EXPLORATION AGREEMENT
BWC Project
Xxxxxxx County, Texas
This Exploration Agreement (the "Agreement") is entered into as of
April 1, 1998, by and between Parallel Petroleum Corporation ("Parallel"), TAC
Resources, Inc. ("TAC"), Beta Oil & Gas, Inc. ("Beta"), Xxxxx Financial
Services, Inc. ("Xxxxx"), FGL, Inc. ("FGL"), Xxxx X. Xxxxxx ("Xxxxxx"),
Mansefeldt Investment Corporation ("Mansefeldt"), Topaz Exploration Company
("Topaz"), Xxx-Xxx Drilling Corp. ("Xxx-Xxx") and CKC Investments, Inc. ("CKC")
all hereinafter collectively referred to as (the "Parties").
WITNESSETH:
WHEREAS, Parallel and TAC have acquired seismic and lease options, oil
and gas leases and seismic permits covering an area of approximately 40,000
acres located in Xxxxxxx County, Texas, as depicted on the plat attached hereto
as Exhibit "A".
WHEREAS, Beta, Xxxxx, FGL, Xxxxxx, Mansefeldt, Topaz, Xxx-Xxx and CKC
propose to acquire undivided interests in and to the rights granted by such
agreements, and to participate in conducting a 3-D seismic program upon the
lands covered thereby.
NOW, THEREFORE, in consideration of the premises, the mutual agreements
and obligations set forth herein, and the mutual benefits to be received
hereunder, the Parties agree as follows:
ARTICLE 1. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
meanings designated below:
1.1 Area of Mutual Interest "AMI" means the lands outlined on the plat
attached hereto as Exhibit "A".
1.2 "AMI Interests" means any interest in the oil, gas or other
minerals in and under the AMI, including leasehold interests under oil
and gas leases, oil and gas lease options, interests of the farmee
under farmout agreement, and other such interests or rights similar or
dissimilar to those mentioned, including, but not limited to, seismic
permits. AMI Interest does not, however, include nonpossessory
interests in the oil, gas and other minerals in and under the AMI, such
as royalty interests, overriding royalty interests, net profits
interests, or other such interests whether similar or dissimilar to
those mentioned.
1.3 "Existing AMI Interests" means the Seismic and Lease Options, Oil
and Gas Leases and Seismic Permits which have been acquired as of
August 1, 1998.
1.4 "Subsequently Acquired AMI Interests" means all AMI Interests
acquired after August 1, 1998.
1.5 "Contract Lands" means lands located within the AMI which are
covered by AMI Interests.
1.6 "Initial Interest" means a Party's ownership in Existing AMI
Interests, and the amount of interest a party is entitled to acquire in
Subsequently Acquired AMI Interests, subject to the provisions hereof.
1.7 "Jointly Owned AMI Interest" means an AMI Interest in which the
Parties own an interest pursuant to the terms of this Agreement.
1.8 "Lease Burden" means any royalty, overriding royalty interest, net
profits interest, production payment, carried interest, reversionary
working interest or other charges upon a leasehold interest or the
production therefrom.
1.9 "Losses" means any and all losses, liabilities, claims, demands,
penalties, fines, settlements, damages, actions, or suits of whatsoever
kind and nature (but expressly excluding consequential damages),
whether or not subject to litigation, including without limitation (i)
claims or penalties arising from products liability, negligence,
statutory liability or violation of any applicable law or in tort
(strict, absolute or otherwise) and (ii) loss of or damage to any
property, and all reasonable out-of-pocket costs, disbursements and
expenses (including, without limitation, legal, accounting, consulting
and investigation expenses and litigation costs) imposed on, incurred
by or asserted against an indemnified Party in connection therewith.
1.10 "Operator" shall mean Parallel Petroleum Corporation.
1.11 "Party" or "Parties" means Parallel, TAC, Beta, Xxxxx, FGL,
Xxxxxx, Mansefeldt, Topaz, Xxx-Xxx and CKC and any other person or
entity, singularly or as a group, which hereafter becomes a party
hereto or is otherwise subject to the terms hereof.
