Exhibit 10.20
EXPLORATION AGREEMENT
POTATO HILLS DEEP PROSPECT
THIS EXPLORATION AGREEMENT (the "AGREEMENT) is made and entered into effective
the 19th day of May, 2003, by and between The GHK Company, L.L.C. and GHK/Potato
Hills Limited Partnership (hereinafter collectively referred to as "GHK"), and
BWP Gas, L.L.C. (hereinafter referred to as "Participant).
WHEREAS, GBX represents that it is the present owner of oil and gas leases (the
"Leases") more particularly described on Exhibit "A" attached hereto.
WHEREAS, Participant desires to acquire a certain undivided portion of GHK's
rights, titles and interests in and to the wellbores of certain ▇▇▇▇▇ that may
be drilled subject to the terms, conditions, reservations and limitations
hereinafter provided, and to participate in the drilling of an Initial Well for
oil and/or gas as hereinafter provided.
NOW THEREFORE, for and in consideration of the covenants and agreements
hereinafter contained and set forth, to be kept and performed by the parties
hereto, such parties agree as follows:
I. CONTRACT AREA
1.1 ▇▇▇ ▇▇▇▇ (▇▇▇▇▇▇▇▇ ▇▇▇▇) covered by this Agreement is described as:
TOWNSHIP 3 NORTH, RANGE 19 EAST, ▇▇▇▇▇▇▇ CO., OKLAHOMA
Sections 25, 26, 35 and 36
TOWNSHIP 3 NORTH, RANGE 20 EAST, ▇▇▇▇▇▇▇ CO., OKLAHOMA
Sections 25 through 36
TOWNSHIP 3 NORTH, RANGE 21 EAST ▇▇▇▇▇▇▇ CO., OKLAHOMA
Sections 29,30,31, and 32
TOWNSHIP 2 NORTH, RANGE 19 EAST PUSHMATAHA CO., OKLAHOMA
Sections 1 through 4,9 through 15
TOWNSHILP 2 NORTH, RANGE 20 EAST, PUSHMATAHA CO., OKLAHOMA
Sections 1 through 9
TOWNSHIP 2 NORTH, RANGE 21 EAST PUSHMATAHA CO., OKLAHOMA
Section 6
II. EXHIBITS
2.1 Attached to and made a part hereof for all intents and purposes are
the following Exhibits:
Exhibit "A" - Schedule of leases (the "Leases") owned by GHK prior to
February 13, 2003;
Exhibit "B" - Copy of A.A.P.L. Form 610-1989 Operating Agreement
(sometimes referred to herein as "JOA"), including
modification, deletions and additions, to be utilized in
accordance with the terms and provisions of this Agreement;
Exhibit "C" - Two(2) copies of Authority for Expenditure ("AFE") for the
drilling and completion of the ▇▇▇▇ #2-34 well in Section
34-3N-20E, ▇▇▇▇▇▇▇ County, Oklahoma.
III. INTEREST OF PARTIES
3.1 The ownership percentage ("Ownership Percentage") of the Parties is as
follows:
▇▇▇▇ #2-34 Wellbore
Participant 6% of 8/8ths
SUBSEQUENT ▇▇▇▇▇ DRILLED IN THE CONTRACT AREA PURSUANT TO ARTICLE VIII
BELOW
*GHK, et al 94%
Participant 6%
* It is understood and agreed that one-half of the 6% interest
being sold to Participant will come from interests currently
owned by Petroleum Properties Management Company and ▇▇▇▇▇ Energy
Corporation.
3.2 It is understood and agreed that Participant shall not pay any
geological, geophysical, or lease acquisition costs in connection with
this Agreement and shall only be responsible for its promoted share of
drilling and completion costs in accordance with Articles VI and VIII
below.
