WINTERS PINCHOUT SOUTH SACRAMENTO VALLEY EXPLORATION PROGRAM AGREEMENT
▇▇▇▇▇▇▇ PINCHOUT
SOUTH SACRAMENTO VALLEY EXPLORATION PROGRAM
AGREEMENT
THIS AGREEMENT made and entered into this 5th day of December, 2003, by and between
▇▇▇▇▇▇ EXPLORATION, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A Nevada corporation, hereinafter called “▇▇▇▇▇▇”, and
SILVER STAR ENERGY, INC.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
| A Nevada corporation, hereinafter called “Silver Star” |
| collectively referred to as the “Parties”. |
| WITNESSETH: |
| WHEREAS ▇▇▇▇▇▇ is the owner of oil and gas prospects, in the General Area of Mutual Interest (hereinafter referred to as ”GAMI”), shown on the attached Exhibit “A” covering and embracing the lands (hereinafter referred to as “said lands”) and described as follows: |
| ▇▇▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇, ▇▇ & ▇▇, ▇▇▇, ▇▇▇, ▇. D. B. & M., |
| Sections 7 – 36, T6N, R3E, M. D. B. & M., |
| Sections 13 – 36, T6N, R4E, M. D. B. & M., |
| Sections 17 – 20 & 29 - 32, T6N, R5E, M. D. B. & M., |
| Sections 1, 12, 13, 24, 25 & 36, T5N, R2E, M. D. B. & M., |
| Sections 1 - 36, T5N, R3E, M. D. B. & M., |
| Sections 1 – 36, T5N, R4E, M. D. B. & M., |
| Sections 5 – 8, 17 - 20 & 29 - 32, T5N, R5E, M. D. B. & M., |
| Sections 1, & 12, T4N, R2E, M. D. B. & M., |
| Sections 1 – 14, 23 – 26 & 35 - 36, T4N, R3E, M. D. B. & M., |
| Sections 1 – 36, T4N, R4E, M. D. B. & M., |
| Sections 5 – 8, 18, 19 & 30 - 31, T4N, R5E, M. D. B. & M., |
| Sections 1, 2 &11 – 12, T3N, R3E, M. D. B. & M., |
| Sections 1 – 18, T3N, R4E, M. D. B. & M., |
| Sections 6, 7 & 18, T3N, R5E, M. D. B. & M., |
Sacramento, ▇▇▇▇▇▇ and Yolo Counties, California
WHEREAS ▇▇▇▇▇▇ and Silver Star acknowledge that twelve (12) oil and gas prospects have been identified to date within the GAMI (see attached Exhibit “B”), and that examination of seismic data may identify further prospects.
WHEREAS ▇▇▇▇▇▇ and Silver Star desire to develop the potential of the GAMI through a combination of geologic review and drilling.
WHEREAS Silver Star desires to earn an assignment of all of ▇▇▇▇▇▇’▇ interest in said lands for the consideration hereinafter set forth:
WHEREAS Silver Star desires to earn an assignment of all of ▇▇▇▇▇▇’▇ interest in the Prospect and in said lands for the consideration and on conditions hereinafter set forth:
NOW
THEREFORE, in consideration of the mutual covenants and agreements herein contained,
the parties hereto agree as follows:
| 1. | Definitions: For
the purposes of the Agreement, the following definitions and/or interpretations
shall apply: |
|
A. |
Completed Well is a well, which
has been fully equipped for the taking of production, through and including
the tanks for an oil well and through and including the Christmas tree
for gas, or plugged and abandoned, if a dry hole. |
|
B. |
Paying Quantities means a quantity
(in the judgment of a reasonable and prudent operator) of oil, gas (including
any gaseous hydrocarbons produced with oil) and/or gas (including any
liquid hydrocarbons produced with gas) sufficient to repay, with a reasonable
profit, the cost and expense of operating the well. |
|
C. |
Contract Depth is a depth sufficient
to fully test the objective zone in the initial test well of each prospect. |
|
D. |
Term of Agreement is as long
as operations are being conducted on the leased lands. |
|
E. |
Net Revenue is that revenue derived
from the sale of hydrocarbons from the oil/gas well after costs associated
with the production of the same as described in the ▇▇▇▇▇ Agreement have
been deducted. |
|
F. |
Spud is defined at the commencement
of actual drilling operations at the drill site of an oil or gas well. |
|
G. |
Un-promoted Working Interest is
defined as one in which only actual drilling costs and completion costs
are charged without the inclusion of Land, Geologic and Geophysical costs