1.12 "Pre-Existing Data" means such data which includes, but is not
limited to: seismic records and related seismic data, electronic and
mud logs, cores and core analyses, field studies (less and except any
proprietary methodology or process used by any Party in such studies),
production tests, engineering, geological, geophysical, paleontological
data, interpretive data and maps prepared by any Party in existence as
of the date of this Agreement.
1.13 "Proportionate Share" except as otherwise provided for herein,
shall be calculated by dividing a Party's Initial Interest by the
aggregate of the Initial Interests of all Parties who are to share an
interest or an obligation pursuant to the terms hereof.
1.14 "Prospect" means an area within the AMI which is designated as a
Prospect pursuant to Article 7.3 hereof and within which there is
expected to occur, based on information developed as a result of 3-D
Seismic Operations, a commercial accumulation of oil and/or gas in a
specific structural or stratigraphic trap.
1.15 "Subsequently Created Burden" means a lease burden which is
created by a party subsequent to its acquisition of the interest which
is subject to the burden, except the overriding royalty interest
provided for in Article 2.5 hereof.
1.16 "Costs Prior to Leasehold Acquisition" means all costs of any
type whatsoever which pertain to this project, covering lands located
within or outside the AMI, including, but not limited to costs of
seismic permits, seismic and lease options, oil and gas leases, and
renewals and/or extensions thereof, land brokerage, legal costs,
surface damages, surveying, seismic acquisition, processing and
interpretation, etc., which are incurred prior to Leasehold
Acquisition conducted under the provisions of Article 4 hereof.
1.17 "Seismic Operations" means all operations which are necessary to
produce a three-dimensional seismic data grid over the portion of the
Contract Lands on which the Parties conduct such operations, including
the processing and interpretation of such data.
1.18 Other terms are defined elsewhere in this Agreement.
ARTICLE 2. INTERESTS AND SHARE OF COSTS OF THE PARTIES
2.1 Area of Mutual Interest. The Parties hereby establish an Area of
Mutual Interest "AMI", same to be comprised of the area outlined on the
attached Exhibit "A", and which shall cover AMI Interests located
therein. This AMI shall continue for a term of seven (7) years, or the
expiration of the last Jointly Owned AMI Interest, whichever is
earlier.
2.2 Interests and Share of Costs of the Parties. The Parties hereby
agree to own, as their Initial Interest, and agree to bear the costs
set out below, as follows:
Party Initial Interest Share of Costs Share of Costs
Prior to Leasehold for Leasehold
Acquisition Acquisition and
Subsequent Operations
Parallel .4825000 .5600000 .4825000
TAC .1875000 .0000000 .1875000
Beta .1250000 .1666667 .1250000
Xxxxx .0200000 .0266667 .0200000
CKC .0300000 .0400000 .0300000
Xxxxxx .0300000 .0400000 .0300000
FGL .0750000 .1000000 .0750000
Mansefeldt .0360000 .0480000 .0360000
Topaz .0040000 .0053333 .0040000
Xxx-Xxx .0100000 .0133333 .0100000
Parallel and TAC have acquired and presently own the Existing AMI
Interests. Beta, Xxxxx, FGL, Xxxxxx, Mansefeldt, Topaz, Xxx-Xxx and CKC
agree that their respective costs in the Existing AMI Interests shall
be based on $100.00 per net mineral acre on seismic and lease options,
and cost plus 33.33333% on oil and gas leases and seismic permits. The
Existing AMI Interests are presently comprised of approximately
28,454.496 net mineral acres covered by seismic and lease option, 2,288
acres covered by seismic permit where cost was $36,895.00, and 279.3065
net mineral acres covered by oil and gas lease where cost was
$41,895.98. Based on the foregoing, the current total cost of Existing
AMI Interests is Two million nine hundred fifty thousand five hundred
four and 24/100 Dollars ($2,950,504.24). Beta, Xxxxx, FGL, Xxxxxx,
Mansefeldt, Topaz, Xxx-Xxx and CKC agree to pay Parallel their share of
such cost, as referenced above, in the Existing AMI Interests upon
execution of this Agreement. Beta, Xxxxx, FGL, Xxxxxx, Mansefeldt,
Topaz, Xxx-Xxx and CKC hereby agree that Parallel shall have the
exclusive right to acquire AMI Interests through August 1, 1998, and
that same shall be treated in all respects as Existing AMI Interests.
