EXHIBIT 2(h)
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is made and entered
into this 12th day of September, 1996, by and between MAYNARD OIL COMPANY, a
Delaware corporation, having its principal office at 8080 North Central
Expressway, Suite 660, Dallas, Texas 75206 ("SELLER") and ENRON OIL & GAS
COMPANY, a Delaware corporation, having its principal office at 1400 Smith
Street, Houston, Texas 77002 ("BUYER").
In consideration of the mutual promises contained herein, the benefits
to be derived by each party hereunder and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Purchase and Sale. Seller agrees to sell and convey and Buyer agrees
to purchase and pay for the interests (as defined in Section 1.02) owned by
Seller, subject to the terms and conditions of this Agreement.
1.02 Interests. All of the following shall herein be called the
"INTERESTS":
(a) All of Seller's right, title and interest in and to the leasehold
estate and mineral rights created by the leases described in Exhibit A
(the "LEASES") together with any and all interest of Seller in and to
such property and in and to any agreements, leases, rights-of-way,
easements, licenses and permits incident thereto;
(b) All of Seller's right, title and interest in and to the wells, and
production therefrom, located on the Leases or lands pooled therewith,
including but not limited to the wells described in Exhibit A together
with any and all buildings or other improvements constructed thereon
(collectively the "WELLS", together with any and all interest of Seller
in and to such property and in and to any agreements, including,
without limitation, gas purchase agreements, farmin and farmout
agreements, operating agreements and pooling agreements, leases,
rights-of-way, easements, licenses and permits incident thereto);
(c) All of Seller's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings now or as of
the Effective Time (as defined in Section 1.03) located on the lands
burdened by the Leases or lands pooled therewith (the LANDS"), and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Seller has or may have with
respect to the Interests;
(d) All of the files, records and data related to the items described
in Subsections (a), (b) and (c) above, and all the seismic and
geophysical data of Seller appurtenant to or crossing the Leases, Wells
and Lands; and
(e) Any and all other assets of Seller appurtenant or related to or
used in connection with the Leases and Wells.
1.03 Effective Time. The purchase and sale of the Interests shall be
effective as of August 1, 1996, at 7:00 A.M., local time (herein called the
"EFFECTIVE TIME ) in the county in which the Lands are located.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the Interests shall be Five
Hundred Sixty Thousand Nine Hundred Sixty Four DOLLARS ($560,964.00) (herein
called the "PRELIMINARY PURCHASE PRICE"), subject to adjustment as set forth
in Section 2.02 and Section 2.03 below.
2.02 Performance Deposit. On or before 4:00 o'clock p.m., local time,
September 13, 1996, Buyer shall tender to Seller, by wire transfer, a
performance deposit in the amount of Fifty Six Thousand Ninety Six DOLLARS
($56,096.00). The performance deposit is received solely to assure the
performance of Buyer pursuant to the terms and conditions hereof. The
performance deposit will be returned to Buyer at Closing, upon consummation
of the transaction, or at Buyer's election, may be credited to the
Preliminary Purchase Price. No interest shall be paid or credited to the
performance deposit. If Buyer fails, refuses, or is unable to close the
sale in accordance with the terms herein, Seller, except as otherwise herein
specifically provided, may, at its option, retain the performance deposit as
agreed liquidated damages and not as a penalty. If Seller, through no fault
of Buyer, refuses to close the sale in accordance with the terms herein, the
performance deposit shall be returned to Buyer.
2.03 Adjustments to Purchase Price. The Preliminary Purchase Price shall
be adjusted as follows and the resulting amount shall be herein called the
"FINAL PURCHASE PRICE".
(a) The Preliminary Purchase Price shall be increased by the
following:
(1) The value of all merchantable, allowable oil attributable to
the Leases, in storage above the pipeline connection at the
Effective Time, and not previously sold by Seller, that is
credited to the Interests, such value to be the net price realized
by Seller;
(2) The amount of all reasonable expenditures, including, without
limitation, royalties, rentals and other charges, ad valorem,
property, production, excise, severance, windfall profit and other
taxes based upon or measured by proceeds therefrom but not
including income or gross receipts taxes, expenses billed under
applicable operating agreements and, as compensation to Seller for
its general and administrative expenses as operator of interests
operated by it, in lieu of any other overhead charges in
connection with such particular Interests:
(i) that amount attributable to the Interests under any
existing joint operating agreement, or
(ii) in the absence of a joint operating agreement with
respect thereto, the applicable rate recommended in the
1995 Ernst & Young, L.L.P. s Fixed Rate Overhead
Survey in connection with the operation of the
Interests from the Effective Time to the Closing Date
(as defined in Section 9.01), as well as any
expenditures approved by Buyer;
(3) An amount equal to all prepaid expenses attributable to the
interests that are paid by or on behalf of Seller prior to the
Closing Date and that are, in accordance with generally accepted
accounting principles, attributable to the period after the
Effective Time including, without limitation, prepaid insurance,
prepaid ad valorem, property, production, severance and similar
taxes (but not including income taxes) based upon or measured by
the ownership of property or the production of hydrocarbons or the
receipt of proceeds therefrom;
(4) An amount equal to seventy-five cents per mcf for a net
underproduced gas imbalance; and
(5) Any other amount agreed upon by Seller and Buyer.
(b) The Preliminary Purchase Price shall be decreased by the
following:
(1) An amount equal to all proceeds of production received by
Seller prior to the Closing Date that are attributable to the
Interests and that are, in accordance with generally accepted
accounting principles, attributable to the period of time from the
Effective Time to the Closing Date;
(2) An amount equal to all unpaid ad valorem, property,
production, severance and similar taxes and assessments (but not
including income or gross receipts taxes) based upon or measured
by the ownership of property or the production of hydrocarbons or
the receipt of proceeds therefrom accruing with respect to the
Interests prior to the Effective Time, which amount shall be
computed based upon such taxes assessed against the applicable
portion of the Interests for the current tax fiscal year, or if
the assessments for the current tax fiscal year are unavailable,
for the preceding such year;
(3) An amount equal to the sum of all Defect Adjustments and
Exclusion Adjustments (as those terms are defined in Section
7.03); and
(4) Any environmental adjustment pursuant to ARTICLE V.(e);
(5) An amount equal to seventy-five cents ($0.75) per mcf for a
net overproduced gas imbalance; and
(6) Any other amount agreed upon by Seller and Buyer.
2.04 Actual Figures. When available, actual figures will be used for
adjustments at Closing. To the extent actual figures are not available,
estimates will be used subject to final adjustments as provided in Section
10.01 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of Seller. Seller represents and
warrants to Buyer with respect to itself and, where applicable, with respect
to the Interests, that:
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Seller is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
require it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Seller. Seller is also duly
licensed or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Seller has all requisite power and authority to execute and
deliver this agreement, to consummate the transactions contemplated
hereby, and to perform the terms and conditions hereof to be performed
by it. This Agreement constitutes, and each of the documents required
to be delivered by Seller hereunder, shall constitute Seller's legal,
valid and binding obligation, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other laws relating to or affecting
generally the enforcement of creditors' rights and general principles
of equity, regardless of whether considered in proceeding in equity or
at law;
(c) This Agreement and its execution and delivery by Seller do not,
and the fulfillment and compliance by Seller with the terms and
conditions of this Agreement, and the consummation by Seller of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
aware, judgment, writ, injunction, or decrees applicable to or binding
upon Seller (assuming the receipt of all routine governmental consents
typically received after consummation of transactions of the nature
contemplated by this Agreement); and (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which such Seller is a party or by
which it is bound or to which any of the Interests are subject;
(d) As of the execution date hereof, there are no currently
outstanding and effective authorities for expenditure or third party
proposals for subsequent operations with respect to the Interests other
than as set forth in Exhibit B;
(e) As of the execution date hereof (i) no action, suit, or proceeding
is pending or, has been threatened against Seller before any court,
administrative agency, or arbitral tribunal, which involves or may
involve the Interests, the production of oil and gas therefrom, or the
use of and enjoyment thereof, or any operation or activity being
conducted therein or thereon or which challenges Seller's rights to
enter into this Agreement or materially adversely affects its ability
to perform its obligations under this Agreement; (ii) Seller has not
received written notice of nor been charged with any violation of, any
provision of any law or regulation relating to the Interests, and to
Seller's best knowledge, no third party has been charged with any
violation of any provision of any law or regulation relating to the
Interests;
(f) As of the execution date hereof Seller has not received written
notice that it is in default under (i) any applicable contract
affecting the Interests; (ii) any order, judgment, or decree of any
federal or state court or governmental authority relating to the
Interests; or (iii) any other agreement, contract, lease, license, or
other instrument;
(g) Exhibit A contains a complete list of the Interests wherein
Seller's interest is currently subject to reversionary interests or
non-consent operations. In each case, such Exhibit reflects the
interest of Seller before and after adjustment for such reversionary
interests or non-consent operations for each Well effected. Exhibit A-
1 reflects the remaining amount to be recouped, or account status as
appropriate, as of the date reflected thereon with respect to each such
well;
(h) As of the Effective Time, to the best of Seller s knowledge,
except as set forth in Exhibit A-1 hereto, there were no production
imbalances or transportation and processing imbalances affecting the
Interests;
(i) All of the written and electronic data (including, without
limitation, information relating to gathering, processing,
transportation and sale of hydrocarbons from the Interests and other
matters) at the time furnished or to be furnished by Seller to Buyer in
conjunction with Buyer's evaluation of the Interests was contained in
or derived from Seller's records kept in the ordinary course of
business; and no representation or warranty is made with respect to the
accuracy or correctness of any estimates, analysis, or projections or
any assumptions or other matters stated therein;
(j) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller for which Buyer has any
liability or obligation (whether contingent or otherwise);
(k) Seller is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder);
(l) From the Effective Time to the execution date hereof there
has not been: (i) any material adverse change in the condition of
the Interests, other than changes caused by the sale, production,
or disposition of production and changes resulting from reservoir
conditions other than fire, blowout, or act of God (provided that
any change or revision in existing laws, regulations, or
governmental policies applicable to the Interests or the sale,
production, or disposition of production therefrom and the
imposition of any new laws, regulations or governmental policies
with respect to the Interests or the sale, production, or
disposition of production therefrom shall be deemed not to be an
adverse change in the condition of the Interests), (ii) any sale,
lease, or other disposition of the Interests, (iii) any
condemnation or taking by eminent domain of any portion of any of
the Interests, or (iv) any contract or commitment to do any of the
foregoing;
(m) Seller or the Operator of any Interest has obtained or
applied for all governmental licenses, permits, certificates,
approvals, consents, authorizations and orders required for it to
own or lease the Interests and develop, construct, maintain, and
operate them, and to market the production therefrom, and no
proceeding is pending or threatened involving revocation of any
such licenses, permits, certificates, consents, authorizations or
orders, provided that this representation is limited to Seller's
best knowledge;
(n) There are no taxes due or tax liens on any of the Interests;
(o) To the best of Seller's knowledge, Seller is not a party to
any joint venture, partnership, limited liability company, farmin,
farmout, joint operating agreement, or other arrangement or
contract with respect to any of the Interests that is reported as
a partnership for federal or state income tax purposes;
(p) As of the execution date hereof all of the wells and all of
the equipment used in the drilling, completion and operation of
any such wells, or in the production, treatment, storage,
gathering and transportation of hydrocarbons from such wells, is
in good operating condition, ordinary wear and tear excepted,
provided that this representation is limited to Seller's best
knowledge with respect to such matters which are the
responsibility of the operator of any interest not operated by
seller;
(q) From the Effective Time to the execution date hereof, no
personal injuries or deaths have occurred in connection with any
of the Interests which should have been reported by Seller in
accident or incident reports in accordance with applicable law or
in accordance with Seller's usual operating procedures and
policies;
(r) To the best of Seller's knowledge, all royalties (including
without limitation royalties with respect to take-or-pay payments
or settlements), minimum royalties, rentals, shut-in gas payments
and other payments due with respect to the Interests have been
properly and timely paid in full, except for payments held in
suspense for title or other reasons that are customary in the
industry or which are being contested in an appropriate forum.
