EXHIBIT 10.1
Chevron Gordon R. Cain North America Upstream
[LOGO OMITTED] Land Manager Gulf of Mexico Land Division
935 Gravier Street
New Orleans, LA 70112
Tel 504-592-6356
Fax 504-592-7110
GordonCain@chevron.com
November 1, 2006
Ridgewood Energy Corporation
11700 Old Katy Road, Suite 280
Houston TX, 77079
Attention: Mr. Greg Tabor
Participation Agreement
North Jaguar Prospect
OCS-G 13980, VIOSCA KNOLL BLOCK 207
Viosca Knoll Block 207 #2ST #2
Viosca Knoll Field
Offshore Alabama
Gentlemen:
This Participation Agreement ("PA"), when executed by each of the Parties
hereto, being Chevron U.S.A. Inc. ("Chevron") and Ridgewood Energy Corporation
("Ridgewood"), sometimes hereinafter referred to as the "Parties", will evidence
the agreement between the Parties to explore, develop and operate certain rights
in the "Contract Area", as defined below. The Parties hereby agree to the
following terms and conditions:
1. CONTRACT AREA. The Contract Area is the leasehold acreage that covers the
following described property:
Viosca Knoll Block 207 (OCS-G 13980) as said lease covers depths down to
and including the total depth of 99,999', hereinafter referred to as the
"Contract Area." Chevron's interest in the Contract Area, to the best of
our information and belief is set out as shown in Exhibit "A" attached
hereto and is hereinafter referred to as the "North Jaguar Prospect".
2. COMMENCEMENT. Subject to the other terms hereof, weather delay, delivery of
materials, (e.g. pipe), rig availability and obtaining all requisite
permits, which rig and permits Chevron shall use reasonable business-like
efforts to obtain, Ridgewood hereby obligates itself to participate,
subject to and under the Article 3 terms below, and, Chevron, as operator,
must commence mobilizing the Ocean Drake drilling rig or mobilizing a
drilling rig capable of drilling the Viosca Knoll Block 207 #2ST #2,
hereinafter sometimes referred to as the "Initial Well", on or before
November 22, 2006, as a development well, to be sidetracked, drilled and
logged pursuant to certain terms of': the Operating Agreement ("OA"),
attached hereto as Exhibit "B".
The terms and provisions of the OA are incorporated herein as if set forth
in full, are not intended to create any operating rights area in which
Ridgewood owns an interest in the Contract Area and apply, prior to any
earning by Ridgewood but, solely to recognize the rights, privileges and
protections of Chevron as operator and for pre-earning notices, content and
election periods and access by Ridgewood to the rig floor, but not
otherwise. The costs, risks and expenses of the Initial Well are
proportionately borne under this PA, and not the OA, until an earning by
Ridgewood. Voting rights under this PA for operations shall require
unanimous consent prior to earning, and a failure to reach unanimous
consent shall be cause for the plugging and abandonment of the well by
Chevron. Either party may propose abandonment at any time after reaching
expenditure of one hundred and fifteen percent (115%) of the AFE. The
Initial Well will be sidetracked, drilled and logged as per the final
executed and approved Authority For Expenditure ("AFE") and well plan, as
attached hereto as Exhibit "C", within the Contract Area, from a surface
location of 7,329' FNL and 266' FEL on Viosca Knoll Block 206 OCS-G 10926
(X = 1,266,927, Y = 10,811,390') to a bottom hole location for this
proposed sidetrack being 7,598' FNL and 4,719' FWL of Viosca Knoll Block
207 OCS-G 13980 (X = 1,271,912.76, Y = 10,811,120.46). The Initial Well
shall be sidetracked, drilled and logged with due diligence and in
accordance with good oilfield practice, at an estimated sub sea top of
14,565', to the Lower Cretaceous Aptian 115 MYBD Middle James age carbonate
formation, hereinafter referred to as the "Objective", and casing point
shall occur when the Initial Well is side tracked, drilled and logged to
the Objective. Subject to the other terms herein, sidetracking, drilling
and logging operations will be conducted to casing point, and elections
regarding subsequent operations after reaching the Objective will be made
under and subject to the OA in the proportions prescribed under Exhibit "B"
OA, with costs, risks and expense of such operations and ownership of and
earning in the Contract Area governed by this PA prior to earning and by
the OA after any earning.
