin agrees to use its best efforts to maintain a relationship with
surface owners and lessors as is consistent with those presently
enjoyed by Pioneer.
XII
ADDITIONAL COVENANTS AND CONDITIONS
Performance by Dolphin of its obligations hereunder and, in particular, the
obligation to close on the Well Assets provided for in Article III, is subject
to and conditioned upon the following:
1. Dolphin has obtained additional capitalization in such amounts
and on such terms as are acceptable to it;
2. Pioneer has performed all of its obligations hereunder;
3. All representations and warranties made by Pioneer are in full
force and effect and are true and accurate;
4. No material adverse change has occurred, including economic
events and declines in production;
5. Title to the Subject Leases and the Well Assets is acceptable
to Dolphin in its reasonable judgment;
6. Pioneer has provided such instruments as Dolphin may
reasonably request to verify the accuracy of the
representations and warranties made by Pioneer hereunder.
XIII
NOTICES
All notifications to be delivered hereunder, shall be made as follows:
Pioneer Oil, LLC
0000 Xxxx Xxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000
Dolphin Energy Corporation
Xxxxx 0000
0000 Xxxxxxxx Xxx Xxxxx
Xxxxx, Xxxxxxx 00000
Phone
Fax
XIV
GENERAL PROVISIONS
A. This Agreement will be binding upon the parties hereto, their heirs,
successors and assigns and shall be deemed a covenant running with the
Subject Leases.
B. No waiver by any party of any one or more defaults by another party in
the performance of this Agreement shall operate or be construed as a
waiver of any future default or defaults by the same party, whether of
a like or of a different character. Except as expressly provided in
this Agreement, no party shall be deemed to have waived, released or
modified any of its rights under this Agreement unless such party
expressly stated, in writing, that it does waive, release or modify
such right.
C. If and for so long as any provision of this Agreement shall be deemed
to judged invalid for any reason whatsoever, such invalidity shall not
affect the validity or operation of any other provision of this
Agreement except only so far as shall be necessary to give effect to
the construction of such invalidity, and any such invalid provision
shall be deemed severed from this Agreement without affecting the
validity of the balance of this Agreement.
D. This Agreement represents the entire agreement of the parties, all
previous agreements and communications having been merged and
integrated into the terms hereof.
E. Each party shall prepare and submit any and all filings in relation to
this Agreement required of such party by any governmental agency having
jurisdiction. Each party shall in a timely fashion provide the other
parties with copies of all such filings made by the party.
F. The captions and heading of this Agreement are for convenience only and
shall not be considered a part of or affect the construction or
interpretation of any provisions of this Agreement.
G. In connection with this Agreement and the transactions contemplated by
it, each party will execute and deliver any additional documents and
instruments and perform any additional acts that may be necessary or
appropriate to effectuate and perform the provisions of this Agreement
and those transactions.
H. In the event that either party incurs attorney fees or costs in
connection with the enforcement or interpretation of this Agreement,
the party prevailing in such dispute shall be entitled to recover its
costs and attorney fees from the other party.
Date: OCTOBER 9, 2002 PIONEER OIL, LLC
---------------
By: /s/ XXX X. BUTT
---------------------------------------
Date: OCTOBER 11, 2002 DOLPHIN ENERGY CORPORATION
----------------
By: /s/ XXXX XXXXXX
---------------------------------------
True signature for this Agreement.
Marc Xxxxxx Xxxxxx
Florida DLB65654573061
Xxxxxx X. Xxxxxxxxx
MY COMMISSION # CC994957 EXPIRES
February 22, 2005
BONDED THRU XXXX INSURANCE INC.
STATE OF MONTANA )
) ss.
COUNTY OF YELLOWSTONE )
The foregoing Lease Acquisition and Drilling Agreement was acknowledged
before me this 9TH day of October, 2002, by XXX X. BUTT as PRESIDENT of PIONEER
OIL, LLC.
/s/ XXXXXXX X. XXXXX
---------------------------------------
Notary Public
My commission expires: MAY 7, 2005
-----------------
0000 0xx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
STATE OF ________________ )
) ss.
COUNTY OF _______________ )
The foregoing Lease Acquisition and Drilling Agreement was acknowledged
before me this _____ day of October, 2002, by ________________ as ______________
of DOLPHIN ENERGY CORPORATION.
---------------------------------------
Notary Public
My commission expires: ___________
XXXXXXXX & XXXXXXX, LLC
Attorneys At Law
0000 Xxxxxxx Xxxxxx, Xxxxx 0000 - Xxxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxxx E-Mail: XxxXxx00@xxx.xxx Telephone: 303/000-0000
Direct Dial: 303/000-0000 Fax: 303/000-0000
2 January 2003
VIA FACSIMILE TRANSMISSION AND US MAIL
Xxx Xxxxx, Esq.
