PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into
this 19th day of AuGust, 1997 by and between STATOIL EXPLORATION (US)INC., a
Delaware corporation with offices at 2700 Post Oak Boulevard, Suite 700,
Houston, Texas 77056, as seller ("Seller"), and SABA ENERGY OF TEXAS,
INCORPORATED, a Texas corporation with offices at 1603 S.E. 19th Street, Suite
202, Edmond, Oklahoma 73103, as purchaser ("Purchaser").
RECITAL:
WHEREAS, Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, on the terms and conditions set forth herein
all of the oil, gas and other mineral properties and interests described in
Section 1.01 below.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the benefits to be derived by each party hereunder and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Purchaser and Seller, intending to be legally bound, hereby agree
as follows.
ARTICLE I
Purchase and Sale of Interests
1.01 Purchase and Sale of Interests. Upon the terms and subject to the
conditions of this Agreement, Seller hereby agrees to sell to Purchaser, and to
convey, transfer, assign and deliver to Purchaser, and Purchaser agrees to
purchase and acquire from Seller all of Seller's right, title and interest in
and to the following properties, assets, rights and interests, hereinafter
referred to collectively as the "Subject Properties":
(A) Leases, OverridiniG Royalty Interests, Convertible
Interests: All right, title and interest in and under the oil, gas and
mineral leases described on Exhibit A; any and all implied rights and
privileges arising by operation of law or otherwise in relation to the Leases;
all the lands described by the Leases; and all land, leases, and properties
pooled or unitized with the Leases or Wells (collectively, the "Leases");
(B) Wells: All oil, gas and other wells located on the
Leases, including but not limited to those described on Exhibit B and shown
on that certain Base Map of Potash Field dated January 16, 1997
prepared by C. H. Fenstermaker & Associates, Inc. (the "Wells");
(C) Hvdrocarbons: All oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
therefrom, together with all minerals produced in association with these
substances (collectively called the "Hydrocarbons") in and under and which may
be produced and saved from or attributable to the Leases or Wells, and all
rents, issues, profits, proceeds, products, revenues and other income from or
attributable thereto;
(D) Production Facilities: All oil wells, gas wells, injection
wells, disposal wells, or other wells; buildings, field offices (including
appliances in such offices) and structures; field separators and liquid
extraction plants; plant and gas compressors; pumps and pumping units; pipeline
systems, field gathering systems, and flow lines; and tanks and tank batteries,
all as used in connection with the ownership or operation of the Leases and the
Wells (collectively called the "Production Facilities");
(E) Equipment and Personal Propertv: All equipment and
personal property, tenements, hereditaments, appurtenances and properties in
anyway appertaining, belonging, affixed or incidental to the properties and
interests described in subparagraphs (A), (B), (C) and (D) above, including,
without limitation, all furniture, office supplies, and office equipment located
in any field offices; valves, fittings, meters, apparatus, equipment, tools,
fixtures, implements, cables, wires, towers, casing, tubing and rods, situated
upon, used, held for use, or useful in connection with the operating, working or
development of any of the Leases, Wells and Production Facilities (collectively
called the "Equipment");
(F) Material Agreements: All material contracts and
agreements, together with all amendments, additions, substitutions,
replacements, accessions and attachments thereto, associated with the interests
referred to in subparagraphs (A), (B), (C), (D) and (E) above,
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including but not limited to, surface leases, rights-of-way, easements,
licenses, permits, franchises, rights-of-way, easements, servitudes; agreements
with lessors, division orders, licenses, and servitudes; all unitization,
communitization, pooling agreements and declarations of pooled units and the
units created thereby (including, without limitation, all units created under
orders, regulations, rules or other official acts of any federal, state or other
governmental body or agency having jurisdiction) which may affect all or any
portion of the Leases or Wells; all oil and gas sales and purchase agreements,
contracts and other agreements relating to the production, sale, purchase,
exchance or processing of production from or attributable to the Leases or Wells
(collectively called the "Material Contracts"); and
(G) Records: All records, reports, files and title documents
relating to the Subject Properties including correspondence, records of
production, maintenance, revenue, sales, expenses, and warranties, lease files,
land files, well files, division order files, abstracts, title opinions,
assignments, reports, maps, engineering, geological, and, subject to any
applicable licensing or confidentiality agreement, all geophysical information,
material, and data, together with other files, contracts, and other records and
data of Seller relating to the Subject Properties and including all
interpretative maps of any kind or character, whether originals, reproductions,
microfilm, or computer records, and wherever located (collectively called the
"Records").
1.02 Excluded Assets. As used herein, "Excluded Assets" means (a) all
trade credits and all accounts, instruments and general intangibles attributable
to the Subject Properties with respect to any period of time prior to the
Effective Date; (b) all claims and causes of action of Seller (i) arising from
acts, omissions or events, or damage to or destruction of property, occurring
prior to the Effective Date, or (ii) with respect to any of the Excluded Assets;
(c) all of the interest of Seller (A) under any policy or agreement of insurance
or indemnity, (B) under any bond, or (C) to any insurance or condemnation
proceeds or awards arising from acts, omissions or events, or damage to or
destruction of property, occurring prior to the Effective Date; (d) all
Hydrocarbons produced and sold from the Leases with respect to all periods prior
to the Effective Date, together with all proceeds from or of such Hydrocarbons;
(e) claims of Seller for refunds of or loss carry forwards with respect to (A)
production or any other taxes attributable to any period prior to the Effective
Date, (B) income or franchise taxes, or (C) any taxes attributable to the
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Excluded Assets; (f) all amounts due or payable to Seller by vendors or other
independent contractors as adjustments or refunds under any Material Contracts
that relate to periods prior to the Effective Date; all amounts due or payable
to Seller as adjustments to insurance' premiums related to the Subject
Properties with respect to any period prior to the Effective Date; (h) all
proceeds, income or revenues (any security or other deposits made) attributable
to (A) the Subject Properties for any period to the Effective Date, or (B) any
Excluded Assets; (i) all of Seller's proprietary computer software, patents,
trade secrets, and other intellectual property, and all audit rights arisina
under any of the Material Contracts or otherwise with respect to any of the
Excluded Assets.
1.03 Effective Date. The purchase and sale of the Subject
Properties shall be effective as of 7:00 a.m., Central Daylight Savincs Time,
on June 1, 1997 ("Effective Date").
1.04 Assumption of 0perations. Purchaser shall assume ownership of the
Subject Properties at Closing (as defined in Section 9.01), and shall at such
time assume the obligations of Seller as operator of the Subject Properties on
and after the Closing Date (as defined Section 9.01). Seller shall cooperate
with Purchaser to obtain any instruments which are prescribed, permitted or
required to be filed with any governmental authority or agency in order for
Purchaser to serve as operator of any of the Subject Properties.
ARTICLE 11
Purchase Price
2.01 Consideration for Sale and Transfer of the Subject
Properties". The purchase price for the Subject Properties
(the "Purchase Price") shall be Ten Million Dollars ($10,000,000),
adjusted as set forth in Sections 2.02(A) and 2.02(B) herein. At Closing,
Purchaser will deliver to Seller, or upon Seller's instructions to Seller's
account at Texas Commerce Bank, Account Number 00101340991, or to such other
institution or account as Seller may specify in writing, the Adjusted Purchase
Price (as hereinafter defined) as provided in Section 9.02(B) herein.