3. PROSPECT WELL COST SHARING. Chevron has proposed and Ridgewood has approved
the sidetracking, drilling and logging of the Initial Well in the Contract
Area as set forth in the attached Exhibit "C" ATE. By executing this PA and
obligating itself to participate in the Initial Well, Ridgewood has the
right to earn a forty percent (40%) working interest of the Chevron
interest, proportionately reduced, in the Contract Area, upon meeting the
obligations herein and in particular those set forth in Article 5 below for
the Initial Well or Substitute Well, by paying seventy percent (70%) of the
costs, to the extent applicable under this PA, of sidetracking, drilling
and logging to the Objective, and/or plugging & abandoning, as a dry hole
if applicable, of the Initial Well or Substitute Well, up to one hundred
and fifteen percent (115%) of the costs in the attached Exhibit "C" AFE. If
the Initial Well's actual cost exceeds the amount as set forth on the AFE
by f fifteen percent (15%) or upon reaching the Objective, whichever occurs
first, Ridgewood will thereafter pay and bear forty percent (40%) of the
costs and risks of all subsequent operations in such well over such AFE
cost for further drilling operations. However, notwithstanding anything to
the contrary, if the Parties unanimously elect not to complete the Initial
Well, whether or not reaching the Objective, but unanimously elect to plug
Ridgewood North Jaguar PA
November 1, 2006
Page 2
and abandon the same, Ridgewood will pay and bear seventy percent (70%) of
the costs and risks of such plugging and abandoning operations. The Parties
agree that should a Substitute Well, as specified in Article 10, below, be
approved by the Parties and commenced, Ridgewood's obligation to pay
seventy percent (70%) of the AFE costs will cease at the point in time that
the actual costs of the Initial Well plus the actual costs of the
Substitute Well combined equal one hundred and fifteen percent (115%) of
the AFE costs for the Initial Well; provided however, once the aggregate
costs of the Initial Well and Substitute Well equal one hundred and fifteen
percent (115%) of the costs of the total amount of the AFE for the Initial
Well, Ridgewood's share of all subsequent drilling and operating costs will
be forty percent (40%), subject to further rights, elections and provisions
of this PA or the OA, as applicable. Effective upon and after reaching the
Objective, but not before, the right to non-consent further or subsequent
operations provided by the overexpenditure provision of the OA shall apply
to subsequent operations. Prior to reaching the Objective, the Parties
remain bound to the obligations of the PA, subject to the other terms of
Article 2. It is the intention of the Parties, subject to Article 4 below,
that the 1.75:1 promote borne by Ridgewood in favor of Chevron under the PA
for the costs and risk of sidetracking, drilling and logging operations
conducted under the PA shall end upon the earlier of earning, as detailed
in Article 5 below, or the aggregate expenditure of one hundred and fifteen
percent (115%) of the AFE cost.
4. REIMBURSEMENT OF ADDITIONAL PROMOTE. The Parties further agree that if the
Initial Well or Substitute Well is completed as a successful well and
produces 12 BCF gross of gas, then Chevron shall bill, and Ridgewood shall,
within thirty days of such event, reimburse to Chevron, in one lump sum
payment additional monies towards the sidetracking, drilling and logging
operations cost conducted hereunder, plus jacket cost, the sum of the
following: 1) an additional ten percent (10%) of the actual expended
sidetracking, drilling and logging operations cost to the Objective, but
not to exceed one hundred and fifteen percent (115%) of the AFE cost, and
2) an additional forty percent (40%) of the actual jacket cost (being its
40% working interest plus an additional 40% for a total of 80% of the
actual jacket costs), which combined thereby increases the promote paid by
Ridgewood to Chevron to a 2:1 level for the AFE cost, subject to Article 3,
plus the jacket cost.
