PURCHASE AND SALE AGREEMENT
between
ENSERCH EXPLORATION, INC.,
as Seller,
and
ABRAXAS PETROLEUM CORPORATION,
as Buyer.
May 22, 1996
TABLE OF CONTENTS
1. Property to be Sold and Purchased................................1
2. Purchase Price...................................................2
3. Deposit..........................................................2
4. Seller's Representations.........................................3
5. Buyer's Representations..........................................4
6. Certain Covenants of Seller and Buyer Pending Closing............5
7. Due Diligence Reviews............................................8
8. Certain Price Adjustments.......................................11
9. Conditions Precedent to Buyer's Obligations.....................12
10. Conditions Precedent to Seller's Obligations....................13
11. The Closing.....................................................13
12. Certain Accounting Adjustments..................................16
13. Assumption and Indemnification..................................18
14. Disclaimer of Warranties........................................19
15. Commissions.....................................................20
16. Casually Loss...................................................20
17. Notices.........................................................21
18. Survival of Provisions..........................................22
19. Miscellaneous Matters...........................................22
EXHIBIT A............................................................A-1
EXHIBIT B............................................................B-1
EXHIBIT C............................................................C-1
EXHIBIT D............................................................D-1
EXHIBIT E............................................................E-1
PURCHASE AND SALE AGREEMENT
This Agreement, dated May 22, 1996, is made by and between ENSERCH
EXPLORATION, INC., (hereinafter called "Seller") and ABRAXAS PETROLEUM
CORPORATION (hereinafter called "Buyer");
WITNESSETH:
1. Property to be Sold and Purchased. Seller agrees to sell, and Buyer
agrees to purchase, for the consideration hereinafter set forth, pursuant to a
special warranty of title by, through and under Seller as limited in Section 14,
but not otherwise, and subject to the terms and provisions herein contained, the
following described properties, rights, and interests:
(a) All rights, titles and interests of Seller in and to the oil,
gas and mineral leases described in Exhibit A hereto (and any
ratifications and amendments to such leases, whether or not such
ratifications and amendments are described in Exhibit A) and all of
Seller's right, title, and interest in and to the fee mineral interests
described in Exhibit A, if any; and
(b) All rights, titles, and interests of Seller in and to, or
otherwise derived from, all presently existing and valid oil, gas and
mineral unitization, pooling, and communitization agreements,
declarations, and orders (including, without limitation, all units formed
under orders, rules, regulations, or other official acts of any federal,
state, or other authority having jurisdiction, and voluntary unitization
agreements, designations and declarations) relating to the properties
described in subsection 1(a) to the extent such rights, titles, and
interests are attributable to the properties described in subsection 1(a);
and
(c) All rights, titles, and interests of Seller in and to all
presently existing and valid production sales contracts, operating
agreements, and other agreements and contracts that relate to any of the
properties described in subsections 1(a) and 1(b), to the extent such
rights, titles, and interests are attributable to the properties described
in subsections 1(a) and 1(b); and
(d) All crude oil, natural gas, casinghead gas, drip gasoline,
natural gasoline, petroleum, natural gas liquids, condensate, products,
liquids and other hydrocarbons and other minerals or materials of every
kind and description, including without limitation, "line fill" and
inventory below the pipeline connection in tanks, insofar as such
hydrocarbons may be produced from or are attributable to the properties
described in Sections 1(a) and 1(b) after the Effective Date, as
hereinafter defined.
(e) All rights, titles, and interests of Seller in and to all
materials, supplies, machinery, equipment, improvements, and other
personal property and fixtures (including, but not limited to, all ▇▇▇▇▇,
wellhead, equipment, pumping units, flowlines, tanks, buildings, injection
facilities, saltwater disposal facilities, compression facilities,
gathering systems, and other equipment) located on the properties
described in subsections 1(a) and 1(b) and used in connection with the
exploration, development, operation, or maintenance thereof.
The properties and interests specified in subsections 1(a), 1(b), 1(c), 1(d) and
1(e) are herein sometimes collectively called the "Properties." The defined term
"Properties" shall not include seismic data, geological or geophysical data, or
other similar data, or any interpretations thereof or other data or records
related thereto except that Seller shall provide Buyer with copies of such data
and records in its possession and a license to seismic data, if permitted to do
so by third party contracts. Such data and records shall not be subject to
Defects as defined in Section 7 herein.
2. Purchase Price. The unadjusted purchase price for the Properties shall
be FORTY SEVEN MILLION, FIVE HUNDRED THOUSAND Dollars ($47,500,000) (herein
called the "Base Purchase Price"). The Base Purchase Price may be adjusted, as
provided in Sections 6(c) and 8 hereof. The Base Purchase Price, as so adjusted
and as otherwise adjusted by mutual agreement of the parties herein, shall be
called the "Purchase Price." Buyer shall pay the Purchase Price in cash at the
Closing, as hereinafter provided. The Purchase Price shall be increased to
include interest at the rate of seven percent (7%) per annum on the Base
Purchase Price compounded on the first day of each month for the period
commencing on the Effective Date and ending on the Closing Date.
3. Deposit. Contemporaneous with its execution of this Agreement, Buyer
paid to Seller THREE MILLION, EIGHT HUNDRED THOUSAND Dollars ($3,800,000)
(hereinafter called the "Deposit"). If Buyer and Seller consummate the
transaction contemplated hereby in accordance with the terms hereof, the Deposit
shall be applied to the Purchase Price. If Buyer and Seller do not consummate
the transaction contemplated hereby because of a material default by Seller in
the absence of a material default by Buyer, Seller shall return the Deposit to
Buyer. If Buyer and Seller terminate this Agreement under Section 9 or 10 hereof
in a circumstance where such Section provides for return of the Deposit, then
Seller shall return the Deposit to Buyer. Except as provided in the preceding
two sentences, if Buyer fails or refuses to consummate the transaction
contemplated hereby, or if the transaction contemplated hereby otherwise fails
to close on the Closing Date, Seller shall retain the Deposit as liquidated
damages. The parties agree that damages in such event would be extremely
difficult to determine, that the Deposit represents a fair and reasonable
estimate of such damages under the circumstances, and that such a retention of
the Deposit does not constitute a penalty.
4. Seller's Representations. Seller represents to Buyer that:
(a) Seller is a corporation duly organized and legally existing
under the laws of its state of incorporation. Seller is qualified to do
business and is in good standing, or will be at Closing, in each of the
states in which Properties are located, where the laws of such state
require a corporation owning the Properties located in such state to
qualify to do business.
(b) Seller has full power to enter this Agreement and perform its
obligations hereunder and has taken all proper action to enter this
Agreement and perform its obligations hereunder.
(c) Seller's execution and delivery of this Agreement, the
consummation of the transaction contemplated hereby, and Seller's
compliance with the terms hereof, will not result in any default under any
agreement or instrument to which Seller is a party or by which the
Properties are bound that would be material to this transaction. Seller's
execution and delivery of this Agreement will not violate any order, writ,
injunction, decree, statute, rule, or regulation applicable to Seller or
to the Properties that would be material to this transaction, except the
following:
(i) Any consents to assignment or waivers of preferential
rights to purchase that must be obtained from third parties;
(ii) Compliance with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act");
(iii) Any approvals that must be obtained from governmental entities
that are lessors under leases included in the Properties (or
who administer such leases for such lessors) and that are
customarily obtained post-closing; and
(iv) Any maintenance of uniform interest provisions contained in
any operating or other agreements.
(d) This Agreement constitutes (and the Assignment and ▇▇▇▇ of Sale
provided for in Section 1.1(a)(i) hereof and any other documentation
provided for herein to be executed by Seller, will, when executed and
delivered, constitute) the legal, valid, and binding obligations of
Seller, enforceable according to their terms, except as limited by
bankruptcy or other laws applicable generally to creditor's rights and as
limited by general equitable principles.
(e) Except as disclosed on Exhibit D, there are no pending suits,
actions, or other proceedings, not filed by Seller, in which Seller is a
party that materially affect the Properties (including, without
limitation, any actions challenging or pertaining to Seller's title to any
of the Properties) or affecting the execution and delivery of this
Agreement or the consummation of the transaction contemplated hereby.
(f) To the knowledge of Seller as of the date of execution of this
Agreement, all material ad valorem, production, severance, excise, and
similar taxes and assessments based upon or measured by the ownership of
or the production of hydrocarbons from the Properties which have become
due and payable have been properly paid or are being challenged in good
faith by Seller, all applicable tax returns relating to the same have been
filed, and Seller knows of no claim by any applicable taxing authority
against Seller in connection with the payment of such taxes.
5. Buyer's Representations. Buyer represents to Seller that:
(a) Buyer is a corporation duly organized and legally existing under
the laws of its state of organization. Buyer is qualified to do business
and is in good standing, or will be at Closing, in each of the states in
which Properties are located where the laws of such state require a
corporation owning the Properties located in such state to qualify to do
business.
(b) Buyer has full power to enter into and perform its obligations
under this Agreement and has taken all proper action to enter this
Agreement and perform its obligations hereunder.