There are no amounts claimed to be due to Seller in respect of the
Interests that are being held in suspense because of a dispute as
to title to the Interests or for any other reason, and Seller is
entitled to be paid, and is being paid, with respect to production
from the Interests, its net revenue interest without indemnity or
guarantee other than those customarily found in division orders
and other similar agreements and documents;
(s) Except as detailed on Exhibit A-2, this Agreement and its
execution and delivery by Seller does not, and the fulfillment and
compliance by Seller with the terms and conditions of this
Agreement and the consummation by Seller of the transactions
contemplated hereby will not permit the exercise of or give rise
to (with the giving of any required notice) any preferential
purchase right, option or right of first refusal;
(t) To the best of Seller's knowledge, all of the wells in which
such Seller has an interest by virtue of its ownership of the
Leases have been (i) drilled and completed within the boundaries
of such Lease or within the limits otherwise permitted by
contract, pooling or unit agreement, and/or by law and (ii)
drilled and completed in compliance with all applicable laws,
rules and regulations; and
(u) Seller has reasonable surface access to each of the Interests
for purposes of oil and gas exploration, development and production.
3.02 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that:
(a) Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation,
and has all requisite power and authority to own and lease the
properties and assets it currently owns and leases and to carry on its
business as such business is currently conducted. Buyer is duly
licensed or qualified to transact business and is in good standing in
all jurisdictions where the character of the properties and assets now
owned or leased by it or the nature of the business now conducted by it
requires it to be so licensed or qualified if the failure to qualify
might reasonably be expected to have a material adverse effect on the
business or financial prospects of Buyer. Buyer is also duly licensed
or qualified to do business and is in good standing in each
jurisdiction where the Interests are located;
(b) Buyer has all requisite power and authority to execute and deliver
this Agreement, to consummate the transactions contemplated hereby, and
to perform the terms and conditions hereof to be performed by it. This
Agreement constitutes, and each of the documents required to be
delivered by Buyer hereunder, shall constitute Buyer's legal, valid,
and binding obligation, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, or other laws relating to or affecting generally the
enforcement of creditors' rights and general principles of equity,
regardless of whether considered in a proceeding in equity or at law;
(c) This Agreement and its execution and delivery by Buyer does not,
and the fulfillment of and compliance by Buyer with the terms and
conditions of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, will not (i) require any filing,
consent, authorization, or approval under, any law or administrative
regulation or any judicial, administrative, or arbitration order,
award, judgment, writ, injunction or decree applicable to or binding
upon Purchaser (assuming the receipt of all routine governmental
consents typically received after consummation of transactions of the
nature contemplated by this Agreement), (ii) conflict with, result in a
breach of, constitute a default under (without regard to any
requirements of notice or the lapse of time), accelerate, or permit the
acceleration of the performance required by, any mortgage, indenture,
loan or credit agreement or other agreement or instrument evidencing
indebtedness for borrowed money to which Buyer is a party or by which
it is bound;
(d) No broker or finder is entitled to any brokerage or finder's fee,
or to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer for which Seller has any
liability or obligation (whether contingent or otherwise);
(e) Buyer is not a foreign person, foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder); and
(f) In making the acquisition of the Interests hereunder, Buyer is
acting in the conduct of its own business in the ordinary course. The
Interests are not being acquired for distribution or transfer in
violation of the securities laws of the United States or of any state
thereof.
ARTICLE IV
COVENANTS OF BUYER AND SELLER
4.01 Covenants of Seller. Seller covenants and agrees with Buyer that:
(a) After the execution of this Agreement, Seller will make available
to Buyer for examination at Seller's offices in Dallas, Texas, title
and other information relating to the Interests insofar as the same are
in Seller's possession and, subject to the consent and cooperation of
third parties, will cooperate with Buyer in Buyer's efforts to obtain,
at Buyer's expense, such additional information relating to the
Interests as Buyer may reasonably desire (to the extent that Seller may
do so without violating legal constraints or any obligation of
confidence or other contractual commitments of Seller to third
parties), including without limitation:
(1) Title opinions, title status reports and contracts or agreements
pertaining to the Interests;
(2) Copies of the leases, prior conveyances of Interests created
thereby, unitization, pooling and operating agreements, division
and transfer orders, mortgages, deeds of trust, security
agreements, financing statements, and other encumbrances not
discharged and affecting the title to or the value of the
Interests;
(3) Accounting and other records relating to the payment of rentals,
royalties, joint interest billings and other payments due under
the Leases or the Wells;
(4) Records relating to the payment of ad valorem, property,
production, severance, excise 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 on
the Interests;
(5) Ownership maps and surveys relating to the Interests;
(6) Copies of purchase, sale, processing and transportation agreements
relating to the production of gas from the Interests. Copies of
all gas balancing agreements and gas balancing statements;
(7) Copies of agreements, leases, permits, easements, licenses and
orders relating to the Interests;
(8) Production records relating to the Interests;
(9) Inventories of personal property and fixtures included in the
Interests; and
(10) Any and all other information contained in Seller's files that
relates to the Interests other than matters subject to attorney-
client or attorney work privilege or concerning Seller's economic
evaluation.
Seller shall permit Buyer to inspect and photocopy such information and
records at any reasonable time during the term of this Agreement. Seller
shall cooperate with Buyer in Buyer's efforts to obtain such additional
title information as Buyer may reasonably deem prudent.
(b) During the period from the date of this Agreement to the Date of
Closing, without the prior written consent of Buyer, Seller will not
(i) cause any of its portion of the Leases or other of the Interests to
be developed, maintained, or operated in a manner substantially
inconsistent with prior operations; (ii) abandon any material part of
any of its portion of the Interests; (iii) commence any material
operation of any of its portion of the Leases or the Interests
anticipated to cost Seller in excess of Fifteen Thousand Dollars
($15,000.00) per operation (except emergency operations, operations
required under presently existing contractual obligations, the on-going
commitments under the AFE's described in Exhibit B hereto, and
operations undertaken to avoid any penalty provisions of any applicable
agreement or order), or (iv) convey or dispose of any material part of
any of its portion of the Interests (other than oil, gas and other
liquid products produced from the Interests in the regular course of
business). Buyer acknowledges that Seller owns undivided interests in
certain of the Interests and Buyer agrees that the acts or omissions of
Seller's co-owners shall not constitute a violation of the provision of
this Section 4.01(b) nor shall any action required by a vote of co-
owners constitute such a violation so long as Seller has voted its
interest with Buyer's prior consent;
(c) Seller shall use all reasonable efforts to maintain its corporate
status from the date hereof until Closing and to assure that as of the
Closing Date it will not be under any corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of
such transactions; and
(d) Seller shall promptly notify Buyer of any suit, action, claim,
threatened suit, action or claim, or other proceedings of the type
referred to in Section 3.01(e) or (f) that arises prior to the Closing
with respect to which Seller receives notice or otherwise obtains
knowledge following the execution of this Agreement.
4.02 Covenants of Buyer. Buyer covenants and agrees with Seller that:
(a) Buyer shall use all reasonable efforts to maintain its corporate
status and to assure that as of the Closing Date it will not be under
any corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions;
(b) To the extent necessary to facilitate the consummation of the
transactions contemplated herein, Buyer agrees to enter into specific
agreements of assumption with respect to the obligations of Seller to
specific third parties or governmental authorities to the extent such
obligations are attributable to the Interests after the Effective Time.
Buyer also shall be obligated to obtain consents from all necessary
Federal authorities, including the Bureau of Indian Affairs, and State
authorities to the assignment of the Leases;
(c) For a period of ten (10) years after the Closing Date, Buyer shall
provide Seller with reasonable access to the Records so long as Buyer
is given reasonable notice prior to Seller's access; and
(d) Buyer represents that it has performed, or will perform prior to
Closing, sufficient review and due diligence with respect to the
Interests which includes reviewing well data, title and other files and
performing necessary evaluations, assessments, and other tasks involved
in evaluating the Interests, to satisfy its requirements, completely,
and enable it to make an informed decision to acquire the Interests
under the terms of this Agreement.
ARTICLE V
ASSUMPTION OF LIABILITIES
AND INDEMNITIES
As used in this ARTICLE V, and the paragraphs hereunder "CLAIMS" shall
include claims, demands, causes of action, liabilities, damages, penalties
and judgements of any kind or character and all costs and fees in connection
therewith.