2.02 Adjustments to Purchase Price. The Purchase Price shall be
adjusted as follows and the resulting amount shall be referred to as the
"Adjusted Purchase Price":
(A) The Purchase Price shall be adjusted upward by the
following:
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(i) The aggregate amount of all additional
reasonable costs of operations conducted on the Subject Properties, incurred
and paid from the Effective Date to the Closing Date, except those costs
incurred by Seller associated with the Pit Remediation, including without
limitation, royalties, ad valorem, production, property, severance, windfall
profit and similar taxes and assessments based upon or
measured by the ownership of property, the production of Hydrocarbons, and
prepaid expenses attributable to the Subject Properties which are paid by
Seller and which are, in accordance with generally accepted accounting
principles, attributable to the period of time between the Effective Date and
the Closing Dat e; and
(ii) The amount of $8,000 per month for
administrative overhead incurred by Seller during the period
of time between the Effective Date and the Closing Date. (B)
The Purchase Price shall be adjusted downward by the
following:
(i) The aggregate amount of all proceeds and
revenues, other than that referred to in Section 2.02(B)(ii), actually received
or accrued in accordance with generally accepted accounting principles by Seller
attributable to the Subject Properties during the period of time between the
Effective Date and the Closing Date;
(ii) The proceeds received by Seller from the
sublease, sale or other disposition (which sublease, sale or other disposition
from the execution of this Agreement until Closing shall not occur without the
prior written consent of Purchaser) of all or any portion of the Subject
Properties; and
(iii) An amount equal to all unpaid ad valorem,
property, production, severance and similar taxes and assessments based upon or
measured by the ownership of the property or production of Hydrocarbons or the
receipt of proceeds therefrom accruing to the Subject Properties in
accordance with generally accepted accounting principles prior to the
Effective Date, which amount shall be based upon such taxes assessed against
production attributable to the Subject Properties in each case for any tax
period that includes the Effective Date;
(C) Not later than forty-eight (48) hours prior to Closing.
Seller shall deliver to Purchaser a statement of Seller's good faith estimate of
the adjustments to Purchase Price provided for in Sections 2.02(A) and (B), and
specifying the Adjusted Purchase Price to be paid to Seller at Closing.
2.03 Performance Deposit. Upon execution of this Agreement, Purchaser
shall deliver to Seller, by wire transfer in immediately available funds, the
amount of five percent (5%) of the Purchase Price as a performance deposit (the
"Performance Deposit"). Seller shall hold the Performance Deposit until Closing
or until it is returned to Purchaser pursuant to this Agreement. Upon
consummation of the transaction at Closing, the Performance Deposit shall be
credited against the Purchase Price, and the Adjusted Purchase Price to be paid
to Seller at Closing shall be reduced by the amount of then retained portion of
the Performance Deposit.
2.04 Liquidated Damages. If the purchase and sale of the Subject
Properties is not completed as contemplated herein by reason of any material
breach or default by Purchaser and Seller is not in material breach or default
and is otherwise ready, willinc,, and able to fully perform its obligations
under this Agreement, then Seller shall in consideration of having held the
Subject Properties and as liquidated damages in lieu of all other damages (and
as Seller's sole remedy), be entitled to liquidated darnaces in the amount of
the Performance Deposit. The parties hereby acknowledge that the extent of
damages to Seller occasioned by such breach or default or failure to proceed
byPurchaser would be impossible to ascertain and that the amount of the
Performance Deposit is a fair and reasonable estimate of such damages under the
circumstances. If the purchase and sale of the Subject Properties is not
completed as contemplated herein by reason of any material breach or default by
Seller and Purchaser is not in material breach or default and is otherwise
ready, willing, and able to fully perform its obligations under this Acreement,
then Purchaser shall, in consideration of having committed its resources and
assets to this acquisition and foregoing other business opportunities, and as
liquidated damages in lieu of all other damages (and as Purchaser's sole
remedy), be entitled to return of its Performance Deposit. The parties hereby
acknowledge the extent of damages to Purchaser occasioned by such breach or
default or failure to proceed by Seller would be
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impossible or extremely difficult to ascertain and that the amount of these
stipulated liquidated damages is a fair and reasonable estimate of such damages
under the circumstances.
ARTICLE III
Due Diligence Review
3.O1 Purchaser shall have until 5:00 p.m. on the third business day
preceding the Closing Date (the "Notice Date") in order to conduct a due
diligence review, at Purchaser's sole cost and expense, with respect to title
matters affectincy the Subject Properties (the "Review"). If Purchaser believes,
in Purchaser's sole opinion, that there is a Material Title Defect (as hereafter
defined in Section 7.01(B)(iv), also called "Defect") relating to the Subject
Properties, Purchaser shall immediately notify Seller of the existence of such
Material Title Defect (the "Defects Report"). The Defects Report shall be in
writing and shall describe the Defect(s), specify the Property affected and set
forth Purchaser's assessment of the actions and the cost required to cure the
Defect(s) (the "Estimate"). Seller shall have the option to cure the Defect(s)
or commence negotiations with Purchaser, prior to the Closing Date,to agree upon
a mutually satisfactory adjustment to the Purchase Price to reflect the amount
of the Estimate. If by 5:00 p.m. on the business day prior to the Closing Date,
Purchaser and Seller are unable to agree upon an adjustment to the Purchase
Price, Purchaser may either (i) terminate this Agreement or (ii) waive the
Material Title Defect and proceed with the Closing and the payment of the
Purchase Price without adjustment for the Defect. If Purchaser elects to
terminate this Agreement pursuant to this Section, Purchaser shall immediately
send a written notice to the Seller indicating such election and in no event
later than 5:00 p.m. on the business day prior to the Closing Date. Upon proper
delivery of such notice in compliance with this Section, this Agreement shall
terminate and neither Purchaser nor Seller shall have any further rights
hereunder, except for the right of Purchaser to receive and the obligation of
Seller to refund the Performance Deposit. In the event Purchaser fails to
deliver written notice of its election to terminate, Purchaser shall be deemed
to have waived such Defect(s) and the parties shall then proceed immediately to
Closing.
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ARTICLE IV
Representations and Warranties
4.01 Representations and Warranties of Seller. The express
representations and warranties of Seller contained in this paragraph or
otherwise stated in this Agreement are exclusive and are in lieu of all other
representations and warranties, express, implied, statutory, or otherwise.
(A) Seller is a corporation, duly organized, validly
existing and in good standing under the laws of Delaware and is properly
qualified to do business in the state of Louisiana;
(B) Seller has the requisite power and authority to carry
on its business as presently conducted and has the requisite power and
authority to enter into and perform its obligations under this Agreement; the
consummation of the transactions contemplated by this Agreement will not
conflict with, or result in a violation or breach of, or give rise to any
rights of acceleration or any default under the articles of incorporation or
by-laws of Seller, or any provision of any mortgage, indenture, contract,
material agreement or other instrument to which Seller is a party or by which
any of its material assets are bound or any judgment, decree, order, statute,
rule or regulation applicable to Seller or to which any material portion of
their respective properties and assets are subject;
(C) The execution and delivery of this Agreement, and the
execution and delivery of all certificates, documents and instruments required
to be executed and delivered by Seller, and the consun-unation of the
transactions contemplated hereby as of the Effective Date, have been duly
authorized by all necessary action;
(D) This Agreement has duly and validly executed and
delivered by Seller and will constitute a legal, valid and bindinc, obligation
of Seller enforceable against it in accordance with its terms, subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium
and similar laws as well as to general principles of equity;
(E) Except with respect to the Pit Remediation (as defined
and provided for in Section 5.01(C) below) and as otherwise expressly made
known to Purchaser, no action, suit or
proceeding is pending or, to the knowledge of Seller threatened before any
court or governmental ac,ency or arbitral body which might have a material
adverse effect with respect to the Subject Properties or which seeks to
invalidate, enjoin or restrain the consummation of the transactions contemplated
hereby or any action taken or to be taken in connection therewith;
(F) Seller has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of the
transactions contemplated by this Agreement;
(G) All ad valorem, property, production, severance and
similar taxes and assessments based on or measured by the ownership of property
or the production of Hydrocarbons or the receipt of proceeds therefrom with
respect to the Subject Properties for all periods prior to the Effective Date
have been properly paid according to industry standards and all such taxes and
assessments which must be paid prior to the Closing Date shall be properly paid
by Seller;
(H) To Seller's knowledge, all royalties, rentals and other
payments (including any due by virtue of any take-or-pay or other gas contract
settlement) due by Seller under all the Leases have been properly and timely