IV. ASSIGNMENT
4.1 Participant shall have until 5:00 p.m., EST on May 23, 2003 to tender
payment to GHK in the amount of six (6) million dollars ($6,000,000
U.S.). Upon receipt of deposited and collected payment in the amount
of $6,000,000, GHK agrees to assign to Participant an undivided six
percent of 8/8ths (6% of 8/8ths) interest in the ▇▇▇▇ #2-34 wellbore
in Section ▇▇-▇▇-▇▇▇, ▇▇▇▇▇▇▇ County, Oklahoma. Any interest assigned
and delivered to Participant shall be subject to the overriding
royalty burdens set forth below and without warranty of any kind,
express or implied, except that GHK shall warrant title to the Leases
by, through and under itself, but not otherwise, and Participant shall
have the right to enforce, to the extent such rights are assignable,
any warranties contained in the Leases. It is understood and agreed
that one-half of the 6% interest being sold to Participant will come
from interest currently owned by Petroleum Properties Management
Company and ▇▇▇▇▇ Energy Corporation. Said wellbore Assignment shall
be effective as of the same date hereof and shall be subject to the
terms, conditions, reservations and limitations of the following:
a. The Leases; and all Assignments as to any portion thereof;
b. This Agreement;
c. That certain unrecorded Operating Agreement dated effective June
1, 2002, by and between the Parties hereto, a full and complete
copy of which is attached hereto as Exhibit "B";
d. An overriding royalty interest in favor of GHK on all acreage
assigned by GHK to Participant in an amount equal to the
difference between existing burdens and twenty-five percent
(25%), it being the intent of GHK to deliver a seventy five
percent (75%) net revenue interest in the Leases to Participant.
e. As to the following units that are held by production as of the
effective date hereof, a depth limitation whereby GHK reserves
and excepts unto itself in any assignment made pursuant to this
agreement all rights as to those depths and formations from the
surface of the earth to the stratigraphic equivalent of the base
of the Upper Jackfork (Ratc1iff) formation as defined at 5,410'
in the ▇▇▇▇▇▇▇▇ #1-33 wellbore in Section 33-3N-20E, ▇▇▇▇▇▇▇
County, Oklahoma.
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TOWNSHIP 2 NORTH - RANGE 20 EAST
Sections 3, 4,5, 6, 8 and 9
TOWNSHIP 3 NORTH - RANGE 20 EAST
Sections 25, 31, 34, 35 and 36
TOWNSHIP 2 NORTH - RANGE 19 EAST
Sections 3, 10 and 12
f. As to the following units that are held by production as of the
effective date hereof a depth limitation whereby GHK reserves and
excepts unto itself in any assignment made pursuant to this
agreement all rights as to those depths and formations listed
below:
TOWNSHIP 2 NORTH - RANGE 20 EAST
Section 7: From the surface of the earth to the
stratigraphic equivalent of the base of
the basal Jackfork sandstone as defined
at 7,815' in the Four Star #1-7
wellbore.
TOWNSHIP 3 NORTH - RANGE 20 EAST
Section 32: From the surface of the earth to the
stratigraphic equivalent of the base of
the Cedar Creek sandstone as defined at
5,600' in the ▇▇▇▇▇ #2-32 wellbore.
TOWNSHIP 3 NORTH - RANGE 20 East
Section 33: From the surface of the earth to the
stratigraphic equivalent of the base of
the Cedar Creek sandstone as defined at
5,330' in the Cedar Creek #3-33
wellbore.
TOWNSHIP 2 NORTH - RANGE 19 EAST
Section 1: From the surface of the earth to the
stratigraphic equivalent of the base of
the basal Jackfork sandstone as defined
at 4,836' in the ▇▇▇▇▇▇▇▇▇ #1-1
wellbore.
TOWNSHIP 2 NORTH - RANGE 19 EAST
Section 2: From the surface of the earth to the
stratigraphic equivalent of the base of
the basal Jackfork sandstone as defined
at 6,150' in the ▇▇▇▇▇▇▇ #1-2 we11bore.
TOWNSHIP 2 NORTH - RANGE 19 EAST
Section 9: From the surface of the earth to the
stratigraphic equivalent of the base of
the Arkansas Novaculite formation as
defined at 5,546' in the Gee #1-9
wellbore.
TOWNSHIP 2 NORTH - RANGE 19 EAST
Section 11: From the surface of the earth to the
stratigraphic equivalent of the base of
the Cedar Creek sandstone as defined at
5,052' in the ▇▇▇▇▇▇-▇▇▇▇▇ #1-11
wellbore.
g. Subject to that certain Letter Agrement dated July 23, 1998,
by and between GHK and W. 0. ▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.,
Tripco, Inc. and/or Prism Energy, Inc., and ▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇ Group") whereby the ▇▇▇▇▇▇ Group has the right to
acquire from GHK an undivided five percent (5.0%) interest
in each section of the Contract Area where GHK owns at least
fifty percent (50.0%) in the Contract Area and five percent
(5.0%) of GHK's leasehold interest in each section of the
Contract Area where GHK owns less than fifty percent
(50.0%). Participant's interest, along with GHK's interest,
shall be subject to a proportionate reduction in interest as
a result of any assignment to the ▇▇▇▇▇▇ Group.