5. ASSIGNMENT, TIMING & INTEREST TRANSFERRED. Ridgewood shall earn, and Chevron
shall timely make, an Assignment of Operating Rights ("Assignment") in the
Contract Area to Ridgewood, if and only if:
a) the Initial Well or Substitute Well is sidetracked, drilled and logged
to the Objective as described in Article 2 above, or
b) if the Initial Well, or its Substitute Well, either fails to reach the
Objective, or reaches the Objective, but the Parties have expended at
least one hundred and fifteen percent (115%) of the funds estimated to
sidetrack, drill and log the Initial Well as stated in the AFE,
Ridgewood North Jaguar PA
November 1, 2006
Page 3
whether such well is completed or not, then Ridgewood will be entitled
to an Assignment of Chevron's operating rights, as set forth on
Exhibit "A" as provided for herein, and
c) Ridgewood complies with all of the terms of this PA.
Within sixty (60) days of satisfying a) and c) or b) and c) of the above
referenced events, Chevron will assign, without warranty of title, express
or implied, to Ridgewood forty percent of eight-eighths (40% of 8/8ths) of
Chevron's operating rights within the Contract Area, from the surface of
the earth to the stratigraphic equivalent of the sub sea true vertical
depth of 15,083' as seen in the Samedan Oil Corporation OCS-G 13982 Well
No. 1 drilled in Viosca Knoll Block 252 and forty percent of twenty-five
percent of eight-eighths (40% of 25% of 8/8ths) of Chevron's operating
rights within the Contract Area, below the stratigraphic equivalent of the
sub sea true vertical depth of 15,083' as seen in the Samedan Oil
Corporation OCS-G 13982 Well No. I drilled in Viosca Knoll Block 252 down
to 99,999 feet. Such interest is further subject to and burdened by all of
the contracts, agreements and dedications recited herein and lessor's
royalty and the overriding royalty interests as set out on Exhibit "A".
If the Initial Well or Substitute Well fails to reach the Objective, but
encounters, as mutually agreed, a zone(s) or formation(s) capable of
producing in paying quantities, above the Objective, that is within the
Contract Area, and the Parties mutually agree to cease further drilling
operations prior to reaching the Objective, Ridgewood will thereafter be
entitled to an Assignment of operating rights within the Contract Area for
the interests above stated but. limited to the total depth drilled and
logged plus 100 feet.
6. WARRANTY. The transfer of any interest in the Contract Area pursuant to this
PA to Ridgewood shall be made by Chevron without express or implied
warranty of any kind. Chevron shall grant and convey to Ridgewood full
subrogation and substitution to all Chevron rights in warranty against the
predecessors in interest of Chevron and its affiliates. Chevron shall
provide Ridgewood full access to the Chevron files and records related to
the Contract Area for independent review and analysis by Ridgewood. Such
files and records are not warranted as complete or accurate but were
maintained as business records upon which Chevron relies.
7. NO NEW LEASE BURDENS. Until Ridgewood earns an interest under this PA, or
until the right to earn a portion of the Chevron interest in the Contract
Area pursuant to this PA terminates, Ridgewood and Chevron (except as
specified in Article 15) agree that they have not and will not create any
additional lease burdens or dedications on the Contract Area. No mortgage
or pledge or refinancing arrangement by Ridgewood before or after any such
interest is earned or assigned is ever permitted without the prior written
consent of Chevron, which consent shall not be unreasonably withheld. Such
condition shall be made express in any Assignment of earned area made to
Ridgewood.
Ridgewood North Jaguar PA
November 1, 2006
Page 4
8. TRANSFER SUBJECT TO APPLICABLE APPROVALS. In the event that the transfer of
any interest in and to the Contract Area requires approval of the lessor or
of any federal agency having jurisdiction, the obligation to obtain such
pertinent approval shall be Ridgewood's, at its cost and risk. Chevron
agrees to assist Ridgewood as necessary to help Ridgewood secure such
approvals, including but not limited to the preparation of mutually
agreeable assignments or conveyance instruments appropriate for fling and
recordation purposes with the MMS and/or applicable parish records.
