MANAGEMENT AGREEMENT
THIS AGREEMENT, made and entered into this 4 day of Feb., 1997, by and
between Jay Petroleum LLC (hereinafter referred to as "Owner") and Jay
Management Company, LLC (hereinafter referred to as "Manager"), WITNESSETH:
I
Premises
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1.1 Owner either owns or controls certain producing oil and gas wells
located in the States of Oklahoma, Texas, Louisiana, Michigan, New Mexico and
Wyoming, which wells are more fully described in Exhibit A, attached hereto and
by this reference made a part hereof. For convenience of reference, such
producing oil and gas wells shall hereinafter be referred to as the "Contract
Wells".
1.2 Manager, upon the terms and provisions hereinafter set forth, has
agreed to supervise and manage the operation of the Contract Wells and Owner
will cause Manager to be appointed as the Operator of such wells on behalf of
Owner.
1.3 The consideration for this contract shall be good and valuable
consideration and the mutual promises and covenants set forth herein, the
receipt and sufficiency of which are hereby confessed and acknowledged.
II
Manager's Duties
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2.1 On behalf of Owner, Manager shall assume and perform the entire general
management and supervision of the operation of the Contract Wells and shall make
its staff available for such purposes. Manager's duties of managing and
supervising the operations of the Contract Wells on behalf of Owner shall
include all responsibilities as the Operator of the Contract Wells as conducted
by a prudent operator including the following:
(a) The general supervision and management of all personnel, including
well-pumpers and field roustabouts, which are assigned or employed in
connection with the field operation of the Contract Wells;
(b) The securing of third party services for the purposes of maintaining
the Contract Wells in a good operating condition;
(c) The preparation of Authorities For Expenditure (AFE's) for reworking,
recompleting and drilling of new wells and the general supervision and
management of such operations;
(d) Manager shall keep and maintain the books of account and other records
which are necessary to the operation of the Contract Wells including
performing the
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joint interest billing and disbursement of revenues to other working
interest owners;
(e) Manager shall prepare and submit all reports relative to the Contract
Wells which may be required by state regulatory bodies.
III
Manager's Compensation
----------------------
3.1 Owners shall pay to Manager monthly as compensation for the services
which Manager shall perform under the terms of this Agreement Twelve Thousand
Five Hundred Dollars ($12,500.00). Manager shall also receive all payments to
Operator for operations pursuant to the Operating Agreements for the Contract
Wells.
3.2 The amount which is to be paid to Manager as set forth in Paragraph 3.1
may be amended from time to time by the parties hereto if they so mutually
agree.
IV
Miscellaneous
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4.1 The Manager shall not be liable for any losses sustained in or on each
well or on the property where each well is located, or for any damage to the
well or productive capacity thereof, caused by the act of God, fire, storm,
flood, explosion, strike, riots, theft or the act of any person not under
direction or supervision of Manager. Manager's liability shall be limited to any
loss or losses resulting from the bad faith, gross negligence, or willful
misconduct of the supervisory employees of Manager.
4.2 This Agreement shall remain in force and effect for the term of ten
(10) years or until terminated by either party hereto. Such termination shall be
effected by either party hereto giving the other party not less than 180 days'
written notice that the contract shall be terminated on a date certain. Notice
of termination shall be in writing sent by courier, to the other party at the
following address:
Owner: Jay Petroleum LLC
One Houston Center
1221 McKinney, Suite 3100
Houston, TX 77010
Manager: Jay Management Company LLC
One Houston Center
1221 McKinney, Suite 3100
Houston, TX 77010
2
Such notice shall be deemed to have been given on the day following the date of
mailing. Upon termination hereof, Manager shall be entitled to payment of any
and all amounts owning to it pursuant to the terms and provisions hereof.
4.3 Neither party hereto shall execute any assignment or transfer of its
rights hereunder without the consent of the other party first obtained.
4.4 Manager shall comply with all laws and regulations of all governmental
bodies applicable to the operations of the Contract Wells.