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h. Subject to existing agreements with Chesapeake Exploration
Limited Partnership, Palace Exploration Company, Castlerock
Resources, Inc., and Tularosa, Inc. dated effective March
28, 2002 whereby GHK's interest is reduced by a
proportionate 15%, 14%, 0.5% and 0.5% respectively.
Participant's interest shall not be reduced by any prior
assignment to the parties named in this paragraph. It is the
intent that Participant shall be assigned its 6%
proportionate share of GHK's interest subject only to GHK's
prior assigninent of interest to the ▇▇▇▇▇▇ Group described
in Paragraph IV g. above.
i. GHK reserves and excepts unto itself all rights in existing
wellbores, equipment, facilities and pipelines within the
AMI. Should any existing wellbore be reentered, recompleted
or deepened ("subsequent operation") to a formation that is
to be assigned to Participant, then Participant shall have
the option to participate in ihe subsequent operation by
paying its ownership share of GHK's actual cost to drill the
well to the point before the subsequent operation along with
its ownership share of the cost to complete the subsequent
operation.
4.2 The interest assigned shall be subject to its proportionate share of
all royalties, overriding royalties, production payments and other
leasehold burdens created, reserved, excepted or assigned in any of
the instruments referred to in Article 4.1 above.
V. AREA OF MUTUAL IMTREST
5.1 An Area of Mutual Interest ("AMI") identical in area to the
aforementioned Contract Area is hereby established.
5.2 The AMI created pursuant to this paragraph shall be effective as of
the same date this Agreement is effective and shall continue for a
period of five (5) years thereafter. The duration of the AMI can be
extended or reduced only by written agreement of the parties hereto.
5.3 Should Participant or anyone on their behalf or for their benefit,
directly or indirectly, after the effective date of this Agreement
acquire any Additionally Acquired Interests within the AMI, then
Participant shall offer GHK the right to acquire its Ownership Share
of the same by paying its proportionate share of the costs incurred in
connection therewith. Participant shall give prompt written notice of
all the particulars with respect to price, terms and conditions
relative to such leases and/or rights with the AMI. GHK shall have ten
(10) days (forty-eight [48] hours if a well is drilling or completing
within one [1] mile of the AMI outline) to acquire its proportionate
share of such offering by paying a like share of the actual land costs
attributable to such acquisition. Failure or refusal to notify or pay
Participant in the manner set forth above shall constitute an election
by GHK not to acquire its proportionate share of said interest.
5.4 Participant shall offer GHK its Ownership Share of any leasehold
interest, unleased mineral interest, force pooled interest, or any
other interests or rights whatsoever ("Participant's Interests"),
which Participant currently owns within the AMI. Participant's
Interests shall be offered in writing to GHK within ten (10) days from
execution and delivery of this Agreement and GHK will have ten (10)
days to elect to acquire its Ownership Share of Participant's
Interests at actual cost and existing net revenue interest.
Participant's Interests shall be assigned by Participant to GHK within
thirty (30) days of GHK's payment of its proportionate share of land
costs, subject to an overriding royalty interest equal to the
difference between existing burdens and twenty two percent (22.00%),
it being the intent of Participant to deliver a seventy eight percent
(78.00%) net revenue interest in the Participant's Interests to GHK.
In the event Participant's Interest has existing burdens in excess of
twenty two percent (22.00%), then such interest shall be delivered to
GHK at existing net revenue interest and Participant shall reserve no
overriding royalty interest as to such interest.
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VI. INITIAL WELL COMMITMENT
6.1 The Parties hereto agree to join in the drilling of the ▇▇▇▇ #2-34
well ("Initial Well") at a location in the Southwest ("SW/4") of
Section 34, Township 3 North, Range 20 East, ▇▇▇▇▇▇▇ County, Oklahoma.
GHK has commenced drilling and has temporarily ceased drilling
operations on the Initial Well at a depth of approximately 20,628'. At
GHK's sole option and discretion, GHK may elect to terminate drilling
operations for the Initial Well at its current depth or GHK may
diligently pursue the drilling of said Initial Well to a total depth
of 24,500' below the surface of the ground or a depth sufficient to
adequately test the ▇▇▇▇▇▇▇▇ formation, whichever is the lesser depth.