(a) At the Closing, but effective as of the Effective Time, Buyer
shall (i) assume, and be responsible for and comply with all duties and
obligations of Seller, express or implied, with respect to the
Interests, including, without limitation, those arising under or by
virtue of the Seller's leases and contracts listed in Exhibit A, and
the permits, the applicable statutes or rules, regulations or orders of
any governmental authority (specifically including, without limitation,
any governmental request or requirement to plug, replug and/or abandon
any well of whatsoever type, status or classification, or to take any
clean-up, remediation or other action with respect to the Interests),
and (ii) except as otherwise provided herein, to defend, indemnify and
hold harmless Seller from any and all claims in connection therewith;
(b) Subject to the provisions of Paragraphs (c), (d) and (e) below
Seller shall defend, indemnify and hold harmless Buyer from any and all
claims, costs, expenses, liabilities or causes of action relating to or
arising out of Seller's ownership or operation of Seller's Interests
prior to the Effective Time and Buyer shall defend, indemnify and hold
harmless Seller from any and all claims, costs, expenses, liabilities
or causes of action relating to or arising out of Buyer's ownership and
operation of the Interests after the Effective Time. Each indemnified
party hereunder agrees that upon its discovery of facts giving rise to
a claim for indemnity under the provisions of this Agreement, including
receipt by it of any demand, assertion, claim, action or proceeding,
judicial or otherwise, by any third party (such third party actions
being referred to herein as a "THIRD PARTY CLAIM"), it will give prompt
notice thereof in writing to the indemnifying party together with a
statement of such information with respect to any of the foregoing as
it shall then have. Such notice shall include a formal demand for
indemnification under this Agreement. The indemnified party shall
afford the indemnifying party a reasonable opportunity to pay, settle,
or contest any Third Party Claim at its expense;
(c) Seller shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Seller from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time prior to
the Effective Time, and (ii) defend, indemnify and hold harmless Buyer
from any and all of such claims and payments;
(d) Buyer shall (i) be responsible for any and all claims, including
but not limited to claims for payment of royalties, arising out of the
production and sale of hydrocarbons by Buyer from the Interests, and
the proper accounting and payment of expenses for the Interests,
insofar as such claims and payments relate to period of time beginning
at the Effective Time and thereafter, and (ii) defend, indemnify and
hold harmless Seller from any and all of such claims and payments; and
(e) After the execution of this Agreement, Buyer, at its option, and
its sole cost, risk and expense, may obtain an environmental audit of
the Interests at any time prior to September 20, 1996. Seller shall
provide the environmental auditors all information available to it
which they may reasonably request and shall grant said auditors
physical access to the Interests. For those Interests which are not
operated by Seller, Buyer shall obtain permission from the operator to
conduct such inspections. If the audit reveals any environmental
conditions which are not satisfactory to Buyer, Seller shall
immediately be provided a copy of the audit information and either
party shall have the option to terminate this Agreement as to the
affected Interest(s) with a deduction from the Preliminary Purchase
Price of the allocated value attributable to that Interest(s), without
liability, unless Seller affirms in writing that it will remediate such
conditions to the satisfaction of the Buyer prior to Closing. Buyer
shall defend and indemnify Seller from any and all liability, claims,
causes of action, injury to Buyer's employees, agents or contractors or
to Buyer's property and/or injury to Seller's property, employees,
agents or contracts which may arise out of Buyer's inspections, but
only to the extent of Buyer's negligence. If such deductions exceed
ten percent (10%) of the Preliminary Purchase Price and the parties are
unable to mutually agree to proceed with closing, then either party
shall have the right to terminate this Agreement without liability.
After Closing, Buyer shall be deemed to have fully inspected and accepted
the Interests "AS IS" in their then current physical and environmental
condition.
ARTICLE VI
DISCLAIMER OF WARRANTIES
Buyer acknowledges that in making the decision to enter into this Agreement
and consummate the transactions contemplated hereby, Buyer has relied only
upon its own independent investigation of the Lands. Accordingly, Buyer
acknowledges that Seller has not made and Seller hereby expressly disclaims
and negates any representation or warranty express or implied at common law,
by statute or otherwise relating to (i) condition of the Lands (including
but not limited to any implied or express warranty of merchantability or
fitness for a particular purpose or of conformity to models or samples of
materials) and (ii) any information, data or other materials (written or
oral) furnished to Buyer by or on behalf of Seller (including but not
limited to information, data or other materials regarding the existence or
extent of oil, gas or other mineral reserves, the recoverability of or the
cost of recovering such reserves, the value of such reserves, any producing
pricing assumption, present or past production rates, the environmental
condition of the Lands, including but not limited to the presence of
naturally occurring radioactive material ("NORM"), and the ability to sell
oil or gas production after Closing); provided, however, that the foregoing
disclaimer and negation of representations and warranties shall not affect
or impair the representations and warranties of Seller made in Section 3.01.
ARTICLE VII
TITLE MATTERS
7.01 Defensible Title.
(a) As used herein, the term "DEFENSIBLE TITLE" shall mean, as to each
of the Interests, such title which, subject to and except for the
Permitted Encumbrances (as defined hereinafter): (i) entitles Seller
to receive not less than the "NET REVENUE INTEREST" set forth in
Exhibit A of all oil, gas and associated liquid and gaseous
hydrocarbons produced, saved and marketed from the presently producing
formations in the presently producing wells bottomed in the Lands; and
(ii) obligates Seller to bear costs and expenses relating to the
maintenance, development and operation of those portions of the
presently producing wells bottomed in the Lands in an amount not
greater than the "WORKING INTEREST" set forth in Exhibit A;
(b) The term "PERMITTED ENCUMBRANCES", as used herein, shall mean:
(1) Lessor's royalties, overriding royalties, reversionary interests
and similar burdens provided that the net cumulative effect of
such burdens does not operate to reduce the Net Revenue Interest
of any interest to less than the Net Revenue Interest therefor set
forth in Exhibit A;
(2) Preferential rights to purchase and required third party consents
to assignments and similar agreements with respect to which, prior
to Closing; (i) waivers or consents are obtained from the
appropriate parties, (ii) the appropriate time period for
asserting such rights has expired without an exercise of such
rights, or (iii) with respect to consents, such consents which
need not be obtained prior to an assignment, or the failure to
obtain such consents will not have a material adverse effect on
the value of the Interests to Buyer;
(3) Liens for taxes or assessments not yet due or not yet delinquent,
or if delinquent, that are being contested in good faith in the
ordinary course of business;
(4) All rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale
or conveyance of any of the Interests if the same are customarily
obtained subsequent to such sale or conveyance;
(5) Rights of reassignment;
(6) Easements, rights-of-way, servitudes, permits, surface leases and
other rights in respect of surface operations, pipelines, grazing,
logging, canals, ditches, reservoir or the like; conditions,
covenants or other restrictions; and easements for streets,
alleys, highways, pipelines, telephone lines, power lines,
railways and other easements and rights-of-way on, over or in
respect of any of the Interests;
(7) Such Title Defects or other defects as Buyer has waived pursuant
to the terms of this Agreement;
(8) Liens to be released at Closing;
(9) The terms and conditions of all leases, agreements, orders,
instruments, documents and other matters described in Exhibit A
hereto; and
(10) Rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any of the
Interests in any manner, and all applicable laws, rules and orders
of governmental authority.
(c) The term "TITLE DEFECT" as used herein shall mean any encumbrance,
encroachment, irregularity, defect in or objection to Seller's title to
each Interest (expressly excluding Permitted Encumbrances), that alone
or in combination with other defects, renders Seller's title to that
Interest less than Defensible Title or which would adversely interfere
with the use, possession, ownership or value thereof, or any violation
of applicable laws, rules, regulations or orders of any governmental
agency having jurisdiction over the Interests which will likely result
in an impairment or loss of title to all or a portion of the Interests
or diminish the value thereof or likely will hinder or impede the
operation of such interest, or any matter constituting a breach of
Seller's representation and warranties as set forth in Section 3.01.
Materialmen's mechanics', repairmen's, employees', contractors',
operators' or other similar liens or charges arising in the ordinary
course of business incidental to construction, maintenance or operation
of the Interests shall not constitute a Title Defect: (i) if they have
not been filed pursuant to law, or (ii) if filed, they have not yet
become due and payable or payment is being withheld as provided by law,
or (iii) if their validity is being contested in good faith by
appropriate action.
7.02. Casualty Loss. If, prior to the Closing, all or any portion of the
Interests be destroyed by fire or other casualty, is taken in condemnation
or under the right of eminent domain or proceedings for such purpose are
pending or threatened, Buyer may elect (i) to treat the Interests affected
by such destruction, taking or pending or threatened taking as Defective
Interests in accordance with Section 7.03; or (ii) to purchase such
Interests notwithstanding any such destruction, taking or pending or
threatened taking (without reduction of the Preliminary Purchase Price
therefor), in which case, Seller shall, at the Closing, pay to Buyer all
sums paid to Seor any lost or foregone income or production attributable to
the time period subsequent to the Effective Time) and shall assign, transfer
and set over unto Buyer all of the right, title and interest of Seller in
and to any unpaid claims, awards or other payments from third parties
arising out of the destruction, taking or pending or threatened taking as to
such Interests (including sums which are in the nature of compensation for
any lost or foregone income or production attributable to the time period
subsequent to the Effective Time). Seller agrees that, prior to Closing, it
shall not voluntarily compromise, settle or adjust any amounts payable by
reason of any destruction, taking or pending or threatened taking as to such
of its portion of the Interests to be assigned to Buyer without first
obtaining the written consent of Buyer.
7.03 Defect Adjustments.
(a) "DEFECTIVE INTEREST" shall mean that portion of the Interests (as
determined in accordance with Section 7.03(c)) affected by a Title
Defect or that Buyer is otherwise entitled under Sections 7.02 or 7.04
to treat as a Defective Interest, and of which Seller has been given
notice by Buyer prior to September 23, 1996, (the "DEFECT NOTICE
DATE"), except as provided hereinafter in this Section 7.03(a). Any
notice of any Defective Interest shall be in writing and shall include:
(i) a description of the Defective Interest, (ii) the specific basis
for the defect that Buyer believes causes such Interest to be a
Defective Interest, and (iii) the amount by which Buyer has determined
the value of the Defective Interest has been reduced and the
computations and information upon which Buyer's determination is based.
Buyer shall be deemed to have waived all Title Defects and any other
defect to any Interest of which Seller has not been given such notice
prior to the Defect Notice Date. If Seller (i) disagrees that a Defect
Adjustment or Exclusion Adjustment is warranted; (ii) disagrees that
the matter giving rise to such claims is uncured, or (iii) disagrees
with the amount of the related Defect Adjustment claimed by Buyer in
any notice given in accordance with this Section 7.03(a), then Seller,
at its option, may remove the defective property from the sale, attempt
to cure the defect at Seller's sole cost and expense, agree to a
mutually acceptable purchase price reduction or terminate this
Agreement without liability to Buyer except for return of the
Performance Deposit, without interest, provided that Seller may not
terminate this Agreement unless the aggregate value of Title Defects
exceeds twenty percent (20%) of the Preliminary Purchase Price;
(b) Defective Interests shall be excluded from the Interests to be
purchased by Buyer hereunder and the Preliminary Purchase Price shall
be reduced in accordance with Section 2.03 by an amount equal to the
value thereof, as agreed to between Buyer and Seller (which reduction
shall be called an "EXCLUSION ADJUSTMENT") unless (i) prior to the
Closing, the basis for treating an Interest as a Defective Interest has
been removed, (ii) Buyer agrees to waive the relevant Title Defect or
other defect and purchase the Defective Interest, notwithstanding the
defect, (iii) Seller agrees to indemnify, defend and hold Buyer
harmless and Buyer agrees to accept such indemnification against all
losses, costs, expenses and liabilities with respect to such Defective
Interest arising from the defect or basis for such Interest being
treated as a Defective Interest, or (iv) Buyer and Seller agree to an
amount by which the value of the Defective Interest has been reduced
and the Preliminary Purchase Price is reduced by such amount in
accordance with Section 2.03 (which reduction shall be called a "DEFECT
ADJUSTMENT"), in which event the Interest shall be included in the
Interests to be purchased by Buyer hereunder and, except in the case of
(iv), no adjustment shall be made to the Preliminary Purchase Price; or
(v) Buyer and Seller do not agree, on or before the Scheduled Closing
Date, as to the value of the Defective Interest that is to be excluded
from the Preliminary Purchase Price and none of Subsections (i) through
(iv) of Section 7.03(b) are applicable, in which event Buyer may
terminate this Agreement without further liability or obligation, by
giving written notice of termination on or before the Scheduled Closing
Date.