9. ACCOUNTING MATTERS. As to the Contract Area, all costs and expenses, which
are accrued or incurred pursuant to this PA and under any transfer of
interest in the Contract Area executed pursuant hereto, if any, shall be
determined and accounted for in accordance with the Accounting Procedure,
which is in Exhibit "C" of the OA, attached hereto as Exhibit "B".
10. SUBSTITUTE WELL. If the Initial Well is drilled and prior to reaching the
Objective, Chevron encounters mechanical difficulties, gulf coast
conditions or other conditions which render further drilling impractical,
or if the Parties agree, per Article 5 above, to complete the Initial Well
above but without reaching the Objective, then without limiting the
Parties' rights pursuant to Article 5, then either of the Parties shall
have the right to propose the drilling of another well to the Objective,
hereinafter referred to as a "Substitute Well", at and to any legal
location in the Contract Area, but such operations must commence within 120
days after the date the rig was released from the last operation on the
Initial Well. If such well is proposed and Ridgewood participates and the
Substitute Well is timely and properly commenced and drilled in compliance
with all terms and conditions provided herein for the Initial Well, then
such Substitute Well shall, in all respects (but, in any event, shall be
subject to the Article 3 cumulative cost sharing limitation for the Initial
Well and Substitute Well) be considered as if it was the Initial Well and
any references in this PA to the Initial Well shall also include any
Substitute Well.
11. SUBSEQUENT OPERATIONS. Should Ridgewood earn hereunder, where the Initial
Well (or a Substitute Well therefore) is drilled to the Objective, as
provided above and the Parties mutually agree to complete the Initial Well
in the Objective, or should the Parties mutually agree, per Article 5
above, to complete the Initial Well above but without reaching the
Objective, no Party shall hold the right to propose a well or any other
drilling operations pursuant to the OA until after six (6) months of
continuous production from any earning well or six months from the last
production in paying quantities, should any earning well fail to provide
six (6) months of continuous production, and any such permitted wells and
operations shall be conducted in accordance with the OA. Should the Initial
Well be a dry hole and should the Parties mutually agree, a subsequent well
may be proposed by either party at any time but subject to the delay period
and rights provisions in the PA.
Ridgewood North Jaguar PA
November 1, 2006
Page 5
Without limiting the express provisions of the Proposal for Development
Operation Letter Agreement dated October 10, 2006, between Chevron U.S.A.
Inc. and Coldren Resources, LP, the Parties further agree to limit and
prohibit any drilling and/or development operations in the South Half of
the South Half (S/2 of the S/2) of the Contract Area within or to the James
Lime sand, as such sand was seen in that certain OCS-G 10930, Well No. A2
drilled and completed on Viosca Knoll Block 251, until the abandonment of
such zone in such well or unless Coldren Resources, LP consents to such
drilling and/or development operation. This restriction within the South
Half of the South Half (S/2 of the S/2) of OCS G 13980 of the Contract Area
is to provide protection from drainage and reserves and grants no rights to
Coldren Resources, LP in any acreage earned by the Parties in the drilling
of the Viosca Knoll Block 207 #2ST #2 well, other than to the retained
overriding royalty interest, as set out in Exhibit "A", and any well
information due Coldren Resources, LP as a result of their election not to
participate and farmout their interest pursuant to and referenced in
Article 15.C.3. Such condition shall be made express in any Assignment of
earned area made to Ridgewood.
12. DESIGNATIONS. The Parties agree to execute the necessary designation of
operator forms and any other forms required by the MMS or other regulatory
authorities to carry out their operations and to make Chevron the operator
under the PA, if required, and the OA, with any earning by Ridgewood.
