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EXHIBIT 2.1
February 4, 1999
PETROLEUM DEVELOPMENT CORPORATION
9720-B Candelaria N.E.
Albuquerque, NM 87112
ATTENTION: MR. JIM C. JOHNSON, JR.
RE: PURCHASE PROPOSAL
H.E. WHITE UNIT
FREESTONE COUNTY, TEXAS
Dear Jim:
In response to our phone conversation about the sale of 100% of our
working interest in the H.E. White Unit in Freestone County, Texas, Venus hereby
makes the following counterproposal subject to the following terms and
conditions:
1. Price: Venus hereby agrees to sell its working interest in the H.E.
White Unit for $1,150,000.
2. Payment for Wells: It is recognized that there are 3 wells drilled
and completed on the referenced unit and it is understood and agreed
that Venus will be responsible for all payments on the #1 and #2 wells
through completion and operations through December 31, 1998. As to the
H.E. White #3 well and future wells, PEDCO shall be responsible for the
drilling, completing and operating expense for said wells and shall be
responsible for all operating costs on all wells after December 31,
1998.
3. Effective Date: The effective date of the purchase shall be midnight
(12:00 p.m.) December 31, 1998. In the event Venus receives any income
attributable to the interest herein conveyed for production of oil
and/or gas which was produced after the effective date hereof, Venus
shall immediately pay PEDCO such sums of money. In the event Venus has
paid operating or other costs and charges attributable to the interest
herein conveyed after the effective date hereof and prior to closing,
Venus shall immediately furnish PEDCO evidence of the same and PEDCO
shall immediately reimburse Venus such sums of money. At the time of
closing, all operating expenses and other costs shall be paid in full
by Venus as of that effective date. All operating and other costs and
charges
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after the effective date shall become PEDCO's responsibility. Taxes and
other charges will be prorated as to the effective date.
4. Closing: The closing contemplated by this offer shall take place in
Venus' offices in San Antonio, or some other mutually acceptable
location on or before February 12, 1999. At closing, PEDCO will pay to
Venus, by check, the purchase price specified in paragraph 1 above. At
closing, Venus shall execute and deliver to PEDCO the necessary
instruments to convey in a mutually satisfactory form, with no warranty
of title, except, by, through and under Venus, covering 100% of Venus'
interest in the properties, equipment and oil, gas and other mineral
leases described in that certain Declaration of Gas Unit, which is
recorded in Volume 607, Page 506 of the Deed Records of Freestone
County, Texas.
5. Warranty: The subject property will be, at the time of conveyance to
PEDCO, free and clear of all liens, charges and encumbrances created by
Venus. The Assignment and Bill of Sale or other instrument of
conveyance shall be without warranty of title, except by, through and
under Venus, but not otherwise. Prior to closing, PEDCO shall have the
opportunity to accept or reject title to the properties, equipment and
oil, gas and mineral leases described in that certain Declaration of
Gas Unit, which is recorded in Volume 607, Page 506 of the Deed Records
of Freestone County, Texas. All personal property and equipment shall
be sold as is and where is, with all faults and without any warranties
whatsoever, either express or implied.
6. Interest Delivered: Venus believes that it owns a 25% working
interest and an 18.51% net revenue interest before payout and a
21.1804% working interest and a 16.51% net revenue interest after
payout of the wells drilled on the H.E. White Unit (assuming back-in
elections are made). There are currently three farmout agreements
covering four tracts within the unit that have a large override that
may be converted to a working interest at payout. These working
interest and net revenue interest numbers are based off the enclosed
schedule that was generated from the division order covering the H.E.
White #1 well, and at this time there is a new division order title
opinion being prepared by Anadarko covering this tract that will
document the working interest and net revenue interest covering this
tract. Venus does not warrant the working interest or net revenue
interest set forth above, therefore, PEDCO agrees to check the records
thoroughly and make its own determination as to the interest that Venus
owns.
In addition, in an Anadarko Title Opinion dated June 10, 1998, an
overriding royalty interest of .24% has been deducted from the Venus
net revenue interest. This overriding royalty interest was assigned out
to employees of the company we acquired. We feel that this overriding
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royalty has reverted back to Venus, but because record title is not
clear on the ownership of this interest, we have deducted it from the
net revenue interest stated above. The parties hereto agree that Venus
will keep this overriding royalty interest and it will not be
considered part of this transaction.
7. Entire Agreement: This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements,
negotiations and understandings. Any amendment to this Purchase
Proposal shall be done only by written instrument executed by both
PEDCO and Venus. This agreement is binding upon and shall inure to the
benefit of the parties hereto, their respective heirs, successors and
assigns.
If you concur with the terms and conditions set forth above, please
indicate your acceptance by executing in the space provided below and returning
one signed copy to the undersigned by 5:00 p.m. CST, February 4, 1999. At
5:00 p.m. CST, February 4, 1999, this proposal shall automatically terminate and
become null and void.
Very truly yours,
/s/ JOHN Y. AMES
John Y. Ames
President and Chief Operating Officer
ACCEPTED and AGREED TO this
_____ day of ______________, 1999.
PETROLEUM DEVELOPMENT CORPORATION
By: /s/ JIM C. JOHNSON JR.
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Printed Name: JIM C. JOHNSON JR.
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JYA/dak