paid and all conditions necessary to keep the same in force have been fully
performed except as to (i) funds which have been placed in escrow by Seller
pursuant to the Leases as a result of, among, other reasons, defects in the
title to royalty owners, the inability to cure defects in said title, or
inability to locate and/or identify royalty owners entitled to payments and (ii)
such non-performance which would not reasonably be expected to have a material
adverse effect on the ownership or operation of the Subject Properties;
(I) Seller is not obligated by virtue of
any prepayment arrangement under any contract for the sale of Hydrocarbons,
including take-or-pay obligation, imbalance of production or similar provisions
or a production payment or any other arrangement to deliver Hydrocarbons from
the Subject Properties at some future time without then or thereafter receiving
full payment therefor;
(J) Seller has all material governmental licenses and
permits and has, to Seller's knowledge, properly made all material filings,
necessary or appropriate to obtain such licenses and permits to own and operate
the Subject Properties as presently being owned and
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operated, and such licenses, permits and filings are in full force and effect,
except where the failure to have made any such filings or to have received any
such licenses or permits would not have a material adverse effect on Seller's
ownership or operation of the Subject Properties, and to Seller's knowledge no
material violations exist in respect of any such licenses, permits or filings,
no proceeding is pending or to Seller's knowledge is threatened looking toward
the challenging, revocation or limitation of any such licenses, permits or
filings; and Seller, to its knowledge, has complied in all material respects
with all laws, rules, regulations, ordinances, codes, orders, licenses,
concessions and permits relating to any of the Subject Properties, except for
any such violations or non-compliance that would not have a material adverse
effect on Seller ownership or operation of the Subject Properties;
(K) With respect to title to the Subject Properties, except
as to Permitted Encumbrances, Seller's right, title, and interest in and to the
Subject Properties is Good and Marketable (as defined herein);
(L) To Seller's knowledge, it has not
sold, nor to its knowledge permitted to be sold, any Hydrocarbons in violation
of any law, ordinance, rule or regulation pertaining to the pricing, production,
conservation or allocation of Hydrocarbons;
(M) There exists no preferential right or any other
agreement, arrangement or understanding with any person not a party to this
Agreement to purchase a portion of the Subject Properties;
(N) All of the Wells included in the Subject Properties have
been drilled and completed within the boundaries of such Subject Properties or
within the limits otherwise permitted by contract, pooling or unit agreement,
and by law, and all drilling and completion of said Wells have been conducted in
material compliance with all applicable laws, ordinances,
rules, regulations and permits, and judgments, orders and decrees of any court,
tribal or governmental body or agency, and no Well is subject to material
penalties on allowables after tfie date hereof because of any overproduction or
any other violation of applicable laws, rules,
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regulations or permits or judgments, orders or decrees of any court or
governmental body or agency which would prevent such well from being entitled to
its full legal and regular allowable from and after the date hereof as
prescribed by any court or governmental body or agency;
(0) Seller is not a "public utility holding company" as
defined in the Public Utility Holding Company Act of 1935, as amended;
(P) Seller has not received notice of any pending claims for
cancellation from any lessors with respect to the Leases;
(Q) There are no gas balancing obligations or makeup
rights relating to the Subject Properties;
(R) The Subject Properties are not subject to any back-in
arrangements which will diminish the interests set forth on Exhibit B;
(S) There are no surface use or access agreements currently
in force and effect, which are not being assicned by this Agreement, that would
materially interfere with oil and gas operations on the Leases;
(T) Environmental Matters.
(i) Without limiting the generality or
applicability of any other provision of this Agreement, and except for the Pit
Remediation, oil and gas activities on the Subject Properties do not, to
Seller's knowledge, violate any federal, state, local, or tribal law (including
common law), ordinance, rule, standard, prohibition, or regulation relating to
health, safety, or the environment (collectively "Environmental Laws"), and
Seller to its knowledge has timely filed all required reports, obtained all
required approvals and permits, and generated and maintained all required data,
documentation and records under any applicable Environmental Laws;
(ii) To Seller's knowledge, except for the Pit
Remediation, there has not been, and is not occurring, any discharge or release
of any hazardous substances in or on any of the Subject Properties operated by
the Seller in amounts or concentrations which reasonably could be expected to
give rise to liabilities or obligations exceeding $100,000 in any instance or
exceeding $500,000 in the aggregate and, except for the Pit Remediation, Seller
does not have any liabilities or obligations in excess of the aforesaid amounts
with respect to the introduction of hazardous substances into the environment
for activities relating, to the operation of the Subject Properties prior to the
Closing Date;
(iii) To Seller's knowledge, there are no existing,
naturally occurring radioactive materials (NORM) within the
Subject Properties; (iv) To Seller's knowledge there
are no pending or
threatened claims nor any basis for claims against Seller relating to the
Subject Properties under Environmental Laws, except for the Pit Remediation;
(v) To Seller's knowledge, no polychlorinated
biphenyls (PCBS) nor transformers, compressors nor other equipment which
contains PCBs have been constructed, placed, deposited, stored, disposed of nor
located on the Subject Properties;
(U) There are no calls on production, forward sales, or
price hedging arrangements in place and affecting the Subject Properties;
(V) Other than the Wells listed on Exhibit B and disclosed
to Purchaser in the data room in Seller's offices during the course of
Purchaser's due diligence review, to Seller's knowledge there are no other oil
and gas wells or disposal wells located on the Subject Properties, and Seller
has received no demands or requests for plugging and abandoning any of the Wells
or any other wells which might be located on the Subject Properties; and
(W) Except for the Pit Remediation, prior to the
Effective Date, and to the extent required by, and in accordance with, rules and
regulations of the Louisiana Commissioner of Conservation and other applicable
laws, rules and regulations and other obligations imposed upon Seller by
contract, Seller has restored associated or affected surface areas, conforming
to and satisfying the terms and conditions of the Leases and/or any agreement,
laws, orders, rules, regulations, or permit
obligations pertinent thereto.
4.02 Limited Warranty. ANY ASSIGNMENT AND BILL OF SALE, DEED, SUBLEASE
OR OTHER CONVEYANCE EXECUTED PURSUANT HERETO SHALL BE WITHOUT ANY WARRANTY OR
REPRESENTATION OF TITLE, EITHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, EXCEPT BY, THROUGH, AND UNDER SELLER, AND SHALL
BE WITHOUT ANY EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION
AS TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE,
FREEDOM FROM REDHIBITORY VICES OR DEFECTS, CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS OR MERCHANTABILITY OF ANY OF THE EQUIPMENT OR ITS FITNESS FOR ANY
PURPOSE, AND WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR
REPRESENTATION WHATSOEVER. PURCHASER IS RELYING SOLELY UPON ITS OWN INSPECTION
OF THE SUBJECT PROPERTIES, AND EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
PURCHASER SHALL ACCEPT THE SUBJECT PROPERTIES IN THEIR "AS IS, "WHERE IS'@
CONDITION, EXCEPT AS EXPRESSLY SET FORTH HEREIN TO THE CONTRARY. IN ADDITION,
SELLER MAKES NO WARRANTY, 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
PURCHASER, INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE SUBJECT
PROPERTIES, PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES
(IF ANY) ATTRIBUTABLE TO THE SUBJECT PROPERTIES OR THE ABILITY OR POTENTIAL OF
THE SUBJECT PROPERTIES TO PRODUCE HYDROCARBON OR ANY OTHER MATTERS CONTAINED IN
THE PROPRIETARY DATA OR ANY OTHER MATERIALS FURNISHED OR MADE AVAILABLE TO
PURCHASER BY SELLER OR BY SELLER'S AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH
DATA, RECORDS, REPORTS PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY
SELLER OR OTHERWISE MADE AVAILABLE TO PURCHASER ARE PROVIDED PURCHASER AS A
CONVENIENCE, AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST
SELLER. ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT THE PURCHASER'S SOLE RISK
TO THE MAXIMUM EXTENT
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PERMITTED BY LAW; PROVIDED, HOWEVER, SELLER REPRESENTS THAT IT HAS NOT KNOWINGLY
FAILED TO PROVIDE TO PURCHASER FOR ITS REVIEW ANY RECORDS OR MATERIAL CONTRACTS
IN ITS POSSESSION OR CONTROL OR TO WHICH IT HAS ACCESS. PURCHASER EXPRESSLY
WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST HIDDEN
OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW INCLUDING LOUISIANA CIVIL CODE
ARTICLES 2520 THROUGH 2548; WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO
LOUISIANA CIVIL CODE ARTICLE 2520 ET SEQ.; ACKNOWLEDGES THAT THIS EXPRESS WAIVER
SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE
CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE
ATTENTION OF THE PURCHASER AND EXPLAINED IN DETAIL AND THAT PURCHASER HAS
VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY
AGAINST REDHIBITORY VICES AND DEFECTS
OF FITNESS AND/OR WARRANTY AGAINST REDHIBITORY VICES AND DEFECTS FOR THE SUBJECT
PROPERTIES. THE ASSIGNMENTS AND BILLS OF SALE, SUBLEASES, DEEDS OR OTHER
CONVEYANCES TO BE DELIVERED BY SELLER AT CLOSING SHALL EXPRESSLY SET FORTH THE
DISCLAIMERS OF REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 4.02.
