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EXHIBIT 99(a)(16)
[SAN XXXX PARTNERS, L.L.C. LETTERHEAD]
July 9, 1998
Devon Acquisition Corporation
00 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxxx Xxxx
Re: Offer to Purchase
Units of Burlington Resources Coal Seam Gas Royalty Trust
Gentlemen:
This letter agreement ("Agreement"), upon execution by the parties hereto,
shall evidence and confirm the agreement between San Xxxx Partners, L.L.C.
("SJP") and Devon Acquisition Corporation ("Devon") concerning the purchase and
sale of certain Burlington Resources Coal Seam Gas Royalty Trust ("BRU") units
owned by Devon and the possible right to purchase an undivided working interest
in the Fruitland coal formation of the Northeast Xxxxxx Unit ("NEBU"), all as
more specifically set forth below:
1. Upon execution of this Agreement by all parties, SJP shall purchase
from Devon 356,228 BRU units at a price of $9.00 per unit. Devon
warrants that its units are free and clear of any encumbrances and
that it does not own other BRU units over and above this figure. In
conjunction with this transaction, SJP will wire transfer the sum of
$3,206,052 to Devon and Devon will deliver properly endorsed stock
certificates to SJP or its designee. Once this transaction is complete
and so long as SJP continues to own 50% or more of the outstanding BRU
units, Devon shall not acquire any additional units of BRU without the
written consent of SJP.
2. As of the date hereof, SJP warrants that it owns, or has sole voting
control over, 4,969,540 units of BRU. Therefore, upon the purchase of
Devon's units, SJP will own, and/or have sole voting control over
5,325,768 units.
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Offer to Purchase
July 9, 1998
Page 2
3. SJP and Xxxxx both represent and warrant that they have the right and
authority to enter into this Agreement, that the terms hereof have
been duly approved by the proper representatives of the respective
parties and that neither the execution of this Agreement, nor the
compliance with the provisions hereof, will violate any law, statute,
rule or regulation of any governmental authority or regulatory body.
4. Within eighteen (18) months after execution of this Agreement, should
SJP be successful in acquiring the underlying working interest
associated with the BRU (the "Working Interest") from Burlington
Resources, Inc. ("Burlington") and BRU is subsequently consolidated
into SJP, then within twenty (20) working days after such
consolidation is complete and BRU has been terminated, SJP shall
provide written notice to Devon of such event. In such notice, SJP
will provide a detailed breakdown of its direct out-of-pocket expenses
reasonably incurred in the acquisition of the BRU units and the
Working Interest, including financing costs (the "Acquisition Costs").
Upon receipt of such notice, Devon, or its designee, shall have ten
(10) working days to notify SJP in writing of Xxxxx's intent to
purchase an undivided 6.70% of the 19.6% working interest/16.5% net
revenue interest (the "NEBU Property Interest") owned by SJP by paying
6.70% of the Acquisition Costs. SJP shall deliver the NEBU Property
Interest to Devon free and clear of any liens and encumbrances.
5. Should Devon elect to exercise its purchase option, then the parties
shall enter into a Purchase and Sale Agreement (PSA) which is
reasonably acceptable to both parties. The closing of said
transaction shall take place as soon as practicable and in accordance
with such agreement after execution of the PSA. In no event shall the
closing of this transaction take place later than sixty (60) working
days after Xxxxx makes its election. Should Devon fail to respond
after timely receiving the notice from SJP, then it shall be
considered that Xxxxx has elected to forfeit its purchase option.
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Offer to Purchase
July 9, 1998
Page 3
6. Notwithstanding anything herein to the contrary, should SJP enter
into an agreement with Burlington whereby SJP, upon consolidation
of the BRU with the Working Interest as described above, is
obligated to sell a percentage of the NEBU Property Interest on
the same basis as set forth in Paragraph 4 above, then the NEBU
Property Interest which Xxxxx has the right to acquire, and the
percentage of the Acquisition Costs Devon is required to pay,
shall be proportionately reduced by the percentage of the NEBU
Property Interest acquired by Burlington.
7. Upon purchase of the BRU units, both Devon and SJP shall have the
right to make press releases outlining all or a portion of the
terms set forth herein. Both parties shall have the right to
review the other's press release and use reasonable efforts to
promptly agree upon the text thereof prior to issuance of the
release.
8. This Agreement may be prepared in multiple counterparts, each of
which may constitute an original Agreement between the parties.
If the foregoing correctly reflects the understanding between the SJP and Devon,
then please indicate your acceptance by executing this letter in the space
provided below and returning same via fax to the attention of the undersigned at
the number shown above.
Very truly yours,
SAN XXXX PARTNERS, L.L.C.
/s/ XXXXX X. XXXXX
Xxxxx X. Xxxxx
Attorney-in-fact for C. N. X'Xxxxxxxx, Manager
cno/ncy
ACCEPTED and AGREED UPON
this 10th day of July, 1998.
DEVON ACQUISITION CORPORATION
/s/ XXXX X. XXXXX
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By: Xxxx X. Xxxxx
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Title: V.P. and General Counsel
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