Beta, Xxxxx, FGL, Xxxxxx, Mansefeldt, Topaz, Xxx-Xxx and CKC agree that
they shall be obligated to accept such interests in the same
percentages and pay Parallel for such interests at the same terms
stated herein. Payment for such interests shall be due within fifteen
(15) days after receipt of written notice as set out in Article 2.4.
Interests available to Parallel which costs exceed those stated above
shall be offered to the other Parties as per the procedure set forth in
Article 2.4 below.
2.3 Recording. Parallel agrees to file for record in the office of the
Xxxxxxx County Clerk, all Memorandums of Seismic and Lease Options
covering the Existing AMI Interests within fifteen (15) days of the
date this Agreement is executed by all Parties.
2.4 Subsequently Acquired AMI Interests. Any Party acquiring a
Subsequently Acquired AMI Interest, directly or indirectly, shall
notify the other Parties hereto. Such notice shall set forth (i) a
description of the interest acquired, (ii) the total cost of the
interest, including all land and legal costs associated with the
acquisition thereof, (iii) the Proportionate Share of the notified
Party and its cost therein, and (iv) any other pertinent terms of such
acquisition, including, but not limited to, copies of the instruments
of conveyance, copies of leases, assignments, subleases, farmout and
other contracts affecting the AMI Interests, copies of paid drafts or
checks, itemized invoices of actual costs incurred by the acquiring
Party. Parties shall have fifteen (15) days from the receipt of this
notice to acquire their Proportionate Share of the Subsequently
Acquired AMI Interest. A Party's election to acquire shall be given in
writing and accompanied by Party's payment of its total cost for such
interest. If a Party's election and payment are not received within
such fifteen (15) day period, it shall be conclusively presumed that
such Party has elected not to acquire its Proportionate Share of the
Subsequently Acquired AMI Interest and has forfeited its right thereto.
A Party's failure to exercise its option as to any particular notice
shall not constitute a waiver or release of its right to acquire any
interest described in any subsequent notice delivered hereunder.
Subsequently acquired AMI Interests shall not be construed to include
oil and gas leases acquired under Article 4 hereof.
2.5 Existing Burdens. Each Party's interest under this agreement in the
AMI Interests, and oil and gas leases which may be acquired thereunder,
shall be subject to and burdened by its proportionate share of all
existing operating agreements, existing and pending pooling and spacing
orders and all Lease Burdens other than Subsequently Created Burdens.
Parallel and TAC represent, except as hereinafter provided, that they
have not burdened the Existing AMI Interests acquired or to be acquired
with any liens or Subsequently Created Burdens. Each Party agrees to
perform its Proportionate Share of the obligations under the AMI
Interests acquired pursuant to this Agreement and the other obligations
described in this Article, but only to the extent that such obligations
arise after the acquisition of such AMI Interests by such Party.
Notwithstanding the foregoing, the Parties agree that they shall bear,
their Proportionate Share of an overriding royalty interest to be owned
by TAC on all oil and gas leases acquired pursuant to this Agreement
(including leases acquired by exercising lease options in which the
Parties own an interest, and in extensions and renewals thereof) equal
to the difference between Lease Burdens and twenty-five percent (25%)
on all such leases where Lease Burdens are less than twenty-five
percent (25%); and an overriding royalty interest equal to two percent
(2%) of eight-eighths (8/8th) in such leases where Lease Burdens are
twenty-five percent (25%) or greater. All such overriding royalty
interests shall be reduced in the proportion that the mineral interest
covered by any such lease or leases bears to the entire undivided fee
mineral estate.
2.6 Expiring Options. If any lease options covered hereby will expire
prior to completion of the Seismic Operations contemplated herein,
Operator shall use its best efforts to renew and/or extend such option
for a sufficient period of time to complete the proposed 3-D Seismic
Operations thereon and exercise the lease option thereunder. Payment
for extensions and/or renewals shall be due within fifteen (15) days
after receipt of an invoice therefore.