13. OPERATING AGREEMENT. Before earning under the PA and any ratification or
execution of the Exhibit "B" OA after earning under the PA, Ridgewood
acknowledges the Chevron interest available to Ridgewood hereunder remains
bound under this PA and the VK 252 Unit Operating Agreement. Should Chevron
earn the rights and interest of Coldren Resources LP under the Proposal for
Development Operation Letter Agreement dated October 10, 2006, between
Chevron U.S.A. Inc. and Coldren Resources, LP and Ridgewood earn hereunder,
Ridgewood shall formally execute or ratify the appropriate operating
agreement, attached hereto as Exhibit "B", only as it pertains to the
Contract Area and the Viosca Knoll 252 Unit Operating Agreement effective
January 21, 1994 between Samedan Oil Corporation and Continental Land & Fur
Co., Inc. for the proportionate rights not held or not made the subject of
this PA, unless all rights holders, including Coldren Resources, LP, agree
otherwise. Further, due to the varying ownership in the deep rights, the OA
will be depth limited to only cover from the surface of the earth to the
stratigraphic equivalent of the sub sea depth of 15,083' as seen in the
Samedan Oil Corporation OCS-G 13982 Well No. 1 drilled in Viosca Knoll
Block 252. Notwithstanding any other provision of this PA that might
indicate to the contrary, if there is any conflict between any other
provision of this PA and a provision of the OA, the other provisions of
this PA shall prevail, as between the Parties.
14. TERM. This PA shall automatically terminate on May 8, 2007 and without
liability or obligation, unless the Initial Well is timely commenced. Once
and if a well has been drilled under which Ridgewood participates and earns
and that entitles Ridgewood to an Assignment as provided above in Article
5, those PA rights and obligations surviving the earning and the OA shall
remain in effect as to such Contract Area, so long as the lease
Ridgewood North Jaguar PA
November 1, 2006
Page 6
within the Contract Area remains in full force and effect or any
obligations between the Parties remain unsatisfied.
15. REPRESENTATIONS. Chevron's business records reflect with respect to the
Contract Area and North Jaguar Prospect that:
A. The Contract Area is dedicated and committed to the
following Contracts and Agreements
1) Gas Gathering Agreement effective June 14, 2000, between
Williams Field Services-Gulf Coast Company, L.P. and Chevron
U.S.A. Inc.
2) Gas Gathering and Processing Agreement effective March 1,
2000, between Chevron U.S.A. Production Company, Samedan Oil
Company, Shell Offshore Inc., and Amoco Production Company
for the Viosca Knoll 252 Unit, as amended.
3) VK 251 "A" Interconnect & Platform Use Agreement dated May
30, 2000, between Samedan Oil Corporation, Chevron U.S.A.
Inc. and Williams.
4) Gas Gathering Agreement dated June 14, 2000.
5) Agreement for Capacity Release and Billing Agency dated
August 9, 2000.
6) Natural Gas Processing Agreement Gulf of Mexico dated March
1, 2002, by and between Chevron U.S.A. Inc., Texaco
Exploration and Production Inc., and Dynergy Midstream
Services, Limited Partnership, as amended, as to depths from
the surface through the James Lime formation.
7) Letter Agreement dated October 14, 2004, effective August 1,
2004, between Noble Energy, Inc. and Chevron, detailing
Production Handling Agreement terms for the Viosca Knoll 252
Unit area.
B. All required filings have been made with the applicable
regulatory authorities and Chevron is not aware of any
notices, pending or threatened violations of any applicable
regulation.
C. The Contract Area is subject to the following Contracts and
Agreements:
1) Viosca Knoll 252 Unit Operating Agreement effective January
21, 1994 between Samedan Oil Corporation and Continental
Land & Fur Co., Inc., as amended, until contracted, amended
and/or terminated.
2) Viosca Knoll 252 Unit Agreement, bearing Contract No.
754394013 effective February 11, 1994 between Chevron U.S.A.
Inc. and Samedan Oil Corporation, as amended, until
contracted.