(c) The amount by which the Preliminary Purchase Price is to be
reduced in accordance with Section 7.03 as the result of any Interest
being treated as a Defective Interest shall be determined as follows:
(1) In the event that the cost of remedying any Title Defect exceeds
the amount allocated to the affected Interest as set forth in
Exhibit A, then such Interest shall be excluded from the
transaction contemplated hereby and the Preliminary Purchase Price
shall be reduced by the amount allocated to the Interest so
excluded as set forth in Exhibit A (which adjustment shall be
called an EXCLUSION ADJUSTMENT");
(2) In the event that the net revenue interest of Seller in any
Interest is less than that set forth in Exhibit A, that portion of
the Preliminary Purchase price allocated on Exhibit A-1 to such
particular Interest shall be reduced in the proportion that the
net revenue interest actually owned by Seller bears to that set
forth in Exhibit A;
(3) In the event that the working interest costs payable with respect
to a particular Interest is greater than the working interest set
forth in Exhibit A, the Preliminary Purchase Price allocated on
Exhibit A-1 to such particular Interest shall be reduced in the
proportion that the working interest percentage attributable to
such interest exceeds that set forth in Exhibit A;
(4) In the event that (i) the record title interest of Seller to any
Interest is burdened by any lien, encumbrance, mortgage, pledge,
or security interest, or (ii) ad valorem, property or other
similar taxes and assessments for any years prior to the Effective
Time have not been paid, the Preliminary Purchase Price of such
interest shall be reduced by the sum necessary to discharge and
obtain a full record release of such burden or to pay such taxes;
and
(5) In the event there exist other Title Defects which would
materially adversely affect or interfere with the use, possession,
ownership or value of any Interest, Buyer, at its option, may
either, (i) exclude the affected Interest from the transaction
contemplated hereby and the Preliminary Purchase Price shall be
reduced by the amount allocated to the affected Interest as set
forth in Exhibit A, or (ii) accept such Interest.
(d) In determining which portion of the Interests are Defective
Interests, it is the intent of the parties to include all portions of
the Interests affected by the defect or basis for such Interests being
treated as Defective Interests; and
(e) If the deductions in the Preliminary Purchase Price to be made
pursuant to this ARTICLE VII exceed twenty percent (20%) of the
Preliminary Purchase price, either party may terminate this agreement
at any time prior to Closing.
7.04 Identification of Additional Defective Interests.
(a) If, prior to the Closing, there has been non-compliance with the
laws, rules, regulations, ordinances or orders of any governmental
agency or authority having jurisdiction over the affected Interests,
resulting in risk of loss of the affected Interests or value thereof,
then Buyer may elect to treat such of the affected Interests as are
adversely affected by such noncompliance as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a);
(b) If, prior to the Closing, any preferential right to purchase any
of the Interests is exercised, Buyer may elect to treat that portion of
the Interests affected by the exercise of such preferential right as
Defective Interests by giving Seller notice thereof in accordance with
Section 7.03(a);
(c) If any necessary third party consent to assignment of any of the
Interests is not obtained prior to the Closing, Buyer may elect to
treat that portion of the Interests subject to such consent requirement
as Defective Interests by giving Seller notice thereof in accordance
with Section 7.03(a). For purposes hereof "NECESSARY THIRD-PARTY
CONSENTS" shall not include:
(1) consents customarily obtained subsequent to such assignment
including without limitation any consent of the State or the
Bureau of Indian Affairs or other Federal agencies or governmental
offices;
(2) consents contractually permitted to be obtained subsequent to such
assignment; or
(3) consents that, if not obtained, will not affect the
transferability, without penalty, of, the operation of, or the
receipt of income from, the Interests subject thereto, or result
in termination of the interests subject thereto or a material
decrease in the value thereof.
(d) If, prior to the Closing, Buyer becomes aware of any suit, action
or other proceeding before any court or governmental agency that would
result in loss or impairment of Seller's title to any portion of the
Interests or a portion of the value thereof, Buyer may elect to treat
the portion of the Interests affected thereby as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a); and
(e) If any inaccuracy in Exhibit A results in a loss of value of a
portion of the Interests, Buyer may elect to treat that portion of the
Interest subject to such reduction in value as Defective Interests by
giving Seller notice thereof in accordance with Section 7.03(a).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Seller's Conditions. The obligations of Seller at the Closing are
subject, at the option of Seller, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Buyer contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Buyer at or prior to the Closing;
(b) 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, except (i) matters with respect to
which Seller has been adequately indemnified by Buyer, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price; and
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect.
8.02 Buyer's Conditions. The obligations of Buyer at the Closing are
subject, at the option of Buyer, to the satisfaction, at or prior to the
Closing, of the following conditions:
(a) All representations and warranties of Seller contained in this
Agreement shall be true, correct and not misleading in all material
respects at and as of the Closing as if such representations and
warranties were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements and covenants in all material
respects required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing;
(b) 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, except (i) matters with respect to
which Buyer has been adequately indemnified by Seller, or (ii) any suit
or proceeding affecting only a portion of the Interests, which portion
of the Interests could be treated as a Defective Interest in accordance
with Section 7.04(d);
(c) The aggregate sum of Defect Adjustments and Exclusion Adjustments
shall not exceed thirty percent (30%) of the Preliminary Purchase
Price;
(d) All necessary and material permissions, approvals and consents
required which are obtainable prior to Closing shall be in full force
and effect; and
(e) The provisions of ARTICLE V.(e) have been satisfied.
8.03 Satisfaction or Waiver. If Seller and Buyer proceed with the Closing
as specified in ARTICLE IX, all conditions of Closing shall be deemed to
have been satisfied or waived and neither of the parties shall have any
liability whatsoever to the other arising out of, resulting from, or
attributable to any such condition of Closing, irrespective of whether such
conditions of Closing were in fact satisfied or waived. Nothing contained
in this Section 8.03 shall be a waiver or release of any breach of a
representation or warranty contained in this Agreement.
ARTICLE IX
CLOSING
9.01 Date of Closing. Unless the parties hereto mutually agree otherwise
and subject to the conditions stated in this Agreement, the consummation of
the transactions contemplated hereby (herein called the "CLOSING") shall be
held on September 30, 1996, at 10:00 A.M. (the "SCHEDULED CLOSING DATE").
The date Closing actually occurs is herein called the "CLOSING DATE".
9.02 Place of Closing. The Closing shall be held at Seller's office in
Dallas, Texas, in accordance with the Closing Instructions to be mutually
given in writing by Seller and Buyer.
9.03 Closing Obligations. At the Closing the following events shall occur,
each being a condition concurrent to the others and each being deemed to
have occurred simultaneously with the others:
(a) Seller shall execute, acknowledge and deliver to Buyer assignment,
bill of sale and conveyance documents (in sufficient counterparts to
facilitate recording), in form and substance as set forth in Exhibit C
hereto, conveying its portion of the Interests (other than those
portions of the Interests excluded under Sections 7.03(b) and 7.04) to
Buyer.
(b) Seller and Buyer shall execute and deliver a settlement statement
(herein called the "PRELIMINARY SETTLEMENT STATEMENT") prepared by
Seller and furnished to Buyer no less than seven (7) days prior to the
Scheduled Closing Date) that shall set forth the Closing Amount (as
hereinafter defined) and each adjustment and the calculation of such
adjustments used to determine such amount. The term "CLOSING AMOUNT"
shall mean the Preliminary Purchase Price adjusted as provided in
Section 2.03, using for such adjustments the best information then
available. Seller and Buyer further agree that Seller shall be
entitled to receive all proceeds attributable to ownership of the
Interests prior to the Effective Time and Buyer shall be entitled to
receive all proceeds attributable to the Interests after the Effective
Time.
(c) Buyer shall deliver the Closing Amount in the form of immediately
available U.S. funds, by wire transfer in accordance with instructions
to be provided by Seller.
(d) Seller shall deliver to Buyer exclusive possession of its portion
of the Interests (other than Interests excluded under Section 7.03(b)
or Section 7.04)
(e) Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of
production to make payment to Buyer of proceeds attributable to
production after the Effective Time from the Interests assigned to
Buyer under Section 9.03(a), but not theretofore paid to Seller.
ARTICLE X
OBLIGATIONS AFTER CLOSING
10.01 Post-Closing Adjustments. Within one hundred thirty (130) days after
the Closing, Seller shall prepare and deliver to Buyer, in accordance with
this Agreement and generally accepted accounting principles, a statement
(herein called the "POST CLOSING SETTLEMENT STATEMENT") setting forth each
adjustment or payment that was not included or correctly included in the
Preliminary Settlement Statement and showing the calculation of such
adjustments. Within thirty (30) days after receipt of the Post Closing
Settlement, Buyer shall deliver to Seller a written report containing any
changes that Buyer proposes to be made to the Post Closing Settlement
Statement. The parties shall undertake to agree with respect to the amounts
due pursuant to such Post Closing adjustment no later than one hundred sixty
(160) days after the Closing Date. The date upon which such agreement is
reached or upon which the Final Purchase Price is established, shall be
herein called the "SETTLEMENT DATE". In the event that (i) the Final
Purchase Price is more than the Closing Amount, Buyer shall pay to Seller,
in certified U.S. Funds, the amount of such difference (ii) the Final
Purchase Price is less than the Closing Amount, Seller shall pay to Buyer,
in certified U.S. funds, the amount of such difference. Payment by Buyer or
Seller shall be made within ten (10) days of the Final Settlement Date.
After the Settlement Date, additional proceeds received by or expenses paid
by either Buyer or Seller on behalf of the other shall be settled by
invoicing the other party for expenses paid or remitting to the other party
any proceeds received. The gas imbalances of the Interests shall be
considered final and neither party thereafter shall make claim upon the
other concerning same.
10.02 Files and Records. Seller shall have the right to make and retain
copies of the Records prior to delivery thereof to Buyer. Within thirty
(30) days after the Closing Date, Seller shall deliver to Buyer all original
files and Recorrests, all ad valorem, property, production, excise,
severance, windfall profit and other taxes, except income taxes, based upon
or measured by the ownership of the property, the production of hydrocarbons
or the receipt of proceeds therefrom which apply to or arise from and after
the Effective Time together with all documentary, filing and recording fees
required in connection with the filing and recording of any assignments or
other documents recorded in connection with the sale of the Interests.
10.04 Further Assurances. After Closing, Seller and Buyer shall each
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, and shall each take such other action, as may
be necessary or advisable to carry out their respective obligations under
this Agreement and under any document, certificate or other instrument
delivered pursuant hereto.
10.05 Survival. The warranties or representations herein made by Seller
are conditions to the obligations of Buyer hereunder and no warranty or
representation herein made by Seller (other than those contained in 3.01(a),
(b), (c), (d), (e), (f), (i), (j), (k), (o) and (q) shall survive the
Closing. The agreements set forth in ARTICLE X and the matters set forth in
ARTICLES V and VI and Section 12.12 shall survive the Closing for a period
of one (1) year from the Closing Date.