or Fees and Prospect Fees, etc. |
|
H. |
Operator is defined as ▇▇▇▇▇▇
or its assigns, working under a Joint Operating Agreement, performing
the functions of preparing, drilling, completing and producing the Prospect. |
|
I. |
Carried Working Interest is defined
as a working interest in the Prospect, without cost to the owner thereof
through the completion of the initial test well. |
|
| 2. | Consideration: As
consideration for the interest in the Prospect, Silver Star shall pay: |
|
1. |
At signing of the Agreement - | $100,000.00 |
||
2. |
At spud of the initial test well of the first three prospects drilled within the GAMI - | $ 15,000.00 |
||
3. |
At completion of the initial test well of each prospect drilled within the GAMI - | $ 25,000.00 |
| 3. | Retained Rights:
▇▇▇▇▇▇ shall retain rights in the Prospect of: |
|
1. |
A two and one-half percent Overriding
Royalty on all lands within the AMI. |
|
2. |
A five percent of one hundred percent
(5% of 100%) Working Interest Carried through the completion of the initial
test well. |
|
3. |
The right to participate in the Prospect
as to a ten percent of one hundred percent (10% of 100%) Working Interest.
Said Working Interest shall be “un-promoted”. |
|
| 4. | Additional Payments:
In addition to the payments set forth above, Silver Star shall be
responsible for payment to ▇▇▇▇▇▇ of: |
|
1. |
All expenses for acquisition of leases
acquired within the GAMI, including a twenty percent (20%) management
fee, based upon the value of the leases acquired. |
|
2. |
All expenses in connection with the
program of Seismic Data acquisition and analysis. |
|
3. |
All expenses in connection with the
drilling and completion of the initial test well on the first Prospect
drilled and completed within the GAMI. |
|
4. |
A monthly management fee in the amount
of $10,000.00. These payments shall commence with the month of January
2004 and are due and payable by the fifteenth (15th) day of
the previous month. These payments shall continue until such time as the
GAMI has been fully geologically and geophysically defined or after four
prospects within the GAMI have been drilled, by mutual agreement of the
Parties. |
|
5. |
Unless otherwise stated, all monthly
fees are due and payable by the fifteenth (15th) day of the
previous month. |
|
| 5. | Additional Working Interest
Election: |
|
1. |
▇▇▇▇▇▇ shall elect to participate up
to a ten percent of one hundred percent (10% of 100%) working interest
in each of the first three Prospects drilled within the GAMI. At the time
of election for the drilling of the fourth Prospect, ▇▇▇▇▇▇ shall make
a one time election as to its participation in the remaining Prospects
within the GAMI. |
|
1. |
In the event that ▇▇▇▇▇▇ elects to participate
up to ten percent of one hundred percent (10% of 100%) working interest,
in addition to its five percent of one hundred percent (5% of 100%) carried
working interest, ▇▇▇▇▇▇ shall be responsible for its proportional share
of expenses of said ten percent (10%) working interest. |
|
2. |
Said Working Interest shall be “un-promoted”
with election to take place no later than five (5) business days after
the issuance of the AFE for drilling of the initial test well. |
|
| 6. | Operations Prior to Drilling: |
|
1. |
Prior to drilling, a program of land
and title work and lease acquisition shall be conducted to bring the Prospects
to a drillable condition. Timing of phases of this work and payment for
the work are outlined on Exhibit “D” attached hereto along with
estimated costs. Leasing operations will continue until 6,000 acres are
under lease within the GAMI. Operations for the leasing of additional
acreage may be extended by the mutual consent of the Parties. |
|
2. |
Prior to drilling, a program of Seismic
Data acquisition and analysis shall be conducted to bring the Prospects
to a drillable condition and to identify new prospects within the GAMI.