4.5 This Agreement shall be binding upon the parties hereto and upon their
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
OWNER:
JAY PETROLEUM LLC
By: /S/ Y. LEVY / REUVEN HOLLO
------------------------------------
Title:
---------------------------------
Date: 2/4/97 / 2/4/97
---------------------------------
MANAGER:
JAY MANAGEMENT COMPANY LLC
By:
-----------------------------------
Title:
--------------------------------
Date: 2/4/97
--------------------------------
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EXHIBIT A
Farmers Acquisition - Average Expenses
Lease Name County/Parish Operator WI NRI
Louisiana
COWLEY NO. 1 Bossier Grigsby 0.25000000 0.17500000
COWLEY NO. 2 Bossier Grigsby 0.25000000 0.17500000
COWLEY NO. 3 Bossier Grigsby 0.25000000 0.17500000
CORLEY NO. 6 Bossier Grigsby 0.25000000 0.17500000
Michigan
JOSEPH NO. 1-25A Manistee WW Energy 0.12500000 0.09296900
New Mexico
HANSON FEDERAL NO. 1 Eddy Anadarko 0.25000000 0.17750000
Oklahoma
HALL UNIT NO. 1 Caddo MW Petroleum 0.00000000 0.00146500
STRATTON FARMS NO. 26 Custer Sonat 0.01327700 0.01033600
BRAKHAGE L UNT/2 Garfield Farmers 0.25000000 0.21533200
BRAKHAGE NO. 1 Garfield Farmers 0.25000000 0.21533200
HOOVER-A NO. 1 Garfield Jay 0.37191900 0.31186900
HOOVER NO. 1 Garfield Jay 0.75490700 0.61729100
RHODES-MORRIS Garfield Continental 0.00000000 0.01702500
BAGWELL EST NO. 1 Beckham Jay 0.78125000 0.67557800
MEADOR NO. 1 Beckham Jay 1.00000000 0.85403600
PUTHUFF NO. 1 Beckham Jay 1.00000000 0.87500000
TURNER NO. 1 Beckham Jay 1.00000000 0.87500000
WHITE NO. 1 Beckham Jay 1.00000000 0.86458400
WHITE NO. 2 Beckham Jay 1.00000000 0.87500000
ALBRIGHT NO. 19-1 Grant Echo 0.40500000 0.42875000
JONES A NO. 1-32 Coal Payne WC 0.08668400 0.07068000
BERNARD NO. 1&2 Alfalfa Mack Energy 0.00000000 0.02734300
WOODWARD NO. 1 Alfalfa Mack Energy 0.00000000 0.02734400
WOODARD NO. 4 Alfalfa Mack Energy 0.00000000 0.02734400
GIFT A Garfield Parker & Parley 0.00000000 0.02734400
ISBEL #2 Garfield Jay 1.00000000 0.82031000
JEWELL #1 Garfield Jay 1.00000000 0.82031000
SAWYER GAS UNIT NO. 2 Garfield Parker & Parley 0.24752500 0.18952500
RICHARDS NO. 2-21 McLain Whitmar 0.37500000 0.28875000
Texas
DENTON NO. 1 Howard Jay 0.75000000 0.58187500
DENTON NO. 2 Howard Jay 0.75000000 0.58187500
4
EXHIBIT A (Continued)
Farmers Acquisition - Average Expenses
GROSS (8/8th) NET
Lease Name LOE* Overhead Total LOE Overhead Total
Jay Expenses*** Jay Expenses
Operator** Operator
Louisiana
COWLEY NO. 1 $2,148 $0 $2,148 $537 $0 $537
COWLEY NO. 2 $2,112 $0 $2,112 $528 $0 $528
COWLEY NO. 3 $1,868 $0 $1,868 $467 $0 $467
CORLEY NO. 6 $1,732 $0 $1,732 $433 $0 $433
Michigan
JOSEPH NO. 1-25A $4,264 $0 $4,264 $533 $0 $533
New Mexico
HANSON FEDERAL NO. 1 $980 $0 $980 $245 $0 $245