(c) Buyer's execution and delivery of this Agreement, the
consummation of the transaction contemplated hereby, and Buyer's
compliance with the terms hereof, will not result in any default under any
Agreement or instrument to which Buyer is a party or by which the
Properties are bound that would be material to this transaction. Buyer's
execution and delivery of this Agreement will not violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or to
the Properties that would be material to this transaction, except the
following:
(i) Any consents to assignment or waivers of preferential
rights to purchase that must be obtained from third parties;
(ii) Compliance with the "HSR Act";
(iii) Any approvals that must be obtained from governmental entities
that are lessors under leases included in the Properties (or
who administer such leases for such lessors) and that are
customarily obtained post-closing; and
(iv) Any maintenance of uniform interest provisions contained in
any operating or other agreements.
(d) This Agreement constitutes, and the Assignment and ▇▇▇▇ of Sale
provided for in Section 1.1(a)(i) hereof and any other documentation
provided for herein to be executed by Buyer, will, when executed and
delivered, constitute, the legal, valid, and binding obligations of Buyer,
enforceable according to their terms, except as limited by bankruptcy or
other laws applicable generally to creditor's rights and as limited by
general equitable principles.
(e) There are no pending suits, actions, or other proceedings, not
filed by Buyer, in which Buyer is a party that materially affect the
execution and delivery of this Agreement or the consummation of the
transaction contemplated hereby.
(f) Buyer is a knowledgeable purchaser, owner, and operator of oil
and gas properties, has the ability to evaluate (and has evaluated or will
evaluate prior to Closing) the Properties for purchase, and is acquiring
the Properties for its own account and not with the intent to make a
distribution within the meaning of the Securities Act of 1933, as amended
(and the rules and regulations pertaining thereto), or a distribution
thereof in violation of any other applicable securities laws, rules, or
regulations.
(g) With regard to those Properties which Buyer seeks to operate,
Buyer is, or will become, qualified to operate such Properties under the
applicable laws, rules and regulations of the jurisdiction in which such
Properties are located.
6. Certain Covenants of Seller and Buyer Pending Closing. Between
the date of this Agreement and the Closing Date:
(a) Seller shall permit Buyer access as follows:
(i) Seller shall give Buyer and its attorneys and other
representatives, who have a legitimate need to know, access
at all reasonable times during normal business hours to the
Properties and, at Seller's office, to Seller's records
(including, without limitation, title files, division order
files, well files, production records, equipment
inventories, and production, severance, and ad valorem tax
records) pertaining to the ownership and operation of the
Properties, to conduct due diligence reviews as
contemplated by Section 7 below. Buyer may make copies of
such records, at its expense, but shall, if Seller so
requests, return all copies so made if the Closing does not
occur. Seller shall not be obligated to provide Buyer with
access to any records or data that Seller considers to be
proprietary or confidential or that Seller cannot provide
to Buyer without, in its opinion, breaching, or risking a
breach of, confidentiality agreements with other parties.
Any records or data provided shall be subject to the
Confidentiality Agreement. Seller makes no representation
or warranty of any kind as to the accuracy or completeness
of any materials made available to Buyer in connection with
the transaction contemplated hereby.
(ii) Seller shall make a good faith effort to give Buyer, or
Buyer's authorized representatives, who have a legitimate
need to know, at reasonable times and upon adequate notice
to Seller, physical access to the Properties for the
purpose of inspecting same. Buyer recognizes that some or
all of the Properties may be operated by parties other than
Seller and that Seller's ability to obtain access to such
properties, and the manner and extent of such access, is
subject to the consent of such third parties. Buyer agrees
to comply fully with the rules, regulations, and
instructions issued by Seller (and, where Properties are
operated by other parties, such third parties) regarding
the actions of Buyer while upon, entering, or leaving the
Properties.
(iii) Exculpation and Indemnification. If Buyer exercises rights of
access under this Section or otherwise, or conducts
examinations or inspections under this Section or otherwise,
then (a) such access, examination, and inspection shall be at
Buyer's sole risk, cost, and expense, and Buyer waives and
releases all claims against Seller (its affiliates and their
respective directors, officers, employees, attorneys,
contractors, and agents) arising in any way therefrom or in
any way connected therewith or arising in connection with the
conduct of its directors, officers, employees, attorneys,
contractors, and agents in connection therewith; and (b) BUYER
SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD HARMLESS SELLER
(AND ITS PARENT, SUBSIDIARY COMPANIES AND OTHER AFFILIATES AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS,
CONTRACTORS, AND AGENTS) (HEREINAFTER COLLECTIVELY REFERRED TO
AS "SELLER GROUP") FROM ANY AND ALL CLAIMS, ACTIONS, CAUSES OF
ACTION, LIABILITIES, DAMAGES, LOSSES, COSTS, OR EXPENSES
(INCLUDING, WITHOUT LIMITATION, COURT COSTS AND REASONABLE
ATTORNEY'S FEES), OR LIENS OR ENCUMBRANCES FOR LABOR OR
MATERIALS, ARISING OUT OF OR IN ANY WAY CONNECTED WITH SUCH
MATTERS. THE FOREGOING RELEASE AND INDEMNIFICATION SHALL APPLY
WHETHER OR NOT SUCH CLAIMS, ACTIONS, CAUSES OF ACTION,
LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF
(i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SINGLE NEGLIGENCE,
CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE, BUT
EXPRESSLY NOT INCLUDING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OF SELLER OR ANY OTHER INDEMNIFIED PARTY, OR (ii)
STRICT LIABILITY.
(b) Seller shall continue to operate in the ordinary course of its
business any portion of the Properties over which it serves as operator.
Except for the transaction contemplated by this Agreement, Seller shall
not sell or otherwise dispose of any material portion of the Properties.
Seller shall not, without the prior written consent of Buyer, (i) enter
into new gas sales contracts or new crude oil sales or supply contracts
with respect to the Properties except Seller may enter into such contracts
that are terminable at will (without penalty or detriment) on notice of 30
days or less; or (ii) incur or agree to incur any material contractual
obligation with respect to the Properties except as may be necessary to
protect health and safety or the environment. If Seller receives or
desires to make any proposal to drill an additional well on the Properties
or to conduct other operations that require the consent of non-operators
under any applicable operating agreement, it shall notify Buyer thereof
and shall consult with Buyer concerning such proposal. However, Seller
shall make its decision regarding such proposal in its own discretion and
in the ordinary course of its business.
(c) Seller shall use reasonable efforts, consistent with industry
practices in transactions of this type, to identify, with respect to each
material portion of the Properties, (i) all preferential rights to
purchase and all rights of third parties to withhold consent to an
assignment that would apply to the transaction contemplated hereby and
(ii) the parties holding such rights. In attempting to identify the same,
Seller shall not be obligated to go beyond its own records. Seller shall
request from the parties so identified (and in accordance with the
documents creating such rights) waivers of the preferential rights to
purchase and consents to assignment so identified. Seller shall have no
obligation hereunder other than to attempt to identify such preferential
rights and rights to withhold consent to assignment and to request such
waivers and consents. Seller shall not be obligated to assure that such
waivers and consents are obtained. Seller may tender to any party refusing
to waive such a preferential right the interest covered by such right at a
price equal to the amount specified in Exhibit B for such interest. To the
extent that such an interest is actually sold to a party exercising such a
preferential right, it shall be excluded from the transaction contemplated
hereby, and the Base Purchase Price shall be reduced by the amount such
party paid to Seller for such interest unless the parties hereto agree
otherwise.
(d) If applicable, as soon as practicable after the execution
hereof, Buyer and Seller shall prepare and submit any necessary filings in
connection with the transaction contemplated by this Agreement under the
HSR Act. Buyer shall pay all filing fees in connection with such filing.
Buyer and Seller shall request early termination of the waiting period by
the FTC, shall promptly make any appropriate or necessary subsequent or
supplemental filings, and shall furnish to each other copies of all
filings made under the HSR Act on the same day that they are filed with
the FTC. Seller shall cooperate with Buyer as to all filings required by
the HSR Act.
7. Due Diligence Reviews.
(a) The term "Defect" as used in this Section shall mean the
following:
(i) Seller's ownership of a well or unit listed on Exhibit B
hereto (A) entities Seller to receive a share of the oil,
gas, and other hydrocarbons produced from, or allocated to,
such well or unit that is less than the share set forth on
Exhibit B in connection with such well or unit in the
column headed "Net Revenue Interest" or (B) causes Seller
to bear a share of the cost of operating such well or unit
greater than the share set forth on Exhibit B for such well
or unit in the column headed "Operating Interest" (without
a proportionate increase in the share of production to
which Seller is entitled from such well or unit); or
(ii) Seller's ownership of a Property is subject to a lien other
than (A) a lien that will be released at or before Closing,
(B) a lien for taxes not yet delinquent, (C) a mechanic's or
materialmen's lien (or other similar lien), or (D) a lien
under an operating agreement or similar agreement, to the
extent the same relates to expenses incurred that are not yet
due; or
(iii) Seller's sale of a Property is subject to a preferential right
to purchase or may not be assigned without the consent of a
third party, unless a waiver of such right or such consent has
been obtained with respect to the transaction contemplated
hereby or an appropriate tender of the applicable interest has
been made to the party holding such right and the period of
time required for such party to exercise such right has
expired without such party exercising such right; or
(iv) Seller's ownership of a Property is subject to an imperfection
in title that, if asserted, would cause a Defect, as defined
in clause (i) above, to exist, and such imperfection in title
normally would not be waived by persons engaged in the oil and
gas business purchasing producing property; or
(v) Seller's rights and interests in the Properties are subject to
reduction by a third party reversionary, back-in or similar
right, except as shown on Exhibit A or Exhibit B; or
(vi) Seller is in default under a material provision of a lease,
farmout agreement, or other contract or agreement affecting
the Properties such that Seller is not entitled to receive the
production of hydrocarbons attributable to the interests shown
on Exhibit B; or
(vii) A Property has been cited for, or in its present condition is
in, violation of Applicable Environmental Laws (as hereinafter
defined) in any material respect unless such violation has
been cured (by remediation, agreement with appropriate
authorities, or otherwise, or by determination that a
violation does not exist) or is disclosed on Exhibit D.