2.7 Assignments. Upon receipt of payment for AMI Interests, Parallel
shall assign to the Parties hereto their Initial Interest in such AMI
Interests. Such assignment shall be recordable in form, shall be
subject to this agreement, shall provide for warranty by, through and
under Parallel, but not otherwise, and shall be subject to the terms
and provisions of the AMI Interests assigned. Notwithstanding such
assignments, the Parties hereby grant Operator full right and authority
to conduct Leasehold Acquisition on their behalf under the provisions
of Article 4 hereof.
2.8 AMI Interests Located In and Outside of the Existing AMI. If an AMI
Interest is found to cover lands located both within and outside the
existing AMI, the entirety of such AMI Interest shall be offered to the
other Parties under the provisions of Article 2.4, and if the other
Parties elect to participate in the acquisition thereof, the
description of the lands comprising the AMI shall be deemed to be
amended to extend and cover all of the lands covered by such interest.
The option of the Parties to participate in the acquisition of such
interests shall be limited to the entirety of the interest acquired.
2.9 Option to Cash Call. Notwithstanding the provisions for the
payments required in Articles 2.2, 2.4, 2.6 and 4, Operator shall the
right to require the other Parties to pay their Proportionate Share of
the estimated costs as provided in such Articles in advance. Such
advanced payment shall be paid within fifteen (15) days of receipt of
an invoice therefor.
ARTICLE 3. SEISMIC OPERATIONS
3.1 Existing Seismic, Geologic and Other Subsurface Data. Except as
prohibited by law or by agreements with third parties, upon request,
each Party owning existing seismic data pertaining to lands located
within the AMI shall furnish copies of all such data to the other
Parties, together with any geologic or other subsurface data that could
be useful in the interpretation thereof. The Party receiving such data
shall bear the expense of copying it. The Party owning any seismic or
other data which may not be copied, due to legal prohibitions or by
agreements with third parties, shall, upon request, make such data
available to the Party requesting such data during normal business
hours.
3.2 Ownership of Pre-Existing Data. Ownership of the Pre-Existing Data
and all reprocessed Pre-Existing Data shall at all times remain vested
in the Party who contributes the Pre-Existing Data for use by the
Parties, and the Parties agree to acknowledge such ownership,
including, but not limited to, the filing with any appropriate
governmental authority of such acknowledgment. The Parties expressly
reserve the right to sell, license, or trade the Pre-Existing Data
which it contributes hereunder, to the extent that it has such right to
sell, license or trade the Pre-Existing Data, through its own efforts,
or through the efforts of others duly authorized by such Party and the
benefits and advantages, including monetary consideration, which such
Party receives as a result of such activities shall be the sole
property of such Party.
3.3 Management of the 3-D Seismic Operations. Operator shall
exclusively manage and conduct the 3-D Seismic Operations contemplated
hereunder and all operations incident thereto, including, but not
limited to, the acquisition of all geoscientific data, the performance
of all 3-D seismic surveys and other geoscientific work incident
thereto, and, subject to the Operating Agreements, the drilling of all
xxxxx on the Prospects. Operator shall perform all such work through
employees, representatives, and contractors of its selection, and
Operator shall and does hereby agree to utilize reasonable prudence and
economic judgment in contracting with third party contractors or
subcontractors. As manager of 3-D Seismic Operations, Operator shall
devote such of its time, attention and efforts to the conduct thereof
as it shall in good faith determine reasonably necessary, but shall
otherwise be free to engage in and pursue all other current and future
business projects, programs, prospects, opportunities, investments and
activities without obligation of any kind to or right of participation
therein by the other Parties hereto. In performing its duties under
this Agreement, Operator shall serve as an independent contractor and
not as an agent or employee of the other Parties hereto. Operator shall
utilize reasonable prudence and economic judgment in incurring costs,
and shall further conduct the 3-D Seismic Operations and perform all of
its duties under this Agreement as a reasonable, prudent operator, in a
good and workmanlike manner with due diligence and dispatch, in
accordance with good oilfield and exploratory practice, and in
compliance with all applicable laws and regulations, BUT SHALL HAVE NO
LIABILITY TO THE OTHER PARTIES HERETO OR ANY OTHER OWNER OF RIGHTS OR
INTERESTS UNDER THIS AGREEMENT FOR ANY LOSSES SUSTAINED OR LIABILITIES
INCURRED IN CONNECTION WITH THE 3-D SEISMIC OPERATIONS AND/OR THE
CONDUCT OF ANY ACTIVITIES UNDER OR CONTEMPLATED BY THIS AGREEMENT, SAVE
AND EXCEPT AS MAY BE OCCASIONED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF OPERATOR. EACH OF THE OTHER PARTIES HERETO ACKNOWLEDGES
THAT (A) IT HAS READ AND AGREED TO THE FOREGOING EXCULPATION OF
OPERATOR AS A NEGOTIATED AND BARGAINED FOR ASPECT OF THIS TRANSACTION,
(B) THIS EXCULPATION PROVISION IS CONSPICUOUS.