3) Proposal for Development Operation Letter Agreement dated
October 10, 2006, between Chevron U.S.A. Inc. and Coldren
Resources, LP.
4) Confidentiality & AMI Agreement dated September 9, 2006
between Chevron U.S.A. Inc. and Ridgewood Energy
Corporation.
5) Offer to Participate Letter Agreement (LOI), dated October
17, 2006, as Parties agreed and accepted on October 19,
2006, between Ridgewood Energy Corporation and Chevron
U.S.A. Inc.
Ridgewood North Jaguar PA
November 1, 2006
Page 7
6) Assignment of Operating Rights Interest, dated effective
April 1, 1996 and bearing upon OCS-G 13980, between
Continental Land & Fur Co., Inc. as Assignor and Samedan Oil
Corporation and Chevron U.S.A. Inc. as Assignees.
7) Suspension of Production for Lease OCS-G 13980, by MMS
approval letter dated November 7, 2006.
8) Right of Use and Easement for Lease OCS-G 10926 Viosca Knoll
Block 206 (RUE #30012), by MMS approval letter dated
November 9, 2006.
D. Chevron represents, to the best of its knowledge, that with
respect to that portion of the leases Chevron is contributing to
the Contract Area that:
1) Chevron has paid rentals and has an approved SOP to maintain the
lease in full force and effect.
2) Chevron is in material compliance with the terms and conditions
of the lease.
3) The lease is not subject to any royalty, overriding royalty, net
profits interest or other similar burden on production, except as
referenced above, and the lessor's royalty.
4) There are no liens, mortgages, deeds of trust, judgments or other
encumbrances of any kind or nature on the lease or Chevron's
working interest in the lease.
5) There are no pending claims or litigation relative to the lease.
6) There are no preferential purchase rights, consents to assign or
other restrictions on Chevron's ability to enter into this
Agreement, other than those addressed in the Coldren Resources,
LP letter agreement at 15.C 3.
7) There are no other owners of working interests in the lease
included within the Contract Area with the exception of;
a. Coldren Resources, LP.'s ownership rights as set out in
the above referenced Article 15.C.3: and,
b. Operating Rights owners of record at the MMS as to all
depths below 15,083'.
16. INTEGRATED AGREEMENT. Except as provided in Article 18 below, this PA and
the Exhibits attached hereto comprise the entire agreement between the
Parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, including the LOI, dated October 17, 2006,
between the Parties. Except as provided in Article 18 below, in the event
of any conflicts between the provisions of this PA and any other agreement,
including any operating agreement or any agreement referenced herein as an
exhibit or to be executed by the Parties hereafter, the provisions of this
PA shall control, as between the Parties.
17. TAX PARTNERSHIP. The Parties understand and agree that the arrangement and
undertakings evidenced by this PA, taken together, result in a partnership
for purposes of Federal income taxation and for purposes of certain state
income tax laws which incorporate or follow Federal income tax principles
as to tax partnerships. Such partnership for tax purposes is hereinafter
referred to as the "Tax Partnership". For every
Ridgewood North Jaguar PA
November 1, 2006
Page 8
other purpose of this PA, however, and notwithstanding any other provision
of this PA, express or implied, to the contrary, the Parties understand and
agree that their legal relationship to each other under applicable state
law with respect to all property subject to this PA is one of tenants in
common, or undivided interest owners, or lessee-sublessees, and not one of
partnership; that the liabilities of the Parties shall be several and not
joint or collective; and that each Party shall be solely responsible for
its own obligations. The Tax Partnership shall be governed by Exhibit "F"
of the attached Exhibit "B" OA. Except as provided in such Exhibit "F", the
Parties agree not to elect to have the Tax Partnership excluded from the
application of all or any part of Subchapter K of Chapter One of Subtitle A
of the Internal Revenue Code of 1986, as amended (the "Code"), from any
successor provisions thereto under the Code, or from any provisions of
state income tax laws of substantially the same effect.