"Applicable Environmental Laws" shall mean all federal, state,
or local laws, rules, orders, or regulations in effect as of
the Effective Date of this Agreement pertaining to health or
the environment, including those relating to waste materials
and hazardous substances.
(viii)Prior to the Effective Date, a well located on the Property
has been plugged and abandoned and the surface restored other
than in accordance with applicable regulatory laws in effect
at the time of the plugging operation and such failure will
cause the owner of the affected Property to incur additional
plugging and abandonment or surface restoration expense to
bring such Property into compliance with regulatory laws in
effect at the time of the original plugging operations. The
amount of the Defect shall be the minimum additional plugging
and abandonment or surface restoration expense necessary to
meet the regulatory requirements in effect at the time of the
original plugging operations. This Defect shall not apply to
▇▇▇▇▇ located on the Property that have not been the subject
of plugging and abandonment operations. In lieu of reducing
the Purchase Price for the amount of such Defect, the Seller
may elect to conduct and pay for the additional plugging and
abandonment or surface restoration operations.
(b) A gas imbalance does not constitute a Defect, and shall be
handled under the provisions of Section 12. hereof.
(c) Buyer may conduct, to the extent it deems appropriate at its
sole cost, such examinations and investigations as it may choose with
respect to the Properties in order to determine whether "Defects" exist.
If Defects come to Buyer's attention, and if Buyer is unwilling to waive
one or more of such Defects, Buyer shall notify Seller in writing of such
Defects as soon as they are identified, but no later than five (5) days
prior to the date upon which Closing is scheduled to occur pursuant to
Section 11 [and not as extended pursuant to 11(i) or 11(ii)] (hereinafter
"Defect Notice Date"). Those Defects identified in such notice to Seller
are herein called "Asserted Defects." Such notification shall include, (i)
a description of the Asserted Defect, the lease or mineral interest on
Exhibit A affected by such Asserted Defect, the ▇▇▇▇▇ and units listed on
Exhibit B to which the Asserted Defect relates, and all supporting
documentation reasonably necessary fully to describe the basis for the
Asserted Defect; (ii) for each applicable well or unit, the size of any
variance from "Net Revenue Interest" or "Operating Interest" set forth in
Exhibit B that does or could result from such Asserted Defect; and (iii)
the amount by which Buyer proposes to adjust the Purchase Price because of
such Asserted Defect. Buyer hereby waives all Defects that it fails to
identify to Seller as Asserted Defects on or before the Defect Notice
Date. If Buyer notifies Seller of Asserted Defects, Seller (i) shall have
the right (but not the obligation) to attempt to cure such Asserted
Defects prior to Closing, and (ii) shall also have the right (which may be
exercised at any time before the Closing Date) to postpone the Closing by
designating a new Closing Date not later than thirty (30) days after the
Closing Date then existing, if Seller desires additional time to attempt
to cure (including determining if it will attempt to cure) one or more
Asserted Defects. In lieu of curing or attempting to cure an Asserted
Defect, Seller may elect, at any time prior to Closing with respect to any
Asserted Defect, to indemnify and hold Buyer harmless from and against any
actual damages or loss (including reasonable attorney's fees and court
costs, but specifically excluding consequential, special, or similar
damages) Buyer may suffer as a result of a third party claim based on such
Asserted Defect, If and when Seller makes such an election as to an
Asserted Defect, such Asserted Defect will be treated under this Agreement
as cured.
(d) Buyer shall have the right to make an environmental assessment
of the Properties during the period beginning on the date of execution of
this Agreement and ending on the Defect Notice Date. Buyer and its agents
shall have the right to enter upon the Properties and all buildings and
improvements thereon, inspect the same, conduct soil and water tests and
borings, and generally conduct such tests, examinations, investigations,
and studies as may be necessary or appropriate for the preparation of
appropriate engineering and other reports in relation to the Properties,
their condition, and the presence of Hazardous Substances (as the term
"Hazardous Substance" is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sec. 9601, et seq. ).
Buyer agrees promptly to provide to Seller a copy of the environmental
assessment, including any reports, data, and conclusions. Buyer shall keep
any data or information acquired by all such examinations and the results
of all analyses of such data and information strictly confidential and
shall not disclose same to any person or agency without the prior written
approval of Seller unless such disclosure is required by court order or,
in the written opinion of third party legal counsel acceptable to Seller
(Seller acknowledges ▇▇▇ & ▇▇▇▇▇ Incorporated, San Antonio, Texas, as
acceptable), required to be disclosed pursuant to any statute or any rule
or regulation of any environmental authority having jurisdiction over
Buyer, Seller or the Properties; and, in such event, Seller shall have a
reasonable period of time within which it may first disclose the data or
information to the applicable court or environmental authority. BUYER
SHALL RELEASE, INDEMNIFY, DEFEND, AND HOLD HARMLESS THE SELLER GROUP FROM
AND AGAINST ANY AND ALL LOSS, COST, DAMAGE, EXPENSE, OR LIABILITY
WHATSOEVER, INCLUDING REASONABLE ATTORNEY'S FEES, ARISING OUT OF ANY
INJURY TO OR DEATH OF PERSONS OR DAMAGE TO PROPERTY OCCURRING IN, ON, OR
ABOUT THE PROPERTIES AS A RESULT OF SUCH ACTIVITIES (EXCEPT ANY SUCH
INJURIES OR DAMAGES CAUSED SOLELY BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY MEMBER OF THE SELLER GROUP). After the Defect Notice
Date, Buyer shall be deemed to have inspected the Properties or waived its
right to inspect the Properties for all purposes and satisfied itself as
to their physical and environmental condition, both surface and
subsurface, including, but not limited to conditions specifically related
to the presence, release, or disposal of Hazardous Substances.
8. Certain Price Adjustments.
(a) If Buyer presents Asserted Defects to Seller as a part of the
due diligence reviews provided for in Section 7 above, and if Seller is
unable or unwilling to cure such Asserted Defects prior to Closing, or if
Buyer has elected to treat a Property affected by a casualty loss pursuant
to Section 16 as if it were a Property affected by an Asserted Defect,
then:
(i) Buyer and Seller shall, with respect to each Property affected
by such matters, attempt to agree upon an appropriate
adjustment to the valuation placed upon such Property in
Exhibit B to account for such matters; and
(ii) With respect to each Property as to which Buyer and Seller
are unable to agree upon appropriate adjustment with
respect to all such matters affecting such Property, such
Property shall be excluded from the transaction
contemplated hereby, and the Purchase Price shall be
reduced by the amount attributed on Exhibit B to the ▇▇▇▇▇
located on such Property and the units in which such
Property participates.
(b) The Properties with Asserted Defects for which Seller and Buyer
agree on a valuation adjustment pursuant to Section 8(a)(i) shall be
divided into two groups. The first group ("Major Defects") shall contain
the Properties with valuation adjustments which individually are in an
amount greater than or equal to $250,000. The second group ("Minor
Defects") shall contain the Properties with valuation adjustments which
individually are in an amount less than $250,000. The Base Purchase Price
shall be reduced by the total amount of the Major Defects. If the total of
all Minor Defects is greater than $2,375,000, the Base Purchase Price
shall be reduced by the total amount of the Minor Defects. If the total of
all Minor Defects is less than $2,375,000, the Base Purchase Price shall
not be reduced.
(c) If Seller is shown to be entitled to a share of the production
from a well or unit listed on Exhibit B greater than the share shown for
such well or unit under the column headed "Net Revenue Interest" on
Exhibit B, then Seller may propose an increase in the Purchase Price, in
which case such increase shall be handled in the same manner as provided
in Sections 8 (a) and (b) above with respect to adjustments for Asserted
Defects except that the Base Purchase Price shall be increased; and,
provided that the party making such determination shall notify the other
party of such adjustment no later than five (5) days prior to the Closing
Date.
9. Conditions Precedent to Buyer's Obligations. Buyer's obligations
under this Agreement are subject to each of the following conditions:
(a) Seller's representations under this Agreement shall be true and
accurate in all material respects as of the date when made and shall be
deemed to have been made again at Closing. At Closing, Seller's
representations under this Agreement shall be true and accurate in all
material respects except as to changes specifically contemplated by this
Agreement or consented to by Buyer.
(b) Seller shall have performed and complied in all material
respects with every covenant, agreement, and condition required by it
under this Agreement prior to or at the Closing unless performance or
compliance therewith shall have been waived by Buyer.
(c) If applicable, Buyer and Seller shall have received approval
from the FTC under the HSR Act of the transaction contemplated by this
Agreement, or shall have received notification that the waiting period
under such act has been terminated, or the waiting period under such act
shall have expired.
(d) The Purchase Price increase resulting from the procedure set
forth in Section 8 does not exceed five percent (5%) of the Base Purchase
Price.