Timing of phases of this work and payment for the work are outlined on
Exhibit “D” attached hereto along with estimated costs. Analysis
of seismic data is to begin in the month of January and to be completed
no later that June 30, 2004. Additional work may be done with the mutual
consent of the Parties. |
|
| 7. | Administration: The Prospect shall be administered according to the following conditions: | |
1. |
▇▇▇▇▇▇ shall manage or contract for
all aspects of leasing and land acquisition with the AMI. |
|
2. |
▇▇▇▇▇▇ shall manage or contract for
all aspects of seismic data acquisition and analysis |
|
3. |
▇▇▇▇▇▇ shall manage or contract for
all aspects of drilling, completion and production on or from the prospect
lands. |
|
4. |
Operator shall commence the actual drilling
of a test well on the said lands on or before September 30th,
2004 or a date mutually acceptable to both parties at a location mutually
acceptable between the Parties. Should Silver Star and ▇▇▇▇▇▇ disagree,
▇▇▇▇▇▇ shall not unreasonably withhold its consent to Silver Star’s
proposal. Thereafter Operator shall diligently and continuously prosecute
the drilling of said test well in a proper and workmanlike manner to contract
depth and to complete said test well within 45 days of the commencement.
Said test well shall be drilled, completed or abandoned at Silver Star’s
sole cost, risk and expense. In the event that ▇▇▇▇▇▇ contracts for any
drilling or productions services, ▇▇▇▇▇▇ shall have on-site access to
all operations on the subject lands. ▇▇▇▇▇▇’▇ access shall be at
its sole risk. Silver Star shall have on-site access to all operations
on the subject lands subject to ▇▇▇▇▇▇’▇ approval. Both ▇▇▇▇▇▇’▇
and Silver Star’s access shall be at its sole risk. |
|
5. |
In the event any well provided for herein
is lost for any reason prior to being drilled to contract depth, or Operator
has encountered during the drilling of any well mechanical difficulty
or formation or condition which would render further drilling impractical
or impossible, Operator shall plug and abandon such well and thereafter
commence a substitute well at a mutually agreed location within forty-five
(45 days after cessation of Operators drilling operations in the prior
well, or at a time mutually agreed between Silver Star and ▇▇▇▇▇▇. In
the event of a disagreement, ▇▇▇▇▇▇ |
|
shall not unreasonably withhold
its consent in these matters. Any substitute well drilled hereunder shall
be drilled subject to the same terms and conditions and to the same depth
as provided for the well so lost or abandoned. Any reference herein or
hereafter made to the test well shall be deemed to be a reference to any
substitute well or ▇▇▇▇▇ which may be drilled therefore. |
|||
| 8. | Assignment of Interest: | ||
| 1. | By the performance of the
covenants and conditions hereof and upon completion of the test well as
a producer of oil and/or gas in paying quantities and in accordance with
the terms and conditions hereof, Silver Star shall earn and receive within
fifteen (15) days thereof an interest in said lands as follows: |
||
1. |
An assignment of one hundred percent
(100%) of all of ▇▇▇▇▇▇’▇ interest in the South Sacramento Valley
Exploration Program Prospect Area. The assignment to Silver Star from
▇▇▇▇▇▇ shall be subject to an overriding royalty of two and one-half percent
of one hundred percent (2.5% of 100%). In any event, ▇▇▇▇▇▇ covenants
and agrees to deliver to operator no less than an average of seventy-six
percent (76%) net revenue interest for the said lands. |
||
2. |
In addition, any new leasehold interest
acquired within the AMI during term hereof by Silver Star of ▇▇▇▇▇▇ shall
be subject to said overriding royalty interest reserved by ▇▇▇▇▇▇, being
two and one-half percent of one hundred percent (2.5% of 100%) and the
carried 5% Working Interest. All information acquired in the drilling
of any well by Operator in the AMI shall be furnished to ▇▇▇▇▇▇ in a timely
manner and at no cost to ▇▇▇▇▇▇ and working interest we elect to hold. |
||
| 9. | Test Well: For the
purposes of this Agreement, the Initial Test Well shall be defined as
the initial well drilled on each the South Sacramento Valley Exploration
Program Prospects, under the terms of this Agreement. Operator shall notify
each Participant of the projected spud date of the Initial Test Well not
more than forty-five (45) days prior to that date. Each Participant shall,
not later than fifteen (15) days following receipt of said notice, advance
its Participation Share of one hundred percent (100%) of said Test Well’s