ARTICLE XI
TERMINATION OF AGREEMENT
11.01 Termination. This Agreement and the transactions contemplated hereby
may be terminated in the following instances:
(a) By Seller if the conditions set forth in Section 8.01(a)
through 8.01(d) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(b) By Buyer if the conditions set forth in Section 8.02(a)
through 8.02(e) are not satisfied in all material respects or
waived as of the Scheduled Closing Date;
(c) By Buyer pursuant to Section 7.03(b);
(d) Pursuant to Article V.(e); or
(e) At any time by the mutual written agreement of Buyer and
Seller.
11.02 Liabilities Upon Termination. If this Agreement is breached by
either party, nothing contained herein shall be construed to limit Seller's
or Buyer's legal or equitable remedies, including, without limitation,
damages for the breach or failure of any representation, warranty, covenant
or agreement contained herein (whether or not the non-defaulting party has
terminated the Agreement) or the right to enforce specific performance of
this Agreement; provided, however, that a party terminating this Agreement
shall have no right to specific performance thereof, and provided, further,
that neither party shall have a right to specific performance thereof if
this Agreement is terminated pursuant to Section 11.01 hereof.
ARTICLE XII
MISCELLANEOUS
12.01 Exhibits and Schedules. Exhibits A through C are attached hereto and
incorporated herein by this reference.
12.02 Expenses. Except as otherwise specifically provided, all fees, costs
and expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid
by the party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses.
12.03 Notices. All notices and communications required or permitted under
this Agreement shall be in writing, delivered to or sent by U. S. Mail or
Express Delivery, postage prepaid, or by facsimile transmission, addressed
as follows:
Maynard Oil Company
Attention Cassondra Foster
8080 North Central Expressway, Suite 660
Dallas, TX 75206
Phone: (214) 891-8461
Fax: (214) 891-8827
Enron Oil & Gas Company
Attention Lee McVay, Vice President and General Manager
20 North Broadway, Suite 800
Oklahoma City, OK 73102
Phone: (405) 239-7880
Fax: (405) 239-7858
Any party may, by written notice so delivered to the others, change the
address or individual to which delivery shall thereafter be made.
12.04 Amendments. Except as otherwise expressly provided herein, this
Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such amendment
or waiver and delivered by such party to the party claiming the benefit of
such amendment or waiver.
12.05 Assignment. Neither Seller nor Buyer shall assign all or any portion
of its rights or delegate all or any portion of its duties hereunder without
the prior written consent of the other to such assignment; provided,
however, that Buyer or Seller or both may assign all or part of this
Agreement to a qualified intermediary to facilitate a deferred like-kind
exchange for federal tax purposes. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon Seller, Buyer and their
respective successors and assigns.
12.06 Announcements. Seller and Buyer shall consult with each other with
regard to all press releases and other announcements issued at or prior to
the Closing 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 or stock exchange, neither
Buyer nor Seller shall issue any such press release or other publicity
without the prior written consent of the other party.
12.07 Headings. The headings of the articles and sections of this
Agreement are for guidance and convenience of reference only and shall not
limit or otherwise affect any of the terms or provisions of this Agreement.
12.08 Counterparts. This Agreement, and any document or instrument entered
into, given or made pursuant to this Agreement or authorized hereby, and any
amendment or supplement thereto, may be executed in any number of
counterparts, and, when so executed, each of which shall be deemed an
original instrument, and shall have the same force and effect as though all
signatures appeared on a single document, and all of which together shall
constitute but one and the same instrument. Any signature page of this
Agreement or of such an amendment, supplement, document or instrument may be
detached from any counterpart thereof and attached to another counterpart
without impairing the legal effect of any signatures identical in form
thereto but having attached to it one or more additional signature pages.
12.09 References. References made in this Agreement, including the use of
a pronoun, shall be deemed to include where applicable, masculine, feminine,
singular or plural, individuals, partnerships or corporations. As used in
this Agreement, "person" shall mean any natural person, corpll be governed
by, and construed in accordance with, the laws of the State of Texas,
without regard to its choice of law principles provided, however, that
issues in connection with title to the Interests shall be governed by the
applicable laws of the State of Oklahoma.
12.11 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding among the parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
12.12 Securities Laws. Buyer has advised Seller that the interests are not
being acquired for distribution or transfer in violation of the securities
laws of the United States or of any state thereof. Buyer hereby agrees to
protect, indemnify and hold harmless Seller from and against any and all
claims, costs (including, without limitation,and liabilities which arise
under applicable state or federal securities laws as a result of acts or
omissions of Buyer or its affiliates which are contrary to such laws and
which are in connection with the transactions contemplated hereby or the
sale or other disposition of the Interests by Buyer or its affiliates.
Seller hereby agrees to protect, indemnify and hold harmless Buyer from and
against any and all claims, costs (including, without limitation, court
costs and reasonable attorney's fees), expenses, damages and liabilities
which arise under applicable state or federal securities laws as a result of
acts or omissions of Seller or its affiliates which are contrary to such
laws and which are in connection with the transactions contemplated hereby.
Executed as of the date first above written.
SELLER
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
----------------------------
Glenn R. Moore
President
BUYER
ENRON OIL & GAS COMPANY
By: /s/ Leland J. McVay
--------------------------------
Leland J. McVay
Vice President
EXHIBIT "A"
Attached to and made a part of Purchase and Sale Agreement dated
September 12, 1996, by and between Maynard Oil Company, as Seller,
and Enron Oil & Gas Company, as Buyer
BLAINE COUNTY, OKLAHOMA
PN 490005 (UT-459)
NIPPERT NO. 1-12
EXPENSE INTEREST 0.4375000
REVENUE INTEREST 0.3750000
Oil and Gas Lease dated July 29, 1963, by and between George E.
Nippert, et ux, as Lessor, and Tom R. Gray, Jr., as Lessee, recorded in
Volume 92, page 428 of the Records of Blaine County, Oklahoma, covering the
SE/4 of Section 12, Township 18 North, Range 13 West, Blaine County,
Oklahoma. (LF-05044-00)
Oil and Gas Lease dated May 1, 1957, by and between Ne sta ne (1882),
successor of Bob Tail Bear, Cheyenne-Arapaho No. 2184, approved by the
Bureau of Indian Affairs under serial number 14-20-205-854, as Lessor, and
Sun Oil Company, as Lessee, recorded in Book 41, page 205 of the Records of
Blaine County, Oklahoma, covering the NW/4 of Section 12, Township 18 North,
Range 13 West, Blaine County, Oklahoma, LIMITED to rights from the surface
to a depth of 8,660 feet below the surface and LIMITED to the borehole of
the Nippert No. 1-12 wellbore. (LF-05604-00)
Oil and Gas Lease dated May 1, 1957, by and between Bobtail Bear
(Andrew Mouse Trail) (1880), and Ruth May Mouse Trail (1906), successors of
Standing Calf, Cheyenne-Arapaho No. 2185, approved by the Bureau of Indian
Affairs under serial number 14-20-205-853, as Lessor, and Sun Oil Company,
as Lessee, recorded in Book 41, page 367 of the Records of Blaine County,
Oklahoma, covering the NE/4 of Section 12, Township 18 North, Range 13 West,
Blaine County, Oklahoma, LIMITED to rights from the surface to a depth of
8,660 feet below the surface and LIMITED to the borehole of the Nippert No.
1-12 wellbore.(LF-05605-00)
Oil and Gas Lease dated November 21, 1966, by and between M. W. Bahan,
et al, as Lessor, and Sun Oil Company, as Lessee, recorded in Book 125, page
11 of the Records of Blaine County, Oklahoma, covering the SW/4 of Section
12, Township 18 North, Range 13 West, Blaine County, Oklahoma, LIMITED to
rights from the surface to a depth of 8,660 feet below the surface and
LIMITED to the borehole of the Nippert No. 1-12 wellbore. (LF-05606-00)
The hereinabove referenced leases are subject to Communitization Agreement
dated June 12, 1967, by and between Sun Oil Company and Superior Oil
Company; Operating Agreement dated March 22, 1967, as amended by and between
Sun Oil Company and Superior Oil Company; Oklahoma Commission Order No.
63129 creating a 640 acre drilling and spacing unit for the Morrow Sand
Formation in Section 12, Township 18 North, Range 13 West, as amended.
Lease numbered LF-05044-00 is subject to Assignment and Bill of Sale
effective August 1, 1988, by and between Mobil Oil Corporation and Mobil
Exploration and Producing North America Inc. and Maynard Oil Company
recorded in Volume 557, page 696 of the Records of Blaine County, Oklahoma
and Limited Partial Assignment and Bill of Sale by and between Maynard Oil
Company and Coastal Oils, Inc. dated March 21, 1989, effective February 1,
1989, recorded in Volume 571, page 126 of the Records of Blaine County,
Oklahoma, conveying a wellbore interest only in the Bahan No. 1 Well located
in the SW/4 of Section 12, Township 18 North, Range 13 West, Blaine County,
Oklahoma. Leases numbered LF-05604-00, LF-05605-00 and LF-05606-00 are
subject to Farmout Letter Agreement by and between Sun Exploration and
Production Company and H&L Operating Company dated October 18, 1982;
Assignment of Operating Rights in Oil, Gas and Mineral Leases and
Stipulation dated December 17, 1985, effective November 1, 1985, by and
between Sun Exploration and Production Company and H&L Operating Company,
recorded in Volume 503, page 411 of the Records of Blaine County, Oklahoma,
and Assignment and Bill of Sale dated November 5, 1992, by and between Sun
Operating Limited Partnership and Maynard Oil Company recorded in Volume
647, page 261 of the Records of Blaine County, Oklahoma.
CADDO COUNTY, OKLAHOMA
PN 442001 (UT-476)
SCOTT B NO. 1
EXPENSE INTEREST 0.0585937
REVENUE INTEREST 0.0476074
Oil and Gas Lease dated October 18, 1982, by and between Mobil Oil
Corporation, as Lessor, and Avanti Energy Corporation, as Lessee, recorded
in Volume 972, page 512 of the Records of Caddo County, Oklahoma, covering
the SE/4 of Section 15, Township 9 North, Range 11 West, Caddo County,
Oklahoma, LIMITED to rights from surface of the ground to a depth of 16,250
feet. (LF-05078-AA)
The hereinabove referenced lease is subject to Operating Agreement dated
April 2, 1982, Cotton Petroleum Corp. (now APC Operating Partnership L. P.),
as Operator and Towner Petroleum et al, as Non-Operator; Communitization
Agreement dated August 1, 1982 approved by the Department of the Interior on
January 28, 1983 creating a 640 acre drilling and spacing unit for Section
15, Township 11 North, Range 10 West.