(e) On the Closing Date, no material suit, action, or other
proceeding against Buyer shall be pending before any court or governmental
agency seeking to restrain, prohibit, or obtain damages or other relief in
connection with the consummation of the transaction contemplated by this
Agreement.
If any such condition precedent to the obligations of Buyer under this Agreement
is not met as of the Closing Date, and if Buyer is not in material breach of its
obligations hereunder, this Agreement may be terminated at the option of Buyer.
If Buyer thus terminates this Agreement, the Deposit will be returned to Buyer
and the parties shall have no further obligations to one another hereunder
(other than the obligations under Sections 6(a)(iii) and 15 hereof, which will
survive such termination). Notwithstanding the foregoing, if a condition set
forth above, other than condition 9(c) or 9(d), is not met (and is asserted by
Buyer as a failure of one of its conditions of Closing), and if the reasons such
condition is not met relate only to some, but not all, of the Properties,
failure of such condition to be met may, at the option of either Buyer or
Seller, be treated as an uncured Asserted Defect and handled in accordance with
the process set forth in Section 8 above.
10. Conditions Precedent to Seller's Obligations. Seller's
obligations under this Agreement are subject to the each of the following
conditions:
(a) Buyer's representations under this Agreement shall be true and
accurate in all material respects as of the date when made and shall be
deemed to have been made again at Closing. At Closing, Buyer's
representations under this Agreement shall be true and accurate in all
material respects except as to changes specifically contemplated by this
Agreement or consented to by Seller.
(b) Buyer shall have performed and complied in all material respects
with every covenant, agreement, and condition required by it under this
Agreement prior to or at the Closing unless compliance therewith shall
have been waived by Seller.
(c) If applicable, Buyer and Seller shall have received approval
from the FTC under the HSR Act of the transaction contemplated by this
Agreement, or shall have received notification that the waiting period
under such act has been terminated, or the waiting period under such act
shall have expired.
(d) The Purchase Price reduction resulting from the procedure set
forth in Section 8 above does not exceed five percent (5%) of the Base
Purchase Price.
(e) On the Closing Date, no material suit, action, or other
proceeding against Seller shall be pending before any court or
governmental agency seeking to restrain, prohibit, or obtain damages or
other relief in connection with the consummation of the transaction
contemplated by this Agreement.
If any such condition precedent to the obligations of Seller under this
Agreement is not met as of the Closing Date, this Agreement may be terminated at
the option of Seller. If Seller terminates this Agreement because of Buyer's
failure to fulfill condition (a) or (b), the Deposit will not be returned to
Buyer. If Seller terminates this Agreement because of conditions (c), (d) or
(e), and Buyer is not in material default under this Agreement, the deposit will
be returned to Buyer. Thereafter Seller and Buyer shall have no further
obligations to one another hereunder (other than the obligations under Section
6(a)(iii) and 15 hereof, which will survive such termination).
11. The Closing. The consummation of the transaction contemplated hereby
("Closing") shall take place in the offices of Seller, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, on July 15, 1996, at 10:00 a.m. Central
Daylight Time, or at such other date and time (i) as the Buyer and Seller may
agree or (ii) to which Seller may postpone the Closing pursuant to Section 7
hereof (such date and time, as changed pursuant to clauses (i) and (ii) being
herein called the "Closing Date"). At the Closing:
(a) Seller shall:
(i) execute, acknowledge, and deliver to Buyer a conveyance of the
Properties (the "Assignment and ▇▇▇▇ of Sale"), in the form
attached hereto as Exhibit C (with Exhibit A hereto being
attached thereto), effective as to runs of oil and deliveries
of gas as of 7 o'clock a.m., local time at the locations of
the Properties, respectively, on April 1, 1996, (herein called
the "Effective Date"); and
(ii) execute (and, where required, acknowledge) and deliver to
Buyer forms of conveyance or assignment as required by the
applicable authorities for transfers of interests in state or
federal leases included in the Properties;
(iii) execute and deliver to Buyer letters in lieu of transfer
orders (or similar documentation), in form acceptable to both
parties; and
(iv) if Buyer requests, deliver to Buyer an affidavit or other
certification (as permitted by the Internal Revenue Code of
1986, as amended) that Seller is not a "foreign person"
within the meaning of Section 1445 (or similar provisions)
of such code (i.e., Seller is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust, or
foreign estate, as those terms are defined in such code and
regulations promulgated thereunder); and
(v) to the extent Seller is able to do so, turn over possession
of the Properties to Buyer.
(b) Buyer shall:
(i) deliver to the Seller, by wire transfer to an account in a
bank located in the United States designated to Buyer by
Seller in writing no later than five (5) days prior to the
Closing, an amount equal to (A) the Purchase Price, less (B)
the Deposit, less (or plus, as the case may be) (C) any
adjustments made at Closing under Section 12 below; and
(ii) with respect to properties operated by Seller, and subject to
applicable Operating Agreement requirements, execute and
deliver to Seller appropriate evidence reflecting change of
operator as required by applicable authorities, and such
evidence as Seller may require that Buyer is qualified with
such authorities to succeed Seller as operator; and
(iii) execute such forms and take such other steps as Seller may
reasonably require to (i) succeed Seller with respect to the
Properties under the rules and regulations of applicable
authorities and (ii) assume any plugging liabilities of Seller
with respect to the ▇▇▇▇▇ located on the Properties or on
units in which the Properties participate (including, without
limitation compliance with state statutes).
Within fifteen (15) days after Closing, Seller shall deliver to Buyer all of
Seller's lease files, abstracts and title opinions, division order files,
production records, well files, copies of accounting records (but not including
general financial accounting or tax accounting records), and other similar files
and records that directly relate to the Properties. Notwithstanding the
foregoing, Seller shall not be required to deliver to Buyer materials that
Seller considers proprietary or confidential or that Seller legally cannot
provide to Buyer without, in its opinion, breaching, or risking a breach of,
confidentiality agreements with other parties. It is expressly understood that
Buyer is not acquiring, and Seller is not obligated to transfer to Buyer, any
seismic data, geological or geophysical data, or other similar data, or any
interpretations thereof or other data or records related thereto except as
provided in Section 1 herein. With respect to each portion of the Properties
from which Seller is disbursing proceeds of production attributable to other
parties:
(i) Seller shall continue to collect proceeds of production
through the production month of July 1996, and shall be
responsible for making disbursements, in accordance with
its normal procedures (and at normal times), of such
proceeds of production so collected to the parties entitled
to same, with any proceeds of production thereafter
collected by Seller to be forwarded promptly to Buyer (who
shall thereafter account for same to the parties entitled
thereto), and
(ii) After execution of this Agreement, but no later than five
(5) days before the Closing Date, Seller shall deliver to
Buyer (A) a copy of its "pay list" for each such property
(which pay list shall include the name, address, social
security number and applicable share of proceeds of
production, to the extent such information is contained in
Seller's records, for each party to whom Seller is
disbursing proceeds of production with respect to such
property), and (B) a list of all parties for whom it is
holding in suspense proceeds of production.
Following delivery of the materials referred to in clause (ii) above, Buyer
shall become responsible for all disbursements of proceeds of production
commencing with the production month of August 1996, and such disbursement
activities shall be included in the matters that Buyer assumes and with respect
to which Buyer indemnities Seller under Section 13 below. It is understood and
agreed that Seller does not represent or warrant to Buyer the accuracy of the
"pay lists" so delivered.
Buyer and Seller shall cooperate with respect to transition activities as to
Properties where Buyer succeeds Seller as operator. SELLER GIVES NO ASSURANCE
HEREUNDER THAT BUYER SHALL SUCCEED SELLER AS OPERATOR OF ANY PROPERTY WHERE
PARTIES OTHER THAN SELLER OWN INTERESTS IN SUCH PROPERTY. To the extent Seller
remains an operator after Closing (which it shall have no obligation to do), it
shall serve as operator under the applicable operating agreement in the manner
provided by such agreement and, to the extent Seller so operates any Property
after Closing, its obligations to Buyer with respect to such operations shall be
no greater than those that it would have to a non-operator under the applicable
operating agreement (and, in the absence of an operating agreement, under the
AAPL 610 (1989 Revision) form Operating Agreement). THE PARTIES RECOGNIZE THAT
UNDER SUCH AGREEMENTS AND SUCH FORM OF AGREEMENT THE OPERATOR IS NOT RESPONSIBLE
TO THE OTHER PARTIES THERETO FOR ITS OWN NEGLIGENCE AND HAS NO RESPONSIBILITY TO
SUCH OTHER PARTIES OTHER THAN FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. SELLER
INDEMNIFIES AND AGREES TO DEFEND BUYER AGAINST CLAIMS THAT RESULT FROM SELLER'S
ACTS THAT ARE HELD IN A FINAL AND UNAPPEALABLE DECISION BY A COURT OF COMPETENT
JURISDICTION TO HAVE BEEN CONDUCTED IN A GROSSLY NEGLIGENT MANNER OR TO HAVE
RESULTED FROM THE WILLFUL MISCONDUCT OF SELLER. Seller agrees that, with regard
to the period between the Effective Date and the Closing Date, if Seller does
not properly distribute proceeds of production from the Properties in accordance
with its duties under the applicable contracts, and if this failure causes
penalties to be imposed on Seller or Buyer, Seller shall bear the cost of such
penalties.