estimated AFE drilling costs to Operator. Operator shall promptly commence
and diligently continue with the actual drilling of the proposed Test
Well after the receipt of all the Test Well’s drilling costs. In
the event any Participant fails to so advance the drilling funds for the
Initial Test Well, ▇▇▇▇▇▇ may, at its option, terminate this Agreement
in its entirety as to that Participant by delivering to such Participant
a written notice of termination. In the event this Agreement is so terminated,
said Participant shall forfeit all funds previously paid to ▇▇▇▇▇▇ and
have no rights or obligations under this Agreement, except any obligations
accruing prior to such termination. |
||
10. |
Completion Operations:
In the event ▇▇▇▇▇▇, as Operator, decides to attempt a completion
of the Test Well, each Participant shall, prior to Operator undertaking
any completions, and upon verbal notice immediately followed by written
notice from Operator, advance its Participation Share of the estimated
AFE completion cost to Operator unless such Participant elects not to
participate in the completion attempt and instead elects to terminate
its further rights and forfeit all amounts paid or required to be paid
under this Agreement prior to the completion attempt, in which case this
Agreement shall automatically terminate as to such Participant, and such
Participant shall have no further rights or obligations under this Agreement
except for the rights and obligations accruing prior to termination. |
|
11. |
Drilling Obligations:
Within one-hundred and eighty (180) days from and after the date of
the commencement of production of oil or gas in paying quantities in the
test well, or at a time mutually agreed between the Silver Star and ▇▇▇▇▇▇,
Operator shall commence drilling operations of the next well. Operations
for drilling of each successor well thereafter shall commence within three-hundred
and sixty-five (365) days from and after the cessation of drilling operations
in the preceding well, or at a time mutually agreed between the Operator
and ▇▇▇▇▇▇, until the lease land has been fully developed. As used in
the paragraph, the term “cessation of drilling operations” shall
not include a temporary stoppage of drilling operations in the same well,
nor to a stoppage of longer duration for such purposes where such stoppage
is approved in writing by ▇▇▇▇▇▇. In the event of a disagreement, ▇▇▇▇▇▇
shall not unreasonable withhold its consent in these matters. |
|
12. |
Liability and Indemnification: |
|
1. |
The Parties recognize that exploration
for oil and gas is a risky undertaking, which requires the investment
of significant amounts of capital and which can lead to loss of all or
substantial portion of that investment. |
|
2. |
▇▇▇▇▇▇ does not warrant the reliability
or accuracy of the information, data or studies used in the development
of this Prospect. |
|
3. |
Each party hereto shall be liable and
responsible for and shall indemnify and hold the harmless (including costs
and attorney’s fees) from and against any claim or actions following
injury to illness or death of any person and any loss or damage to any
property occurring in connection with the performance or non-performance
of this agreement only to the extent of its own negligence and that of
its agents, servants, employees and contractors. |
|
13. |
Authority for Expenditure:
Operator shall issue an Authority for Expenditure (“AFE”)
thirty (30) days prior to the month in which it intends to conduct a given
operation. Silver Star shall pay to the Operator the amount proscribed
on the AFE no later than the close of business on the tenth business day
following the delivery of the AFE. Any AFE for existing rentals or new
lease acquisition shall contain a twenty percent (20%) management fee
for Operator. This section of the Agreement does not apply to any |
|
AFE or supplemental AFE
issued during the course of actual drilling operations. In that instance
the Joint Operating Agreement shall govern as to the timeliness of payment. |
||
14. |
Insurance: While
operations are being conducted hereunder on any leasehold interest covered
hereby, Operator agrees to acquire and/or maintain adequate general and
automobile liability insurance covering operations hereunder with limits
of at least $1 million per occurrence. In addition, Operator agrees to
acquire and/or maintain Workmen’s compensation insurance in accordance
with applicable state laws and employer’s liability insurance. Operator
further agrees, upon request, to furnish ▇▇▇▇▇▇ and or Silver Star prior