18. AREA OF MUTUAL INTEREST. Notwithstanding any other agreement to the
contrary, and both prior to and after any Ridgewood earning of any interest
in the Contract Area described herein in Article 1, the Confidentiality &
AMI Agreement as referenced above in Article 15.C.4 shall survive and will
control any AMI obligations between the Parties and the Parties further
agree that the provisions of the referenced Confidentiality & AMI Agreement
shall take precedence over the PA.
19. PRODUCTION HANDLING AGREEMENT. Within ten days following the commencement of
the Initial Well, the Parties agree to enter into negotiations of a
mutually acceptable Production Handling Agreement ("PHA"), if applicable,
substantially in the form as set out in Exhibit "D".
The Parties understand that should there be a need for any production
handling arrangements that extend beyond any Contract Area facilities,
which would be jointly owned by Chevron and Ridgewood, that the Parties
will most likely utilize the jointly owned Chevron sixty percent (60%) and
Coldren Resources, LP forty percent (40%) Viosca Knoll Block 251 "A"
Facility, and while Chevron will attempt to gain Coldren's acceptance to
Chevron's terms, Chevron cannot guarantee that Coldren's PHA terms will be
the same as Chevron's PHA terms.
20. GOVERNING LAW. This PA shall be governed by and in accordance with the laws
of the State of Alabama, without regard to any choice of law or rule
thereof that would direct the application of the laws of any other
jurisdiction.
21. INDIVIDUAL LIABILITY. The rights, duties, elections, obligations, and
liabilities of the Parties shall be several and not joint or collective,
and nothing contained herein is intended to create, nor shall it be
construed as creating, a partnership of any kind (except the tax
partnership specified in Article 17 above), joint venture, association, or
other business entity recognizable by law for any purpose. The Parties
shall be individually responsible only for their own obligations, except as
herein described.
Ridgewood North Jaguar PA
November 1, 2006
Page 9
22. NOTICES. All notices required hereunder shall be in writing sent by
certified mail or overnight mail delivery, or by facsimile
telecommunications to the addresses set forth below, and shall be deemed
effective when actually received by the addressee, as follows:
Ridgewood Energy Corporation
11700 Old Katy Road, Suite 280
Houston TX 77079
Tel: (281)293-8449
Fax: (281)293-7705
Attn: Greg Tabor
Executive Vice President
Chevron U.S.A. Inc.
935 Gravier Street
New Orleans, LA 70112
Tel: (504) 592-6356
Fax: (504) 592-7110
Attn: Gordon R. Cain
Land Manager
23. COUNTERPART EXECUTION. This PA may be executed by signing the original or a
counterpart thereof with the same force and legal effect as if all
executions were on one single instrument.
24. SUCCESSORS AND ASSIGNS. This PA shall be binding upon and inure to the
benefit of the Parties and their respective heirs, representatives,
successors and assigns. Ridgewood shall not assign their interests in this
PA or any rights earned hereunder without the prior written consent of
Chevron, which consent shall not be unreasonably withheld.
25. INSURANCE. Ridgewood shall independently acquire or self-insure for the
coverage and amounts as shown on Exhibit "B" OA and provide evidence of
such coverage to Chevron prior to commencement of operations hereunder.
Such coverage and limits shall not in any way limit any Ridgewood indemnity
due Chevron.
26. INDEMNITY.
A. Ridgewood agrees to protect, indemnify, and save Chevron, its parent,
subsidiaries, affiliates, and/or successors and the directors,
officers, employees or agents of each ("Chevron Company Group") free
and harmless from all obligations, business dealings, liabilities,
debts, charges, claims, damages, demands, costs (including attorneys'
fees and court costs), penalties and causes of action arising directly
or indirectly out of any dealing with third parties Ridgewood has with
Ridgewood North Jaguar PA
November 1, 2006
Page 10
regard to financing or the assignment of, in whole or in part, any rights
under this PA and to relieve the Chevron Company Group from any and all
liability (exclusive of business debts and charges) incurred as a result of
such actions. The indemnities and covenants of this Article 26 shall be
effective whether or not such obligations, business dealings, liabilities,
debts, charges, claims, damages, demands, costs (including attorneys' fees
and court costs), penalties and causes of action aforesaid are caused
wholly or partly by negligence attributed to the Chevron Company Group, or
by any other means, excepting those occurrences involving the gross
negligence or willful misconduct of the Chevron Company Group.
