EXHIBIT 10.1
October 18, 1999
Mr. C. E. "Gene" Miller
Eagle Investments
P.O. Box 348
Traverse City, MI 49685-0348
RE: Mississippi Salt Basin Exploration Program
Commitment of Expenditures
Dear Gene,
As referenced in Letter Agreement dated June 30, 1999, Miller
Exploration (MEXP) sold to Eagle Investments (Eagle) 53% of 8/8ths interest in
the Miller-Heffelfinger #1 well for a cash consideration of $1,000,000 (one
million dollars). In view of MEXP being unable to formally provide a Release of
Lien to Eagle and MEXP is not presently able to return said funds, MEXP and
Eagle agree to exchange the encumbered interest in the aforementioned well for
$1,100,000 (one million one hundred thousand dollars) under the following terms
and conditions:
1. MEXP will expend $1,100,000 (one million one hundred thousand
dollars) for Eagle's share of all drilling and completions
operations conducted on the initial well on the domes listed on
Exhibit A, in addition to the subsequent well(s) of the
Miller-Campbell #1 well currently drilling on Centerville Dome and
the Allar #7 well to be drilled on Midway Dome.
2. In the event Eagle is a working interest participant in the
drilling of the Allar #7, Section 20, T4N-R15W, 1660' FEL, 1540'
FSL, Lamar County, Mississippi, Eagle will participate on an
actual cost basis.
3. Subject to Eagle's election under the applicable Joint Operating
Agreement, Eagle will pay its after casing point proportionate
share of all lease renewals, extensions, rentals and new leasehold
acquisition costs; provided, however, if any part of the
$1,100,000 is still owed to Eagle, or if MEXP still owes Eagle any
other money as a result of the sums paid by Eagle pursuant to the
Prior Agreements, MEXP shall pay Eagle's share of the above costs
or expenses contemplated by this paragraph and shall credit the
same against the money MEXP may still owe Eagle.
Eagle Investments
Page 2 of 3
October 18, 1999
4. Eagle will have the option to elect to pay its proportionate share
of its respective completion cost and to pay its proportionate
share of the proposed subsequent well(s) on the domes referenced
on Exhibit A, pursuant to the existing Joint Operating Agreements.
In the event that MEXP has not yet expended a total of $1,100,000
(one million one hundred thousand dollars) for the benefit of
Eagle, the balance of the remaining funds will be applied to said
operations.
5. If any part of the above $1,100,000 applicable to the
Miller-Heffelfinger #1 well interest has not been paid by MEXP for
Eagle's benefit on or before June 30, 2000, then the balance of
said $1,100,000 will be paid to Eagle in cash at the earlier of
said date or there are no additional operations contemplated for
the use of said funds.
6. Eagle will be responsible for its proportionate share of any
remaining costs associated with the specific operations and all
subsequent operations on the domes upon the fulfillment of the
obligation of MEXP or the return of the balance of said funds as
referenced in Paragraph 5.
7. MEXP will provide a monthly reconciliation to Eagle on a timely
basis.
8. MEXP will provide a recordable Assignment and Release of Lien for
Eagle's interest in the N.E. Collins Prospect.
9. MEXP will reimburse Eagle for its proportionate share of the
actual leasehold costs associated with the leasing on SW Kola, as
per letter dated August 16, 1999, and provide Eagle with a
recordable Assignment and Release of Lien on said leases.
10. In the event MEXP does not participate in the drilling of the
initial well at SW Kola, Kola, Richmond, or Eminence, MEXP will
assign its rights, title, and interest in the undrilled
prospect(s) to Eagle. However, said assignment(s) will not relieve
MEXP of the financial obligation as referenced in Paragraph 1.
11. MEXP will escrow the financial obligations due Eagle pursuant to
Paragraph 1 on the before casing point interest of the respective
wells listed on Exhibit A, as required under the specific Joint
Operating Agreements.
12. This Agreement is subject to a formal resolution of the majority
of outside MEXP Board of Directors and written approval from the
Bank of Montreal.
13. This Agreement and the rights and obligations of the parties shall
be governed by and interpreted in accordance with the laws of the
State of Michigan, without giving effect to principles of
conflicts of laws.
Eagle Investments
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October 18, 1999
14. This Agreement shall be binding upon and shall inure to the
benefit of MEXP and Eagle and their respective successors and
assigns.
15. This Agreement may be executed in one or more counterparts, each
of which shall constitute one and the same agreement. Facsimile
signatures may be relied upon as originals.
Should the foregoing meet with your approval, please so indicate where
provided below and return one copy to the undersigned.
Sincerely,
MILLER EXPLORATION COMPANY
/s/ C.W. Measley, Jr.
Vice President - Land and Acquisitions
/sc/vs
cc: Doug Bell
Agreed to and Accepted this 20th day of October, 1999.
EAGLE INVESTMENTS
By: /s/ C.E. Miller
Its: President
EXHIBIT A
TO THE EAGLE/MEXP OCTOBER 18, 1999
LETTER AGREEMENT
MEXP MEXP EAGLE EAGLE MEXP BCP EAGLE
DOME EXPECTED BCP EXPECTED ACP EXPECTED BCP EXPECTED ACP (EAGLE CARRY) $$$ CARRY
- -------------------------------------------------------------------------------------------------------------------
Richmond 6.060% 25.260% 10.640% 14.240% 16.700% $ 265,718.40
SW Kola 20.830% 38.830% 15.170% 21.170% 36.000% $ 232,870.00
Eminence 8.270% 23.270% 4.230% 4.230% 12.500% $ 84,600.00
Kola 4.540% 17.740% 12.760% 12.760% 17.300% $ 236,060.00
Centerville 0.655% 17.180% 14.650% 14.65% 15.305% $ 250,881.25
Allar#7 79.5818% 79.5818% 7.91825% 7.92% 87.500% $1,260,167.65