County Line Energy Corp. PARTICIPATION AGREEMENT Highway 21, Alberta
County
Line Energy Corp.
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THIS
AGREEMENT made
this
21st
day of
December, A.D., 2006.
BETWEEN:
COUNTY
LINE ENERGY
CORP., a
body
corporate, having an office in the City of Calgary in the Province of Alberta,
(hereinafter called "the Grantor")
PARTY
OF THE FIRST
PART
-
and
-
NUANCE
EXPLORATION LTD., a
body
corporate, having an office in the City of Vancouver in the Province of British
Columbia, (hereinafter called "the Participant")
PARTY
OF THE SECOND
PART
WHEREAS,
pursuant
to an Agreement (hereinafter referred to as "the Farmout Agreement") dated
the
1st
day
of
December, A.D., 2006, and made between BMW Energy Inc.(hereinafter referred
to
as "Farmor") and the Grantor, it is provided that the Grantor by performing
certain obligations in the Farmout Agreement contained, will become entitled
to
earn an interest in certain lands therein contained, all as more particularly
described in the Farmout Agreement (a copy of the Farmout Agreement is attached
hereto as Schedule "A"); and,
WHEREAS
the
Participant desires to participate with the Grantor as if it had been an
original party to the Farmout Agreement by assuming a share of the obligations
therein contained and earning a share of the interest to be earned
thereunder.
NOW
THEREFORE THIS AGREEMENT WITNESSETH that
in
consideration of
the
premises and of the covenants and agreements of the Parties as hereinafter
set
forth, the Parties do hereby covenant and agree as follows:
1.
INTERPRETATION
| (a) |
The
headings of the clauses of this Agreement are inserted for convenience
of
reference only and shall not affect the meaning or construction
thereof.
|
| (b) |
The
terms and expressions used herein shall have the same meanings as
are
ascribed to such terms and expressions under the Farmout
Agreement.
|
| (c) |
Wherever
the plural or masculine or neuter is used the same shall be construed
as
meaning singular, or feminine, or body politic or corporate, or vice
versa
as the context so requires.
|
1
2. APPOINTMENT
OF OPERATOR
Grantor
is appointed as Operator as between Grantor and Participant with respect
to
all
operations conducted hereunder and is authorized solely to deal with Farmor
on
behalf of the Parties in respect of all matters arising out of
the
Farmout Agreement.
3. FARMOUT
AGREEMENT
Except
as
modified by the terms of this Agreement, all of the terms and conditions of
the
Farmout Agreement together with its operating provisions shall control the
operation
of the Parties and shall be deemed to be incorporated herein as if
included
mutatis
mutandis.
4. TRUST
CONDITIONS AND TERM
The
Participant understands that its earned working interest will not be recognized
by
Farmor
until earned and consequently Grantor agrees to hold Participant's
earned Working
Interests in and to the Farmout Agreement in trust for the Participant
until
such
time as Participant becomes a recognized party to the Farmout
Agreement.
5. REIMBURSEMENT
OF SEISMIC COSTS
Along
with an executed copy of this Agreement, Participant agrees to reimburse Grantor
the gross costs of acquiring and interpreting any and all seismic carried out
by
Grantor in developing a drillable geological prospect on the Farmout Lands.
By
so doing the Participant shall thereafter own an undivided 100% ownership of
such seismic
data. The gross costs incurred by Grantor in that regard to the date hereof
is
$95,000
($82,650 US).
6. LAND
SALE PARTICIPATION
The
Participant, by completing the conditions of Clause 5, shall earn the right
to
participate
in the Alberta Crown Land Sale with the Grantor, subject to the terms
and
conditions of the Farmout Agreement, with the Participant paying 50% of the
Land
Sale costs should a drillable anomaly be located after the seismic review and
interpretation.
Grantor and Farmor shall be solely vested with the right and
authority
to
determine the bid price of the Land Sale parcel.
7. FARMOUT
TERMS AND EARNING
Grantor
solely shall be vested with the right and authority to elect to drill the Test
Well pursuant to the terms and conditions of the Farmout Agreement.
The
Participant shall bear, pay for and assume 50% of all of the costs, expenses
and
risks of the Drilling and either abandonment or Completion and Equipping of
the
Test Well.
By
bearing and paying for costs as aforesaid and if Participant is not otherwise
in
default
pursuant to the terms hereof, Participant shall earn 50% of Grantor's
interest
as per
the Farmout Agreement and be subject always to the terms and conditions
of
2
the
Farmout Agreement and this Agreement.
8. AFE's
AND CASH CALLS
Grantor
agrees to prepare and submit to Participant in advance proper and reasonable
"Authorities for Expenditure" (AFE's) for any operation carried out under the
Farmout Agreement.
Grantor
shall be vested with the authority to issue to Participant Cash Call invoices
based
upon the said AFE's. The under noted terms and conditions shall apply to
the
payment
of Cash Call invoices by Participant but may be waived by Grantor at its sole
discretion.
(a) Reimbursement
Seismic Expenses
Failure
by Participant to provide a cheque for $95,000 as per Clause 5. hereof, along
with an executed copy of this Agreement shall result in the complete
irrevocable forfeiture by Participant of any and all of its interests
in
and
under this Agreement.
(b) Drill
&
Case
Costs
Failure
by Participant to meet a Cash Call invoice for its share of the
estimated costs to drill and case the Test Well within 5 business days of
receipt thereof shall result in the complete irrevocable forfeiture by
Participant of any and all of
its
interests in and under this Agreement.
(c) Other
Costs
All
other
Cash Call invoices shall be issued and dealt with pursuant to the terms of
the
Operating Procedure.