Oklahoma
HALL UNIT NO. 1 $0 $0 $0 $0 $0 $0
STRATTON FARMS NO. 26 $5,423 $0 $5,423 $72 $0 $72
BRAKHAGE L UNT/2 $720 $0 $720 $180 $0 $180
BRAKHAGE NO. 1 $720 $0 $720 $180 $0 $180
HOOVER-A NO. 1 $262 $428 $690 $97 $159 $257
HOOVER NO. 1 $211 $431 $642 $159 $325 $485
RHODES-MORRIS $0 $0 $0 $0 $0 $0
BAGWELL EST NO. 1 $395 $593 $988 $309 $463 $772
MEADOR NO. 1 $336 $593 $929 $336 $593 $929
PUTHUFF NO. 1 $491 $593 $1,084 $491 $593 $1,084
TURNER NO. 1 $455 $593 $1,048 $455 $593 $1,048
WHITE NO. 1 $178 $593 $771 $178 $593 $771
WHITE NO. 2 $232 $593 $825 $232 $593 $825
ALBRIGHT NO. 19-1 $2,629 $0 $2,629 $1,065 $0 $1,085
JONES A NO. 1-32 $3,333 $0 $3,333 $289 $0 $289
BERNARD NO. 1&2 $0 $0 $0 $0 $0 $0
WOODWARD NO. 1 $0 $0 $0 $0 $0 $0
WOODARD NO. 4 $0 $0 $0 $0 $0 $0
GIFT A $0 $0 $0 $0 $0 $0
ISBEL #2 $178 $593 $771 $178 $593 $771
JEWELL #1 $178 $593 $771 $178 $593 $771
SAWYER GAS UNIT NO. 2 $723 $0 $723 $179 $0 $179
RICHARDS NO. 2-21 $3,629 $0 $3,629 $1,361 $0 $1,361
Texas
DENTON NO. 1 $602 $501 $1,103 $452 $376 $827
DENTON NO. 2 $4,000 $501 $4,501 $3,000 $376 $3,376
5
EXHIBIT A (Continued)
Farmers Acquisition - Average Expenses
Lease Name County/Parish Operator WI NRI
GLASS NO. 1 Howard Jay 0.75000000 0.56250000
SHANNON A NO. 1 Crockett Crockett 0.39875000 0.27710000
GOREE Bee Bee 0.25000000 0.20312500
RICHARDS B NO. 1 Jack Jay 1.00000000 0.80000000
CHERRYHOMES NO. 1-4 Jack Jay 1.00000000 0.81250000
CHERRY D/4/5/7/9 Jack Jay 1.00000000 0.75000000
CHERRYHOMES M/2/3/4 Jack Jay 1.00000000 0.81250000
CHERRYHOMES B NO. 1 Jack Jay 1.00000000 0.81250000
MCLAUGHLIN Nolan Boyd&McWilliams 0.18750000 0.13500000
LOPEZ CREEK 1-5 Irion Boyd&McWilliams 0.18750000 0.11812500
FRYSAK NO. 1 Glasscock Boyd&McWilliams 0.25000000 0.16958300
ELENBURG NO. 1 Clay Jay 1.00000000 0.81250000
LOPEZ CREEK 3/6 Irion Boyd&McWilliams 0.18750000 0.11812500
Wyoming
FLAT TOP FED #32-10 Converse Equitable 0.20250000 0.17218800
Farmers Acquisition - Average Expenses
GROSS (8/8th) NET
Lease Name LOE* Overhead Total LOE Overhead Total
Jay Expenses*** Jay Expenses
Operator** Operator
GLASS NO. 1 $285 $501 $786 $214 $376 $590
SHANNON A NO. 1 $449 $867 $1,316 $179 $346 $525
GOREE $1,080 $0 $1,080 $270 $0 $270
RICHARDS B NO. 1 $164 $598 $762 $164 $598 $762
CHERRYHOMES NO. 1-4 $819 $1,105 $1,924 $819 $1,105 $1,924
CHERRY D/4/5/7/9 $1,053 $886 $1,939 $1,053 $886 $1,939
CHERRYHOMES M/2/3/4 $5,293 $3,900 $9,193 $5,293 $3,900 $9,193
CHERRYHOMES B NO. 1 $258 $571 $829 $258 $571 $829
MCLAUGHLIN $1,845 $0 $1,845 $346 $0 $346
LOPEZ CREEK 1-5 $2,550 $0 $2,550 $478 $0 $478
FRYSAK NO. 1 $2,162 $0 $2,162 $541 $0 $541
ELENBURG NO. 1 $282 $593 $875 $282 $593 $875
LOPEZ CREEK 3/6 $1,020 $0 $1,020 $191 $0 $191
Wyoming
FLAT TOP FED #32-10 $1,283 $0 $1,283 $260 $0 $260