4.03 Representations and Warranties of Purchaser. Purchaser represents and
warrant to Seller:
(A) Purchaser is duly organized, validly existing, and in good
standing under the laws of the state of Texas and is properly qualified to
transact business in the state of Louisiana, or will be so qualified by the
Closing Date;
(B) Purchaser has all requisite power and authority, corporate
and otherwise, to carry on its business as presently conducted, to enter into
this Agreement, to purchase the Subject Properties on the terms described in
this Agreement and to perform its other obligations under this Agreement. The
consummation of the transactions contemplated by this Agreement
CP
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will not violate, or be in conflict with, any provisions of Purchaser's articles
of incorporation or by-laws, or of Purchasers agreements or governing documents
or any material agreement or instrument to which Purchaser is a party or by
which it is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Purchaser;
(C) The execution and delivery of this Agreement, all
certificates, documents, and instruments required to be executed and delivered
by Purchaser, and the consummation of the transactions contemplated hereby as of
the Effective Date, are duly authorized by all requisite action;
(D) This Agreement constitutes a legal, valid and binding
obligation of Purchaser, enforceable against it in accordance with its terms,
subject, however, to the effects of bankruptcy, insolvency, reorganization,
moratorium and similar laws as well as to general principles of equity;
(E) To the knowledge of Purchaser, no action, suit or
proceeding is pending, or threatened before any court or governmental agency
which seeks to invalidate, enjoin or restrain the consummation of the
transactions contemplated hereby, or any action taken or to be taken in
connection therewith;
(F) Purchaser has adequate financial resources to make timely
payment of the Purchase Price and to pay and perform its other obligations
hereunder and all financial statements furnished to Seller accurately reflect
Purchaser's current financial position;
(G) Purchaser has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Seller shall have any responsibility
whatsoever;
(H) Purchaser has been afforded an opportunity to (a) examine
the Subject Properties and such materials as it has requested to be provided to
it by Seller, (b) discuss with representatives of Seller such materials and the
nature and operation of the Subject Properties and (c) investigate the
condition, including subsurface condition, of the Leases and Material Contracts
and the condition of the Equipment. Purchaser acknowledges that in entering into
this Agreement, Purchaser has relied upon its independent investigations of and
judgment with respect to the Subject Properties in addition to Seller's
representations, warranties and covenants hereunder;
(I) The consummation of the transactions contemplated herein are not 44
prohibited transactions" with respect to Purchaser under the Employee
Retirement Income Security Act of 1974 ("ERISA"), and the Consummation of
the transactions contemplated herein will not violate any other provisions
of ERISA with respect to Purchaser;
(J) To the extent required by, and in accordance with,
rules and regulations of the Louisiana Commissioner of Conservation and
other applicable laws, rules and regulations and other obligations imposed
upon Purchaser by contract, Purchaser shall plug and abandon all Wells
(including, but not limited to, any salt water disposal wells, but
excluding any wells the existence of which would violate Seller's
representation in Section 4.01(V) above) and shall remove all abandoned or
unused production facilities and equipment, which, as of the Effective
Date or thereafter, are located on the lands subject to the Leases, or
otherwise in which Seller's interests are hereby transferred;
(K) After the Closing, Date but as of the Effective Date,
except for the Pit Remediation, to the extent required by, and in accordance
with, rules and regulations of the Louisiana Commissioner of Conservation and
other applicable laws, rules and regulations and other obligations imposed by
contract, Purchaser shall restore associated or affected surface areas of the
Subject Properties, conforming to and satisfying the terms and conditions of the
Leases and/or any agreements, laws, orders, rules, regulations or permit
obligations pertinent thereto;
(L) Purchaser shall pay the cost of all plugging and
abandonment of the Wells, all removal of facilities, equipment and pipelines,
and all restoration of lands or water bottoms, Leases, Production Facilities,
Equipment or pipelines located on the Subject Properties or on lands or water
bottoms unitized therewith, including but not limited to any such costs which
Seller is obligated to pay to the extent that these obligations arise from and
after the Effective Date; and
16
(M) Purchaser warrants that it is acquiring the Subject
Properties for its sole account and not for resale, in whole or part, to any
other person, firm or entity in any manner that will violate any applicable
state or federal securities law.
ARTICLE V
Covenants
5.01 Covenants and Agreements of Seller. Seller covenants and
agrees that:
(A) Seller agrees after Closing to provide reasonable revenue
and expense accounting support regarding the Subject Properties for a reasonable
period of time.
(B) Seller agrees to cooperate with Purchaser in the execution
and delivery of any agreements or documents reasonably necessary to effect the
transaction contemplated hereby.
(C) Seller has been required by the Louisiana Department of Environmental
Quality ("DEQ") to remediate a certain pit, identified by and with the DEQ as
"Pit #' )8PO80,
Sections 7, 8 & 9" (the "Pit Remediation"). Seller agrees to complete the Pit
Remediation to the satisfaction of the DEQ. and to bear the cost of such
remediation regardless of the completion date of such remediation. Seller shall
provide written notice to Purchaser at such time as Seller has completed the Pit
Remediation ("Remediation Completion Notice").
(D) Seller agrees to use its best efforts to cause the
Subject Properties to be maintained and operated in a prudent and workmanlike
marine r in accordance with standard oil and gas industry practices for the
general area during, the period between the date of this Agreement and the
Closing Date.
(E) During the period from the date of this Agreement until
the Closing Date, Seller will not (i) abandon or permit the abandonment of any
material part of the Subject Properties or conveyed or disposed of any material
part of the Subject Properties (other than Hydrocarbons produced from the
Subject Properties in the ordinary course of business).
17
5.02 Covenants and Agreements of Purchaser=. Purchaser covenants
and agrees that:
(A) From and after the Closing Date and to the extent
necessary to facilitate the consummation of the transactions contemplated
herein, in addition to the assumption by Purchaser of the obligations of Seller
attributable to the Subject Properties after the Closing Date, Purchaser agrees,
to the extent required by applicable law or the terms of any Leases or Material
Contracts, to enter into specific agreements of assumption with respect to said
obligations of Seller to specific third parties or governmental authorities to
the extent such obligations are attributable to the Subject Properties after the
Effective Date;
(B) Purchaser agrees to cooperate with Seller in the execution
and delivery of any agreements or documents reasonably necessary to effect the
transaction contemplated hereby;
(C) Purchaser accepts the Subject Properties subject to all
existing Naturally Occurring Radioactive Material (NORM) and oil and/or
saltwater spills and damages on the Leases, except for the Pit Remediation; and
(D) Purchaser agrees to conduct a 3D seismic survey (the "3D
Survey") over all or a substantial portion of the Lease lands within twenty-four
(24) months after Closing, subject to the timely receipt of necessary permits to
begin and complete the 3D Survey. Failure by Purchaser to conduct the 3D Survey
within the 24 month time period will not constitute a breach of contract or
constitute grounds for a claim by Seller for indemnification, provided Purchaser
is proceeding in good faith to complete the Survey.
ARTICLE VI
Title Matters
6.01 Good and Marketable Title.
(A) As used herein, the term "Good and Marketable Title" shall mean, as to the
Leases, such title held by the Seller, that, subject to and after giving effect
to the Permitted
1 8
Encumbrances: (i) entitles Seller to receive not less than the "Net Revenue
Interests" set forth on Exhibit B of the Hydrocarbons produced, saved and
marketed from the Wells; or (ii) obligates Seller for the life of the applicable
leasehold or other interest to bear costs and expenses relating to the
maintenance, development and operation of the Subject Properties in an amount
not greater than the "Working Interest" set forth on Exhibit B, other than
Permitted Encumbrances.
