Woodstone Resources, L.L.C. Houston, TX 77063 PH (713) 706-3090 FAX (713) 706-3490
Exhibit
10.1
Woodstone
Resources, L.L.C.
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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PH (▇▇▇)
▇▇▇-▇▇▇▇ FAX (▇▇▇) ▇▇▇-▇▇▇▇
June 13,
2008
▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, CEO
Northern
Oil and Gas, Inc.
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▇▇▇▇▇▇▇,
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T141N-R93W,
T141N-R94W, T141N-R95W, T141N-R97W, T142N-R93W, T142N-R94W, T142N-R95W,
T143N-93W, T143N-R94W, T143N-R95W & T144N-R94W,
▇▇▇▇
County, North Dakota
Dear ▇▇.
▇▇▇▇▇:
The
purpose of this Lease Purchase Agreement is to set forth the terms and
conditions under which NORTHERN OIL & GAS, INC. (“NOG”) hereby agrees to
acquire and Woodstone Resources, L.L.C. (the “Company”) agrees to sell all of
the Company's right, title and interest in, to and under oil, gas and mineral
leases covering approximately 42,277 gross and 23,210 net acres that the Company
has acquired or will acquire located in the above referenced Townships and
Ranges in ▇▇▇▇ County, North Dakota and further described on the attached lease
schedule labeled Exhibit “A” hereto (the “Leases”).
1. Terms of
Sale; Purchase Price. NOG will pay to Company $400.00 cash per net acre
(“Purchase Price”) for the Leases. Company shall reserve an overriding royalty
equal to the difference between all existing lease burdens of record on June 11,
2008 and 20% on each lease thereby delivering to NOG a net revenue interest of
80% on each lease. Subject to adjustments as hereinafter provided the total cash
consideration paid by NOG to Company shall be $9,284,000.00.
2.
Conditions.
a. Due
Diligence. This
agreement is subject to NOG’s satisfactory completion of a due diligence title
review of the Leases. NOG shall commence its review on June 11, 2008
and complete such due diligence review by July 10, 2008. The Company
will allow NOG and its representatives full and complete access to the Leases
and title records in Company’s offices during normal business hours or such
other hours as are reasonable under the circumstances and upon reasonable
notice.
b. Adjustments. In the event NOG
determines that title to a lease(s) or a portion(s) has failed or that a
lease(s) or any portion thereof is invalid (“title failure”), NOG shall have the
right to adjust the total cash consideration to be paid at closing to the
Company by deducting the product of $400.00 multiplied times the number of net
acres on which title has failed. That portion of the Lease(s) on
which title has failed shall be subtracted from the total cash consideration to
be paid at closing by NOG to Company and excepted or deleted from the Assignment
of Oil, Gas and Mineral Leases contemplated herein. In the event NOG
or the Company determines that the Company owns a greater number of net acres
than 23,210 within the areas described on Exhibit “A”, the total cash
consideration to be paid at closing by NOG to Company shall be increased by
adding the product of $400.00 multiplied times the number of net acres in excess
of 23,210 and the Lease and acreage shall be added to the Assignment of Oil, Gas
and Mineral Leases.
c. Cure
Period. In the event of a title failure, NOG shall notify the Company of
such title failure in writing together with a detailed description of the nature
of the title failure. The Company shall at its option have a thirty
(30) day period from Closing in which to cure such title failure. In
the event the title failure is cured to the satisfaction of NOG, NOG will
acquire same on the same basis as provided in number 1 above.
d.
Deposit. NOG
agrees to wire transfer concurrent with its execution of this Agreement the sum
of $1,500,000.00 which is a nonrefundable deposit. In the event NOG
does not close as provided for in number 3. below, Woodstone shall retain the
deposit and Woodstone shall have no further obligation to NOG. If NOG
closes as provided for in number 3. below, the deposit shall be applied to the
Purchase Price and deducted from the cash consideration to be paid at closing by
NOG to Company.
d. Assignment. The purchase and sale of the
Leases will be effected in accordance with the terms of an Assignment of Oil,
Gas and Mineral Leases and/or Partial Assignment of Oil, Gas and Mineral Leases
in the forms attached hereto as Exhibit “B” and “B-1”.