For the purpose of drilling said Initial Well, all of Section
34-3N-20E ▇▇▇▇▇▇▇ County, Oklahoma shall be considered the appropriate
drilling and spacing unit unless changed by GHK pursuant to State
and/or Federal rules and regulations or by mutual agreement.
6.2 Should the total costs as reflected on the AFE attached hereto as
Exhibit "C" exceed one hundred and ten percent (110%), Participant
agrees to pay its six percent (6%) Ownership Share of all costs
incurred in the drilling, testing, equipping, producing and operating
the Initial Well that exceed 110% of the AFE. GHK will invoice
Participant for such costs incurred on a monthly basis.
6.3 If, prior to reaching the authorized depth during the drilling of the
Initial Well, or prior to completing said well, conditions are
encountered, which would render further operations by a reasonably
prudent Operator impractical or unreasonably dangerous and Operator is
forced to abandon the well, then, within sixty (60) days after
cessation of operations GHK shall have the right to commence or cause
to be commenced the actual drilling of a "Substitute Well" for said
Initial Well at a mutually acceptable (among the parties of the
Operating Agreement) location on the Contract Area described in the
JOA, and then continue the drilling thereof in the same manner and to
at least the same authorized depth as provided for the Initial Well,
and such Substitute Well when so drilled shall qualify as the Initial
Well. Assignor may drill as many Substitute ▇▇▇▇▇ as may be necessary
to reach the authorized depth provided operations for each Substitute
Well shall be commenced within sixty (60) days of cessation of
operations of the previous Substitute Well unless a shorter term is
required by any of the Leases or Agreements. Each such Substitute Well
shall be considered under this Agreement to be the Initial Well.
6.4 By execution of this Agreement, the parties hereto agree that all
operations conducted within the AMI shall be conducted in accordance
with the terms and provisions of the form Operating Agreement attached
hereto as Exhibit "B". At such time as the first well is proposed in
each drilling and spacing unit within the AMI, there shall be prepared
and submitted by the Operator for approval by Participant, an
operating agreement similar in form as Exhibit "B" attached hereto.
VII. OPERATOR OF CONTRACT AREA
7.1 GHK shall be designated Operator of all operations in the AMI. and
shall conduct, direct and have full control of all operations,
including determination of appropriate drilling and spacing unit size,
in the AMI as permitted and required within the limits of this
agreement. Participant agrees to support GHK as Operator at any
hearing before any State and/or Federal regulatory body in which GHK
is seeking operations.
VIII. SUBSEQUENT ▇▇▇▇▇
8.1 Should GHK desire to drill a well or ▇▇▇▇▇ ("Subsequent Well") in
addition to the Initial Well on lands in the AMI, then with respect to
each additional well GHK shall give Participant written notice of the
proposed operation specifying the work to be performed, the
approximate location, proposed depth, objective formation,
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and the estimated cost of the operation in the form of an AFE.
Participant shall have thirty (30) days after receipt of the notice
within which to notify, in writing, GHK whether Participant elects to
participate in the cost of the proposed operation. Failure of
Participant to reply within the 30-day period shall constitute an
election by that party NOT to participate in the cost of the proposed
operation. Should Participant elect to participate, they shall pay and
bear an undivided six percent (6%) interest in the wellboro of the
Subsequent Well by paying 1.33 times of the actual costs associated
with the drilling and completion of such well. The 6% interest shall
be proportionately reduced to the total GHK interest in the well. By
way of clarification and example, if GHK owns a 50% interest in a
Subsequent Well, Participant's participation interest will be 50%
times 6% (or 3%) and when multiplied by 1.33, will result in
Participant paying 3.99% of the actual costs of drilling and
completing said well. Participant's interest in any well shall be
limited to the wellbore only of such well and shall be subject to
Paragraph 4.1 g. and h.
8.2 Notwithstanding anything to the contrary contained in Exhibit "B"
attached hereto, in the event GHK proposes that Subsequent Well(s) be
drilled in the AMI, Participant will have thirty (30) days to make an
election to participate in such well or forever forfeit its rights to
participate in that well or any other well drilled in that particular
spacing unit.
