EXHIBIT 10.2
HARBOUR PETROLEUM COMPANY LIMITED
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
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Telephone: (▇▇▇)▇▇▇-▇▇▇▇
OVERRIDING ROYALTY AGREEMENT
THIS AGREEMENT made as of the 4th day of August, A.D. 1981
BETWEEN:
HARBOUR PETROLEUM COMPANY LIMITED,
a body corporate, having an office in the City of Calgary,
in the Province of Alberta,
(hereinafter referred to as "Harbour")
OF THE FIRST PART
- and -
N.D.G. ▇▇▇▇▇, a geologist, having an office in the
City of Calgary, in the Province of Alberta,
(hereinafter referred to as "the Geologist")
OF THE SECOND PART
WHEREAS the Geologist has developed hydrocarbon prospects underlying certain
lands in the Province of Alberta, which prospects and land are set out in
Schedule "A" attached hereto (hereinafter referred to as "the said lands"), and;
WHEREAS Harbour has agreed to grant to the Geologist a certain percentage
overriding royalty on the said lands set out in Schedule "A".
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and of the covenants and agreements of the parties hereinafter set forth, the
parties do hereby covenant and agree as follows:
1. In this Agreement, unless the context otherwise requires:
(a) "the prospects" means the prospects described in Schedule "A" hereto;
(b) "the said lands" means the lands described in Schedule "A" hereto where
and if Harbour acquires an interest therein within 6 months of the date
of this agreement.
(c) "petroleum substances" means petroleum, natural gas and all other
substances which may be produced from the said lands, the rights to
which are granted by the documents of title for the said lands.
(d) "market value" means the current market value of petroleum substances
at the wellhead calculated by deducting from the selling price of such
petroleum substances the cost of gathering, transporting, extracting,
fractionating, dehydrating, processing, treating or otherwise rendering
merchantable the petroleum substances, including a reasonable return on
plant, gathering and processing facilities investment.
2. Harbour hereby undertakes and agrees to pay to the Geologist a certain
overriding royalty (hereinafter called "the royalty") as set out in Schedule "A"
hereto, of Harbour's undivided working interest in the
said lands from which Harbour has the right to recover, remove, treat, sell and
dispose of the petroleum substances within, upon or under the said lands and any
renewal or renewals thereof.
3. Such overriding royalties on the said lands shall be calculated as herein
specified on the petroleum substances or any of them, produced, saved and
marketed from Harbour's undivided working interest in the said lands, and shall
be paid by Harbour to the Geologist on or before the last day of each month for
all crude oil, crude naptha, natural gas and plant products sold during the
previous month as follows:
(a) Crude Oil: The applicable royalty percentage of the market value of
crude oil and crude naptha marketed;
(b) Natural Gas: The applicable royalty percentage of the market value of
natural gas marketed.
(c) Plant Products: In the event that natural gas is transported to a plant
for the purpose of extracting natural gasoline therefrom or of
extracting, condensing or saving additional petroleum products or
sulphur; the applicable royalty percentage of the market value received
by Harbour on such plant products.
4. Notwithstanding anything to the contrary herein contained or implied, Harbour
shall be entitled to use free from the payment of royalty such part of the
production of any petroleum substances required and used by Harbour and/or its
agents in carrying out petroleum and natural gas operations, including plant
operations.
5. Harbour shall at all times keep complete and accurate records of production
from the said lands and the sale thereof, and said records shall be available
for inspection by the Geologist and his authorized representatives at mutually
convenient times during normal business hours.