The
rights herein granted to Grantor shall be in addition to and not in substitution
of
any
other rights or remedies which Grantor may have under this agreement or
otherwise by law, and specifically the exercise of such right shall not serve
to
deprive Grantor either wholly or partially of any right or remedy, including
injunction, damages and indemnity.
9.
INCORPORATION OF OPERATING PROCEDURE
All
the
terms and conditions of the Operating Procedure shall come into effect
between
Participant and Grantor with respect to the Farmout Lands as of the date
of
earning.
In addition, the Operating Procedure shall govern the relationship of Grantor
and Participant with respect to all operations on the Test Well.
10.
GRANT AND CREDITS
Any
credits or grants allowable under any acts, rules, regulations or other laws
of
the Province of Alberta and/or Canada shall be shared by the Parties in
accordance with the manner in which the Parties bear the cost of operations
which give rise to the generation of such credits or grants.
3
11. ASSIGNMENT
BY PARTICIPANT
Participant
may assign all or a part of its interest in this Agreement but notwithstanding
any assignment by Participant, Grantor will always look to Participant for
performance of any duties and obligations required to be carried out by
Participant under this Agreement during the Seismic phase, Land Sale phase
and
drilling of the Test Well.
12. WARRANTY
OF TITLE
Grantor
makes no representation or warranties as to its or Farmor's title to the Farmout
Lands but covenants that they are encumbered to the extent noted in the Farmout
Agreement.
During
the term of this Agreement, no party shall do or cause to be done any act
nor
make or
cause to be made any omission whereby the Farmout Lands become encumbered
in such a way as to adversely affect the interests of the other Parties,
or
become
subject to termination or forfeiture.
13. NO
PARTNERSHIP
The
rights, duties, obligations and liabilities of the Parties shall be several
and
not joint or collective, it being the Parties express purpose and intention
that
nothing herein
shall be construed as creating a partnership of any kind or imposing upon
any
party
hereto any partnership duty, obligation or liability to the other
party.
14. NOTICE
PERIODS
As
between the Parties any periods of notice specified in the Farmout Agreement
shall
be
lengthened or shortened by fifty (50%) per cent as the case may be, in
order
to
enable the Parties to comply with the provisions of the Farmout
Agreement.
15. FURTHER
ASSURANCE
Each
of
the Parties shall at all times do all such further acts and deliver all such
further deeds and documents as shall be reasonably required in order to fully
perform and carry out the terms of this Agreement.
16. ADDRESSES
FOR SERVICE
All
notices, reports and other correspondence required or given under the terms
of
this
Agreement shall be deemed to have been properly served if delivered or sent
by
registered prepaid mail to the following addresses:
County
Line Energy Corp. #▇▇▇▇,
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Nuance
Exploration Ltd. ▇▇▇,
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Any
party
may from time to time change its address for service hereunder by
written
notice
to the other Parties. Any notice may be served by personal delivery or by
mailing the same by registered post, postage prepaid, in a properly addressed
envelope addressed to the party to whom the notice is to be given at its address
for service hereunder, and shall be deemed to be received forty-eight (48)
hours
after the mailing thereof in Canada, Saturdays, Sundays and statutory holidays
excepted. Any notice may also be served by prepaid telegram addressed to the
party to whom such notice is to be given at such party's stated address for
service and any such notice so served shall be deemed to be given to and
received by the addressee eighteen (18) hours after the time of delivery to
the
telegraph office, Saturdays, Sundays and statutory holidays excepted. Any notice
may also be given by telephone followed immediately by letter or telegram,
and
any notice so given shall be deemed to have been received as of the date and
time of the telephoned notice.
17. CONTROL
OF WELL INSURANCE
To
the
extent of its cost sharing interest Participant agrees to be covered by the
Operator's Control of Well Insurance and Grantor agrees to make suitable
arrangements
in that regard. Participant will bear and pay its share of such
coverage
at
cost.
18. SUCCESSORS
AND ASSIGNS
This
Agreement shall enure to the benefit of and be binding on the Parties hereto
and
their respective successors and permitted assigns. An assignment made by any
party hereunder shall be made pursuant to all of the terms and conditions of
the
1993
CAPL
Assignment Procedure which shall be deemed to be incorporated herein
in its
entirety.
19. PROPER
LAW
This
Agreement and the relationship between the Parties shall be construed and
determined according to the laws of the Province of Alberta and the courts
having exclusive original jurisdiction with respect to any matter or thing
arising directly or indirectly relating to this Agreement shall be the courts
of
the Province of Alberta.
20. SUPERSESSION
This
Agreement supersedes and replaces all other agreements, documents, writings
and
verbal understandings between the Parties with respect to the subject matter
of
this Agreement.
21. LIMITATIONS
ACT
The
two-year period for seeking a remedial order under section 3(1)(a) of the
Limitations
Act, S.A. 2000 C. L-12, as amended,
for any claim ( as defined in that
5
Act
)
arising in connection with this Agreement and any of the Schedules attached
hereto is extended:
| (a) |
for
claims disclosed by an audit, two (2) years after the time this Agreement
permitted that audit to be performed;
or
|
| (b) | for all other claims, four (4) years. |
IN
WITNESS WHEREOF the
Parties hereto have caused this Agreement to be executed as of the day and
year
first above written.
| County Line Energy Corp. | Nuance Exploration Ltd. |
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
President
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
|
SCHEDULE
"A"
This
is
Schedule "A" attached to and forming part of a Participation ▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇) dated as of the 12th
day of
December, A.D., 2006. between County Line Energy Corp. and Nuance Exploration
Ltd.
6
"Farmout
Agreement" means the following document attached hereto
i. Term
Sheet Agreement dated December 1, 2006 between Grantor and BMW
Energy
Inc.