IX. DELAY RENTALS, MINIMUM ROYALITIES
SHUT-IN ROYALITIES
9.1 If any delay rental, minimum royalty or shut-in royalty shall become
due on any oil and gas lease subject to this agreement while the same
remains in force and effect and such oil and gas lease is not then
subject to an effective JOA entered into pursuant to the terms and
provisions of this Agreement, then the party hereto who originally
acquired such lease shall pay such delay rental, minimum royalty or
shut-in royalty and the other owner of such lease, determined in
accordance with the terms and provisions of this Agreement, shall
reimburse the paying party for its respective proportionate part
calculated pursuant to the terms and provisions of this Agreement upon
receipt of an invoice evidencing such payment.
X. RELATIONSHIEP OF PARTIES
10.1 Nothing contained in this Agreement is intended to create, nor shall
this Agreement be construed as creating, a partnership, joint venture,
partnership, association or other relationship whereby any party
hereto shall be held liable for the acts, debts, or obligations of the
other. The duties, obligations and liabilities of the parties to this
Agreement shall be several and not joint, it being understood and
agreed that each party shall be responsible only for its duties,
obligations and liabilities as set out herein. For federal income tax
purposes, the provision contained in the attached JOA in respect to
federal income tax is herewith adopted for all purposes hereunder as
though said provision appeared herein.
XI. RISK OF LOSS
11.1 GHK and Participant understand and agree that the drilling and
exploration for hydrocarbons is a highly speculative venture and
Participant agrees that GHK has made no warranties or representations
as to the success or financial gain relative to the above captioned
prospect. Participant, by acceptance of this Agreement, signifies that
it has sufficient knowledge and experience to utilize the information
contained herein and to evaluate the risks involved in any investment
in oil and gas activities and that it is capable of bearing any and
all economic risks involved in this investment with full knowledge
that its investment could result in a loss.
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XII. MISCELLAMOUS
12.1 The terms, covenants and conditions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors, heirs, representatives and assigns.
12.2 Should Participant desire to sell all or any part of its interest
under this agreement, or its rights and interests in the Contract
Area, it promptly give written notice to GHK, with full information
concerning its proposed disposition, which shall include the name and
address of the prospective transferree (who most be ready, willing and
able to purchase), the purchase price, a legal description, sufficient
to identify the property, and all other terms of the offer. GHK shall
then have an optional prior right, for a period of ten (10) days after
the notice is delivered, to purchase for the stated consideration on
the some terms and conditions the interest which Participant proposes
to sell. However, there shall be no preferential right to purchase in
those cases where Participant wishes to mortgage its interest or to
transfer title to its interests to its mortgagee in lieu of or
pursuant to foreclosure of a mortgage of its interests, or to dispose
of its interests by merger, reorganization, consolidation, or by sale
of all or substantially all of its Oil and Gas assets to any party or
by transfer of all or part of its interests to an affiliate entity,
trust, subsidiary or parent company or to a subsidiary of a parent
company, or to any company in which Participant owns a majority of the
stock.
12.3 The articles, sections and other headings contained in this Agreement
are inserted and included solely for convenience and shall not be
considered, or given any effect, in construing this Agreement, or any
part thereof or in connection with the duties, obligations, benefits
or liabilities of the respective parties hereto, or in ascertaining
the intent of the parties hereto if any questions of intent should
arise; it being otherwise the intention of the parties hereto that
this Agreement be construed as whole.
12.4 The Agreement represents the entire agreement between the parties
hereto with respect to the AMI, and shall only be amended by a written
instrument executed by all the parties hereto.
12.5 Each of the parties to this Agreement represents it is not a party to
any agreement or arrangement which conflicts with the terms and
provisions of this Agreement.
12.6 Any party's obligations under this Agreement shall be suspended during
the time and to the extent that it is prevented from complying
therewith, in whole or in part, by weather conditions, labor
disturbances, civil disorder, Acts of God, unavoidable accidents,
laws, rules or regulations of governmental bodies or agencies, delays
in transportation, inability to obtain necessary materials or
equipment including drilling rigs in the open market, or any other
cause, except financial, whether similar or dissimilar to those
specifically enumerated, beyond the party's reasonable control.
12.7 In the event of a conflict between this Agreement and JOA attached
hereto as Exhibit "B" or any operating agreement prepared pursuant to
the terms hereof, this Agreement shall control.