12. Certain Accounting Adjustments.
(a) Appropriate adjustments shall be made between Buyer and
Seller so that:
(i) all expenses (including, without limitation, all drilling
costs, all capital expenditures, all overhead charges under
applicable operating agreements, regardless of whether such
operating agreements are with third parties or related
entities, and regardless of whether Seller is the operator
or a non-operator) and all other overhead charges actually
charged by third parties and incurred in the operation of
the Properties after the Effective Date shall be allocated
to Buyer, and all proceeds (net of applicable production,
severance, and similar taxes) from sale of oil, gas, and
other minerals produced from the Properties after the
Effective Date shall be allocated to Buyer; and
(ii) all expenses incurred in the operation of the Properties
before the Effective Date shall be allocated to Seller, and
all proceeds (net of applicable production, severance, and
similar taxes) from the sale of oil, gas, and other minerals
produced from the Properties before the Effective Date shall
be allocated to Seller.
In making such adjustments, the parties agree that:
(i) oil above pipeline connections that was produced from the
Properties and that was stored in tanks located on the
Properties on the Effective Date (or located elsewhere but
used by Seller to store oil produced from the Properties prior
to delivery to oil purchasers) and above pipeline connections
shall be deemed to have been produced before the Effective
Date; and
(ii) ad valorem and similar taxes assessed for periods prior to
the Effective Date shall be borne by Seller, and ad valorem
taxes assessed for periods on or after the Effective Date
shall be borne by Buyer (ad valorem and similar taxes shall
be considered assessed for the period for which they are
stated to be assessed, even if the same are based on
production or other activities occurring in prior periods);
and
(iii) ad valorem taxes with respect to the period containing the
Effective Date shall be prorated between Buyer and Seller
based on the number of days in such period that fall before
and after the Effective Date (with the Effective Date being
counted in the period after the Effective Date); and
(iv) no consideration shall be given to the local, state, or
federal income tax liabilities of any party.
(b) In addition, Buyer and Seller shall determine (i) the total
amount of overproduction of gas (measured in Mcf) with respect to the
Properties as of the Effective Date (e.g. volumes of gas taken from ▇▇▇▇▇
on the Properties, or on lands unitized therewith, by the owners of the
Properties in excess of those volumes which the ownership of the
Properties would entitle such owners to receive) and (ii) total amount of
underproduction of gas (measured in Mcf) with respect to the Properties as
of the Effective Date (e.g. the amount by which the volume of gas from
▇▇▇▇▇ on the Properties, or on lands unitized therewith, which the
ownership of the Properties would entitle the owners thereof to take
exceeds the volumes taken from such ▇▇▇▇▇ by owners). If the total amount
of overproduction exceeds the total amount of underproduction, Buyer shall
be credited with an amount equal to $1.00 times such excess. If the total
amount of underproduction exceeds the total amount of overproduction,
Seller shall be credited with an amount equal to $1.00 times such excess.
Buyer and Seller shall also determine the amount of all pipeline and
gathering system imbalances that existed as of the Effective Date with
respect to deliveries from the Properties. Seller shall receive credit for
all benefits arising out of such imbalances, and Buyer shall receive
credit for all obligations arising out of such imbalances.
(c) At or before Closing, the parties shall determine, based upon
the best information reasonably available to them (and as to adjustments
under subsection (a), based on amounts actually received or paid by Seller
prior to such time) the amount of the adjustments provided for in
subsections (a) and (b) above. If the amount of adjustments so determined
that would result in a credit to Buyer exceeds the amount of adjustments
so determined that would result in a credit to Seller, Buyer shall receive
a credit for the amount of such excess. If the amount of adjustments so
determined that would result in a credit to Seller exceed the amount of
adjustments so determined that would result in a credit to Buyer, Buyer
shall pay to Seller the amount of such excess. On or before one hundred
twenty (120) days after Closing, Buyer and Seller shall review any
additional information pertaining to the adjustments provided for in
subsections (a) and (b) above, shall determine if any additional
adjustments (whether the same be made to account for expenses or revenues,
or overproduction or underproduction volumes, not considered in making the
adjustments made at Closing, or to correct errors made in such
adjustments) should be made beyond those made at Closing, and shall make
any such adjustments by appropriate payments from Seller to Buyer or from
Buyer to Seller. Following such additional adjustments, no further
adjustments shall be made under this Section 12.
13. Assumption and Indemnification. Buyer shall, on the date of Closing,
agree (and, upon the delivery to Buyer of the Assignment and ▇▇▇▇ of Sale shall
be deemed to have agreed) (a) to assume, and timely to pay and perform, all
duties, obligations and liabilities relating to the ownership or operation of
the Properties after the Effective Date (including, without limitation, those
arising under the contracts and agreements described in Section 1(c) above), and
(b) to release, indemnify, defend, and hold harmless the Seller Group from and
against any and all claims, actions, liabilities, losses, damages, costs or
expenses (including court costs and attorneys' fees) of any kind or character
arising out of or otherwise relating to the ownership or operation of the
Properties after the Effective Date. In connection with (but not in limitation
of) the foregoing, it is specifically understood and agreed that matters arising
out of or otherwise relating to the ownership or operation of the Properties
after the Effective Date shall be deemed to include all matters arising out of
the condition of the Properties on the Effective Date including, without
limitation, within such matters all obligations to properly plug and abandon
▇▇▇▇▇ located on the Properties, to restore the surface of the Properties and to
comply with, or bring the Properties into compliance with, applicable
environmental laws, including all liability and expense for any restoration,
clean-up, disposal, or removal that may be incurred as a result of the existence
or discovery of Hazardous Substances or other deleterious substances in, on, or
under the Properties, regardless of when the events occurred that give rise to
such condition, and the above provided for assumptions and indemnifications by
Buyer shall expressly cover and include such matters. THE FOREGOING ASSUMPTIONS
AND INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH DUTIES, OBLIGATIONS, OR
LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES,
LOSSES, COSTS, OR EXPENSES ARISE OUT OF (i) NEGLIGENCE (INCLUDING SOLE
NEGLIGENCE, SINGLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE
NEGLIGENCE, BUT EXPRESSLY NOT INCLUDING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
OF SELLER OR ANY OTHER INDEMNIFIED PARTY, OR (ii) STRICT LIABILITY. Seller shall
give notice to Buyer of an event giving rise to the obligation to indemnify, and
Seller shall, at its sole cost and expense, have the right, if it so elects, to
participate in the defense of any such suit or suits in which it may be a party,
without relieving Buyer of its obligation.
14. Disclaimer of Warranties. THE EXPRESS REPRESENTATIONS AND WARRANTIES
OF SELLER CONTAINED IN SECTION 4 (OR IN THE ASSIGNMENT AND ▇▇▇▇ OF SALE EXECUTED
PURSUANT TO THIS AGREEMENT) ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
EXCEPT FOR A SPECIAL WARRANTY OF TITLE AS HEREINAFTER DESCRIBED, AND SELLER
EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES.
WITHOUT LIMITATION OF THE FOREGOING, THE PROPERTIES SHALL BE CONVEYED PURSUANT
HERETO WITHOUT ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS
FOR A PARTICULAR PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERILALS, OR
MERCHANTABILITY OF ANY EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE, AND, EXCEPT AS
PROVIDED OTHERWISE IN THE FIRST SENTENCE OF THIS PARAGRAPH, WITHOUT ANY OTHER
EXPRESS, IMPLIED, STATUTORY, OR OTHER WARRANTY OR REPRESENTATION WHATSOEVER.
BUYER SHALL HAVE INSPECTED, OR WAIVED (AND UPON CLOSING SHALL BE DEEMED TO HAVE
WAIVED) ITS RIGHT TO INSPECT, THE PROPERTIES FOR ALL PURPOSES AND SATISFIED
ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND
SUBSURFACE, INCLUDING, BUT NOT LIMITED TO, CONDITIONS SPECIFICALLY RELATED TO
THE PRESENCE, RELEASE, OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID WASTES,
ASBESTOS OR OTHER MANMADE FIBERS OR NATURALLY OCCURRING RADIOACTIVE MATERIALS
("NORM") IN, ON, OR UNDER THE PROPERTIES. BUYER IS RELYING SOLELY UPON ITS OWN
INSPECTION OF THE PROPERTIES, AND BUYER SHALL, EXCEPT AS PROVIDED OTHERWISE
HEREIN, ACCEPT ALL OF THE SAME "AS IS, WHERE IS" WITHOUT LIMITATION OF THE
FOREGOING, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA,
REPORTS, RECORDS, PROJECTIONS, INFORMATION, OR MATERIALS NOW, HERETOFORE, OR
HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT
INCLUDING, WITHOUT LIMITATION, PRICING ASSUMPTIONS OR QUALITY OR QUANTITY OF
HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR
POTENTIAL OF THE PROPERTIES TO PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL
CONDITION OF THE PROPERTIES OR ANY OTHER MATTERS CONTAINED IN THE PROPRIETARY
DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER OR BY
SELLER'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS,
PROJECTIONS, INFORMATION, AND OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED BY
SELLER OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO BUYER ARE PROVIDED TO BUYER
AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST SELLER, AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER'S SOLE
RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
TO THE EXTENT OF SELLER'S INTEREST IN THE PROPERTIES AS SHOWN ON EXHIBIT
B, SELLER WARRANTS TITLE BY, THROUGH AND UNDER SELLER, BUT NOT OTHERWISE, IT
BEING EXPRESSLY UNDERSTOOD THAT THE TERM "SELLER" AS USED IN THIS SPECIAL
WARRANTY PROVISION REFERS TO ENSERCH EXPLORATION, INC. AND NOT TO ITS
PREDECESSORS IN TITLE INCLUDING, BUT NOT LIMITED TO, DALEN CORPORATION, DALEN
RESOURCES OIL & GAS CO., PG&E RESOURCES COMPANY, PG&E ENTERPRISES AND EACH OF
THEIR PREDECESSORS. THIS SPECIAL WARRANTY SHALL NOT COVER OR PERTAIN TO TITLE AS
IT MAY BE AFFECTED BY THAT CERTAIN ASSIGNMENT OF OIL AND GAS LEASES WITH
RESERVATION OF PRODUCTION PAYMENT, DATED EFFECTIVE AUGUST 1, 1995, BETWEEN
SELLER AND TGAS INVESTMENTS L.L.C.