3.4 Ongoing and Future Seismic Operations. The Parties agree to conduct
such operations on all or substantially all of the Contract Lands. The
Parties may, subject to their unanimous written consent, agree to
reduce or increase the acreage on which such operations will be
conducted when technical, legal or operational considerations indicate
that such reduction or increase is warranted. In any event, the Parties
agree to pay Operator their respective shares of the total costs of the
3-D Seismic Operations conducted on all land covered by AMI Interests
as set forth in Article 2.2 hereof. Payment for 3-D Seismic Operations
shall be due within fifteen (15) days after receipt of each invoice
therefore. Operator shall furnish the other Parties hereto with copies
of all applicable contracts and other information pertaining to all 3-D
Seismic Operations conducted hereunder. The Parties shall own their
Proportionate Share of the geophysical data obtained by and resulting
from the 3-D Seismic Operations conducted on the Contract Lands,
including, but not limited to all tapes, seismic sections and any and
all other data generated by such 3-D Seismic Operations. Each Party
shall have access to such data and shall receive copies thereof. The
Parties agree to work together in a spirit of cooperation and in good
faith in planning and causing the 3-D Seismic Operations to be
conducted as contemplated herein as well as in sharing the data
collected therefrom and the interpretations thereof. Such
interpretations, by any Party, shall in no way be deemed a
representation to any other Party that such interpretations are
accurate or correct. Such interpretations shall be given merely as a
means of sharing such Party's analysis and ideas regarding such data.
3.5 Confidentiality of Seismic Data. Except as provided below, each
Party agrees to keep all seismic data obtained pursuant to Article 3.3
confidential for a period of seven (7) years from the date hereof.
After the expiration of seven (7) years from the date hereof any Party
may sell the data it acquired pursuant to Article 3.3. Each Party
owning an interest in such data shall receive its Proportionate Share
of the proceeds of any such sale. Any data acquired from another Party
pursuant to Article 3.1 shall forever be kept confidential by the
Parties; provided, however, that the Party who originally contributed
such data may share, sell or otherwise dispose of such data that does
not pertain to a Prospect to a third party after the expiration of one
(1) year from the date hereof, and the other Parties shall have no
interest in the proceeds from such sale. Notwithstanding the foregoing,
a Party may disclose seismic data to (A) a prospective purchaser or
farmee of such Party's interest, provided (i) such disclosure is
limited to the Prospect under consideration for sale or farmout, (ii)
the prospective purchaser or farmee must review such data in the
affected Party's offices and may not copy such data until such time as
it has acquired or earned an interest in the Contract Lands, and (iii)
such prospective purchaser or farmee must execute a confidentiality
agreement to prevent further disclosure and unauthorized use of such
data; or (B) a third party who is entitled thereto pursuant to the
terms of a lease, lease option or seismic permit. Any Party may
disclose such data to its agents, staff, representatives and
consultants in the normal conduct of its business.
3.6 Review of Seismic Data. The Parties agree to cooperate in good
faith in reviewing the seismic data acquired hereunder. Such data
should be reviewed by the Parties as soon as practicable after the data
is available so that the Parties can make decisions regarding the
exercise of lease options.