(B) The term "Permitted Encumbrances", as used herein, shall
mean:
(i) lessors' royalties, overriding royalties,
and other leasehold burdens of
whatever nature, of record or reflected on Exhibits A and B, sales contracts
covering oil, gas or associated liquid or gaseous hydrocarbons, reversionary
interests and similar burdens to the extent to which they do not operate to
reduce the Net Revenue Interest in any of the Subject Properties to less than
the Net Revenue Interest set forth for the affected property on Exhibit B;
(iii) liens for taxes or assessments not yet due or
not yet delinquent;
(iv) all rights to consent by, required notices
to, filings with, or actions by
governmental entities in connection with the sale or conveyance of oil and gas
leases or interests therein if the same are customarily obtained subsequent to
such sale or conveyance;
(v) all outstanding contracts, agreements,
instruments, obligations, defects and
irregularities affecting the Subject Properties that are not such as to
interfere, individually or in the aggregate, materially with the operation or
use of the Subject Properties in the judgment of a reasonable and prudent
operator in the area where the Subject Properties are located;
(vi) the terms and conditions of all agreements,
orders, instruments, documents which do not, individually or in the aggregate,
reduce the Net Revenue Interest of any of the Subject Properties to less
than the Net Revenue Interest set forth on Exhibit B;
19
(vii) rights reserved to or vested in any
municipality or governmental, statutory or public authority to control or
regulate any of the Subject Properties in any manner, and all applicable laws,
rules, and orders of governmental authority;
(viii) gas contracts and crude oil purchase
contracts that are terminable within 30 days or less notice; and
(ix) such Title Defects (as defined herein) or
other defects as Purchaser has
waived pursuant to the terms of this Agreement.
(C) A "Title Defect" shall be any material encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to any of
the Leases that does not constitute a Permitted Encumbrances, or that alone or
in combination with other defects renders Seller's title to any portion of the
Leases less than Good and Marketable Title.
ARTICLE VII
Indemnification
7.01 Survival and indemnification
(A) Survival. Notwithstanding any investigation made before or after the Closing
Date by or on behalf of any party to this Agreement, (1) the covenants, except
for Seller's covenant in Section 5.01(C) which shall expire six months after
Purchaser's receipt of the Remediation Completion Notice, (ii) the agreements,
excluding agreements to indemnify which shall survive for the time periods
hereinafter specified, and (iii) the representations and warranties, except for
Seller's representations made in Sections 4.01(T) and 4.01(W), and farther
excluding Section 4.01(K) which shall expire at Closing, of the parties to this
Agreement will survive for one (1) year from the Closing Date.
(B) Obligations of Seller. Seller agrees to indemnify and hold
harmless Purchaser and its shareholders, directors, officers, partners,
employees, their agents and assigns from and against any loss or damage
(including, without limitation, reasonable attorneys' fees and costs) reasonably
incurred (excluding any consequential damage or loss) (a "Loss") by Purchaser
resulting from, based upon, or arising from, directly or indirectly:
20
(i) For a period of one year after Closing, any
inaccuracy in, or breach or non-performance of, any of the representations,
warranties, covenants, or agreements made by Seller in or pursuant to this
Agreement, except for representations made in Sections 4.01(K), 4.01 (T) and
4.01 (W);
(ii) The Pit Remediation provided for in Section
5.01(C), including any demands
made by the DEQ for additional remediation measures in connection with the Pit
Remediation, provided that such demands by the DEQ or any other demand made in
connection with the Pit Remediaton is made within six months following
Purchaser's receipt of the Remediation Completion Notice;
(iii) For a period of one year after Closing,
any other matter as to which Seller
in other provisions of this Agreement has expressly agreed to indemnify
Purchaser unless expressly provided otherwise.
(C) Obligations of Purchaser. Purchaser agrees to indemnify
and hold harmless Seller and its shareholders, directors, officers, employees,
agents and assigns from and against any Loss of Seller resulting from, based
upon or arising from, directly or indirectly:
(1) For a period of one year after Closing,
any inaccuracy in, or breach or
non-performance of any of Purchaser's representations and warranties, except
for Sections 4.0-')(J), (K) and (L), covenants, or agreements made by
Purchaser in or pursuant to this Agreement;
(ii) Any inaccuracy in Sections 4.03(J), (K) and (L);
(ii) Any other matter as to which Purchaser in
other provisions of this Agreement has expressly agreed to indemnify Seller;
(iii) Except as may be otherwise expressly
provided for in this Agreement, any lawsuits, liens, judgments, costs,
reasonable attorneys' fees, claims or proceedings of any nature relating to the
Subject Properties and arising out of any act, transaction or circumstance
involving Purchaser, whether based on negligence or otherwise, and occurring
after the Closing Date; and
(iv) Any claims, losses, damages, lawsuits, liens,
judgments, costs, reasonable
attorneys' fees, claims or proceedings of any nature made by third parties,
including any and all governmental entities, subject to Section 7.01(B)(ii),
relating to the Subject 21
Properties, whether such claims are related to incidents occurring before or
after the Effective Date or the Closing Date.
(D) Notice and Opl2ortunitv to Defend. After receipt by any
party hereto (the "Indemnified Party") of notice of any demand, claim, or
circumstances that, with the lapse of time, could give rise to a claim, or the
commencement (or threatened commencement) of any action, proceeding, or
investigation, that in either case could give rise to a right to indemnification
pursuant to this Article VII (an "Asserted Liability"), the Indemnified Party
will give the party that may become obligated to provide indemnification under
this Article VII (the "Indemnifying, Party") written notice describing the
Asserted Liability in reasonable detail and indicating the amount (estimated, if
necessary) of the Loss that has been or may be suffered by the Indemnified
Party. After accepting in writing its obligation to indemnify the lndemnified
Party against the Assumed Liability, the Indemnifying Party may defend, at its
own expenses and by its own counsel, any Asserted Liability, and the Indemnified
Party will cooperate in such defense against such Asserted Liability. If the
Indemnified Party fails to defend the Asserted Liability within thirty (30)
calendar days after notice thereof (or sooner if the nature of the Asserted
Liability so requires) or contests its obligation to indemnify under this
Agreement, the Indemnified Party may pay, compromise, or defend such Asserted
Liability for the account, and at the expense of, the Indemnifying Party.
Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnified Party may settle or compromise any claim over the objection of the
other; provided, however, that consent to settlement or compromise will not be
unreasonably withheld. In connection with the defense of any claim, the
Indemnified Party will make available to the Indemnifying, Party any books,
records, or other documents within its control that are necessary or appropriate
for such defense. In addition, any Indemnifying, Party will be subrogated to the
rights of the Indemnified Party with respect to the respective Loss.
(E) Limitation. Notwithstanding anythind, in this Article
VII with respect to the obligation of Seller to indemnify Purchaser for any
Loss, Seller will not be required to indemnify Purchaser until the aggregate
of all amounts for which indemnity would otherwise be due exceeds $200,000, in
which case Seller will be responsible for all indemnifiable amounts 22
excluding the first $200,000. With respect to the obligation of Purchaser to
Seller for any Loss, Purchaser will not be required to indemnify Seller until
the aggregate of all amounts for which indemnity would otherwise be due exceeds
$200,000, in which case Purchaser will be responsible for all indemnifiable
amounts excluding the first $200,000. This limitation shall not
apply to any costs, losses or damages arising out of Seller's obligation in
respect of the Pit Remediation provided for in Section 5.01(C).
(F) Neither Purchaser nor Seller shall be entitled to recover
from Seller or Purchaser, respectively, for any losses, costs, expenses, or
damages arising under this Agreement or in connection with or with respect to
the transactions contemplated in this Agreement any amount in excess of the
actual compensatory damages, court costs and reasonable attorney fees, suffered
by such party. Neither Purchaser nor Seller shall have any right to recover
punitive, special, exemplary and consequential damages arising in connection
with or with respect to the transactions contemplated in this Agreement.