6. Pooling and Unitization: Harbour at any time and from time to time shall have
the right to include the said lands or any part or parts thereof and as to all
or any of the leased substances and/or petroleum and natural gas, in a unit
operation or pooling agreement entered into by non-associated companies dealing
at arms length for the unitised or pooled development and/or operation thereof
with other lands, if such becomes necessary or desirable in the sole opinion of
Harbour. In addition, Harbour shall have the right from time to time in their
sole discretion to alter, amend, extend or cancel any such unit operation or
pooling agreement. The basis and manner of allocating unitised or pooled
production among several tracts of unitised or pooled land and the content of
any such operating agreement shall be in the sole discretion and determination
of Harbour and if exercised bona fide shall be binding upon the Geologist. Upon
any such unitization or pooling the royalty payable in respect of production and
sale of the leased substances from any portion of the said lands set out in
Schedule "A" hereto so unitised or pooled shall be calculated as provided in
Clause 3 hereof on the value of production or unitised or pooled substances
produced and sold from the unit and allocated under such unit operating
agreement to that portion of the said lands included in the unit from time to
time.
7. The Geologist shall own and at its own expense take in kind or separately
dispose of its royalty share of the petroleum substances. If, and for so long as
the geologist fails to take its royalty in kind, or if it so directs Harbour,
Harbour shall dispose of the Geologist's royalty share of the petroleum
substances at the same price and on the same terms as Harbour received for its
own share of the petroleum substances, or at such price as Harbour, acting as a
reasonably prudent operator and having regard to current market prices,
availability of markets and economic conditions affecting the petroleum industry
generally would dispose of its own share of the petroleum substances. Harbour
may, in such case enter into a contract for the disposition of the petroleum
substances, but any such contract shall be only for such reasonable period of
time as is consistent with the immediate needs of the industry under the
circumstances. Subject to the sales contract, the geologist may commence or
resume taking its share of petroleum substances in kind by giving thirty (30)
days written notice to Harbour of its desire to exercise this right. The
Geologist may not exercise this right more often than once in any six (6) month
period. If Harbour does not dispose of the Geologist's royalty share of
petroleum substances, the Geologist shall at its own expense provide facilities
for the taking thereof.
8. In the event Harbour shall assign, convey, farmout or lease their interest in
the petroleum substances within, upon or under the said lands or any of them or
in any portion thereof, it will cause to be inserted in any such instrument of
assignment, conveyance, farmout or lease an express provision whereby assignee,
purchaser farmee or lessee thereof shall assume and agree to perform and be
bound by all the terms of this Agreement to the extent of the term of the estate
hereby created.
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9. In the event the Geologist wishes to dispose of the royalty to any other
party, the Geologist shall give notice of its intention to dispose of such
royalty and the price at which it wishes to dispose of the royalty. Harbour
shall have thirty (30) days from the date of receipt of the said notice to
decide whether it wishes to acquire the royalty at the price contained in the
notice. If Harbour desires to purchase the royalty at the price stipulated in
the said notice, the Geologist shall be obligated to sell the same to Harbour at
such price. If Harbour does not advise the Geologist within the said (30) days
of its intention to buy the royalty at the price stipulated in the said notice,
then the Geologist shall be entitled to dispose of the royalty at a price not
less favourable than stipulated in the said notice. If the Geologist has not
disposed of the royalty on such terms within ninety (90) days of the termination
of the above mentioned thirty (30) day notice period, it must reoffer any
intended disposition to Harbour with the same privileges and notice period being
in effect. In the event the Geologist assigns all or any part of its interest in
the royalty, Harbour shall not become liable to make payments, render statements
or permit audits in respect of the overriding royalty to more than one person.
If the royalty is at any time owned by more than one person, such persons shall
nominate one person to act as a common trustee for receipt of the royalty
payable hereunder and otherwise to deal with Harbour in respect to such royalty.
10. Nothing in this Agreement shall require Harbour to perform any work on the
said lands or leases thereon and Harbour may at any time and from time to time
surrender the said leases or any severable part thereof without prior notice to
the Geologist.
11. The parties hereto shall from time to time and at all times do all further
acts and execute and deliver all such further deeds and documents as shall be
reasonably required in order to fully perform and carry out the terms and
provisions of this Agreement.