to commencing operations, either valid certificates of insurance certifying
the above coverage or evidence of Operator being a qualified self-insurer. |
|
| 15. Failure to Fund: | ||
| 1. | In the event Silver Star fails to advance
the drilling funds, in a timely manner, for the Initial Test Well or any
other prospect cost or leasehold operation, ▇▇▇▇▇▇ may, at its option,
terminate this Agreement in its entirety as to Silver Star by delivering
to such Participant a written notice of termination. In the event this
Agreement is so terminated, Silver Star shall forfeit all funds previously
paid to ▇▇▇▇▇▇ and have no rights or obligations under this Agreement,
except any obligations accruing prior to such termination. |
|
| 2. | If termination is in conjunction with
or prior to the drilling of the initial test well, Silver Star shall immediately
forfeit all of its right, title and interest to and in the Prospect. If
termination is in conjunction with operations subsequent to the completion
of the initial test well, Silver Star shall immediately forfeit all of
its right, title and interest to and in the Prospect, with the exception
of the well bore and a surrounding area of eighty (80) acres centered
on the well bore. In the event Silver Star defaults in the drilling of
any well, there shall be no liability on the part of Silver Star for such
failure, other than liability for loss or damage occasioned to lands or
injury or death as a result of or as a consequence of Operator’s
operations hereunder. Upon Operator’s failure to conduct the drilling
operations on the test well as provided for herein, ▇▇▇▇▇▇ may, at its
option, take possession of all tools placed thereon by Operator and complete
said operations at ▇▇▇▇▇▇’▇ sole cost and liability. |
|
16. |
Joint Operating Agreement:
All operations on the leased lands within the AMI shall be governed
by a mutually acceptable Joint Operating Agreement with, among other attachments,
a ▇▇▇▇▇ Accounting Procedure. The said Joint Operating Agreement and Accounting
Procedure is attached hereto as Exhibit ”B”. For the purpose
of determining Operator’s reimbursable costs and expenses for any
well in which Operator retains a working interest, the said ▇▇▇▇▇ Accounting
Procedure, as herein modified, shall control. In the event of a conflict
between the provisions of the Operating Agreement and/or the Accounting
Procedure and this Agreement, the terms of the latter shall control. |
|
| 1. | If operations for a replacement
well or reworking operations are not commenced within forty-five (45)
days thereafter, Operator shall immediately inform ▇▇▇▇▇▇ in writing of
such fact and ▇▇▇▇▇▇ shall have the option, to be exercised within fifteen
(15) days, to reacquire free of cost the rights assigned to Silver Star
hereunder free and clear of liens and encumbrances insofar as said rights
cover and embrace the lands attributable to any such well, if ▇▇▇▇▇▇ elects
to reacquire any of said lease(s) (or any part or interest as herein provided),
▇▇▇▇▇▇ shall also have the option to acquire any well, together with the
material in and around such well then on said lands and necessary in the
provisions of this paragraph 14 shall be applicable to all operations
conducted by Operator in which ▇▇▇▇▇▇, as to the interest in the said
lease covered by this Agreement, either does not own a working interest
or is not participating in an operation with a working interest. |
|||
| 2. | Operator shall drill all
▇▇▇▇▇ necessary to protect the said lands from drainage through offset
▇▇▇▇▇ said lease(s). |
|||
| 3. | If Operator should elect
to abandon any well either drilled on the said lands or on said unit of
production, or if any well either on the said lands or on said unit of
production ceases to produce in paying quantities and if actual drilling
operation of such well at a price equal to the reasonable salvage value
of said materials. |
|||
| 4. | In the event Operator desires
to surrender any of the said lease(s) as to all or any part of said lands
covered thereby or to allow any of said lease(s) to terminate or expire,
Operator shall notify ▇▇▇▇▇▇ and or Silver Star at least sixty (60) days
in advance of the anniversary date specified in such lease (or the date
to be surrendered, if other than the anniversary date) and ▇▇▇▇▇▇ and
or Silver Star shall have fifteen (15) days after receipt of such notice
of its election to take a reassignment of said lease as to the portion
thereof to be relinquished or to be allowed either to expire or terminate.