15. Commissions. Seller agrees to indemnify and hold harmless Buyer, its
parent and subsidiary companies and other affiliates, and their directors,
officers, employees and agents from and against any and all claims, obligations,
actions, liabilities, losses, damages, costs, or expenses (including court costs
and attorneys fees) of any kind or character arising out of or resulting from
any agreement, arrangement, or understanding by, or on behalf of, Seller with
any broker or finder in connection with this Agreement or the transaction
contemplated hereby. Buyer agrees to indemnify and hold harmless Seller Group
from and against any and all claims, obligations, actions, liabilities, losses,
damages, costs, or expenses (including court costs and reasonable attorney's
fees) of any kind or character arising out of or resulting from any agreement,
arrangement, or understanding by, or on behalf of, Buyer with any broker or
finder in connection with this Agreement or the transaction contemplated hereby.
16. Casualty Loss. If the Properties are damaged by fire or other casualty
prior to the Closing, this Agreement shall remain in full force and effect, and
(unless Buyer and Seller shall otherwise agree) in such event as to each such
damaged Property that Seller, in its sole discretion, elects not to repair,
Buyer either may treat such Property as if it had an Asserted Defect or elect
not to adjust the Purchase Price therefor. If Buyer elects hereunder to treat
the damaged Property as if it had an Asserted Defect, the procedure provided for
in Section 8 shall apply to such Property, and all rights to insurance proceeds
and claims against third parties related thereto shall belong to Seller. If
Buyer elects hereunder not to adjust the Purchase Price for such damaged
Property, and if Seller is entitled to any claims under an insurance policy with
respect to such damage, Seller shall either collect and pay over, or assign,
such insurance claims to Buyer. Buyer shall then take title to such Property
without reduction of the Purchase Price. If Seller elects to repair a damaged
Property, all rights to insurance proceeds and claims against third parties
related thereto shall belong to Seller.
17. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing, unless otherwise specifically provided
herein, and shall be delivered personally, by recognized commercial courier or
delivery service (which provides a receipt), by telex or telecopier (with
receipt acknowledged), or by registered or certified mail (postage prepaid), at
the following addresses:
If to Buyer:
Abraxas Petroleum Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
With a copy to:
▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Seller:
Enserch Exploration, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and General Counsel Enserch Exploration, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
All such notices and communications shall be considered delivered on the date of
receipt. Buyer or Seller may specify as its proper address any other post office
address within the continental limits of the United States by giving notice to
the other party, in the manner provided in this Section.
18. Survival of Provisions. All representations and warranties made in
Section 4 by Seller and in Section 5 by Buyer shall be continuing and shall be
true and correct on the Closing Date with the same force and effect as if made
at that time (and shall inure to the benefit of the respective successors and
assigns of Buyer and Seller). All such representations and warranties shall
survive the Closing and the delivery of the Assignment and ▇▇▇▇ of Sale. The
obligations of the parties under Section 11 (to the extent the same are, by
mutual agreement, not performed at Closing), and Sections 12, 13, 14, 15, 17,
18, and 19 shall (subject to any limitations set forth therein) also survive the
Closing and the delivery of the Assignment and ▇▇▇▇ of Sale.
19. Miscellaneous Matters.
(a) After the Closing, Seller and Buyer shall execute and deliver,
and shall otherwise cause to be executed and delivered, from time to time,
such further instruments, notices, division orders, transfer orders, and
other documents, and do such other and further acts and things as may be
reasonably necessary more fully and effectively to grant, convey, and
assign the Property to Buyer. Seller shall prepare and Buyer shall file
appropriate assignments and other documents required for the transfer of
any federal leases comprising a portion of the Properties. Seller agrees
that until governmental approval of each such assignment is obtained,
Seller shall forward to Buyer notices that Seller receives regarding such
leases and Seller agrees to cooperate with Buyer in maintaining such
leases in effect. At the request of Buyer, Seller agrees to name Buyer as
its designated operator for any federal leases which comprise a portion of
the Properties.
(b) Except as provided below, neither party shall have the right to
assign its rights under this Agreement without the prior written consent
of the other party, and any such assignment in violation of this provision
shall be void. Seller may, without consent, assign its rights to a direct
or indirect parent of Seller, to a direct or indirect subsidiary of
Seller, or to an entity that is a direct or indirect subsidiary of a
direct or indirect parent of Seller.
(c) On the Closing Date (and upon the delivery to Buyer of the
Assignment and ▇▇▇▇ of Sale), Buyer shall succeed to the position of
Seller with respect to all gas imbalances (whether wellhead imbalances or
pipeline or gathering imbalances) and to the position of Seller with
respect to all make-up obligations. As a result of such succession, Buyer
(i) shall be entitled to receive any and all benefits, including payments
of proceeds of production in excess of amounts that it would otherwise be
entitled to produce and receive by virtue of ownership of the Properties
that Seller would have been entitled to receive by virtue of such position
and (ii) shall be obligated to suffer any detriments (whether the same be
in the form of obligations to deliver production that would have otherwise
been attributable to its ownership of the Properties without receiving
full payment therefor, or be in the form of the obligation to make payment
in cash) that Seller would have been obligated to suffer by virtue of such
positions.
(d) To the extent applicable to the transaction contemplated hereby,
or any portion thereof, Buyer waives the provisions of the Texas Deceptive
Trade Practices Act, Chapter 17, Subchapter E, Sections 17.41 through
17.63, inclusive (other than Section 17.555 which is not waived), Texas
Business and Commerce Code. In connection with such waiver, Buyer hereby
represents and warrants to Seller that Buyer (a) is in the business of
seeking or acquiring, by purchase or lease, goods or services for
commercial or business use, (b) has assets of Five Million and No/100
Dollars ($5,000,000.00) or more according to its most recent financial
statement, (c) has knowledge and experience in financial and business
matters that enable it to evaluate the merits and risks of the transaction
contemplated hereby, and (d) is not in a significantly disparate
bargaining position.
(e) Any Confidentiality Agreement executed by Buyer and Seller in
connection with the transaction contemplated hereby remains in full force
and effect and is not superseded or modified by this Agreement.
(f) This Agreement contains the entire understanding of the parties
hereto with respect to subject matter hereof and supersedes all prior
agreements, understandings, negotiations, and discussions among the
parties with respect to such subject matter, except as provided above with
respect to any Confidentiality Agreement. The headings contained in this
Agreement are for convenience only and shall not control or affect the
meaning or construction of any provision of this Agreement. Within this
Agreement, words of any gender shall be held and construed to cover any
other gender, and words in the singular shall be held and construed to
cover the plural, unless the context otherwise requires. Time is of the
essence in this Agreement.
(g) This Agreement may be amended, modified, supplemented, restated,
or discharged (and provisions hereof may be waived) only by an instrument
in writing signed by the party against whom enforcement of the amendment,
modification, supplement, restatement, or discharge (or waiver) is sought.
(h) Each party shall bear and pay all expenses it incurred in
connection with the transaction contemplated by this Agreement.
(i) This Agreement shall be binding on the parties hereto and their
respective successors and assigns.
(j) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which shall constitute
one and the same instrument. It shall not be necessary for both parties to
sign the same counterpart.
(k) WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS AGREEMENT
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE AND BY THE LAWS OF THE UNITED STATES
OF AMERICA, EXCEPT THAT, TO THE EXTENT THE LAW OF A STATE IN WHICH THE
PROPERTIES ARE LOCATED NECESSARILY GOVERNS, THE LAW OF SUCH STATE SHALL,
TO SUCH EXTENT, APPLY TO THE PROPERTIES.
(1) Prior to Closing, Buyer shall not issue public announcements of
this Agreement or the transaction described herein without the prior
written consent of Seller, provided however, the foregoing shall not
restrict disclosures by Buyer which, in the written opinion of third party
legal counsel acceptable to Seller (▇▇▇ & ▇▇▇▇▇ Incorporated, San Antonio,
Texas, is acknowledged to be acceptable) are required to comply with
applicable securities or other laws or are required to maintain compliance
with existing loan or other agreements binding such party (or its
affiliated companies). Such required public announcements shall be limited
to the minimum information and circulation necessary to comply with the
disclosure obligation. Buyer and Seller agree that a Press Release in the
form of Exhibit E, attached hereto, may be issued by Buyer after execution
of this Agreement by Buyer and Seller.
