FARMOUT AGREEMENT Compeer Area, Albet·ta
EXHIBIT 10.1
Compeer Area, Albet·ta
THIS AGREEMENT dated the 2nd day of February, 2012.
BETWEEN:
HARVEST OPERATIONS CORP., a body corporate, having an office in the City of Calgary, in the Province of Alberta,
(hereinafter referred to as "Harvest")
-and-
STRONGBOW RESOURCES INC., a body corporate, having an office m the City of Houston, in the State of Texas,
(hereinafter referred to as "Strongbow")
WHEREAS Harvest has agreed to farmout to Strongbow in the Farmout Lands as set forth and described in
Schedule "A" hereto;
NOW THEREFORE, in consideration of the premises, covenants and agreements of the parties, the parties hereby covenant and agree as follows:
|
1.
|
Definitions
|
Each capitalized term used in this Agreement, including recitals, will have the meaning given to it in the Farmout & Royalty Procedure and in addition:
|
(a)
|
"Contract Depth" shall mean a mmnnum total vertical depth of 900 meters into the BakkenFormation or a total measured depth of 1950m subsurface, whichever shall first occur; (b)"Effective Date" means February 2, 20 12;
|
|
(c)
|
"Farmee" means Strongbow Resources Inc.;
|
|
(d)
|
"Farmor" means Harvest Operation Corp.;
|
|
(e)
|
"Farmout Lands" means the lands set forth and described in Schedule "A" hereto;
|
|
(f)
|
"Farmout & Royalty Procedure" means the 1997 CAPL Farmout & Royalty Procedure incorporated by reference herein, subject to the elections and amendments set forth on Schedule ''8" attached hereto;
|
|
(g)
|
"Mutual Interest Lands" means the area outlined in red excluding ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇: ▇▇▇ ▇▇- ▇&▇▇ to base Mannville as set forth in Schedule "C" attached hereto;
|
|
(h)
|
"Test Well" means the proposed well location at I 02/05-29-033-02W4/00, or as otherwise may be agreed to in writing between the parties;
|
|
(i)
|
"Title Documents" means the documents and any renewals or extensions thereof or further Title Documents issued pursuant thereto insofar as they relate to the Farmout Lands as set forth in Schedule "A" attached hereto.
|
1
|
2.
|
Schedules
|
The following Schedules are attached hereto and are incorporated into this Agreement:
Schedule "A" which sets forth the Farmout Lands, the Title Documents, the Pre-Farmout Working Interest and the Encumbrances;
Schedule "B" which sets forth the rates, elections and modifications to the Farmout & Royalty Procedure;
Schedule "C" which sets forth the Mutual Interest Lands;
Schedule "D" which sets forth Fannor's well data requirement sheet as referred to in Article 9.00 of the Farmout & Royalty Procedure.
|
3.
|
Qualified Operator
|
On or before March 30'", 2012 Farmee must obtain approval to hold EUB Licences ("Operator Status") from the Alberta Energy and Utilities Board. Farmee shall provide the Farmor with documentation supporting the operator status prior to the spud date of the Test Well. If the Fannee has not obtained Operator Status, this Agreement will terminate and the non performance penalty as set out in Clause 6 will be in effect.
|
4.
|
Test Well
|
|
(a)
|
On or before June 1, 2012 Farmee shall, subject to rig availability, surface accessibility and regulatory approval and in accordance with Article 3.00 of the Farmout & Royalty Procedure, spud the Test Well at I 02/05-29-033-02W4/00 on the Farmout Lands and continuously drill down to Contract Depth. Farmee shall while drilling to Contract Depth cut two full bore cores one each from the Viking and ▇▇▇▇▇▇ formations. Farmee shall also run a DST in the Viking formation. In the event that hydrocarbons are noted in the core and geological cuttings in the ▇▇▇▇▇▇, a DST will then be run in the ▇▇▇▇▇▇. A decision will be mutually reached between the parties whether or not to continue with drilling a lateral in the ▇▇▇▇▇▇ section. If the ▇▇▇▇▇▇ formation proves non-productive or uneconomic, Farmee shall cut a window to enable for the drilling of a lateral into the Viking formation. In either event, the proposed lateral would be drilled to a minimum of 1,000 meters to a maximum of 1,200 meters of horizontal length. In either event, the total measured depth of the Test Well shall be 1,950 meters for the Test Well. Fannee shall complete the Test Well in the ▇▇▇▇▇▇ or Viking formation within the Farmout Lands prospective of containing petroleum and natural gas and equip or abandon same.
