October 31, 1995
Nautilus Oil and Gas Company
▇▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: Proposal to Purchase Your Interest
in the Moneta Hills Project
Fremont and Natrona Counties, Wyoming
Dear ▇▇. ▇▇▇▇:
Upon acceptance by you this letter will confirm our mutual
intent to enter into an agreement whereby Melange Associates, Inc.,
Nautilus Oil and Gas Company and Thorofare Resources, Inc.
(collectively "Seller") will agree to sell to Delta Petroleum
Corporation ("Delta") and Delta will agree to purchase from Seller
all of the Seller's right, title and interest in various oil and
gas properties described as all the real and personal property of
any kind and nature on, in, under or appurtenant to the Moneta
Hills Unit Area and any oil or gas ▇▇▇▇▇ located thereon, including
without limitation, the leases and interest described on the Moneta
Hills Unit Area Lease Schedule, the Bridger Mountain Gas Gathering
System, all leasehold and unit equipment, any easements and unit
equipment, any easements or rights of way, and any executory or
contractual rights or interest, corporeal or incorporeal, relating
thereto, free and clear of any liens or encumbrances of any kind
and without any additional royalty or overriding royalty,
production payments, net profits interests or other burdens,
similar or dissimilar, not of record prior to October 1, 1994 (all
of the foregoing to the extent of the percentage interests of
Seller therein being herein collectively called "Properties").
1. Delta will exchange a 30.5% working interest (21.96% net
revenue interest) in the ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ #32-3 well located in the
NESW Section 32, T1N, R65W Weld County, Colorado and 4,500 shares
of restricted and legended Delta common stock as consideration for
the properties. However Delta may, at its sole discretion,
repurchase the interest being transferred in the ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
#32-3 for $140,000 (less net production revenues received from this
well by ▇▇▇▇▇▇▇ Associates or its assigns) at any time between the
date of acceptance of this letter agreement and October 1, 1996.
Delta also agrees to assign to Seller a 10% net profits interest in
the RCU #1-31 and RCU #1-35 ▇▇▇▇▇, Fremont County, Wyoming. In
addition, Delta agrees to assign to Seller a 5% net profits
interest in the balance of the undrilled acreage on a well by well
basis proportionately reduced to Delta's working interest. The
above mentioned net profits interests shall bear any net profits
obligated to third parties, including but not limited to Chaparral
Resources, Inc. ("Chaparral") and will extend to any additional
interests acquired by Delta in the contract area and any new
leases, renewals or extensions obtained by Delta in the contract
area.
Further, Delta will agree to pay a $0.05 per MCF fee on gas
transported through the Bridger Mountain Gas Gathering System and
any extension or addition thereto. This consideration shall be
subject to equitable adjustment in the event of title failure,
encumbrance or other circumstance which reduces the leasehold or
net revenue interest in and to any of the Properties.
2. The consummation of this transaction shall take place at
the closing, with the date (the "Closing Date"), and time of such
closing to be mutually agreed to by the parties hereto, subject to
Paragraph 4 hereof.
3. Irrespective of the actual Closing Date, the effective
date of the sale for transfer of title to Seller's interests in the
Properties shall be as of 12:01 a.m. October 1, 1995.
4. It is the intention of the parties that this transaction
be consummated within 30 days following Delta's investigation of
title but no later than December 31, 1995.
5. It is a condition precedent to closing that:
a. All necessary parties shall execute a mutually
acceptable definitive Purchase and Sale Agreement
which shall contain the usual terms and provisions
for the purchase and sale of oil and gas producing
properties, including but not limited to, providing
access to all lease records and related agreements,
including all prior agreements in your files such
as that certain farmout agreement between
Chaparral, et al, and ▇▇▇▇▇▇ and Brown and the
Moneta Hills Unit and unit operating agreements,
your delivery of conveyancing instruments
containing special warranties, and representations
by each of us which are usual and customary to the
industry;
b. There shall occur no adverse material change to the
Properties or your interest therein prior to the
closing;
c. Delta shall inspect and be satisfied with the
condition and deliverability of the ▇▇▇▇▇ and
associated equipment; and
d. You will accept this letter of intent in writing
not later than 5:00 p.m. November 3, 1995.
6. Subject to the terms hereof, the parties agree to keep
all matters concerning the parties hereto confidential during the
course of the negotiations, and thereafter, to return all documents
of one party to the other in the event transactions contemplated
hereunder do not close. It is provided, however, that nothing shall
prevent the parties from fulfilling their reporting requirements
under the Securities and Exchange Act of 1934.
Please indicate below if the foregoing correctly sets forth
the understanding between us, which understanding is subject in all
respects, to the execution and delivery of any agreements and the
closing of all transactions thereunder. This letter is not a
binding legal obligation, but only represents the present intention
of the parties and shall not create any rights or obligations of
the parties hereto, except with regard to matters set forth in
Paragraph 6 hereinabove.
Very truly yours,
DELTA PETROLEUM CORPORATION
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
RAP:ss
AGREED AND ACCEPTED AS OF THE 31st DAY OF OCTOBER, 1995, by the
undersigned:
SELLER:
MELANGE ASSOCIATES, INC.
BY: /s/▇▇▇▇ ▇▇▇▇▇▇▇
Authorized Officer-President
NAUTILUS OIL AND GAS COMPANY
BY: /s/▇▇▇ ▇▇▇▇
Authorized Officer
THOROFARE RESOURCES, INC.
BY: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Authorized Officer