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xx. Xxxx Xxxx
Pioneer Oil, LLC
XX Xxx 00000
Xxxxxxxx, XX 00000
Re: Pioneer Oil LLC; Dolphin Energy Transaction
Lease Acquisition and Development Agreement dated September 30, 2002
Gentlemen:
This correspondence will confirm the conversation between Mr. Butt and Xxxx
Xxxxxx concerning the above-referenced matter.
Reference is made to the above-captioned agreement. As you know, this office
represents Dolphin Energy Corporation regarding the foregoing matter. In further
consideration of that identified in the recited agreement, we are authorized to
agree to the following amendments to the recited agreement.
It is hereby agreed that Article III-B and C of the above-referenced agreement
are hereby amended by addition of the following language:
1. Article III-B is amended by addition of the following:
"Notwithstanding the foregoing, Dolphin shall notify Pioneer
of its election to accept or reject the Well Assets and the
Subject Leases no later than close of business January 31,
2003."
2. Article III-C is amended to state as follows:
"If Dolphin elects to accept the Well Assets and the Subject
Property, it shall deliver to Pioneer with such election the
sum of one hundred thousand dollars by close of business
January 31, 2003, by cashiers check or wire transfer or other
2
January 2003
Page 2
immediately available funds, which amount shall be in
addition to all other amounts payable hereunder."
3. Further, Article V-A, fifth line, is amended by substitution, as
follows:
"3000 FEET whichever is shallower (Pilot Xxxxx").
Otherwise the recited agreement shall remain in full force and effect.
By executing this agreement, neither party waives any rights or claims it may
have pertaining to the recited transaction which has accrued or that may later
accrue.
If the foregoing reflects your understanding of our agreement, please indicate
your acceptance and agreement to these terms by signing and returning a copy of
this letter to the undersigned via facsimile transmission immediately.
Very truly yours,
XXXXXXXX & XXXXXXX, LLC
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
AGREED TO AND ACCEPTED THIS 4TH DAY OF JANUARY, 2003.
Pioneer Oil, LLC
/s/ XXXX XXXX
--------------------------------
Xxxx Xxxx
cc: Xxxx Xxxxxx
GALAXY
ENERGY CORPORATION
--------------------------------------------------------------------------------
0000 Xxxxxxx Xxx Xxxxx Xxxxx 0000 x Xxxxx, Xxxxxxx 00000 o tel (000) 000-0000
o fax (000) 000-0000 o xxx.xxxxxxxxxxxx.xxx
Xxx Xxxxx, Esq.
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xx. Xxxx Xxxx
Pioneer Oil, LLC
XX Xxx 00000
Xxxxxxxx, XX 00000
Re: Pioneer Oil LLC; Dolphin Energy Transaction
Lease Acquisition and Development Agreement dated September 30, 2002
Gentlemen:
This correspondence will confirm the conversation between Mr. Butt and Xxxx
Xxxxxx concerning the above-referenced matter.
Reference is made to the above-captioned agreement. In further consideration of
that identified in the recited agreement, we are authorized to agree to the
following amendments to the recited agreement.
It is hereby agreed that Article IV-B, Article IV-C, and Article V-A of the
above-referenced agreement are hereby amended as follows:
1. Article III is amended by addition of the following:
In consideration of this Extension Agreement, Dolphin shall
pay the sum of $100,000 to Pioneer on or before May 15, 2003.
Further, upon further written agreement of the parties, the
payment or payments to be made by Dolphin to Pioneer pursuant
to this Article III-D ($100,000), or Article IV-A and B
($500,000), may be extended by a written Agreement signed by
both parties specifically referencing such payment, the date
of which is to be extended.
2. The first sentence of Article IV-B is amended to read as follows:
Subject to the other provisions hereof, closing of the recited
purchase will occur at a mutually agreeable time and place,
but no later than May 15, 2003.
3. Article IV-C is amended to read as follows:
The Effective Date of the purchase and sale provided for in
this Article IV shall be 7 o'clock a.m. local time on May 1,
2003.
4. Article V-A, tenth line, is amended by substitution, as follows:
... complete discretion of Dolphin, provided that Dolphin
will no later than May 15, 2003, (1) ...
Otherwise the recited agreement shall remain in full force and effect.
This correspondence will also confirm our election under Article III-B of the
above referenced agreement to accept the Well Assets and the Subject Leases.
Please acknowledge this election and receipt of the prospect fee provided for in
Article III-C of the referenced agreement.
By executing this agreement, neither party waives any rights or claims it may
have pertaining to the recited transaction which has accrued or that may later
accrue.
If the foregoing reflects your understanding of our agreement, please indicate
your acceptance and agreement to these terms by signing and returning a copy of
this letter to the undersigned via facsimile transmission immediately.
Thank you for your continued cooperation and professional conduct of this
transaction.
Very truly yours,
DOLPHIN ENERGY, INC.
By /s/ XXXX XXXXXX
----------------------------------
Xxxx X. Xxxxxx, President
Agreed to and to accepted this 31st day of
January, 2003.
PIONEER OIL, Oil, LLC
By /s/ XXXX XXXX
---------------------------------------------
Xxxx Xxxx