Gulfstar Energy Corporation
3410 Embassy Drive, West Palm Beach, FL 33401
Phone: 800-820-1632
October 22, 2010
Timberline Production Company, LLC
800 Werner Ct., Suite 220
Casper, WY 82601
(307) 577-7121
RE: Greasewood Field
Dear Don and Bruce:
GulfStar Energy Corporation (GulfStar) intends to purchase certain assets from
Timberline Production Company (Timberline) in a cash transaction for the agreed
upon price of $75,000,000.00 US for 100% of the Working Interest (WI)
($55,529,427.30 US for 74.0392364% WI) with an effective closing date on or
before December 31st, 2010.
Assets to be purchased. Assets owned by Timberline Production Co, Bruce Bummer,
and Bob Selby in Greasewood Field, Niobrara County, WY represented to be as
follows:
1. Greasewood Producing Unit - 74.0392364% WI, 60.68285186% NRI per the
following schedule:
- ------------------------------------- ---------------------------------- ----------------------------------
WI NRI
- ------------------------------------- ---------------------------------- ----------------------------------
Timberline 43.9323884 36.00657339
- ------------------------------------- ---------------------------------- ----------------------------------
Bruce Bummer 23.22469610 19.03789317
- ------------------------------------- ---------------------------------- ----------------------------------
Bob Selby 6.8821519 5.6383853
- ------------------------------------- ---------------------------------- ----------------------------------
Total 74.0392364 60.68285186
- ------------------------------------- ---------------------------------- ----------------------------------
2. Federal 14-26 - 68.75%WI, 60.01875% NRI per the following schedule:
- ------------------------------------- ---------------------------------- ----------------------------------
WI NRI
- ------------------------------------- ---------------------------------- ----------------------------------
Timberline 42.50 37.1025
- ------------------------------------- ---------------------------------- ----------------------------------
Bruce Bummer 19.6875 17.1871875
- ------------------------------------- ---------------------------------- ----------------------------------
Bob Selby 6.5625 5.7290625
- ------------------------------------- ---------------------------------- ----------------------------------
Total 68.75 60.01875
- ------------------------------------- ---------------------------------- ----------------------------------
3. Greasewood producing field located in portions of Section 31 T39N R62W,
Sections 26, 35 & 36 T39N R63W and Section 1, T38N R63W and Section 5 & 6
T38N R62W in Niobrara County, Wyoming.
4. Associated leases held by Timberline or its agent adjacent to the
Greasewood Field in T39N R63 & T39N R62W, T38N R63W & T38N R62W, Niobrara
County, Wyoming. Leases would be 81.95% NRI proportionately reduced by
total WI owned by Timberline, Bruce Bummer and Bob Selby.
5. All surface and down hole equipment related to the Greasewood producing
field including pump jacks, heater treaters, injection equipment for water
flooding operations, meters and recording instrumentation, etc. Should
Timberline, Bruce Bummer and Bob Selby find the foregoing acceptable,
please sign this letter agreement in the space provided below. GulfStar's
attorney will then draft a purchase and sale agreement for the parties'
review. The parties agree that unless and until a definitive written
purchase and sale agreement ("Definitive Written Agreement") shall have
been executed by the parties, no party to this letter agreement shall be
under any obligation whatsoever (legal or otherwise) to continue
discussions or to conclude the referenced transaction or any other
transaction. Unless the same are included in the Definitive Written
Agreement, any communications (written or oral) may not be relied upon by
any party to this letter agreement, nor anyone else, as the basis for
taking any action, foregoing any opportunity or incurring any costs, and do
not and will not create any obligations whatsoever on the part of any party
hereto.
by: by:
--------------------------------------------- -----------------------------------------
Don Walters, Managing Member Robert McCann, CEO
Timberline Production Company, LLC GulfStar Energy Corporation
by: by:
--------------------------------------------- -----------------------------------------
Bruce Bummer, Managing Member Bob Selby
Timberline Production Company, LLC
by:
---------------------------------------------
Bruce Bummer