CANADIAN COUNTY, OKLAHOMA
PN 490008
STOVER UNIT NO. 1(UT-462)
EXPENSE INTEREST 0.1241856
REVENUE INTEREST 0.1086624
Oil and Gas Lease dated February 12, 1960, by and between John
Stringer, et al, as Lessor, and Vader W. Coontz, as Lessee, as recorded in
Volume 327, page 358 of the Records of Canadian County, Oklahoma, covering
Lot 2 and the SW/4 NE/4 (also described as the W/2 NE/4) of Section 3,
Township 14 North, Range 10 West, Canadian County, Oklahoma. (LF-05047-00)
The hereinabove referenced lease is subject to Gas Purchase Agreement dated
September 1, 1988, as amended, by and between Transok Pipe Line Company, as
Seller, and Mobil Oil Corporation, as Seller, Oklahoma Corporation
Commission dated January 25, 1966, Order No. 61449 creating a 640 acre
drilling and spacing unit in Section 26, Township 11 North, Range 10 West;
Communitization Agreement dated October 3, 1966, executed by Pan American
Petroleum Corp. et al and Oklahoma Corporation Commission Order No. 61449,
as amended, creating a 640 acre drilling and spacing unit cover all of
Section 26, Township 11 North, Range 10 West; Operating Agreement dated
February 10, 1966, as amended, by and between Pan American Petroleum
Corporation, as Operator and Union Oil Company of California et al, as Non-
Operator; Assignment and Bill of Sale effective August 1, 1988, by and
between Mobil Oil Corporation and Mobil Exploration and Producing North
America Inc., as Grantor, and Maynard Oil Company, as Grantee, recorded in
Volume 1541, page 290 of the Records of Canadian County, Oklahoma.
PN 490009 (UT-463)
WILLARD "A-1" UNIT
EXPENSE INTEREST 0.0880609
REVENUE INTEREST 0.0770533
PN 490010 (UT-463)
WILLARD "A-2" UNIT
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.0880609
AFTER PAYOUT REVENUE INTEREST 0.0770533
Oil and Gas Lease dated August 14, 1970, by and between Marvin E.
Majors, et ux, as Lessor, and James W. Pitts, as Lessee, as recorded in
Volume 468, page 454 of the Records of Canadian County, Oklahoma, covering
Lots 3 and 4 of Section 31, Township 11 North, Range 9 West, Canadian
County, Oklahoma. (LF-05048-AA)
Oil and Gas Lease dated August 18, 1970, by and between Chickasha
Royalty Trust, as Lessor, and James W. Pitts, as Lessee, as recorded in
Volume 468, page 458 of the Records of Canadian County, Oklahoma, covering
Lots 3 and 4 of Section 31, Township 11 North, Range 9 West, Canadian
County, Oklahoma, as amended. (LF-05048-AB)
The hereinabove referenced leases are subject to Gas Purchase Contract dated
September 1, 1988, as amended, by and between Enogex Services Corporation,
as Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
March 29, 1975, as amended, by and between Amoco Production Company, as
Operator and Mobil Oil Corporation, et al, as Non-Operator; Assignment and
Bill of Sale effective August 1, 1988, by and between Mobil Oil Corporation
and Mobil Exploration and Producing North America Inc., as Grantor, and
Maynard Oil Company, as Grantee, recorded in Volume 1541, page 290 of the
Records of Canadian County, Oklahoma.
PN 490012 (UT-464)
JOHN WILLIAMS NO. 1-26
EXPENSE INTEREST 0.3125000
REVENUE INTEREST 0.2604167
Oil and Gas Lease dated March 18, 1970, by and between Frederick E.
Parton, (1925) successor to Ben Parton, Caddo Allotte No. 801, approved by
the Bureau of Indian Affairs under serial number 14-20-206-26169, as Lessor,
and Mobil Oil Corporation, as Lessee, recorded in Volume 464, page 677 of
the Records of Canadian County, Oklahoma, covering the NE/4 of Section 26,
Township 11 North, Range 10 West, Canadian County, Oklahoma, LIMITED to
rights from the surface of the ground to a depth of 12,894 feet. (LF-05049-
AA-00)
Oil and Gas Lease dated March 18, 1970, by and between Successors to
Alice Johnson, Caddo Allottee No. 800, approved by the Bureau of Indian
Affairs under serial number 14-20-206-26170, as Lessor, and Mobil Oil
Corporation, as Lessee, recorded in Volume 464, page 681, of the Records of
Canadian County, Oklahoma, covering the NW/4 Section 26, Township 11 North,
Range 10 West, Canadian County, Oklahoma, LIMITED to rights from the surface
of the ground to a depth of 12,894 feet below the surface. (LF-05050-00)
Oil and Gas Lease dated March 18, 1970, by and between Successor to
Annie Johnson, Caddo Allottee No. 778, approved by the Bureau of Indian
Affairs under serial number 14-20-206-26171, as Lessor, and Mobil Oil
Corporation, as lessee, recorded in Volume 464, page 689, of the Records of
Canadian County, Oklahoma, covering the SE/4 Section 26, Township 11 North,
Range 10 West, Canadian County, Oklahoma, LIMITED to rights from the surface
of the ground to a depth of 12,894 feet below the surface. (LF-05051-00)
The hereinabove referenced leases are subject to Gas Purchase Agreement
dated January 1, 1977, as amended, by and between Transok Pipe Line Company,
as Buyer, and Mobil Oil Corporation, as Seller; Operating Agreement dated
June 5, 1974, as amended, by and between Samedan Oil Corporation, as
Operator, and Woods Petroleum Corp. et al, as Non-Operator; Communitization
Agreement dated July 10, 1974, creating a 640 acre unit covering all of
Section 26, Township 11 North, Range 10 West; Assignment and Bill of Sale
effective August 1, 1988, by and between Mobil Oil Corporation and Mobil
Exploration and Producing North America Inc., as Grantor, and Maynard Oil
Company, as Grantee, recorded in Volume 1541, page 290 of the Records of
Canadian County, Oklahoma.
PN 440504 (UT-405)
HAYES UNIT NO. 1-27 & 2-27
EXPENSE INTEREST 0.0000000
REVENUE INTEREST 0.0154321 (ORI)
0.0154321 (ROYALTY)
An undivided one-half (1/2) interest in the oil, gas and other
minerals in and under and that may be produced from the SW/4 Section 27,
Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation, as conveyed in that
certain Mineral Deed dated March 13, 1957, by and between James B. Franklin,
as Grantor, and Shell Canadian Exploration Company, as Grantee, recorded in
Volume 92, page 366 of the Records of Ellis County, Oklahoma and
subsequently conveyed to Maynard Oil Company from Shell Western E&P Inc. by
instrument entitled "Assignment, Conveyance and Bill of Sale" effective
December 1, 1985, recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma. (LF-04894-AA)
The hereinabove referenced mineral deed is subject to Oil and Gas Lease
dated December 21, 1973, from Shell Oil Company to Amoco Production;
Purchase and Sale Agreement dated December 19, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of
Sale effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440601 (UT-435)
HEBNER (AKA HERBER) NO. 1-14
EXPENSE INTEREST 0.1174122
REVENUE INTEREST 0.1027357
Oil and Gas Lease dated November 25, 1955, by and between D. L.
Katterjohn, as Lessor, and E. J. Farris, as Lessee, recorded in Volume 78,
pages 27-28 of the Records of Ellis County, Oklahoma, covering Lots 1 and 2
and S/2 NE/4 of Section 2, Township 22 North, Range 26 West, together with
any rights, titles and interests acquired by Shell Western E&P Inc. in and
to the Pan Am Shattuck Operating Unit by virtue of that certain unrecorded
Operating Agreement dated November 5, 1958 by and between Pan American
Petroleum Company, as Operator, and Shell Oil Company, et al, as Non-
Operators, INSOFAR AND ONLY INSOFAR as said Operating Agreement pertains to
the spacing units established by the Oklahoma Corporation Commission and the
Hebner 1-14 well located in Section 14, Township 22 North, Range 26 West,
Ellis County, Oklahoma. (LF-04929-00)
The hereinabove referenced lease is subject to Gas Purchase Contract dated
October 1, 1989, as amended, by and between Production Gathering Company, as
Buyer, and Maynard Oil Company, as Seller; Operating Agreement dated
November 5, 1958, as amended, by and between Pan American Petroleum
Corporation, as Operator, and Shell Oil Company, et al, as Non-Operators,
May 1, 1959; Purchase and Sale Agreement dated December 19, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company; Assignment,
Conveyance and Bill of Sale effective December 1, 1985, by and between Shell
Western E&P Inc. and Maynard Oil Company recorded in Volume 459, page 381 of
the Records of Ellis County, Oklahoma.
PN 440505 (UT-443)
INGLE NO. 1-17
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440505-N
INGLE NO. 2-17
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0000000
AFTER PAYOUT EXPENSE INTEREST 0.2500000
AFTER PAYOUT REVENUE INTEREST 0.2187500
Oil and Gas Lease dated December 4, 1956, by and between Mary L.
Babcock, et al, as Lessor, and James B. Franklin, as Lessee, recorded in
Volume 87, Page 393 of the Records of Ellis County, Oklahoma, covering the
SW/4 of Section 17, Township 23 North, Range 25 West, Ellis County,
Oklahoma, LIMITED to rights from the surface to the base of the Morrow
formation. (LF-04902-00)
The hereinabove referenced lease is subject to Operating Agreement dated May
29, 1962, by and between Phillips Petroleum Company, as Operator, and Shell
Oil Company, et al, as Non-Operators; Gas Agreement amending various Gas
Purchase Contracts, dated February 5, 1990, by and between Northern Natural
Gas Company, a division of Enron Corp., successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller; Purchase
and Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440507 (UT-411)
IRVIN C NO. 1-6 AND C2
EXPENSE INTEREST 0.0642323
REVENUE INTEREST 0.0562033
Oil and Gas Lease dated August 12, 1959, by and between Mearl R.
Snyder and Edith J. Snyder, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 112, page 390 of the Records of Ellis County, Oklahoma,
INSOFAR AND ONLY INSOFAR as said lease covers the SE/4 SW/4 of Section 6,
Township 23 North, Range 24 West, Ellis County, Oklahoma, LIMITED to rights
from the surface to the base of the Morrow formation. (LF-04910-00)
The hereinabove referenced lease is subject to Letter Agreement dated
December 21, 1989, and Agreement Amending Various Gas Purchase Contracts
dated February 5, 1990, as amended, by and between Northern Natural Gas
Company, a Division of Enron Corporation, successor in interest to Northern
Natural Gas Company, as Buyer, and Maynard Oil Company, as Seller; Operating
Agreement dated February 16, 1961, by and between Amoco Production Company,
as Operator, and Gulf Oil Corporation, et al, as Non-Operators; Purchase and
Sale Agreement dated December 19, 1985, by and between Shell Western E&P
Inc. and Maynard Oil Company; Assignment, Conveyance and Bill of Sale
effective December 1, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company recorded in Volume 459, page 381 of the Records of Ellis
County, Oklahoma.