(G) If the Closing- occurs, the sole and exclusive remedy of
each of the Purchaser and the Seller with respect to the purchase and sale of
the Properties shall be pursuant to the express indemnification provisions of
this Article VII. If the Closing occurs, Purchaser and Seller shall be deemed to
have waived, to the fullest extent permitted under applicable law, any right of
contribution against Seller or any of its affiliates and any and all rights,
claims and causes of action it may have against Seller or any of its affiliates
or Purchaser or any of its affiliates, respectively, arising under or based on
any federal, state or local statute, law, ordinance, rule or regulation or
common law or otherwise.
(H) No person entitled to indemnification hereunder or
otherwise to damages in connection with or with respect to the transactions
contemplated in this Agreement shall settle, compromise or take any other action
with respect to any claim, demand, assertion of liability or legal proceeding
that could prejudice or otherwise adversely impact the ability of the person
providing such indemnification or potentially liable for such damages to defend
or otherwise settle or compromise with respect to such claim, demand, assertion
of liability or legal proceeding.
(I) Seller and Purchaser acknowledge that the payment of money,
as limited by the terms of this Agreement, shall be adequate compensation for
breach of any representation, warranty, covenant or agreement contained herein
or for any other claim arising in connection with or with respect to the
transactions contemplated in this Agreement. As the payment of
24
money shall be adequate compensation, Purchaser and Seller waive any right to
rescind this Agreement or any of the transactions contemplated hereby.
(J) Each person entitled to indemnification hereunder or otherwise
to damages in connection with the transactions contemplated in this Agreement
shall take all reasonable steps to mitigate all losses, costs, expenses and
damages after becoming, aware of any event or circumstance that could reasonably
be expected to give rise to any losses, costs, expenses and damages that are
indemnifiable or recoverable hereunder or in connection herewith.
(K) THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS
PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM THE ACTIVE,
PASSIVE OR CONCURRENT NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE), STRICT LIABILITY
OR OTHER FAULT, EXCLUDING WILLFUL MISCONDUCT, OF ANY INDEMNIFIED PARTY.
PURCHASER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS
NEGLIGENCE RULE AND IS CONSPICUOUS.
(L) Neither Seller nor Purchaser shall have any obligation or
liability under this Agreement or in connection with or with respect to the
transactions contemplated in this Agreement for any breach, misrepresentation or
noncompliance with respect to any representation, warranty, covenant or
obligation if such breach, or misrepresentation or noncompliance shall have been
waived by the other party, any misrepresentation or breach of warranty if such
other party had knowledge of the relevant facts at or before Closing or any
t-)
24
misrepresentation or breach of warranty if such other party should have known,
in the exercise of reasonable diligence, of the relevant facts at or before
Closing.
ARTICLE VIII
Conditions to Closing
8.01 Seller's Conditions. The obligations of Seller to consummate
the transactions contemplated hereby are subject, at the option of Seller, to
the satisfaction of the following conditions:
(A) All representations and warranties of Purchaser contained
in this Agreement shall be true in all material respects as of the Closing Date,
and Purchaser has performed and satisfied all material agreements in all
material respects required by this Agreement to be performed and satisfied by'
Purchaser prior to the Closing Date.
(B) Seller shall have received a certificate dated as of the
Closing Date, executed by Purchaser, in form and substance satisfactory to
Seller, to the effect that the statements in Sections 8.01(A) above are true at
and as of the Closing Date, and Purchaser's conditions to Closing have been
waived or satisfied by Purchaser in connection with the transactions
contemplated by this Agreement.
(C) No suit or other proceeding, shall be pending before any
court or governmental agency seeking, to restrain, prohibit or declare illegal,
or seeking substantial damages in connection with the purchase and sale
contemplated by this Agreement.
8.02 Purchaser's Conditions. The obligations of Purchaser to
consummate the transactions contemplated hereby are subject, at the option of
Purchaser, to the satisfaction of the following conditions:
(A) All representations and warranties of Seller contained in
this Agreement shall be true in all material respects at and as of the Closing
Date, and Seller shall have performed and satisfied all material agreements in
all material respects required by this Agreement to be performed and satisfied
by Seller at or prior to the Closing Date.
(B) Purchaser shall have received a certificate dated as of
the Closing Date, executed by Seller, in form and substance satisfactory to
Seller, to the effect that the statements in Sections 8.02(A) above are true at
and as of the Closing, Date, and Seller's conditions to Closing have been waived
or satisfied by Seller in connection with the transactions contemplated by this
Agreement.
(C) No suit or other proceeding shall be pending before any
court or governmental agency seeking to restrain, prohibit or declare illegal,
or seeking, substantial damages in connection with, the purchase and sale
contemplated by this Agreement.
(D) Seller shall convey to Purchaser title to the Subject
Properties and to the properties and rights described in Section 1.03 herein,
without warranty of title, expressed or implied, except by, through, and under
Seller, subject to Permitted Encumbrances and/or waived Material Title Defects.
ARTICLE IX
Closing
9.01 Time of Closing. The closing ("Closing") of the
transactions contemplated hereby shall take place at a place mutually agreed
upon in writing by the parties on or before September 1,1997 (the "Closing
Date").
9.02 Actions of Seller and Purchaser at Closing. At Closing,
the following events shall occur, each being a condition precedent to the others
and each being deemed to have occurred simultaneously with the others:
(A) Seller shall execute, acknowledge, and deliver to
Purchaser the instruments (in sufficient counterparts to facilitate recording)
necessary to convey the Subject Properties. The assignment and bill of sale of
the Leases and Wells and attendant property and fixtures shall be on the form
attached hereto as Exhibit D. Assignments on forms required by governmental
entities shall be prepared to be executed and delivered by Seller to Purchaser
at Closing;
(B) Purchaser shall deliver to Seller the Adjusted Purchase Price, less the
Performance Deposit, by wire transfer to an account designated by Seller;
26
(C) Seller shall deliver to Purchaser exclusive possession of the Subject
Properties conveyed to Purchaser; (D) Seller and Purchaser shall execute,
acknowledge, and deliver to each other such additional documents as are
reasonable and customary to accomplish the purposes of this Agreement, including
conveyances, assignments, transfers, bills of sale, and resignations of
ZD
Seller as operator, and other instruments necessary to convey to Purchaser the
title, rights, and obligations in and to the Subject Properties;
(E) Seller and Purchaser shall execute and deliver transfer
orders, letters in lieu thereof or other instruments which may be necessary or
desirable to cause all proceeds of production attributable to the Subject
Properties to be made to Purchaser as provided in this Agreement;
t@
(F) Seller shall deliver to Purchaser the certificate provided for in Section
8.02(B);
(G) Purchaser shall deliver to Seller the certificate provided for in Section
8. 01 (B); and
(H) At Closing, or within 180 days following Closing,, Seller
shall deliver to Purchaser all funds representing the value or proceeds from
production removed or sold from third party interests related to the Subject
Properties and held by Seller in accounts from which payments have been
suspended ("Suspended Funds"). Purchaser shall accept the Suspended Funds and,
thereafter, be solely responsible for the proper distribution of the Suspended
Funds, including any obligation to identify, locate and pay the persons entitled
to the Suspended Funds and to report and to escrow the Suspended Funds as
required by any applicable law; provided that Seller advises Purchaser of the
specific property(s) to which the Suspended Funds are attributable, and all
information in the possession of Seller relative to the division of interest of
the Suspended Funds, Purchaser shall indemnify, hold harmless and defend Seller
against any and all losses, claims, suites, causes of action, controversies,
liability and expenses arising directly or indirectly out of Purchaser's
improper or untimely disbursement, escrow or continued suspension of the
Suspended Funds. For a period of one year after Closing, Seller shall remain 27
liable for any interest and penalties incurred by Purchaser in connection with
the Suspended Funds, to the extent that such penalties and/or interest are
attributable to Seller's possession of the Suspended Funds prior to the
Effective Date; provided, however, that Purchaser shall not make any settlement
with any claimant to the Suspended Funds which would include penalties and/or
interest allocable to Seller pursuant to this Section without the consent of
Seller. In addition, for a period of one year after Closing, in the event that
any final judicial determination finds that the Suspended Funds are insufficient
to satisfy the claims of any claimant to the Suspended Funds, Seller shall be
liable for any such deficiency but only to the extent that such deficiency is
attributable to the period of Seller's possession of the Suspended Funds prior
to the Effective Date.
