FIRST AMENDMENT AND SUPPLEMENT TO
PURCHASE AND SALE AGREEMENT
This FIRST AMENDMENT AND SUPPLEMENT TO PURCHASE AND SALE AGREEMENT (the
"Amendment") is made and entered into as of the 26th day of September, 1996, by
and between MOBIL OIL EXPLORATION & PRODUCING SOUTHEAST INC., a Delaware
corporation ("Seller"), with a place of business at 12450 Greenspoint Drive,
Houston, Texas 77060-1991, and FLORES & RUCKS, INC., a Louisiana corporation
("Purchaser"), with a place of business at 500 Dover Boulevard, Suite 300,
Lafayette, Louisiana 70503.
WHEREAS, Seller and Purchaser have entered into that certain Purchase
and Sale Agreement dated July 10, 1996 (the "Purchase and Sale Agreement "); and
WHEREAS, pursuant to the Purchase and Sale Agreement, Purchaser
delivered to Seller a Notice of Title Defects, by letter dated September 13,
1996 (the "Notice of Title Defects"); and
WHEREAS, Seller and Purchaser desire to amend and supplement the
Purchase and Sale Agreement to advance the Closing Date, substitute certain
Exhibits and to agree with respect to certain closing and post closing matters.
NOW, THEREFORE, in consideration of the mutual benefits and obligations
of Seller and Purchaser included herein and in the Purchase and Sale Agreement,
Seller and Purchaser do hereby agree as follows:
1. Closing Date: Article 4 of the Purchase and Sale Agreement is hereby
amended to delete "September 30, 1996," and to substitute therefor
"September 26, 1996."
2. Operations: Article 17 of the Purchase and Sale Agreement is hereby amended
to delete the first two sentences and to substitute therefor the following:
Seller, as to the portion of the Interests to be conveyed
which it now operates, shall, from the date of execution of
this Agreement, continue to operate the same in a good and
workmanlike manner until October 1, 1996, at 7:00 a.m., when
such operations shall be turned over to and become the
responsibility of Purchaser, unless an applicable unit,
pooling, communitization or operating agreement requires
otherwise or any necessary Designation of Operator forms have
not been executed and filed with the Minerals Management
Service ("MMS"), in which case (unless Purchaser and Seller
otherwise agree) Seller shall continue the physical operation
of such portion of the Interests pursuant to and under the
terms of such applicable agreement or as required by the MMS
until such time as such applicable agreement may require or
until any necessary
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Designation of Operator forms have been executed and filed
with the MMS; provided, however, that Seller shall have no
liability as operator to Purchaser for losses or damages
sustained, or liabilities incurred, WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES AND DAMAGE IN QUESTION AROSE SOLELY OR IN PART
FROM THE ACTIVE, PASSIVE, CONCURRENT, SIMPLE OR SOLE
NEGLIGENCE, OR STRICT LIABILITY OR OTHER FAULT OF SELLER OR
ANY OTHER THEORY OF LIABILITY OR FAULT, WHETHER IN LAW
(WHETHER COMMON OR STATUTORY) OR EQUITY, except as may result
directly from Seller's gross negligence or willful misconduct.
Any operations from and after the Effective Time shall be
conducted by Seller for and on behalf of Purchaser and, after
the Closing Date, subject to Purchaser's sole direction and
right of control. Seller shall make appropriate charges to the
Purchaser for such services as operator of the Interests (or
any portion thereof) performed by Seller from and after the
Effective Time.
3. Exhibits: Exhibits "A-1" though "A-13" and "B" to the Purchase and Sale
Agreement are hereby amended by deleting same in their entirety and
substituting therefor Exhibits "A-1" though "A-13" and "B" attached hereto
as Attachment No. 1.
4. Indemnification for Liens and Judgments: Seller shall defend, indemnify,
save, discharge, release and hold Purchaser harmless from any and all
Claims arising out of or related to the liens and judgments listed in
Sub-Paragraphs "1.a" through "v" and in Paragraph "3" of the Notice of
Title Defects. The provisions of Subsection 21.01(f) and Section 21.02 of
the Purchase and Sale Agreement shall be applicable to claims for indemnity
under this paragraph.
5. Indemnification for Gas Purchase Contracts and Production Payments: Seller
shall defend, indemnify, save, discharge, release and hold Purchaser
harmless from any and all Claims arising out of or related to the Gas
Purchase Contracts, Production Payments and Mortgage listed in Paragraphs
"2," "7," "11.a" through "c", and "12" of the Notice of Title Defects. The
provisions of Subsection 21.01(f) and Section 21.02 of the Purchase and
Sale Agreement shall be applicable to claims for indemnity under this
paragraph.