12.8 In the event that Participant pays all sums set forth in Article 4.1
hereinabove, GHK does hereby grant Participant the right, but not the
obligation, to participate with an undivided ten percent (10%) of
GHK's interest in all other prospects generated or acquired by GHK
(hereinafter referred to singularly as "Prospect" and plurally as
"Prospects"). Participant's terms for such participation shall be
identical to those terms and conditions offered to Petroleum
Properties Management Company, L.L.C., ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (hereinafter collectively refered to as the "Private Investor
Group"). In the event that any of the participants in the Private
Investor Group makes an election to not participate,
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for it's proportionate share of any Prospect, Participant shall have
the option, but not the obligation, to acquire Participant's
proportionate share of the nonparticipating Private Investor Group's
interest in said Prospect. Additionally, in the event that GHK makes
the determination to seek the participation of additional industry
partners or investors (other than the Private Investor Group) in any
Prospect, Participant shall have the right of first refusal to acquire
all or any portion of the participation interest offered by GHK in
said Prospect, under the same terms as offered to said industry
partner(s) or investor(s). Participant will have thirty (30) days
after receipt of notice within which to notify, in writing, GHK
whether Participant elects to participate in the Prospect. Failure to
timely reply shall constitute an election by Participant not to
participate in said Prospect. For the purposes of this paragraph, the
notice to be provided to the Participant shall contain all the terms
of the Prospect and all information necessary for Participant to make
an informed decision regarding its election to participate in the
proposed Prospect. The Prospects currently being evaluated and
assembled by GHK include, but are not limited to, the Indian Prospect
in ▇▇▇▇▇ ▇▇▇▇▇ County, Oklahoma, the ▇▇▇▇▇▇▇▇ Prospect in Beckham
County, Oklahoma, and the Big "O" Prospect in the Texas Panhandle. The
terms of participation have not been determined by GHK for any of the
Prospects identified in this Article 12.8, as of the effective date of
this Agreement
12.9 Continental Southern Resources, Inc. ("CSOR") intends to acquire a
majority of the membership interest of Participant. Upon the
completion and initial commercial production of the ▇▇▇▇ #2-34 along
with the presentation of a development plan and the commencement of
the next exploration or development well in the Potato Hills Deep
Prospect, Participant agrees to assign or transfer, or cause to be
assigned or transferred, to GHK one and one-quarter (1.25) million
common shares of CSOR stock and ▇▇▇▇▇ ▇. ▇▇▇▇▇ one and one-quarter
(1.25) million common shares of CSOR stock. CSOR, GHK and ▇▇▇▇▇ will
enter into a standard registration agreement that will require that
these shall be registered for resale within a period of one year from
May 23, 2003. The agreement will also contain standard anti-dilution
provisions based on the outstanding shares of CSOR on May 23, 2003.
12.10 All notices required hereunder shall be delivered by certified mail,
return receipt requested, and shall be made to the following:
The GHK Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. May
BWP Gas, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Managing Member
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ Energy Corporation
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Petroleum Properties Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
****Prior to the payment of the sums set forth in
Article 4.1 hereinabove, GHK shall provide to
Participant all necessary consents, approvals and
authorizations of assignments and waivers of
preferential rights to purchase as to the
Ownership Interests to be conveyed to Participant.
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12.11 All jointly acquired well information and proprietary data, whether of
technical or land-related nature, shall be held strictly confidential
by Participant. Requests from a third party to examine or contract to
lease or purchase any of such data must be approved in writing by GHK.
If the terms and conditions contained to this Agreement correctly set
forth your understanding of our agreement, please signify your acceptance by
executing the Agreement in the space provided below and returning one (1)
executed original to GHK at the above address on or before May 23, 2003, or, at
GHK's option, this Agreement shall expire and have no further force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 20th day of May, 2003, but is effective as of the 19th day of May, 2003.
The GHK Company, LLC BWP Gas, L.L.C.
GHK/Potato Hills Limited Parntership
By: /s/ ▇▇▇▇▇▇ ▇. May By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. May, Attorney-in-Fact Title: President HBA GAS
Managing Member
▇▇▇▇▇ ▇. ▇▇▇▇▇ Petroleum Properties Management
▇▇▇▇▇ Energy Corporation Company
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: President
--------------------------------
9
Omitted Exhibits
The following exhibits to the Exploration Agreement have been omitted:
Exhibit Exhibit Description
A Schedule of Leases
B A.A.P.L. Form 610-1989 Operating Agreement
C Authority for Expenditure
The Registrant agrees to furnish supplementally a copy of the foregoing
omitted exhibits to the Securities and Exchange Commission upon request.