ARTICLE X
Obligations after Closinig
10.01 Post-Closing Adjustmenta. As soon as practicable after Closing,
but not later than December ' ) 1, 1997, Seller and Purchaser shall prepare and
deliver to each other, in accordance with this Agreement and generally accepted
accounting principles, a statement (herein respectively called "Purchaser's
Final Settlement Statement" and "Seller's Final Settlement Statement" and
collectively the "Final Settlement Statements") each setting forth each
adjustment or payment that was not finally determined as of Closing and showing
the calculation of such adjustments. As soon as practicable after receipt of
such Final Settlement Statements, and no later than ten (10) days after receipt
of such Final Settlement Statement, each party shall deliver to the other party
a written report, containing any chances that each such party proposes be made
to the other party's Final Settlement Statement. The parties shall undertake to
agree with respect to the "Final Purchase Price" pursuant to such post-Closing
adjustments no later than December 1, 1997. The date upon which such agreement
is reached or upon which the Final Purchase Price is established, shall be
herein called the "Final Settlement Date". In the event the Final Purchase Price
is more than the Purchase Price, Purchaser shall pay the difference to Seller
within thirty (30) days. If the Final Purchase Price is less than the Adjusted
Purchase Price, Seller shall pay the difference to Purchaser within thirty (-'
)0) days.
28
10.02 Files and Records. At Closing, but in no event later than ten
(10) business days following Closing, Seller shall deliver to Purchaser all
files and records relating to the Subject Properties, including all Material
Contracts and Records, seismic data, geological maps, logs, interpretations,
evaluations, scouting reports and magnetic surveys, but excluding accounting
records for dates prior to the Effective Date. Seller may retain copies of all
such files and records at its sole expense. From and after Closing, Seller shall
permit Purchaser or its designated representatives reasonable access during
normal business hours to the accounting and financial records of Seller
pertaining to the Subject Properties and in Seller's possession (which records
shall be maintained for a period of no less than three (-')) years after the
Closing Date), as such requests for access may be made by Purchaser from time to
time and provided that such access by Purchaser does not unreasonably interfere
with the other operations of Seller.
10.0') Sales Taxes and
10.0') Sales Taxes and Recordin2 Fees. Purchaser shall pay all sales
taxes occasioned by the sale of the Subject Properties, any interests,
properties or rights provided for herein and all documentary, filing fees and
recording fees required in connection with the filing and recording of any
assignments or bills of sale.
10.04 Further Assurances. After Closing, Seller and Purchaser shall
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such action including payment of monies as
may be necessary or advisable to carry out their obligations under this
Agreement and under any document, certificate or other instrument delivered
pursuant hereto or required by law. If at any time subsequent to Closing either
party comes into possession of money or property belonging to the other, such
money or property shall be promptly turned over to the party entitled thereto.
ARTICLE XI
Termination
I 1.01 Termination. This Agreement and the transactions completed
hereby may be terminated and be of no further force and effect in the following
instances:
(A) By Purchaser if any condition set forth in Section 8.02 shall
not be satisfied at or before Closing.
29
(B) By Seller if any condition set forth in Section 8.01 shall not
be satisfied at or before Closing.
(C) By the mutual written consent of Purchaser and Seller. (D) As
set forth in Article III.
ARTICLE XII
Miscellaneous
12.01 Notices. Any notice, request, instruction, correspondence or
other communication to be given or made hereunder to either party to the other
(herein collectively called "Notice") shall be in writing and (a) delivered in
hand, (b) mailed by certified mail, postage prepaid and return receipt
requested; (c) sent by telecopier, or (d) sent be Express Mail, Federal Express,
or other delivery service, as follows:
If to Seller to: Statoil Exploration (US) Inc. Barbara J. Bordelon,
General Counsel 2700 Post Oak Boulevard, Suite 700 Houston, Texas 77056
Telephone: (281) 694-1809
Facsimile: (281) 694-1899
If to Purchaser to: Saba Energy of Texas, Incorporated
Bradley Katzung, President
160'j' S.E. 19th Street, Suite 202
Edmond, Oklahoma 73103
Telephone: (405) 340-3600
Facsimile: (405) 340-3691
Notice given by hand, Federal Express or other express delivery service
or by mail shall be effective upon actual receipt. Notice given by telecopier
shall be effective upon actual receipt if received during the recipient's normal
business hours, or at the beginning of the recipient's next business day after
receipt if not received during the recipient's normal business hours. All
Notices by facsimile shall be confirmed promptly after transmission in writing
by certified mail
30
or personal delivery. Any party may change any address to which Notice is to be
given to it by giving Notice as provided above of such change of address.
12.02 Entire Agreement. This Agreement, together with the Exhibits
hereto (which are hereby incorporated by reference in and made a part of this
Agreement for all purposes), constitute the entire agreement between the parties
hereto relating, to the subject matter hereof and supersede all prior agreements
between Seller and Purchaser whether written or oral.
12.03 Headings. The headings contained herein are for convenience of
reference only and shall not be deemed to be a part of or to modify or affect
the meaning of any of the provisions contained herein.
12.04 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
together constitute but one and the same instrument.
12.05 Governing Law. This Agreement shall be governed by and by in
accordance with the laws of the state of Louisiana relating- to contracts made
and to be fully performed therein. Seller and Purchaser agree that any
litigation affecting this Agreement and the transactions contemplated herein
will be held in a court of proper jurisdiction within the state of Louisiana.
12.6 Arbitration.
(A) Binding Arbitration. On the request of any party hereto,
whether made before or after the institution of any legal proceeding, any
action, dispute, claim or controversy of any kind now existing or hereafter
arising between any of the parties hereto in any way arising out of, pertaining
to or in connection with this Agreement (a "Dispute") shall be resolved by
binding arbitration in accordance with the terms hereof. Any party may, by
summary proceedings, bring an action in court to compel arbitration of any
Dispute.
(B) Governing Rules. Any arbitration shall be administered by
the American Arbitration Association (the "AAA") in accordance with the terms of
this Section, the Commercial Arbitration Rules of the AAA, and, to the maximum
extent applicable, the Federal Arbitration Act. Judgment on any award rendered
by an arbitrator may be entered in any court having jurisdiction.
3 1
(C) Arbitrators. Any arbitration shall be conducted before one
arbitrator. The arbitrator shall be a practicing attorney licensed to practice
in the State of Texas who is knowledgeable in the subject matter of the Dispute
selected by agreement between the parties hereto. If the parties cannot agree on
an arbitrator within 30 days after the request for an arbitration, then any
party may request the AAA to select an arbitrator. The arbitrator may engage
engineers, accountants or other consultants that the arbitrator deems necessary
to render a conclusion in the arbitration proceeding
(D) Conduct of Arbitration. To the maximum extent practicable,
an arbitration proceeding hereunder shall be concluded within 180 days of the
filing of the Dispute with the AAA. Arbitration proceedings shall be conducted
in Houston, Texas. Arbitrators shall be empowered to impose sanctions and to
take such other actions as the arbitrators deem necessary to the same extent a
judge could impose sanctions or take such other actions pursuant to the Federal
Rules of Civil Procedure and applicable law. At the conclusion of any
arbitration proceeding, the arbitrator shall make specific written findings of
fact and conclusions of law. The arbitrator shall have the power to award
recovery of all costs and fees to the prevailing party. Each party agrees to
keep all Disputes and arbitration proceedings strictly confidential except for
disclosure of information required by applicable law.
(E) Costs of Arbitration. All fees of the arbitrator and any
engineer, accountant or other consultant engaged by the arbitrator, shall be
paid by Purchaser and Seller equally unless otherwise awarded by the arbitrator.
12.07 Announcements. After Closing, Seller and Purchaser shall consult
with each other with regard to all press releases and other announcements issued
concerning this Agreement or the transactions contemplated hereby and except as
may be required by applicable laws or the applicable rules and regulations of
any governmental agency, self-regulatory organization or stock exchange, and
Purchaser and Seller shall not issue such press release or make any other
announcement without the prior written consent of the other party.
12.08 Assignments. Purchaser may not assign its rights under this
Agreement without the express written consent of Seller.