PN 440702 (UT-430)
LYTLE NO. C 1-21
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187500
PN 440706
LYTLE NO. C 2-21
BEFORE PAYOUT EXPENSE INTEREST 0.0000000
BEFORE PAYOUT REVENUE INTEREST 0.0312500
AFTER PAYOUT EXPENSE INTEREST 0.0875000
AFTER PAYOUT REVENUE INTEREST 0.0765625
Oil and Gas Lease dated July 7, 1956, by and between Loyd I. Haymaker
and Evangeline M. Hamaker, as Lessors, and George McDaniel, as Lessee,
recorded in Volume 82, page 273 of the Records of Ellis County, Oklahoma,
covering NW/4 of Section 21, Township 21 North, Range 23 West, Ellis County,
Oklahoma, LESS AND EXCEPT the interest assigned to Amoco Production Company
by instrument titled Limited and Partial Assignment of Oil and Gas Lease
dated October 17, 1995, effective September 6, 1994, from Maynard Oil
Company, and recorded in Volume _____, page _____ of the Records of Ellis
County, Oklahoma, in and to the borehole of the Lytle Well No. 2-21 located
1,320 feet from the south line and 1,320 feet from the west line of the NW/4
of Section 21, Township 21 North, Range 23 West, Ellis County, Oklahoma.
(LF-04833-00)
The hereinabove referenced lease is subject to Operating Agreement dated
April 1, 1965, by and between Pan American Petroleum Corporation, as
Operator, and Shell Oil Company, et al, as Non-Operators; Purchase and Sale
Agreement dated December 19, 1985, by and between Shell Western E&P Inc. and
Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
December 1, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company recorded in Volume 459, page 381 of the Records of Ellis County,
Oklahoma.
PN 440511
MOYER NO. 1-19 (UT-441)
EXPENSE INTEREST 0.2571800
REVENUE INTEREST 0.2099609
Oil and Gas Lease dated January 16, 1948, by and between Ruth Moyer,
et al, as Lessor, and W. G. Mouser, as Lessee, recorded in Volume 36, page
495 of the Records of Ellis County, Oklahoma, covering the SE/4 of Section
19, Township 24 North, Range 25 West, Ellis County, Oklahoma, LIMITED to
rights from the surface to the base of the Morrow formation. (LF-04904-00)
The hereinabove referenced lease is subject to Agreement dated February 12,
1969, between Shell Oil Company and Cities Service Oil and Gas Company;
Operating Agreement dated December 23, 1957, by and between Pan American
Petroleum Corporation (now Amoco Production Company), as Operator, and Gulf
Oil Corporation, et al, as Non-Operators; Gas Purchase Agreement dated
October 1, 1989, as amended, by and between Production Gathering Company, as
Buyer, and Maynard Oil Company, as Seller; Purchase and Sale Agreement dated
December 19, 1985, by and between Shell Western E&P Inc. and Maynard Oil
Company; Assignment, Conveyance and Bill of Sale effective December 1, 1985,
by and between Shell Western E&P Inc. and Maynard Oil Company recorded in
Volume 459, page 381 of the Records of Ellis County, Oklahoma.
STEPHENS COUNTY, OKLAHOMA
PN 438903 (UT-373)
CALDWELL NO. 22-A
EXPENSE INTEREST 0.1210937
REVENUE INTEREST 0.1059570
Oil and Gas Lease dated October 16, 1969, by and between David Harris,
et al, as Lessor, and L. R. Snyder, as Lessee, recorded in Volume 1042, page
390 of the Records of Stephens County, Oklahoma, covering the E/2 NW/4, SW/4
NW/4, E/2 NW/4 NW/4, SW/4 NW/4 NW/4 and the NW/4 NW/4 SW/4 of Section 22,
Township 1 North, Range 7 West, LESS AND EXCEPT rights limited to the
borehole of the Bumpass 1-22 Well located 1,320 feet from the south line and
1,320 feet from the east line of said Section and further limited to rights
from the surface to 12,590 feet from the surface, Stephens County, Oklahoma.
(LF-04708-00)
Oil and Gas Lease dated May 2, 1969, by and between Frances Louise
Jackson and Miles Jackson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 1024, page 428 of the Records of Stephens County,
Oklahoma. (LF-04709-AA)
Oil and Gas Lease dated May 21, 1969, by and between L. W. Corbett,
Executor of the Joseph E. Hanson Estate, deceased, as Lessor, and Shell Oil
Company, as Lessee, recorded in Volume 1024, page 426 of the Records of
Stephens County, Oklahoma. (LF-04709-AB)
The hereinabove referenced leases cover the E/2 SW/4, SW/4 SW/4,
S/2 NW/4 SW/4 and the NE/4 NW/4 SW/4 of Section 22, Township 1
North, Range 7 West, LESS AND EXCEPT rights limited to the
borehole of the Bumpass 1-22 Well located 1,320 feet from the
south line and 1,320 feet from the east line of said Section and
further limited to rights from the surface to 12,590 feet from the
surface, Stephens County, Oklahoma.
The hereinabove referenced leases are subject to Farmout Agreement and
Assignment dated June 5, 1973, from Shell Oil Company to James R. Hazelwood;
Assignment dated July 1, 1974, from Shell Oil Company to James R. Hazelwood,
recorded in Volume 1171, page 141; Gas Purchase Contract dated May 1, 1974,
as amended, by and between Arkansas Louisiana Gas Company, as Buyer, and
Tesoro Petroleum Corporation, et al, as Seller; Gas Purchase Contract dated
February 8, 1978, as amended, by and between Oklahoma Natural Gas Company,
as Buyer, and Shell Oil Company, et al, as Seller; Assignment from L. R.
Snyder to Shell Oil Company, recorded in Volume 1042, page 391; Purchase and
Sale Agreement dated December 3, 1984, by and between Shell Western E&P Inc.
and Maynard Oil Company; Assignment, Conveyance and Bill of Sale effective
November 1, 1984, by and between Shell Western E&P Inc. and Maynard Oil
Company, recorded in Volume 1585, page 704 of the Records of Stephens
County, Oklahoma; Farmout Agreement dated September 27, 1989, by and between
Maynard Oil Company, as Farmor, and Kaiser-Francis Oil Company, as Farmee;
Corporation Commission Order No. 341238; Operating Agreement dated October
17, 1973, by and between Tesoro Petroleum Corporation, as Operator, and
Montgomery Exploration Company, et al, as Non-Operators; Oklahoma
Corporation Commission Order No. 100058 dated September 25, 1973; Farmout
Agreement and Assignment dated August 17, 1973, by and between James R.
Hazelwood and Tesoro Petroleum Corporation; Limited and Partial Assignment
of Oil and Gas Leases dated May 24, 1995, from Maynard Oil Company to Apache
Corporation, recorded in Volume _____, page _____ of the Records of Stephens
County, Oklahoma.
WOODS COUNTY, OKLAHOMA
PN 429601
FORREST REX BAIRD NO. 1
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
PN 429604
FORREST REX BAIRD NO. 2
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
PN 429605
FORREST REX BAIRD NO. 3
EXPENSE INTEREST 0.2500000
REVENUE INTEREST 0.2187110
Oil and Gas Lease dated June 8, 1978, by and between Forrest Rex
Baird, et al, as Lessor, and Enserch Exploration Inc., as Lessee, recorded
in Volume 398, page 229 of the Records of Woods County, Oklahoma, covering
Lots 1, 2, 3, 4, and 5, NW/4 NE/4, E/2 NE/4 and all accretion and riparian
rights thereto and covering situated and located in Section 16, Township 23
North, Range 15 West, Woods County, Oklahoma. (LF-03228-00)
Oil and Gas Lease dated February 5, 1975, by and between Bess L.
Baird, et vir, as Lessor, and Deason & Vance, as Lessee, recorded in Volume
336, page 604 of the Records of Woods County, Oklahoma, INSOFAR AND ONLY
INSOFAR as said lease covers the accretion and riparian rights to Lot 1 of
Section 15 which fall in Section 16, Township 23 North, Range 15 West, Woods
County, Oklahoma. (LF-03233-00)
The hereinabove referenced leases are subject to Operating Agreement dated
January 21, 1981, as amended, by and between Enserch Exploration, Inc., as
Operator an Moore McCormack Oil & Gas Corporation, et al, as Non-Operator;
Oklahoma Corporation Commission Order No. 46673 (CD 15628) dated October 3,
1961 and Order No. 46674 (CD 15629) dated October 3, 1961, creating a 640
acre drilling and spacing unit for all of Section 16, Township 23 North,
Range 15 West, Woods County, Oklahoma.
WOODWARD COUNTY, OKLAHOMA
PN 440803 (UT-394)
HOHWEILER NO. 1-18
EXPENSE INTEREST 0.1945150
REVENUE INTEREST 0.1702006
Oil and Gas Lease dated March 7, 1966, by and between F. A. Morehart,
et ux, as Lessor, and L. D. Sargent, as Lessee, recorded in Volume 240, page
400 of the Records of Woodward County, Oklahoma, covering Lot 3, NE/4 SW/4
and South 20 acres of the S/2
NW/4 of Section 18, Township 22 North, Range 22 West, Woodward County,
Oklahoma. (LF-04891-00)
Oil and Gas Lease dated December 14, 1961, by and between F. A.
Morehart and Gladys Morehart, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 184, page 438 of the Records of Woodward County,
Oklahoma. (LF-04936-AB)
Oil and Gas Lease dated September 10, 1965, by and between A. E.
Goerke and Frances Goerke, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 266 of the Records of Woodward County,
Oklahoma. (LF-04936-AD)
Oil and Gas Lease dated September 10, 1965, by and between Kenneth C.
Scott, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 268 of the Records of Woodward County, Oklahoma. (LF-04936-AE)
Oil and Gas Lease dated September 10, l965, by and between Clarence
Keller, Jr. and Laverne Keller, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 270 of the Records of Woodward County,
Oklahoma. (LF-04936-AF)
Oil and Gas Lease dated September 20, 1965, by and between Clella C.
Short, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 272 of the Records of Woodward County, Oklahoma. (LF-04936-AG)
Oil and Gas Lease dated September 10, 1965, by and between Mary R.
Washta, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 274 of the Records of Woodward County, Oklahoma. (LF-04936-AH)
Oil and Gas Lease dated September 20, 1965, by and between Thomas
Howenstine and Jeanne E. Howenstine, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 233, page 276 of the Records of Woodward County,
Oklahoma. (LF-04936-AI)
Oil and Gas Lease dated September 10, l965, by and between Charles S.
Wilson and Betty Ann Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 278 of the Records of Woodward County,
Oklahoma. (LF-04936-AJ)
Oil and Gas Lease dated September 10, 1965, by and between Nadine
Wilson Stanford and Bobby Gene Stanford, as Lessor, and Shell Oil Company,
as Lessee, recorded in Volume 233, page 280 of the Records of Woodward
County, Oklahoma. (LF-04936-AK)
Oil and Gas Lease dated September 29, 1965, by and between L. J.
Barrett, Jr. and Marion E. Barrett, as Lessor, and Shell Oil Company, as
Lessee, recorded in Volume 233, page 282 of the Records of Woodward County,
Oklahoma. (LF-04936-AL)
Oil and Gas Lease dated September 10, l965, by and between Woodrow A.
Wilson and Eleanor Faye Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 284 of the Records of Woodward County,
Oklahoma. (LF-04936-AM)
Oil and Gas Lease dated September 10, 1965, by and between James L.
