ENRON Capital & Trade Resources
CONFIRMATION OF AN OPTION
(CALL)
Date: April 03, 1996
To: Inland Resources Inc. ("Counterparty")
Attention: Bill Pennington
From: Enron Capital & Trade Resources Corp.
("ECT")
Re: Commodity Option
Contract No.: ECT Contract No. e31409.1
The purpose of this letter agreement (together with the
General Terms and Conditions of Confirmation as set forth in
Annex A and any other attachments hereto, collectively the
(Confirmation") is to confirm the terms and conditions of the
transaction entered into between us on the Trade Date specified
below (the "Transaction") pursuant to a telephone conversation
between Bill Pennington and Fred Lagrasta whereby we accepted
your offer to enter into the Transaction. The terms of the
particular Transaction to which this Confirmation relates are as
follows:
General Terms for Call:
Trade Date: April 03, 1996
Commodity: Crude Oil
Commodity Unit: Barrels (BBL) (42 U.S. Gallons)
Option Type: Call Option
Seller: ECT
Buyer: Counterparty
Total Premium: U.S. Dollars $86,400.00 due ECT
Premium Payment Date(s): April 5, 1996
Automatic Exercise: Applicable
Exercise Period: Inapplicable
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Written Confirmation: Inapplicable
Transaction Terms:
Notional Quantity Per
Determination Period: 12,000 Barrels per month
Effective Date: July 01, 1996
Termination Date: December 31, 1996
Determination Period(s): Each calendar month beginning with
July 01, 1996 and ending on
December 31, 1996. The end date
for each Determination Period
shall be the last day of each such
calendar month.
Strike Price: US Dollars $18.20000 per Barrel
Floating Price: The average of the daily settlement
prices for the prompt month of the
YMEX Light Sweet Crude Oil Futures
Contract for each NYMEX Trading Day
of the Determination Period.
Strike Price
Differential: A price per Commodity Unit equal to
the excess (if a positive number)
of (i)the Floating Price over (ii)
the Strike Price.
Cash Settlement Amount: For each relevant Determination
Period, an amount (if any) equal to
the product of (i) the Notional
Quantity per Determination Period
multiplied by (ii)the Strike Price
Differential, which amount shall be
due and payable on the application
Payment Date for such Determination
Period (if for any Determination
Period the Floating Price is equal
to or less than the Strike Price,
then no payment shall be due with
respect to such determination
Period.)
Payment Date(s): The fifth Business Day after the
Floating Price is determinable.
Contractual Currency: US Dollars
Governing Law: Texas
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General Terms and Conditions
of Confirmations: The general terms and conditions
contained in Annex A attached
hereto and made a part here of
apply and are incorporated herein
by reference.
Credit or Other Special Provisions: Inapplicable.
For the purposes of the calculations of the Floating Price
(s), all numbers shall be rounded as follows: Floating Price (s)
relating to commodities quoted in (i) gallons shall be rounded to
five places, (ii) MMBtu s shall be rounded to four places and
(iii) barrels shall be rounded to three places. If the number
after the final number is five (5) or greater then the final
number shall be increased by one (1), and if the number after the
final number is less than five (5) then the final number shall
remain unchanged.
This confirmation is a complete and binding agreement
between you and us as to the Transaction. Until a master
Agreement is executed by you and us, all currently existing swap,
option or other financially settled derivative transactions
between the parties shall be governed by the terms and conditions
set forth in any Annex attached hereto. All such swap, option or
other financially-settled derivative transactions, shall
constitute single integrated agreement between you and us, it
being acknowledged that the parties are relying upon the fact
that all such swap, option or other financially-settled
derivative transactions will form a single agreement and the
parties would not otherwise enter into any transactions. The
terms and conditions contained in any Annex attached hereto are
incorporated into this Confirmation, and in the event of any
inconsistency between any Annex and this letter agreement, this
letter agreement shall govern. Upon execution by you and us of a
Master Agreement, this confirmation will supplement, form a part
of, and be subject to the Master Agreement. In the event of any
inconsistency between the Confirmation and the Master Agreement,
the Master Agreement shall govern except as expressly set forth
there in.
If this confirmation correctly sets forth the terms of the
Transaction that we have entered into, please promptly confirm in
a reply to us by signing below and sending this Confirmation (or
a copy hereof) to us (or notifying us of any bona fide error that
would require revision in order to accurately reflect our
agreement on the Transaction) by facsimile transmission within
two Business Days after your receipt of this confirmation. If
you fail to so reply within such time period, the terms hereof
will constitute binding and conclusive evidence of the
Transaction. We look forward to receiving your prompt reply.
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Sincerely,
Enron Capital & Trade Resources Corp. Inland Resources Inc.
By: ______________________ By: ______________________
Name: ____________________ Name: ____________________
Title: ___________________ Title: _____________________
Date: ____________________ Date: _____________________
COUNTERPARTY: AFTER YOU HAVE CONFIRMED TRANSACTION, PLEASE
RETURN TO ECT, ATTENTION: DIRECTOR OF DOCUMENTATION AT FAX NO.
(713) 646-4816
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