Should ▇▇▇▇▇▇ and or Silver Star elect to receive a reassignment, it shall
be delivered by Operator not less than fifteen (15) days prior to the
anniversary date of any such lease (or proposed date of surrender). Any
reassignment under terms hereof shall be free of cost to ▇▇▇▇▇▇ and or
Silver Star. In the event that both ▇▇▇▇▇▇ and Silver Star elect to accept
reassignment, the lease shall be apportioned according to their relative
proportional interest in the Prospect to each well drilled on the leased
lands, or lands within the AMI, Operator shall notify ▇▇▇▇▇▇ in writing
of the following items: |
|||
1. |
The exact legal description
of the location. |
|||
2. |
The date actual drilling
is commenced. |
|||
3. |
The total depth drilled. |
|||
4. |
The date of completion. |
|||
5. |
Whether completed as a producer
of oil and/or gas or as a dry hole. |
|||
6. |
The date any production
commences. |
|||
7. |
The date any well is shut-in. |
|||
8. |
The date and amount of payment
of any shut-in royalty. |
|||
Such written notice shall be given to
▇▇▇▇▇▇ within five (5) days after the occurrence of each of said items.
▇▇▇▇▇▇ shall promptly convey that information to Silver Star. |
||
5. |
Should Operator commence any well which
will be drilling over the end of the primary term of any said lease(s),
Operator shall give ▇▇▇▇▇▇ and or Silver Star written notice of such drilling
at least ten (10)days prior to the end of such primary term. |
17. |
Accounting Statements: If any
well is completed as a producer of oil and/or gas in paying quantities,
Operator shall furnish within ninety (90) days after the date of completion,
to ▇▇▇▇▇▇ and or Silver Star, an itemized statement of the cost of drilling,
testing, completing and equipping the well, together with an inventory
of the material and equipment therein, thereon and used in connection
therewith and Operator shall thereafter furnish ▇▇▇▇▇▇ and or Silver Star
with a monthly itemized statement of the cost of operations and the quantities
and qualities of oil, gas or other minerals which are produced from said
well, together with the amount of proceeds from the sale of such production
in the preceding month. Such reports, together with a complete well record
shall be furnished to ▇▇▇▇▇▇ and or Silver Star pursuant to the provisions
of the ▇▇▇▇▇ section Exhibit “C” of the Joint Operating Agreement. |
18. |
Less than Full Leasehold Estate:
If a lease described herein covers less that a full oil and gas leasehold
estate in any lands described herein under such lease, or if ▇▇▇▇▇▇’▇
interest in such lease covering any lands described herein under such
lease is less than the full oil and gas leasehold estate (excluding and
disregarding any applicable royalty, overriding royalty, production payment
or other burden to which leasehold estate is subject), then the overriding
royalty reserved out of the production from the lands in which ▇▇▇▇▇▇’▇
interest in the oil and gas lease bears to the full oil and gas leasehold
estate in such land, and the interest in the well in which ▇▇▇▇▇▇ may
acquire a working interest shall be in the proportion that the oil and
gas leasehold estate in such lease covering the lands described herein
bears to the full oil and gas leasehold estate in said lands. |
| 19. | Extension of Leases: Each extension
of any of the said leases, in whole or in part, shall maintain and continue
in effect the rights and interests reserved by ▇▇▇▇▇▇ in said leases so
extended and in said lands covered thereby. Should a renewal or new lease
or leases covering the said lands, or a part of or interest in the said
lands, or a part of or interest in such a lease, be acquired by ▇▇▇▇▇▇,
or by a third party wholly or partly for Operator or Operator’s benefit,
within three (3) years from the date of the expiration of the primary
term of said lease, the rights and interests herein reserved by ▇▇▇▇▇▇
shall attach and apply to each renewal or new lease, the lands described
therein and estate created thereby with the same result and effect as
such reserved rights and interests attach and apply to the said lease,
the said lands or in the estates created by the said lease. Should ▇▇▇▇▇▇,
acting as Agent for the Silver Star, acquire any additional acreage within
the AMI in addition to the acreage described above, ▇▇▇▇▇▇ shall assign
said leases to Silver Star per the terms and conditions of this Agreement.