6. Outstanding Preferential Rights to Purchase: Article 7 of the Purchase and
Sale Agreement provides that Seller and Purchaser may agree on a procedure
to accommodate outstanding Preferential Rights. Seller and Purchaser agree
to the following procedure with regard to any Properties where there are
outstanding Preferential Rights which have not expired or been properly
waived by the Closing Date. Seller shall execute and deliver an assignment
as to any such Property and Purchaser shall pay the allocated Sales Price
for such Property at Closing. Purchaser will hold said assignment and will
not submit same for recordation in any parish or for approval by the MMS
until the Preferential Rights covering such Property expire or are waived.
In the event the Preferential Rights are exercised, within five (5) days of
notification of exercise, Purchaser shall return to Seller the assignment
for such Property as to which the Preferential Rights were exercised and
Seller shall simultaneously return to Purchaser the allocated Sales Price
for such Property. In the event the Preferential Rights are exercised, the
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assignment for such Property shall be null and void and Purchaser shall be
deemed to have not assumed any obligations or liabilities with respect to
such Property.
7. Post Closing Curative: Subsections 6.03 through 6.05 of the Purchase and
Sale Agreement address the notification and handling of Title Defects.
These provisions do not specifically address post closing curative matters.
Article 24 of the Purchase and Sale Agreement provides the further
assurance obligations of Seller and Purchaser. Without limiting the further
assurance obligations of Purchaser or Seller, Purchaser and Seller agree to
the following.
a. Vermilion 215 Field:
i. Vermilion 215 Field Curative: Reference is made to
Paragraphs "5" (including Requirements Nos. "5.a", "b"
and "c" thereunder) and "6" (including Requirement No.
"6" thereunder) of the Notice of Title Defects. The
assignments and other curative required ("Vermilion 215
Field Curative") have not been obtained as of the
Closing Date.
ii. Closing: Seller shall execute and deliver at Closing to
Purchaser: (1) an Assignment of Record Title Interest
and Bill of Sale for Vermilion 215 Field; (2) an
Assignment of Overriding Royalty Interests; (3) an
Assignment of Operating Rights; and (4) an Assignment
of Interests in Wells. Purchaser shall pay at Closing
the allocated Sales Price for the Vermilion 215 Field
Property. Purchaser shall not file in the Parish
Records or with the MMS "(3)" and "(4)," pending
receipt from Seller of the Vermilion 215 Field Curative
or the expiration of the time period under iii below.
iii. Post Closing Curative
(1) Seller shall attempt, for a period of up to six (6)
months after the Closing Date, to obtain the execution
of and deliver to Purchaser the Vermilion 215 Field
Curative.
(2) If said curative is not executed and delivered to
Purchaser within thirty (30) days of the Closing Date,
Purchaser shall have right to demand the return of the
allocated Sales Price for the affected portion of the
Interests(being $9,000,000.00). If Purchaser makes said
demand, Seller shall pay the return payment within five
(5) days after the expiration of the thirty (30) day
period and Purchaser shall simultaneously return to
Seller assignments "(3)" and "(4)" referenced above
under "ii".
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(3) If the return payment has been made and the Vermilion
215 Field Curative is executed and delivered to
Purchaser within the aforesaid six (6) month period,
Purchaser shall repay the allocated Sales Price to
Seller. Said repayment shall be made within five (5)
days of the delivery to Purchaser of said curative and
Seller shall simultaneously redeliver to Purchaser
assignments "(3)" and "(4)" referenced above under
"ii".
(4) If the Vermilion 215 Field Curative is not obtained
within six (6) months of the Closing Date, then
Purchaser shall have the option to elect between: (a)
the return of the allocated Sales Price, or (b)
receiving an assignment of any contractual rights
Seller may have to demand said curative. If there has
been a prior return payment, then upon electing "(a)"
Purchaser will retain the return payment, or upon
electing "(b)" Purchaser shall repay the allocated
Sales Price within five (5) days of such election and
Seller shall simultaneously redeliver to Purchaser
assignments "(3)" and "(4)" referenced above under
"ii". If there has been no prior return payment and
Purchaser elects "(a)", then within five (5) days after
the expiration of the aforesaid six (6) month period
Seller shall return the allocated Sales Price for the
affected portion of the Interests and Purchaser shall
simultaneously return to Seller assignments "(3)" and
"(4)" referenced above under "ii".