Wilson and Wanda Joyce Wilson, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 233, page 286 of the Records of Woodward County,
Oklahoma. (LF-04936-AN)
Oil and Gas Lease dated September 10, 1965, by and between Rosella L.
Scott, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 233,
page 288 of the Records of Woodward County, Oklahoma. (LF-04936-AO)
Oil and Gas Lease dated September 10, 1965, by and between J. C. Park,
Jr., and Blanche Park, as Lessor, and Shell Oil Company, as Lessee, recorded
in Volume 233, page 290 of the Records of Woodward County, Oklahoma. (LF-
04936-AP)
Oil and Gas Lease dated October 22, 1965, by and between Mary Washta,
Guardian of the Estate of George Washta, Incompetent, as Lessor, and Shell
Oil Company, as Lessee, recorded in Volume 234, page 268 of the Records of
Woodward County, Oklahoma. (LF-04936-AQ)
Oil and Gas Lease dated September 10, l965, by and between Alice Marie
Teis and Donald R. Teis, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 234, page 432 of the Records of Woodward County,
Oklahoma. (LF-04936-AR)
Oil and Gas Lease dated September 10, 1965, by and between Stacy L.
Wilson, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 234,
page 434 of the Records of Woodward County, Oklahoma. (LF-04936-AS)
Oil and Gas Lease dated September 30, 1965, by and between Zollie E.
Larrabee, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume
234, page 436 of the Records of Woodward County, Oklahoma. (LF-04936-AT)
Oil and Gas Lease dated September 10, 1965, by and between Willis
Buchanan Morter and Marion Callery Morter, as Lessor, and Shell Oil Company,
as Lessee, recorded in Volume 234, page 438 of the Records of Woodward
County, Oklahoma. (LF-04936-AU)
Oil and Gas Lease dated September 10, l965, by and between W. A.
Morter, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 234,
page 440 of the Records of Woodward County, Oklahoma. (LF-04936-AV)
Oil and Gas Lease dated October 25, 1965, by and between Everett G.
King and Marjorie P. King, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 235, page 227 of the Records of Woodward County,
Oklahoma. (LF-04936-AW)
Oil and Gas Lease dated September 10, l965, by and between Ethel
Wilson Moran, as Lessor, and Shell Oil Company, as Lessee, recorded in
Volume 235, page 412 of the Records of Woodward County, Oklahoma. (LF-
04936-AX)
Oil and Gas Lease dated September 10, 1965, by and between Ruth Alene
Wheatley and C. D. Wheatley, as Lessor, and Shell Oil Company, as Lessee,
recorded in Volume 235, page 414 of the Records of Woodward County,
Oklahoma. (LF-04936-AY)
Oil and Gas Lease dated September 10, 1965, by and between Susan
McCabe, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 241,
page 33 of the Records of Woodward County, Oklahoma. (LF-04936-AZ)
Oil and Gas Lease dated September 10, 1965, by and between Gertrude H.
Camm, as Lessor, and Shell Oil Company, as Lessee, recorded in Volume 242,
page 319 of the Records of Woodward County, Oklahoma. (LF-04936-BA)
The hereinabove referenced leases cover Lot 1, Section 18,
Township 22 North, Range 22 West, Woodward County, Oklahoma.
The hereinabove referenced leases are subject to Operating Agreement dated
April 25, 1966, by and between Sun Oil Company, as Operator, and Shell Oil
Company, et al, as Non-Operators; Purchase and Sale Agreement dated December
19, 1985, by and between Shell Western E&P Inc. and Maynard Oil Company;
Assignment, Conveyance and Bill of Sale effective December 1, 1985, by and
between Shell Western E&P Inc. and Maynard Oil Company recorded in Volume
966, page 165 of the Records of Woodward County, Oklahoma.
EXHIBIT A-1
Attached to and made a part of Purchase and Sale Agreement
dated September 12, 1996, by and between Maynard Oil Company,
as Seller, and Enron Oil & Gas Company, as Buyer
WELLBORE UNIT PRELIMINARY IMBALANCE PAYOUT
VALUE VALUE PURCHASE VOLUME DATE AMOUNT
490005 NIPPERT 1-12 $85,666 $14,000 $99,666 0
442001 SCOT B-1 $46,764 $1,875 $48,639 1,328
490008 STOVER #1 $13,050 $3,974 $17,024 (115,829)
490009 WILLARD A-1 $5,867 $2,818 $8,685 (16,578)
490010 WILLARD A-2 $0 $0 $0 0
490012 JOHN WILLIAMS 1-26 $218,659 $10,000 $228,659 18,344
440504 HAYES UNIT 1-27 $3,875 $0 $3,875 0
440504 HAYES UNIT 2-27 $1,488 $0 $1,488 0
440601 HEBNER 1-14 $2,466 $3,749 $6,215 3,379
440505 INGLE 1-17 $24,139 $8,000 $32,139 9,269
440505 INGLE 2-17 $0 $0 $0 0
440507 IRVIN C $13,618 $2,056 $15,674 (794)
440702 LYTLE C 1-21 $6,976 $8,000 $14,976 12,970
440706 LYTLE C 2-21 $11,306 $0 $11,306 0
440511 MOYER 1-19 $231 $2,246 $2,477 (2,920)
438903 CALDWELL 22A $12,411 $3,875 $16,286 0
429601 FORREST REX BAIRD #1 $0 $0 $0 6,127
429604 FORREST REX BAIRD #2 $751 $0 $751 1,926
429605 FORREST REX BAIRD #3 $18,889 $8,000 $26,889 8,140
440803 HOHWEILER 1-18 $19,978 $6,237 $26,215 26,994
$486,134 $74,830 $560,964 (47,644)
EXHIBIT A-1
PREFERENTIAL RIGHTS TO PURCHASE
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer
PRELIMINARY
WELLBORE UNIT PURCHASE
VALUE VALUE PRICE
440507 IRVIN C $13,618 $2,056 $15,674
440702 LYTLE C 1-21 $6,976 $8,000 $14,976
440706 LYTLE C 2-21 $11,306 $0 $11,306
440511 MOYER 1-19 $231 $2,246 $2,477
TOTAL $32,131 $12,302 $44,433
EXHIBIT B
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, SELLER, and Enron Oil & Gas
Company, BUYER
THERE ARE NO OPEN AUTHORIZATIONS FOR EXPENDITURES
EXHIBIT C
Attached to and made a part of Purchase and Sale Agreement dated September
12, 1996, by and between Maynard Oil Company, as Seller, and Enron Oil & Gas
Company, as Buyer
ASSIGNMENT, BILL OF SALE AND CONVEYANCE
FROM MAYNARD OIL COMPANY TO ENRON OIL & GAS COMPANY,
EFFECTIVE AUGUST 1, 1996
THE STATE OF OKLAHOMA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF )
THAT, the undersigned, MAYNARD OIL COMPANY, a Delaware
corporation, having its principal office at 8080 North Central Expressway,
Suite 660, Dallas, Texas 75206 (hereinafter called "ASSIGNOR"), for and in
consideration of Ten Dollars ($10.00) and other valuable consideration to it
in hand paid by ENRON OIL & GAS COMPANY, a Delaware corporation, having its
principal office at 1400 Smith Street, Houston, Texas 77002 (hereinafter
called "ASSIGNEE"), does hereby GRANT, BARGAIN, SELL, ASSIGN and CONVEY unto
Assignee, subject to the terms and conditions contained herein, the
following:
(a) All of Assignor's right, title and interest in and to the
leasehold estate and mineral rights created by the leases described in
Exhibit A, attached hereto and made a part together with any and all
interest of Assignor in and to such property and in and to any
agreements, leases, rights-of-way, easements, licenses and permits
incident thereto, INSOFAR AND ONLY INSOFAR as the said rights cover the
lands and depths described in Exhibit A;
(b) All of Assignor's right, title and interest in and to the wells,
and production therefrom, located on the Leases or lands pooled
therewith, including but not limited to the wells described in Exhibit
A together with any and all buildings or other improvements constructed
thereon , together with any and all interest of Assignor in and to such
property and in and to any agreements, including, without limitation,
gas purchase agreements, farmin and farmout agreements, operating
agreements and pooling agreements, leases, rights-of-way, easements,
licenses and permits incident thereto;
(c) All of Assignor's right, title and interest in and to the real and
personal property, fixtures, improvements and buildings located on the
lands burdened by the Leases or lands pooled therewith, and all
contract rights, rights of substitution and subrogation in and to any
rights and actions of warranty which Assignor has or may have.
This Conveyance, Assignment and Bill of Sale is executed and delivered
as part of the consummation of the transaction contemplated by that certain
Purchase and Sale Agreement between Assignor, as SELLER , and Assignee, as
BUYER , dated September 12, 1996, hereinafter referred to as "Sale
Agreement". The warranties, representations, indemnities and covenants
contained in the Sale Agreement shall survive the delivery of this
Assignment in accordance with the provisions of the Sale Agreement and the
delivery of this Assignment shall not affect, expand, diminish, or otherwise
impair any of the warranties, representations, indemnities or covenants made
in the Sale Agreement and the terms and conditions set forth therein;
provided, however, any third parties transacting with Assignee with respect
to any of the interests may rely on this Assignment as vesting Assignee with
all of Assignor's rights, titles and interests in the said leases and wells.
Assignor warrants to Assignee title to the leases as described in said
Sale Agreement against any claims and demands of all persons whomsoever
claim the same or any part thereof by, through and under Assignor, but not
otherwise.
This Conveyance, Assignment and Bill of Sale shall extend to, be
binding upon and inure to the benefit of Assignor and Assignee, their
respective successors and assigns and shall be deemed covenants running with
the herein described lands and leasehold estates.
Assignee expressly assumes, as of the Effective Date, all of Assignor's
obligations relating to the said leases, including, but not limited to, the
obligation of plugging and abar all purposes as of 7:00 o'clock a.m. August
1, 1996.
Thisntical, except that, to facilitate recordation, only that portion of
Exhibit A which contains specific descriptions of the leases located in the
recording jurisdiction in which the particular counterpart is to be recorded
are included, and other portions of Exhibit A are included by reference
only. All of such counterparts together shall constitute one and the same
instrument. Complete copies of the Assignment containing the entire Exhibit
A have been retained by Assignor and Assignee.
EXECUTED this 30th day of September 1996, but to be effective as stated
above.
MAYNARD OIL COMPANY
By: ___________________________
Glenn R. Moore
President
ENRON OIL & GAS COMPANY
By: ___________________________
Leland J. McVay
Vice President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on September 30, 1996, by
Glenn R. Moore, President of Maynard Oil Company, a Delaware corporation, on
behalf of said corporation.
MY COMMISSION EXPIRES:
___________________________
Cassondra Foster, Notary
Public in and for the State
of Texas
THE STATE OF OKLAHOMA )
)
COUNTY OF )
This instrument was acknowledged before me on _________, 1996, by
Leland J. McVay, Vice President of Enron Oil & Gas Company, a Delaware
corporation, on behalf of said corporation.
MY COMMISSION EXPIRES:
_________________________________
Notary Public in and for the State
of ________