|
|
(b)
|
Farmor shall be provided with all well information pertaining to the Test Well on a current and confidential basis, as outlined in Clause 9.00 of the Farmout & Royalty Procedure. All risks and expenses associated with the Test Well shall be borne solely by Fannee 100%, and the Farmor shall be entirely free of any such costs, risk and expense.
|
2
|
5.
|
Interest Earned
|
Subject to A1ticle 3.00 of the Farmout & Royalty Procedure, upon Farmee having drilled, completed, equipped or abandoned the Test Well on the Farmout Lands, Fannee shall earn an undivided one hundred percent (100%) of ▇▇▇▇▇▇'▇ Pre-Farmout Working Interest in the Farmout Lands subject to a non-conve1tible Overriding Royalty payable to the Farmor as provided for in Article 5.00 of the Farmout & Royalty Procedure
|
6.
|
Non-Performance Penalty
|
|
(a)
|
In the event Farmee fails to comply with its Test Well commitment as set forth in this Agreement, then the Farmee's right to earn any further interest shall terminate upon written notice of default served by Farmor to Farmee. Fannee shall pay to ▇▇▇▇▇▇ the sum of Three Hundred and Fifty Thousand Dollars ($350,000) (CAD) as liquidated damages within ten (10) business days of receipt of the written notice. It is agreed that the Three Hundred and Fifty Thousand Dollars ($350,000) (CAD) is a genuine pre-estimate of the damages and Farmor does not need to establish that any actual damage occurred upon failure of Farmee to complete the Test Well commitment, it being the intention of the parties to establish the damage that can be foreseen from the failure of Farmee to complete its Test Well commitment at the time of making this Agreement.
|
|
(b)
|
Payment by Fannee of the genuine pre-estimate of damages in no way constitutes earning by Farmee under this Agreement nor does it deprive ▇▇▇▇▇▇ of any other rights at law or in equity, including damages and indemnity.
|
|
7.
|
Mutual Interest Lands
|
|
(a)
|
Article 8.00 of the Farmout & Royalty Procedure shall apply from the Effective Date and shall remain in full force for one (1) year from the drilling rig release date of the Test Well.
|
|
(b)
|
Any Mutual Interest Lands acquired pursuant to this Article 8.00 of the Farmout& Royalty Procedure by the Farmee shall be subject to a 5% Overriding Royalty payable to the Farm or.
|
|
(c)
|
In the event the Farmee does not meet their requirements pursuant to Clause 3 and 4 of thisAgreement, This Agreement and Mutual Interest Lands will be terminated.
|
|
8.
|
Incorporation of the Farmout & Royalty Pr·ocedure
|
'l'o the extent that they do not conflict with the provisions of this Agreement, the provisions of the Farmout & Royalty Procedure are incorporated herein.
|
9.
|
Indemnification
|
Farmee shall indemnify and save Fanner harmless from all actions, lawsuits and adverse claims created or caused as a result of any operations conducted by Farmee pursuant to this Agreement on the Farmout Lands.