3.
Closing.
Closing will occur on or before July 10, 2008. At Closing Company
shall deliver the Assignment of Oil, Gas and Mineral Leases and/or Partial
Assignment of Oil, Gas and Mineral Leases in favor of Northern Oil and Gas, Inc.
and NOG shall wire transfer to Woodstone Resources, L.L.C. the balance (after
deducting the Deposit provided for in number 2.d. above) of the cash
consideration based on the Purchase Price.
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4. Additional
Acreage. Company has through a third party nominated 560 net acres of
mineral rights owned by the State of North Dakota located in Section 36,
T142N-R95W, to be sold by auction at the state sale on August 5, 2008 in Minot,
North Dakota (the "State Sale"), as scheduled on Exhibit "C." Woodstone agrees
to attempt to purchase at the State Sale up to 560 net acres located in Section
36, T142N-R95W. Should Woodstone be successful in acquiring any of this acreage,
NOG agrees to purchase up to 560 net acres of such acreage purchased by
Woodstone under the same terms and conditions as the other acreage purchased
from Woodstone. Should Woodstone pay more than $400 per acre for any of the
State tracts purchased, NOG shall have the option to elect (a) not to acquire
said tract from Woodstone or (b) to acquire said tract from Woodstone for the
price paid by Woodstone at the sale plus $25.00 per net acre with Woodstone
delivering an 80% net revenue interest to NOG. Further, Company agrees to
attempt to acquire up to 5,000 additional net acres located within the
referenced Townships and Ranges, which acreage would be in addition to that
identified in the first paragraph above. Should Woodstone be
successful in acquiring any of this acreage within ninety (90) days of Closing,
NOG agrees to purchase up to 5,000 net acres of such acreage acquired by Company
located in the above Townships and Ranges under the same terms and conditions as
the other acreage purchased from Company. NOG agrees that it will not compete
with Company within the aforementioned Townships and Ranges for a period of
Ninety (90) days from closing.
5. Obligations.
NOG and the Company agree that after October 10, 2008 the Company shall have no
obligation to offer any additional leases and/or interest acquired by the
Company to NOG and NOG shall have no obligation to purchase any additional
leases and/or interests acquired by the Company.
6. Reassignment. Subject to force
majeure, in the event NOG or its assigns is not drilling on a Lease or acreage
pooled therewith one hundred twenty (120) days prior to the expiration of any
such Lease, NOG and/or its assigns agree to reassign to Company or its designees
such Lease(s) delivering to Company and/or its assigns the same net revenue
(eighty (80) percent) as was delivered by the Company to NOG. In the event the BLM
leases in Section 29, T142N-93W (160 gross and 80 net acres) and Section 18,
T143N-R95W (160 gross and 40 net acres) are not held by production on July 1,
2012 NOG and/or its assigns agree to reassign to Company or its designees such
BLM leases delivering to Company and/or its assigns the same net revenue (eighty
(80) percent) as was delivered by the Company to NOG in the Assignment of Oil,
Gas and Mineral Leases.
7. Legal
Effect. This
letter is binding upon the both NOG and the Company and execution hereof shall
constitute an obligation and commitment and shall give the parties rights and
claims against one and other in the event either party for any reason fails to
Close on the transaction contemplated by this Lease Purchase
Agreement.
This Agreement shall terminate unless
executed by both parties and the deposit required in Paragraph 2.d. is received
by Company prior to June 13, 2008 at 3:00 P.M..
Should
have any questions, please contact us at ▇▇▇-▇▇▇-▇▇▇▇.
WOODSTONE
RESOURCES, L.L.C.
By:
_/s/ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
President
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Agreed to
and Accepted this 13th day of June 2008
NORTHERN
OIL & GAS, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇
___________
▇▇▇▇▇▇▇
▇▇▇▇▇, CEO
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