$56,342 $15,626 $71,968 $22,481 $14,225 $36,706
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EXHIBIT A (Continued)
Snyder Acquisition - Average Expense
Lease Name County/Parish Operator WI NRI
Louisiana
ST MARY PARISH (SN) St. Mary Parker&Parsley 0.3623470 0.2572660
KG LEE 1,2,3,5 (SN) Concordia Ross Production 0.5463750 0.3961210
COTTEN NO. 1 (SN) Iberia An-Son 0.0946800 0.0736690
COTTON LD CP 1 (SN) Iberia Parker&Parsley 0.0138990 0.0107880
HERO Plaqumine Parker&Parsley 0.3675290 0.2613530
Texas
VAN VORST W 1-L (SN) Harris Sonora Petroleum 0.2500000 0.1682270
WILBER B.E NO.1 (SN) Jefferson Snyder (Jay) 0.8127520 0.6502070
KIRKENDALL B-1 (SN) Hardin Snyder (Jay) 0.3129520 0.2465220
Wyoming
BCU-1ST CODY (SN) Fremont Amoco 0.0025870
BCU-2ND CODY (SN) Fremont Amoco 0.0045750
BCU-FORT UNION (SN) Fremont Amoco 0.0010000
BCU-FRONTR/DAK (SN) Fremont Amoco 0.0027080
BCU-MADISON (SN) Fremont Amoco 0.0025200
BCU-PHOSPORIA (SN) Fremont Amoco 0.0039990
BCU-TENSLEEP (SN) Fremont Amoco 0.0025710
OFF-RK 1-14&5-14 (SN) Campbell Wellstar 0.0977600 0.0806520
OFF-ROURK 2-14 (SN) Campbell Wellstar 0.0977600 0.0806520
MILLER JAC #1 (SN) Campbell Lep Operating 0.2500000 0.1725000
ARMSTRNG FED 1D (SN) Campbell Presidio 0.1497500 0.1323800
ARMSTRNG FED 1F (SN) Campbell Presidio 0.1497500 0.1323800
ARMSTRNG FED 2-23 (SN) Campbell Presidio 0.1955180 0.1535940
GROSS (8/8th) NET
Lease Name LOE* Overhead Total LOE Overhead Total
Jay Expenses** Jay Expenses
Operator** Operator
Louisiana
ST MARY PARISH (SN) $5,671 $0 $5,671 $2,055 $0 $2,055
KG LEE 1,2,3,5 (SN) $9,776 $0 $9,776 $5,341 $0 $5,341
COTTEN NO. 1 (SN) $7,955 $0 $7,955 $753 $0 $753
COTTON LD CP 1 (SN) $7,512 $0 $7,512 $104 $0 $104
HERO $7,821 $0 $7,821 $2,874 $0 $2,874
Texas
VAN VORST W 1-L (SN) $4,881 $0 $4,881 $1,220 $0 $1,220
WILBER B.E NO.1 (SN) $1,339 $947 $2,286 $1,088 $770 $1,858
KIRKENDALL B-1 (SN) $3,299 $687 $3,986 $1,032 $215 $1,247
Wyoming
BCU-1ST CODY (SN) $0 $0 $0 $0 $0 $0
BCU-2ND CODY (SN) $0 $0 $0 $0 $0 $0
BCU-FORT UNION (SN) $0 $0 $0 $0 $0 $0
BCU-FRONTR/DAK (SN) $0 $0 $0 $0 $0 $0
BCU-MADISON (SN) $0 $0 $0 $0 $0 $0
BCU-PHOSPORIA (SN) $0 $0 $0 $0 $0 $0
BCU-TENSLEEP (SN) $0 $0 $0 $0 $0 $0
OFF-RK 1-14&5-14 (SN) $6,212 $0 $6,212 $607 $0 $607
OFF-ROURK 2-14 (SN) $3,106 $0 $3,106 $304 $0 $304
MILLER JAC #1 (SN) $1,565 $0 $1,565 $391 $0 $391
ARMSTRNG FED 1D (SN) $2,194 $0 $2,194 $329 $0 $329
ARMSTRNG FED 1F (SN) $1,907 $0 $1,907 $286 $0 $286
ARMSTRNG FED 2-23 (SN) $4,526 $0 $4,526 $885 $0 $885
$67,764 $1,634 $69,398 $17,270 $985 $18,255
LOE* Lease Operating Expenses
Overhead** Overhead charged to working interest owners on wells operated by Jay.
Total Expenses *** Gross Expenses - LOE plus Overhead
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