ARTICLE 4. LEASEHOLD ACQUISITION
As soon as is practicable after the 3-D seismic data has been processed
and interpreted, Operator shall, in its sole discretion, acquire leases
within the AMI, and the Parties agree to pay their Proportionate Share
of cost therein, including all land and legal costs associated with the
acquisition thereof. Upon receipt of payment, which shall be due within
fifteen (15) days after receipt of each invoice therefore, Operator
shall promptly execute and deliver recordable assignments to the
Parties reflecting their respective interests in the leases acquired.
ARTICLE 5. FORFEITURE
Payments due hereunder, including Cash Calls provided for in Article
2.9, for Existing AMI Interests under Article 2.2, renewals and/or
extensions acquired under Article 2.6, Seismic Operations under
Article 3.4, and Lease Acquisition under Article 4 shall be mandatory.
A Party failing to timely make any such payment shall be in breach of
this Agreement; and, in the event such payment is not received by the
Party entitled thereto, within sixty (60) days after written demand
therefore has been received, such Party shall, without the necessity
of any further proceeding, forfeit all of its right, title and
interest under this Agreement (including, but not limited to all of the
interest that it acquired pursuant to the terms hereof in any AMI
Interests and seismic data) to the Party to whom such payment is owed.
Any Party so forfeiting its interest hereunder, hereby designates
and appoints the Party to whom such payment is owed as its Agent
and Attorney-in-Fact for the sole and limited purpose of executing
an instrument of conveyance vesting title to the forfeited interest in
the Party to whom such payment is owed. The Party receiving such
forfeited interest shall then offer the other Parties their
Proportionate Share of such forfeited interest as per the provisions of
Article 2.4 hereof.
ARTICLE 6. SALE, FARMOUT OR OTHER DISPOSITION OF AMI INTERESTS TO A THIRD PARTY
Any Party may sell, assign, farmout or otherwise dispose of all or any
portion of its interest acquired pursuant to or in connection with this
Agreement without consent of any other Party. Operator shall be
furnished with a copy of the assignment or other instrument disposing
of such interest within ten (10) days from the date thereof.
ARTICLE 7. SUBSEQUENT OPERATIONS
7.1 Operator. Operator shall have the right, subject to the terms and
provisions of the attached Operating Agreement, to be the Operator for
all operations conducted within the AMI, and the Parties hereby agree
to execute separate Operating Agreements designating Operator, as
Operator, as required.
7.2 Operating Agreement. Except as provided herein, all operations
conducted within the AMI shall be conducted in accordance with the
terms of an Operating Agreement substantially in the form attached
hereto as Exhibit "B". A separate Operating Agreement shall be executed
for each Prospect, with the first well drilled in such Prospect to be
designated as the "Initial Well". The share of costs which each Party
must bear and the interest of each Party in the production from each
well drilled under the Prospect Operating Agreement will be determined
on a well-by-well basis in accordance with the terms hereof as modified
by the terms of the Operating Agreement. In the event of conflict
between the terms and provisions hereof and those contained in the
Operating Agreement, the terms and provisions hereof shall prevail.
7.3 Designation of Prospects. As soon as practicable after the data has
been processed and interpreted, Operator shall furnish the other
Parties with maps which reflect designated Prospects, together with a
description of the seismic data, prospective feature and any
interpretative data or other maps upon which such Prospect is based.
7.4 Non-Consent Election on Initial Well. If a Party elects not to
participate in the drilling of the Initial Well in a Prospect, such
Party shall relinquish all of its rights and interests in that Prospect
to the Parties participating in the drilling of such well which elect
to acquire their Proportionate Share of the relinquished interest. A
condition precedent to such relinquishment shall be the reimbursement
of the relinquishing Party's leasehold cost in the relinquished
interest by the Parties electing to participate in such interest, which
cost shall be specifically limited to that incurred by such Party under
Article 4 hereof. A Party so relinquishing its interest shall promptly
execute a recordable assignment of its relinquished interest to the
Parties entitled thereto, which interest shall be free of any
Subsequently Created Burdens. Upon receipt of such assignment the
Parties receiving the relinquished interest shall reimburse the
relinquishing Party their respective Proportionate Share of the
relinquishing Party's cost in the interest so assigned.