(5) An accounting will be made between the Seller and Buyer
for revenue and expenses for the applicable periods in
the event of any return payment or repayment. By way of
illustration: (a) if there is a return payment after
the end of thirty (30) days, then the return payment
shall be adjusted according to the revenue and expenses
between the Effective Date and the end of the thirty
(30) day period; and (b) if there is a repayment then
the repayment shall be adjusted according to the
revenue and expenses between the end of the thirty (30)
day period and the date of the repayment.
b. Eugene Island 45 Field Curative:
i. Walter, et al Reassignment: Reference is made to
Paragraph "9" (including Requirement No. "9"
thereunder) of the Notice of Title Defects. The
reassignment of operating rights from Walter Oil & Gas
Corporation and/or its successors and assigns (the
"Walter, et al Reassignment") has not been obtained as
of the Closing Date. Seller shall execute and deliver
at Closing to Purchaser: (1) an Assignment of Record
Title Interest and Bill of Sale for the Eugene Island
45 Field Property; (2) an Assignment of Overriding
Royalty
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Interest; and (3 )an Assignment of Operating Rights.
Purchaser shall pay at Closing the allocated Sales
Price for the Eugene Island 45 Field Property. Seller
shall use its best efforts to obtain the execution of
the Walter, et al Reassignment and deliver same to
Purchaser within thirty (30) days of the Closing Date.
If the Walter, et al., Reassignment is not obtained
within said thirty (30) day period, there shall be no
return of the allocated Sales Price for such Property,
but Seller shall continue to use its best efforts to
obtain said reassignment.
ii. Newfield Abandonment: Pursuant to a Farmout Agreement
dated April 1, 1993, between Seller, as Farmor, and
Newfield Exploration Company ("Newfield"), as Farmee,
as amended by Letter Agreement dated August 10, 1994,
Mobil became obligated, upon the drilling of the
contract well in compliance with the terms of the
Farmout, to assign Newfield certain operating rights.
The contract well, the Eugene Island Block 51 #8 Well,
was drilled and Seller elected to retain an overriding
royalty interest. No assignment has been made from
Seller to Newfield, subject to the retained overriding
royalty interest. Newfield has notified Seller of its
intention to plug and abandon or to turn over said well
to Seller, and to return any interest that would have
been assigned. Seller shall use its best efforts to
obtain a reassignment from Newfield of the operating
rights and/or obtain an agreement, satisfactory to
Purchaser, turning over said well and recognizing that
the assignment and reassignment are no longer necessary
and that Newfield relinquishes its interest in any
operating rights, within thirty (30) days of the
Closing Date. If the reassignment or agreement is not
obtained within said thirty (30) day period, there
shall be no return of the allocated Sales Price for
such Property, but Seller shall continue to use its
best efforts to obtain said reassignment or agreement.
8. Estimated Revenue and Expenses: Seller and Purchaser hereby agree to an
adjustment to the Sales Price to be paid at closing to deduct the sum
of $4,500,000.00, being the estimated revenues net of expenses for the
months of August and September, 1996. Seller and Purchaser recognize
that this is an estimate and is subject to adjustment at Final
Accounting.
9. Ratification of Purchase and Sale Agreement: Except as amended hereby,
the Purchase and Sale Agreement is ratified and confirmed in all res-
pects and shall continuein full force and effect as originally written.
10. Successors and Assigns: The provisions of this Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.
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11. Defined Terms: Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Purchase and Sale Agreement.
IN WITNESS WHEREOF, the Purchaser and Seller have executed this
Amendment as of the date first written above.
SELLER:
ATTEST: MOBIL OIL EXPLORATION &
PRODUCING SOUTHEAST INC.
By: /s/ B.D. Martiny BY: /s/ H. L. Hickey
-------------------------- ----------------------
Name: B. D. Martiny Name: H. L. Hickey
Title: Assistant Secretary Title: Attorney-in-fact
BY: /s/ D. B. Litchfield
----------------------
Name: D. B. Litchfield
Title: Attorney-in-fact
PURCHASER:
FLORES & RUCKS, INC.
BY: /s/Richard G. Zepernick, Jr.
----------------------------
Name: Richard G. Zepernick, Jr.,
Title: Executive Vice President &
Chief Operating Officer
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