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto on
the date set forth above.
ENSERCH EXPLORATION, INC.
By: ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
ABRAXAS PETROLEUM CORPORATION
By: ________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President & Chief Financial Officer
ACKNOWLEDGEMENTS
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me, Notary Public, this _____ day
of ______________, 1996, by ▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President of ENSERCH
EXPLORATION, INC., a Texas corporation, on behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My commission expires:
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me, Notary Public, this _____ day
of__________ , 1996, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President & Chief
Financial Officer of ABRAXAS PETROLEUM CORPORATION, a Nevada corporation, on
behalf of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_______________________________
Notary Public
My commission expires:
__________________________
0135685.01
EXHIBIT "A"
LEASE EXHIBIT
LEASE
PROSPECT....... ST.. COUNTY........ NUMBER...... LEASE NAME............ LESSEE................. REC BOOK.. PAGE.....
CRESTON........ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 38437 ▇▇▇▇▇▇ ▇▇▇▇▇▇
CRESTON ....... ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 57177 ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ 724 335
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 10054 ▇▇▇▇▇▇▇ ▇▇▇▇ 743 604
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 12480 ▇▇▇▇▇ ▇. ▇▇▇▇▇ 689 299
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 16350 ▇ ▇ ▇▇▇▇▇▇▇▇▇ 696 237
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W ▇▇▇▇▇ ▇▇▇▇▇ P ANDRIKPOULOS 766 332
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 37184 ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇ 737 1825
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 38447 ▇▇▇▇ ▇▇▇▇ 688 ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 54410 ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 742 1290
WAMSUTTER NE .. WY CARBON 493016 ST WY 727052 ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. WY SWEETWATER 493017 ST WY 73 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. WY SWEETWATER 493018 ▇▇▇▇▇▇▇▇ PETROLEUM AMOCO PRODUCTION 657 110
COMPANY COMPANY
WAMSUTTER NE .. WY SWEETWATER 493019 ▇▇▇▇▇▇▇▇ PETROLEUM AMOCO PRODUCTION 615 116
COMPANY COMPANY
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 115283 NGC ENERGY COMPANY ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 124394 PG&E RESOURCES COMPANY 870 908
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 124928 PG&E RESOURCES COMPANY
WAMSUTTER NE .. WY SWEETWATER WY3758 UNION PACIFIC PG&E RESOURCES COMPANY 846 127
RESOURCES CO
PAGE 1 of 2
ROW EXHIBIT
LEASE
PROSPECT....... ST.. COUNTY........ NUMBER ..... LEASE NAME............ LESSEE.................. REC BOOK.. PAGE.....
WAMSUTTER NE .. WY SWEETWATER 493610 UNION PACIFIC LAND PACIFIC TRANSMISSION
WAMSUTTER NE .. WY SWEETWATER 493613 UNION PACIFIC NGC ENERGY COMPANY
RESOURCES CO
WAMSUTTER NE .. WY CARBON 493614 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ESTATE PTS
WAMSUTTER NE .. WY CARBON 493615 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ESTATE PACIFIC TRANSMISSION
SUPPLY CO
WAMSUTTER NE .. WY SWEETWATER 493616 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ESTATE PACIFIC TRANSMISSION
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 80301 NGC ENERGY COMPANY
WAMSUTTER NE .. WY CARBON 493618 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST NGC ENERGY COMPANY
WAMSUTTER NE .. WY CARBON 493619 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST NGC ENERGY COMPANY
WAMSUTTER NE .. WY CARBON 493620 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ TRUST PACIFIC TRANSMISSION
SUPPLY
WAMSUTTER NE .. WY SWEETWATER 493621 P&H LIVESTOCK COMPANY PACIFIC TRANSMISSION
SUPPLY
WAMSUTTER NE .. WY SWEETWATER 493622 P H LIVESTOCK COMPANY NGC ENERGY COMPANY
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ W 93669 NGC ENERGY COMPANY
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ .. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 117008 PG&E RESOURCES COMPANY
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 117001 PG&E RESOURCES COMPANY
WAMSUTTER NE .. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ WYW 119066 PG&E RESOURCES COMPANY
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ UNION PACIFIC LAND PG&E RESOURCES COMPANY
RESOURCES
WAMSUTTER NE .. WY CARBON ▇-▇▇▇-▇▇▇▇ NORWEST BANK GREELEY PG&E RESOURCES COMPANY
NATL ASSO
WAMSUTTER NE .. WY CARBON ▇-▇▇▇-▇▇▇▇ NORWEST BANK GREELEY PG&E RESOURCES COMPANY
NATL ASSO
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ USA WYW 128278 PG&E RESOURCES COMPANY
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ USA WYW 127932 PG&E RESOURCES COMPANY
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ UNION PACIFIC LAND PG&E RESOURCES COMPANY 838 614
RESOURCES
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ UNION PACIFIC LAND PG&E RESOURCES COMPANY 838 609
RESOURCES CO
WAMSUTTER NE .. WY CARBON ▇-▇▇▇-▇▇▇▇ USA WYW 128279 PG&E RESOURCES COMPANY
WAMSUTTER NE .. WY SWEETWATER ▇-▇▇▇-▇▇▇▇ UNION PACIFIC LAND PG&E RESOURCES COMPANY 846 859
RESOURCES
PAGE 2 of 2
EXHIBIT B
------------------------------------------------------------------------------------------------------------------------
B.P.O. A.P.O. ALLOCATED
--------------------- -----------------
API WELL WELL NAME COUNTY ST FIELD NAME G.W.I. N.R.I. G.W.I. N.R.I. VALUE
NUMBER ID
------------------------------------------------------------------------------------------------------------ ----------- ----------
4900721150 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8450000 1.00000000 .8450000 $2,473,574
4903721427 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ #▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.1575000 .1295990 .14062500 .1160157 $13,992
4903720828 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.5000000 .4093750 .50000000 .4093750 $9,240
4900721155 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇-▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250001 .00000000 .8250000 $257,806
4903722126 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇-▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8000000 .75000000 .6375000 $0
4900720491 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $0
4900720492 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $6,297,141
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8400000 1.00000000 .8400000 $5,799,338
4900720493 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8350000 1.00000000 .8350000 $4,447,607
4903721233 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.6000000 .4950000 .75000000 .6187500 $193,241
4903721358 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇-▇▇▇ ▇▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.6743540 .5320905 .67435420 .5320905 $35,966
4900720462 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $6,795,550
4903721326 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8450000 1.00000000 .8450000 $2,254,866
4903722060 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8450000 1.00000000 .8450000 $850,150
4900721523 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8350000 1.00000000 .8350000 $3,745,328
4903722998 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8450000 1.00000000 .8450000 $1,520,294
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $2,704,304
4900721256 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $733,662
4903723067 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ #▇-▇▇ ▇▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8750000 1.00000000 .8750000 $1,559,330
4903722935 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇ ▇▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.0000000 .0337500 0.07500000 .0633750 $36,182
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ #▇-▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .7750000 0.60000000 .4800000 $1,121,942
4903723251 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8750000 1.00000000 .8750000 $1,414,029
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ #▇-▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8000000 0.60000000 .4800000 $396,556
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 1.0000000 .8250000 1.00000000 .8250000 $2,165,159
4900721375 5850 ECHO SPRINGS #2-18A FED CARBON WY
4903723652 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ #▇-▇▇ ▇▇▇* ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 0.2500000 .1875000 0.25000000 .1875000 $235,483
4900720845 ▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇▇-▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ 0.0000000 .6250000 0.00000000 .6250000 $0
4900720768 ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ 0.0000000 .0318750 0.37500000 .3131250 $13,787
4900720769 ▇▇▇▇ ▇▇▇▇▇▇▇ #▇-▇ ▇▇▇* ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ 0.0000000 .0318750 0.37500000 .3093750 $15,123
SIBERIA RIDGE,SECTION ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.37500000 .3093750 $224,892
SIBERIA RIDGE,SECTION 22,NE/4 SWEETWATER WY SIBERIA RIDGE 0.75000000 .6187500 $146,341
▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇,▇▇/▇ SWEETWATER WY SIBERIA RIDGE 0.75000000 .6187500 $145,996
▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇,▇▇/▇ SWEETWATER WY SIBERIA RIDGE 0.75000000 .6187500 $153,429
SIBERIA RIDGE,SECTION 24,NE/4 SWEETWATER WY SIBERIA RIDGE 0.67435420 .5320905 $120,607
▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇,▇▇/▇ SWEETWATER WY SIBERIA RIDGE 0.67435420 .5320905 $140,010
▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇,▇▇/▇ SWEETWATER WY SIBERIA RIDGE 0.67435420 .5320905 $120,607
SIBERIA RIDGE,SECTION 26,NE/4 SWEETWATER WY SIBERIA RIDGE 0.25000000 .2187500 $55,045
▇▇▇▇▇▇▇ ▇▇▇▇▇,▇▇▇▇▇▇▇ ▇▇,▇▇/▇ SWEETWATER WY SIBERIA RIDGE 0.25000000 .2187500 $50,799
SIBERIA RIDGE,SECTION ▇▇,▇▇/▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0.25000000 .2187500 $50,799
ECHO SPRINGS 3-2A CARBON WY ECHO SPRINGS 0.07500000 .0633750 $0
STANDARD DRAW 3-36A CARBON WY STANDARD DRAW 1.00000000 .8450000 $0
===========
TOTAL ALLOCATED VALUE $47,500,000
*DALEN Resources Oil & Gas Co. (now Enserch Exploration, Inc.) assigned to Tgas
Investments LL C. its right, title and interest in and to the oil and gas leases
described in Exhibit 'A', insofar, and only insofar, as such leases cover the
right to produce from t he Mesaverde formation the ▇▇▇▇▇ identified above b y an
asterisk. Enserch's lack of record title in such leases, insofar only as they
cover the right to produce such ▇▇▇▇▇ from the Mesaverde formation, shall not
constitute a Defect under Section 7 of the Purchase and Sale Agreement to which
this Exhibit is attached.