12.9 Parties in Interest. This Agreement shall be binding, upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns; and nothing contained in this Agreement, express or implied, is
intended to confer upon any other person or entity any benefits, rights or
remedies.
12.10 Facsimile Signatures. The parties acknowledge that execution of
this Agreement by Purchaser may be first presented by facsimile transmission,
and the parties agree to accept such facsimile signature as correct and binding.
Purchaser agrees to immediately follow up the facsimile transmission with an
original signatures and to submit originals to Seller within two business days
of the facsimile execution.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed on its behalf by the undersigned, thereunto duly authorized.
WITNSSES:
STATOIL EXPLORATION (US) INC.
/s/ Sigmund Rodvelt
Manager Business Development
SABA ENERGY OF TEXAS, INCORPORATED
/s/ Bradley T. Katzung
President
Exhibit A
Attached to and made a part of that certain Purchase And Sale Agreement by and
between Statoil Exploration (US) Inc. and Saba Energy of Texas, Inc.
and dated August 1997.
Lease Date Lessor Lessee Recording Data Gross acres Net Acres
Board of Levee Humble Oil & COB 66, 2258.5 2258.5
Lease 1 11-08-28 Commissioners - Refining Co. Page 518
Orleans Levee District
Lease 2 01-23-36 State of LA W. T. Burton COB 81, 576 576
State Lease No. 3 3 5 Page 004
Lease 3 11-21-41 State of LA Humble Oil & COB 105, 450 450
State Lease No. 508 Refining Co. Page 392
Lease 4 03-11-47 Board of Levee The Superior COB 130, 132.85 132.85
Commissioners Oil Company Page 556
TOTAL 3417.35 3417.35
*References to Recording Data are to the public records of Plaquemines Parish,
Louisiana.
**As the leases are more fully described on pages 2 and 3 of Exhibit A
LEASE-1
That certain oil, gas and mineral lease effective November 8, 1928, granted by
the Board of Levee commissioners of the Orleans Levee District in favor of
Humble Oil & Refining Company, recorded in COB 66, Polio 518, LESS AND EXCEPT
land lying within the surface boundaries of the Pengo Petroleum, Inc. Voluntary
Unit "B" created by instrument dated effective July 1, 1978, recorded in COB
482, Folio 429, Entry No. 76 containing 132.846 acres, more or less, from the
surface down to the stratigraphic equivalent of the base of the TEXT W Sand seen
at a depth of 13,500 feet measured depth on the ISFSonic Log,, Run No. 1 for the
Orleans Levee Board B-1 Well, dated November 10, 1975,
LEASE 2
That certain oil, gas and mineral lease granted by the
State of Louisiana to W. T. Burton, effective January 23, 1936, recorded in COB
81, Folio 4, designated State Lease 335, as to all land covered thereby lying in
Townships 17 and 18 South, Range 15 East LESS AND EXCEPT (1) lands and depths
released therefrom on November 1, 1943, July 30, 1974, February 5, 1986 and
September 7. 1989 and (2) all land lying within the surface boundaries of the
Pengo Petroleum, Inc. Voluntary Unit *B* created by instrument dated effective
July 1, 1978, recorded in COB 482, Folio 429, Entry No. 76, containing 132.846
acres more or less, from the surface to the stratigraphic equivalent of the base
of the TEXT W Sand seen at a depth of 13,500 feet measured depth on the
ISF-Sonic Log, Run No. 1, for the Orleans Levee Board B-1 Well, dated November
10r 1975,r but not less and except the Mio 10 Sand as found at 9,500 feet to
10,240 feet measured depth on the ISF-Sonic Log Run No. 1 for the Orleans Levee
Board B-1 Well, dated
November 10, 1975.
Exhibit A, Page 2 of 3
I LAAAS-1
That certain oil, gas and mineral lease dated effective November 21, 1941,
granted by the State of Louisiana in favor of Humble Oil & Refining Company,
recorded in COB 105, Folio 392, designated State Lease SOB.- LESS AND EXCEPT (1)
forty acres surrounding the State Lease 508 No. 13 Well. described as beginning
at the point X 2,517,580.06 and Y - 307,462.15, then South 360 36' 35' East
11320 feet, then South 530 23' 25" West 1,320 feet, then North 360 36' 350 West
1,320 feet, then North 530 23' 25" East 1,320 feet to the point of beginning-as
to all depths from the surface to 100 feet below the stratigraphic equivalent of
the base of the MIO 12F Sand seen at 11,818 feet (log depth) on the electric log
for the Humble State Lease 508 No. 5 Well, (2) forty acres surrounding the State
Lease 508 No. 15/15-D Wells described as beginning at the point X = 2,517,715.00
and Y = 307,443.15, then North 600 East 1,320 feet,, then South 300 East 1,,320
feet, then South 600 West 1,320 feet, then North 300 West 1.,320 feet to the
point of beginning as to all depths from the surface to 100 feet below the
stratigraphic equivalent of the base of the MIO 12F Sand seen at 11,818 feet
(log depth) in the state Lease 508 No. 5 Well and (3) all land and depths
released therefrom on May 6.. 1971,, September 9,, 1983, September 5., 1991, and
July 30, 1992.
Lease-A
That certain oi1, gas and mineral lease effective March 11, 1947 granted by
Board of Levee Commissioners of the Orleans Levee District to The Superior Oil
Company, recorded in COB 130, Folio 556, LESS AND EXCEPT (1) land and depths
released on March 18, 1985, (2) the 160 acres of the lease in Sections 3 and 10,
Township 18 South, Range 15 East reserved by The Superior Oil Company from the
sublease to Gulf Oil Corporation and Humble Oil & Refining Company on December
2, 1959 (3) land lying within the surface boundaries of 'the Pengo Petroleum..
Inc. Voluntary Unit "B" created by instrument effective July 1, 1978, recorded
in COB 482, Folio 429, Entry No.76, containing 132.846 acres from the surface to
the stratigraphic equivalent of the base of the TEXT W Sand seen at a depth of
13,500 feet measured depth on the ISFSonic Log, Run No. 1, for the Orleans Levee
Board B-1 Well, dated November 10, 1975, but =t less and except the MIO 10 Sand
as found at 9,500 feet to 10,240 feet measured depth on the ISF-Sonic Log, Run
No. 1 for the Orleans Levee Board B-1 Well, dated November 10, 1975.
Exhibit A, Page 3 of 3
Exhibit B
Attached to and made a part of that certain Purchase and Sale Agreement by and
between Statoil Exploration (US) and Saba Energy of Texas, Inc. and dated August
20, 1997.
UNIT/WELL SUMMARY SHEET
NRI
Unit/Well Name Operator WI OIL GAS
===========================================================================================================
OLB #90; MIO 9D R9
VUA (Order 364-D-2) Statoil Exploration (US) Inc. 100.00% 84.5 84.5
OLB #62 Statoil Exploration (US) Inc. 100.00% 83.684731 83.684731
OLB#B-7 Statoil Exploration (US) Inc. 100.00% 84.231446 84.231446
OLB#B-10 Statoil Exploration (US) Inc. 100.00% 84.379981 84.379981
OLB#B-11 Statoil Exploration (US) Inc. 100.00% 84.23143 84.23143
OLB #B-11 RI Statoil Exploration (US) Inc. 100.00% 0.001 0.01
OLB#68 Statoil Exploration (US) Inc. 100.00% 84.5 84.5
OLB#73 Statoil Exploration (US) Inc. 100.00% 84.5 84.5
OLB#92 Statoil Exploration (US) Inc. 100.00% 84.5 84.5
OLB#93 Statoil Exploration (US) Inc. 100.00% 84.5 84.5
OLB#37 SWD
OLB#77 SHUT-IN
OLB#52 SHUT-IN
SL508#25& 25D Statiol Exploration (US) Inc. 100.00% 78.967262 84.5
SL508 #26 &26D Statoil Exploration (US) Inc. 100.00% 78.967262 84.5
SL508#15/15D Statoil Exploration (US) Inc. 100.00% 79.866076 79.866076
SL508#13&14 SHUT-IN
VU B; Orleans
Levee Board B-3 Vintage Petroleum, Inc. (1) 0.00% 10.059617 10.059617
===============================================================================================================
(1) ORRI