7.5 Limitation on Number of Xxxxx Drilling. Not more than three (3)
xxxxx shall be drilling on the Contract Lands at any time unless it is
necessary to commence a well in order to perpetuate a lease or
otherwise satisfy the terms of a continuous drilling obligation.
ARTICLE 8. MISCELLANEOUS
8.1 Legal Relationship. This agreement is not intended to create, and
shall not be construed to create, a partnership or other relationship
whereby one party is liable for the actions or debts of another party;
it being understood and agreed that the rights and liabilities of all
parties are several and not joint or collective.
8.2 Entire Agreement. This agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof,
superseding any and all prior agreements, understandings, discussions,
negotiations and commitments of any kind.
8.3 Amendment. The provisions of this agreement may be amended,
supplemented, or waived only if in writing signed by all parties
hereto.
8.4 Construction. The parties to this agreement all acknowledge and
agree that this agreement was drafted jointly by them, and that in the
event of any ambiguity, this agreement shall not be construed against
any of them on the basis of the fact or presumption that one party had
a greater or lesser hand in the drafting of the agreement than another
party, but rather the terms shall be given a reasonable interpretation.
8.5 Governing Law. Except to the extent preempted by federal law, this
agreement is to be construed and interpreted in accordance with, and
governed by, the laws of the State of Texas.
8.6 Binding Agreement. This agreement shall bind and inure to the
benefit of the parties hereto and their respective heirs, successors,
legal representatives and assigns.
8.7 Section and Subsection Headings. The article, section and
subsection headings contained in this agreement are for the purpose of
convenience only and are not intended to define or limit the contents
hereof or otherwise be considered in construing and enforcing this
agreement.
8.8 Waivers. Any failure by any party hereto to comply with any of its
obligations, agreements or conditions herein contained may be waived in
writing, but not in any other manner, by the party to whom such
compliance is owed. No waiver of, or consent to a change in, any
provision of this agreement shall be deemed to be, or shall constitute,
a waiver of or consent to a change in the provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver
unless expressly provided.
8.9 Further Assurances. The parties hereto agree to deliver or cause to
be delivered to each other at all such times as shall be reasonably
required, all such additional instruments, agreements, and other
documents, and to perform all such actions, as any of them may
reasonably request for the purpose of performing any provision of this
agreement or evidencing the transactions contemplated by this
agreement.
8.10 Severability. If any term or provision of this agreement or any
application of this agreement is held invalid or unenforceable, the
remainder of this agreement and any other application of the terms and
provisions of this agreement shall not be affected by that holding, but
shall be valid and enforceable.
8.11 Exhibits. All exhibits attached hereto or referred to in this
agreement are incorporated herein and made a part of this agreement.
8.12 Term. The term of this agreement shall be seven (7) years from the
date hereof or until the last expiration of the last Jointly Owned AMI
Interest acquired hereunder, whichever is earlier, with the exception
of the confidentiality requirements of Article 3.5 which shall survive
and extend past that period.
8.13 Notices. All notices, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly
given (a) when delivered by hand, (b) when sent by facsimile (with
receipt confirmed), provided that a copy is promptly mailed thereafter
by first class postage prepaid registered or certified mail, return
receipt requested, (c) when received by the addressee, if sent by
Express Mail, Federal Express, other express delivery service (receipt
requested) or by such other means as the Parties named below may agree
from time to time or (d) five (5) days after being mailed in the USA,
by first class postage prepaid registered or certified mail, return
receipt requested; in each case to the appropriate address and
telecopier number set forth below (or to such other address or
telecopier number as a Party may designate as to itself by notice to
the other Parties).
Parallel Petroleum Corporation
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxx , XX 00000
Attn: Xxxxx Xxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
TAC Resources, Inc.
P. O. Xxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Beta Oil & Gas, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Xxxxx Financial Services, Inc.
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Xxxx X. Xxxxxx
P. O. Xxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
CKC Investments, Inc.
P. O. Xxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
FGL, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Also Notify:
EG Operating, Inc.