B-1
EXHIBIT C
ASSIGNMENT AND ▇▇▇▇ OF SALE
ENSERCH EXPLORATION, INC. ("Grantor"), for Ten Dollars and other good and
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), hereby GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, SETS
OVER, and DELIVERS unto ABRAXAS PETROLEUM CORPORATION whose address is ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (herein called "Grantee")
the following described properties, rights and interests.
(a) All of Grantor's right, title, and interest in and to the oil,
gas and mineral leases described in Exhibit A hereto (and any
ratifications and amendments to such leases, whether or not such
ratifications and amendments are described in Exhibit A) and all of
Grantor's right, title and interest in and to the fee mineral interests
described in Exhibit A, if any; and
(b) All rights, titles, and interests of Grantor in and to, or
otherwise derived from, all presently existing and valid oil, gas and
mineral unitization, pooling, and communitization agreements,
declarations, and orders (including, without limitation, all units formed
under orders, rules, regulations, or other official acts of any federal,
state, or other authority having jurisdiction, and voluntary unitization
agreements, designations and declarations) relating to the properties
described in subsection (a) to the extent such rights, titles, and
interests are attributable to the properties described in subsection (a);
and
(c) All rights, titles, and interests of Grantor in and to all
presently existing and valid production sales contracts, operating
agreements, and other agreements and contracts that relate to any of the
properties described in subsections (a) and (b) , to the extent such
rights, titles, and interests are attributable to the properties described
in subsections (a) and (b); and
(d) All crude oil, natural gas, casinghead gas, drip gasoline,
natural gasoline, petroleum, natural gas liquids, condensate, products,
liquids and other hydrocarbons and other minerals or materials of every
kind and description, including without limitation, "line fill" and
inventory below the pipeline connection in tanks, insofar as such
hydrocarbons may be produced from or are attributable to the properties
described in subsections (a) and (b) after the effective date hereof; and.
(e) All rights, titles, and interests of Setter in and to all
materials, supplies, machinery, equipment, improvements, and other
personal property and fixtures (including, but not limited to, all ▇▇▇▇▇
listed on Exhibit B hereto, all ▇▇▇▇▇, wellhead equipment, pumping units,
flowlines, tanks, buildings, injection facilities, saltwater disposal
facilities, compression facilities, gathering systems, and other
equipment) located on the properties described in subsections (a) and (b)
and used in connection with the exploration, development, operation, or
maintenance thereof.
The properties and interests specified in subsections (a), (b), (c), (d) and (e)
are herein sometimes collectively called the "Properties."
TO HAVE AND TO HOLD the Properties unto Grantee, its successors and
assigns, forever.
EXCEPT FOR A SPECIAL WARRANTY OF TITLE AS HEREINAFTER DESCRIBED, THIS
ASSIGNMENT AND ▇▇▇▇ OF SALE IS MADE WITHOUT WARRANTIES OR REPRESENTATIONS OF ANY
KIND, ALL REPRESENTATIONS AND WARRANTIES BEING EXPRESSLY DISCLAIMED SPECIFICALLY
IN THIS CONNECTION, BUT WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ALL
EQUIPMENT, OTHER PERSONAL PROPERTY, AND FIXTURES SOLD AND CONVEYED TO GRANTEE
ARE SOLD AND CONVEYED ON AN "AS IS" AND "WHERE IS" BASIS, AND GRANTOR EXPRESSLY
DISCLAIMS ANY AND ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES. WITHOUT
LIMITATION OF THE FOREGOING, THE PROPERTIES SHALL BE CONVEYED PURSUANT HERETO
WITHOUT ANY WARRANTY OR REPRESENTATION, WHETHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A
PARTICULAR PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS OR
MERCHANTABILITY OF ANY EQUIPMENT OR ITS FITNESS FOR ANY PURPOSE WITHOUT ANY
OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION
WHATSOEVER. GRANTEE SHALL HAVE INSPECTED, OR WAIVED (AND UPON CLOSING SHALL BE
DEEMED TO HAVE WAIVED) ITS RIGHT TO INSPECT, THE PROPERTIES FOR ALL PURPOSES AND
SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE
AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS SPECIFICALLY RELATED TO
THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES, SOLID WASTES,
ASBESTOS OR OTHER MANMADE FIBERS OR NATURALLY OCCURRING RADIOACTIVE MATERIALS
("NORM") IN, ON OR UNDER THE PROPERTIES. GRANTEE IS RELYING SOLELY UPON ITS OWN
INSPECTION OF THE PROPERTIES, AND GRANTEE SHALL, EXCEPT AS PROVIDED OTHERWISE
HEREIN, ACCEPT ALL OF THE SAME IN THEIR "AS IS, WHERE IS" CONDITION. ALSO
WITHOUT LIMITATION OF THE FOREGOING, GRANTOR MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN
CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, RELATIVE TO
PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY)
ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF THE PROPERTIES TO
PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE PROPERTIES OR ANY
OTHER MATTERS CONTAINED IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS FURNISHED
OR MADE AVAILABLE TO BUYER BY GRANTOR OR BY GRANTOR'S AGENTS OR REPRESENTATIVES.
ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED BY GRANTOR OR OTHERWISE MADE AVAILABLE OR
DISCLOSED TO GRANTEE SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR
AGAINST GRANTOR AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT GRANTEE'S
SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.
TO THE EXTENT OF GRANTOR'S INTEREST IN THE PROPERTIES AS SHOWN ON EXHIBIT B,
GRANTOR WARRANTS TITLE BY, THROUGH AND UNDER GRANTOR, BUT NOT OTHERWISE, IT
BEING EXPRESSLY UNDERSTOOD THAT THE TERM "GRANTOR" AS USED IN THIS SPECIAL
WARRANTY PROVISION REFERS TO ENSERCH EXPLORATION, INC. AND NOT TO ITS
PREDECESSORS IN TITLE INCLUDING, BUT NOT LIMITED TO, DALEN CORPORATION, DALEN
RESOURCES OM & GAS CO., PG&E RESOURCES COMPANY, PG&E ENTERPRISES AND THEIR
PREDECESSORS. THIS SPECIAL WARRANTY SHALL NOT COVER OR PERTAIN TO TITLE AS IT
MAY BE AFFECTED BY THAT CERTAIN ASSIGNMENT OF OIL AND GAS LEASES WITH
RESERVATION OF PRODUCTION PAYMENT, DATED EFFECTIVE AUGUST 1, 1995, BETWEEN
GRANTOR AND TGAS INVESTMENTS L.L.C.
This Assignment and ▇▇▇▇ of Sale is subject to the terms and provisions of
that certain Purchase and Sale Agreement, dated May 22, 1996, between Grantor
and Grantee.
This Assignment and ▇▇▇▇ of Sale may be executed in several counterparts
all of which are identical, except that, to facilitate recordation, in certain
counterparts hereof only that portion of Exhibit A that contains specific
descriptions of properties located in the recording jurisdiction in which the
particular counterpart is to be recorded are included, and other portions of
Exhibit A are included by reference only. All such counterparts together shall
constitute one and the same instrument. Complete copies of this Assignment and
▇▇▇▇ of Sale containing the entire Exhibit A have been retained by Grantor and
Grantee.
IN WITNESS W]HEREOF this Assignment and ▇▇▇▇ of Sale has been executed and
delivered on , effective as to runs of oil and deliveries of gas, and for all
other purposes, as of 7:00 o'clock a.m. local time at the locations of the
Properties, respectively, on April 1, 1996.
ENSERCH EXPLORATION, INC.
By:________________________
Name:______________________
Title:_____________________
ABRAXAS PETROLEUM CORPORATION
By:_________________________
Name:_______________________
Title:______________________
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
On this _____ day of ________, before me, a Notary Public of said state,
duly commissioned and sworn, appeared , known to me to be the person whose name
is subscribed to the within instrument as of ENSERCH EXPLORATION, INC., a Texas
corporation, and acknowledged to me that such corporation executed the same.
Witness my hand and official seal.
_________________________________
Notary Public, State of Texas
My Commission Expires:
______________________
STATE OF TEXAS ss.
ss.
COUNTY OF DALLAS ss.
On this _____ day of_______ , before me, a Notary Public of said state,
duly commissioned and sworn, appeared , known to me to be the person whose name
is subscribed to the within instrument as of ABRAXAS PETROLEUM CORPORATION, a
Texas corporation, and acknowledged to me that such corporation executed the
same.
Witness my hand and official seal.
___________________________________
Notary Public, State of Texas
My Commission Expires:
__________________________
EXHIBIT D
Disclosure Schedule
1. Certain litigation: None
2. Certain environmental matters: None
D-1