3
|
10.
|
Confidentiality and Public Announcements
|
Except in connection with required regulatory disclosures, the parties shall keep confidential all information obtained from the other party in connection with the Farmout Lands and shall not release any information concerning this Agreement and the operation and transactions herein provided for, without the prior written consent of the other party, which consent shall not be unreasonably withheld. Farmee shall not issue any press release or other public announcements concerning this Agreement and the operations and transactions herein provided for, without the prior written consent of the Farmor, which consent shall not be unreasonably withheld. In particular, any press release or other public announcement issued by Farmee shall not disclose or infer the identityof Fannor.
|
11.
|
Permitted Assignments
|
Farmee shall not, during the period that it has a right to earn an interest hereunder, encumber, grant or assign any legal or equitable interest in this Agreement, the Title Documents or the Farmout Lands without the prior written consent of Fannor. If after obtaining Farmor's consent, Farmce makes any such assignment, then Farmee shall continue to be bound by and be responsible for carrying out the terms and conditions of this Agreement and Farmor shall only be required to look to Farmee for performance hereunder.
Upon Farmee having earned its interest hereunder, any further assignment shall be subject to the provisions of the Assignment Procedure.
|
12.
|
Address for Service
|
The address for service of each party hereto for notices issued pursuant to this Agreement, and the Farmout & Royalty Procedure is as follows:
| Farmor:
Harvest Operations Corp.
▇▇▇▇, ▇▇▇-▇'" ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇: Land Manager
|
Farmee:
Houston Office: Strongbow Resources Inc.
600, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
|
||
|
Calgary Office:
C/0 APEX Energy Consultants Inc.
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
|
4
|
13.
|
Miscellaneous
|
| (a) |
Each of the pa1iies represents and warrants that it now has or is entitled to have full right, full power and absolute authority to enter into this Agreement.
|
| (b) |
If any term or condition of this Agreement conflicts with any Schedule attached hereto, the provisions of the body of this Agreement shall prevail. In the event of any conflict or inconsistency between the provisions of this Agreement and those of the Title Documents, the provisions of the Title Documents shall prevail.
|
| (c) |
This Agreement shall for all purposes be construed and interpreted according to the laws of Alberta. The courts having jurisdiction with respect to matters relating to this Agreement shall be the courts of Alberta.
|
| (d) |
The parties shall from time to time and at all times do all such further acts and execute and deliver all such further deeds and documents as shall be reasonably required in order to perform fully and carry out the terms of this Agreement.
|
| (e) |
This Agreement supersedes all other agreements, documents, letters and understandings, whether written or oral, among the parties in respect of the Farmout Lands.
|
| (f) |
The two year period for seeking a remedial order under Section 3( I )(a) of the Limitations Act, R.S.A. 2000 c.L-12, as amended, for any claim (as defined in the Act) arising in connection with this Agreement is extended to four years.
|
| (g) |
This Agreement may be executed in counterpart and all of those counterparts when taken together shall have the same effect as if all Parties had executed one document.
|
| (h) | Time shall be of the essence in this Agreement. |
5
IN WITNESS WHEREOF the parties have executed this Agreement.
| HARVEST OPERATIONS CORP. | STRONGBOW RESOURCES INC. | |||
 |
Per: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | Chief Exceutive Officer | |||
This is the execution page to a Farmout Agreement dated the 2nd day of February, 201 2 between Harvest
Operations Corp. and Strongbow Resources Inc.
6
SCHEDULE "A"
This Schedule "A" attached to and made pa1i of a Farmout Agreement dated the 2nd day of February, 2012
between Harvest Operations Corp. and Strongbow Resources Inc.
|
Title Documents
|
Farmout Lands
|
Pre-Farmout
VVorking Interest
|
Encumbrances
|
|
Alberta P&NG Licence
5310090903
|
▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇▇: ▇▇▇ ▇▇, ▇▇, ▇▇,▇▇ & ▇▇
▇▇▇ ▇&▇▇
|
100%
|
None
|
|
Expiry:
September 29, 2012
|
▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇▇: ▇▇▇ ▇▇ & ▇▇
▇▇▇ ▇&▇▇
|
||
|
▇▇▇ ▇▇▇ ▇▇▇ ▇▇ ▇▇▇: ▇▇▇ ▇
▇▇▇ ▇&▇▇
|
7
SCHEDULE "B"
This Schedule "B" attached to and made part of a Farmout Agreement dated the 2nd day of February,
2012 between Harvest Operations Corp. and Strongbow Resources Inc.