12. The address for service of notices, correspondence and reports required to
be served by one party upon the other to this Agreement shall be as follows:
HARBOUR PETROLEUM COMPANY LIMITED
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
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N.D.G. ▇▇▇▇▇
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Any notice required to be served hereunder shall be deemed to have been duly
served on the second business day next following the mailing hereof by the party
giving the same by prepaid registered mail duly addressed as aforesaid to the
party upon whom the same is served; provided that any notices delivered by hand
shall be deemed to have been served as of delivery thereof.
In the event that post office mail service is for any reason temporarily
suspended, notice shall be delivered by hand. Any party hereto may change its
address for service by notice served upon the other party in the manner
aforesaid.
13. This Agreement shall continue in full force and effect as long as an
interest in the lands subject to this Agreement, or any of them, is owned by
Harbour, its successors, or assigns, provided that land surrendered by Harbour
shall no longer be subject to this Agreement.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
16. This Agreement supercedes all other agreements, documents, writings and
verbal understandings among the parties relating to the said lands and
prospectus.
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IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
HARBOUR PETROLEUM COMPANY LIMITED
/s/President
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/s/Secretary
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/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ N.D.G. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ N.D.G. ▇▇▇▇▇
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THIS IS SCHEDULE "A" ATTACHED TO AND FORMING PART
OF AN OVERRIDING ROYALTY AGREEMENT DATED
THE 4TH DAY OF AUGUST, A.D. 1981, BETWEEN HARBOUR
PETROLEUM COMPANY LIMITED AND N.D.G. ▇▇▇▇▇
The Applicable
Prospect Said Lands Royalty Percentage
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ 2%
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Section 19: All
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇%
-----------------
Section 20: N1/2
Section 21: N1/2
Section 28: All
Section 29: All
Section 30: All
Section 31: All
Section 32: All
Section 33: All
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇
-----------------
Section 4: All
Section 5: All
Section 6: All
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇ ▇▇▇ 2%
------------------
Section 32: All
Section 33: N1/2 & ▇▇▇/▇
▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇ ▇▇▇
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Section 14: All
Section 15: Portion NE1/4 (161.0 acres)
Section 15: Portion NE1/4 (55.7 acres)
Section 15: Portion SE1/4 (109.8 acres)
Section 21: Portion N1/4 (232.7 acres)
Section 21: Portion NW1/4 (4.7 acres)
Section 21: Portion SE1/4 (21.2 acres)
Section 21: Portion NE1/4 (82.6 acres)
Section 21: Portion E1/4 (103.8 acres)
Section 22: Portion SW1/4 (160.0 acres)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇ ▇▇▇ ▇▇ ▇▇▇ 1%
-----------------
Section 31: ▇▇/▇
▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ 1%
-----------------
Section 24: All
Goose River ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ 1%
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Section 1: All
Section 2: All
Section 11: All
Section 12: All
Section 13: All
Section 14: All
Section 23: All
Section 24: All
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ 1%
-----------------
Section 30: E1/2
Section 31: All
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇
-----------------
Section 36: All
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇
-----------------
Section 6: ▇▇/▇
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇
-----------------
Section 8: N1/2
Section 9: N1/2
Section 17: All
Section 18: All
Section 19: All
Section 20: All
Alix ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ 2%
-----------------
Section 26: All
Section 27: SE1/4
Section 34: All
Section 35: All
TWP 41 RGE 24 W4M 2%
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Section 3: SW1/4
Section 4: All
Section 9: ▇▇▇/▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇ ▇▇▇ 2%
-----------------
Section 33: SW1/4
▇▇▇▇▇▇▇▇ "27" ▇▇▇ ▇▇ ▇▇▇ ▇ ▇▇▇ 2%
-----------------
Section 27: All
2
TWP 42 RGE 3 W4M
----------------
Black Creek Section 31: ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇%
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Section 10: All
Section 11: All
Section 14: All
Section 15: All
Section 21: All
Section 22: All