1101 S. Capitol of Xxxxx Xxxxxxx, Xxxxxxxx X, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xx Xxxxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Mansefeldt Investment Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Topaz Exploration Company
P. O. Xxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Xxx-Xxx Drilling Corp.
P. O. Xxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
Each Party shall have the right upon giving thirty (30) days prior
written notice to the other Parties, in the manner herein provided, to
change its address and telecopier number for the purpose of notice.
8.14 Transfers Subject to this Agreement. Any sale, agreement, transfer
or other disposition of an interest in the Contract Lands, however
accomplished, either voluntarily or involuntarily, by operations of law
or otherwise, shall be subject to the terms of this Agreement. Any
instruments which convey any interest in the Contract Lands shall be
made expressly subject to the Agreement.
8.15 Counterparts. This agreement may be executed in multiple
counterparts, all of which when taken together shall constitute one
and the same agreement.
8.16 Public Announcements. Each Party hereto agrees that prior to
making any public announcement or statement with respect to the
transaction contemplated in this Agreement, the Party desiring
to make such public announcement or statement shall consult with
the other Parties hereto and exercise their best efforts to (i)
agree upon the text of a joint public announcement or statement to
be made by the Parties, (ii) obtain approval of the other Parties
hereto to the extent of a public announcement or statement to be made
solely by one of the Parties, as the case may be. Approval
shall be requested pursuant to Article 8.13 hereof, and any such
announcement or statement shall be deemed approved if no reply to
the contrary is received within twenty-four (24) hours (Saturdays,
Sundays and federal legal holidays excluded) after receipt of such
request by the other Parties. Nothing contained in this paragraph
shall be construed to require any Party to obtain approval of the other
Parties hereto to disclose information with respect to the transaction
contemplated by this Agreement to any governmental body to the extent
required by applicable law or by any applicable rules.
8.17 Expenses. Except as specified herein and as the Parties may
otherwise agree, each Party shall be solely responsible for all
expenses incurred by it in connection with any and all transactions
that are contemplated by this Agreement.
8.18 Force Majeure. Should any Party be prevented, wholly or in part,
from complying with any express or implied obligation of this
Agreement(other than the obligation to make money payments), from
conducting any operations provided for under this Agreement,
including by way of illustration but not limitation, the conducting
of the 3-D Seismic Operations by reason of scarcity of or inability to
obtain or to use labor, water, equipment or materials in the open
market or transportation thereof from any cause (other than
financial) beyond the control of such Party, or operation of "Force
Majeure, any State or Federal law or any order, ruling or regulation
of governmental authority, then while so prevented, such Party's
obligation to comply with such provision or obligation shall be
suspended, and such Party shall not be liable in damages or otherwise
to the other Parties for failure to comply therewith, provided that
the Party claiming suspension shall give written notice and full
particulars of the reason of such inability to perform its obligations
to the other Parties within thirty (30) days after the occurrence of
the cause relied on by the Party claiming suspension.
8.19 Arbitration. The Parties agree that any and all disputes arising
under or relating to this Agreement shall be referred to arbitration
pursuant to the commercial rules of arbitration of the American
Arbitration Association. Venue for such arbitration shall be Houston,
Texas USA.
IN WITNESS WHEREOF, this agreement is executed on the date first above written.
Parallel Petroleum Corporation
By:__________________________________
Xxxxx X. Xxxxxx, President
TAC Resources, Inc.
By:__________________________________
Xxxx Xxxxxx, President
Beta Oil & Gas, Inc.
By:___________________________________
Xxxxx Xxxxx, President
Xxxxx Financial Services, Inc.
By:___________________________________
Xxxx Xxxxx, President
CKC Investments, Inc.
By:___________________________________
Xxxx X. Xxxxxx, President
-----------------------------------
Xxxx X. Xxxxxx
FGL, Inc.
By:__________________________________
Xxx Xxxxxxxx, Vice President
Mansefeldt Investment Corporation
By:__________________________________
Xxxxxx Xxxxxxxx, President
Topaz Exploration Company
By:_________________________________
Xxxxxx Xxxxxxxx, President
Xxx-Xxx Drilling Corp.
By:__________________________________
Xxxxx Xxxxxxxxxx,
Chairman of the Board