Silver Star shall reimburse ▇▇▇▇▇▇ for all of its costs and expenses related
to the acquisition per the terms and |
conditions of this Agreement. ▇▇▇▇▇▇ shall maintain
rights and interest in the additional acreage the same as in all other
acreage subject to this Agreement. ▇▇▇▇▇▇ shall submit an AFE outlining
costs to Silver Star prior to the acquisition of the additional acreage.
Silver Star shall forward funds to ▇▇▇▇▇▇ to cover estimated costs prior
to acquisition in a timely manner. |
|
| 20. | Notices: All notices and consents to be given
hereunder shall be in writing and shall be deemed to have been duly given
if delivered personally, faxed with receipt acknowledged, mailed by certified
mail, postage prepaid, or delivered by a recognized commercial courier
to the party as follows, or such other address as any party shall have
designated for itself by ten (10) days’ prior notice to the other
party: addressed to; ▇▇▇▇▇▇ Exploration, Inc., Attn: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and to Silver Star at
the address first set forth above. The time for such receiving party to
give any notice in response thereto shall begin to run on the day following
the date the originating notice is received, and responsive notice shall
be deemed given when deposited in the United States mail or telexed with
receipt acknowledged, or deposited with a recognized commercial courier,
properly addressed and with postage or charges prepaid. |
| 21. | Title: Operator, prior to commencing operations
for any well on the leased lands shall, at Silver Star’s sole expense,
conduct adequate title work and make reasonable effort to cure title defects.
Operator shall keep ▇▇▇▇▇▇ and or Silver Star advised of these efforts.
Operator shall promptly furnish ▇▇▇▇▇▇ and or Silver Star with copies
of all title reports, abstracts and attorney’s title opinions obtained
by it relating to said lease(s). Operator and ▇▇▇▇▇▇ shall make available
to each other, any title information it may have pertaining to said lease(s).
Neither party shall be liable for the accuracy of any title information
furnished pursuant to the foregoing. ▇▇▇▇▇▇ does not warrant title, either
expressed or implied, to the said lease(s). |
| 22. | Assignment: Silver Star may not assign this
Agreement, or its interest hereunder, in whole or in part without first
fully disclosing to ▇▇▇▇▇▇ the nature of the assignment, as to amounts,
terms and parties involved, and then without the prior written consent
of ▇▇▇▇▇▇. |
| 23. | Time is of the Essence: Time shall be the
essence of this Agreement in all of its parts. This Agreement may be executed
in any number of counterparts, each of which shall be considered as an
original for all purposes. The terms, covenants and conditions hereof
shall run in favor of and be binding upon the parties hereto, their successors
and assigns, and shall run with the said leases and lands. |
| 24. | Deposit: The $85,00.00 consideration shall
be paid to ▇▇▇▇▇▇ upon Silver Star’s execution of this Agreement.
Acknowledgment is made hereby that ▇▇▇▇▇▇ has received a non-refundable
deposit in the amount of $15,000.00 from Silver Star, which shall apply
to the total price should this Agreement be executed. |
| 25. | Authority: The Parties each represent and
warrant to the other that all requisite authority, corporate or otherwise,
required for the execution and delivery of this |
Agreement and the consummation of the transactions
contemplated hereunder has been obtained, and furthermore that the execution
of this Agreement by the individuals(s) signing on behalf of a partnership
or corporation has been duly authorized. Each Participant further represents
and warrants to ▇▇▇▇▇▇ that such Participant is financially sophisticated,
and has significant experience in making high risk investments like the
investment contemplated by this Agreement, and that such Participant has
the ability to fully evaluate the benefits, if any, and risks associated
with such Participant’s participation under this Agreement. |
| IN WITNESS WHEREOF, Silver Star has hereunder caused its name to be subscribed the day and year first above written. | ||
| ▇▇▇▇▇▇ EXPLORATION, INC. | SILVER STAR ENERGY, | |
| By: “▇▇▇▇ ▇. ▇▇▇▇” | By: “▇▇▇ ▇▇▇▇▇▇▇▇” | |
| ▇▇▇▇ ▇. ▇▇▇▇ - President | ▇▇▇ ▇▇▇▇▇▇▇▇ - President | |
| Date: December 5, 2003 | Date: December 5, 2003 | |