Rates, Elections and Modifications to the 1997 FARMOUT & ROYALTY PROCEDURE:
| 1. | Clause 1.01 (f)- Effective Date: February 2, 2012 | ||
| 2. | Clause 1.01 (t)- Payout (if Article 6.00 applies): N/A | ||
| 3. |
Clause 1.02- Incorporation Of Provisions From 1990 CAPL Operating Procedure:
|
||
| Clause 311 -Insurance: | Alternate A | ||
| 4. | Article 4.00- Option ▇▇▇▇▇: | will _____ /will not_X_apply. | |
| 5. | Article 5.00- Overriding Royalty: | will_X_ I will not _____ apply. | |
|
6.
|
Subclause 5.01A, if applicable- Quantification of Overriding Royalty: (a)
|
||
| (a) |
Crude Oil
Alternate 2
If Alternate I is selected, ______ %
If Alternate 2 is selected, 1/23.8365, min 5% max 15 %
|
||
| (b) |
Other
Alternate I
If Alternate I is selected, 15%
If Alternate 2 is selected, _____ % in (i) and _____ % in (ii).
|
||
|
7.
|
Clause 5.04B, if applicable- Permitted Deductions:
|
Alternate I and 2 | |
| If Alternate 2 is selected: 40% | |||
| 8. | Article 6.00- Conversion of Overriding Royalty: | will ______ / will not _X_ apply. | |
|
If Article 6.00 applies, conversion to ______ % of Working Interest in Clause 6.04 A.
|
|||
| 9. | Article 8.00 (Area of Mutual Interest): | will_X_/will not _____ apply. | |
| 10. | Clause 11.02- Reimbursement of Land Maintenance Costs: will_ /will not _X_ apply. | ||
| If applies, reimbursement of$ __________________ | |||
8
SCHEDULE "C"
This Schedule "C" attached to and made patt of a Farm out Agreement dated the 2nd day of February, 2012
between Harvest Operati ons Corp. and Strongbow Resources Inc.
MUTUAL INTEREST LANDS
As Outlined in Red
9
SCHEDULE "D"
This Sched ule "D" attached to and made pa11of a Farmout Agreement dated the 2 day of February, 2012
between Harvest Operations Corp. and Strongbow Resources Inc.
WELL DATA REQUIREMENT SHEET
|
TO:
|
Drilling and Completions administrator
|
|
WELL:
|
ALL NON-OPERATED LOCATIONS (including LOR/▇▇▇, Farmouts, etc)
|
|
INFORMATION REQUIRED PRIOR TO DRILLING
|
NUMBER OF COPIES
|
|||
| Construction Reports, including costs | 1 | |||
|
Survey Plan
|
1 | |||
|
Application for Well License
|
1 | |||
|
Approved Well License, and applicable Amendments
|
1 | |||
|
Drilling Program and Geological Prognosis
|
1 | |||
|
AFE/Cost Estimate
|
1 | |||
|
INFORMATION REQUIRED DURING AND AFTER DRILLING
|
||||
|
Daily Drilling Reports
|
1 | |||
|
Regulatory Reports
|
1 | |||
|
Logs and Surveys- including LAS for logs
|
1 | |||
|
Cores Analysis (if applicable)
|
1 | |||
|
Drill Stem Test Reports and Charts (if applicable)
|
1 | |||
|
Core Analysis (if applicable)
|
1 | |||
|
Oil, Water and Gas Analysis (if applicable)
|
1 | |||
|
Geological Report (if applicable)
|
1 | |||
|
New Oil Well Report (if applicable)
|
1 | |||
|
Final Completion or Abandonment Report
|
1 | |||
|
Daily Completion Reports
|
1 | |||
|
Completion Logs
|
1 | |||
|
Initial Production/Fiow/AOF- or any other Production Reports
|
1 | |||
|
All subsequent Workover & Service Reports
|
1 | |||
Please send all of the above mentioned information to the attention of:
Non-Op Administrator ▇▇▇.▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Mailing Address:
Harvest Operations Corp.
2100, ▇▇▇ - ▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ OL4
10