B. Chevron agrees to protect, indemnify, and save Ridgewood, its parent,
subsidiaries, affiliates, and/or successors and the directors, officers,
employees or agents of each ("Ridgewood Company Group") free and harmless
from all obligations, business dealings, liabilities, debts, charges,
claims, damages, demands, costs (including attorneys' fees and court
costs), penalties and causes of action arising directly or indirectly out
of any dealing with third parties Chevron has with regard to financing or
the assignment of, in whole or in part, any rights under this PA and to
relieve the Ridgewood Company Group from any and all liability (exclusive
of business debts and charges) incurred as a result of such actions. The
indemnities and covenants of this Article 26 shall be effective whether or
not such obligations, business dealings, liabilities, debts, charges,
claims, damages, demands, costs (including attorneys' fees and court
costs), penalties and causes of action aforesaid are caused wholly or
partly by negligence attributed to the Ridgewood Company Group, or by any
other means, excepting those occurrences involving the gross negligence or
willful misconduct of the Ridgewood Company Group.
C. Chevron shall, as between the Parties, remain solely liable for all
liabilities, costs and risks of any kind or nature arising out of its
operations relating to the VK 252 Unit Agreement or the VK 252 Unit
Operating Agreement that are not related to this PA and in which Ridgewood
does not participate, including, but not limited to the plugging and
abandonment and remediation of all existing wells, platforms and other
facilities on said Unit and under said Unit Operating Agreement ("Chevron
Retained Claims"). CHEVRON SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD
RIDGEWOOD COMPANY GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
CAUSES OF ACTION, LIABILITIES, DAMAGES (INCLUDING COURT COSTS AND
ATTORNEYS' FEES) AND JUDGEMENTS ARISING OUT OF THE CHEVRON RETAINED CLAIMS.
27. DISCLAIMER OF WARRANTY.
THIS PA IS MADE WITHOUT ANY WARRANTY OF TITLE. CHEVRON FURTHER DOES NOT
WARRANT EITHER EXPRESS, STATUTORY OR IMPLIED, AS TO TITLE, MERCHANTABILITY,
Ridgewood North Jaguar PA
November 1, 2006
Page 11
CONDITION, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO THE LEASE IN
THE CONTRACT AREA, AND ALL OTHER PROPERTY COVERED BY THIS PA, INCLUDING,
BUT NOT LIMITED TO THE WELL BORES, EQUIPMENT AND FACILITIES UTILIZED BY THE
PARTIES HEREUNDER, OR ANY OTHER SORT OF WARRANTY AND IS WITHOUT RECOURSE
AGAINST CHEVRON WHATSOEVER, EVEN AS TO THE RETURN OF CONSIDERATION. CHEVRON
MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING RIDGEWOOD'S RIGHT OF
INGRESS TO AND EGRESS FROM THE CHEVRON LEASE ACROSS ADJACENT OR ADJOINING
LANDS.
CHEVRON SPECIFICALLY DISCLAIMS, AND RIDGEWOOD EXPRESSLY WAIVES ANY IMPLIED
WARRANTY OF TITLE WITH RESPECT TO THE LEASE IN THE CONTRACT AREA EXCEPT FOR
THE ACTS BY, THROUGH AND UNDER CHEVRON, BUT NOT OTHERWISE. RIDGEWOOD
ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED A MATERIAL AND
INTEGRAL PART OF THIS PA AND PART OF THE CONSIDERATION GIVEN THEREFOR.
RIDGEWOOD FURTHER ACKNOWLEDGES THAT THIS WAIVER HAS BEEN SPECIFICALLY
BROUGHT TO RIDGEWOOD'S ATTENTION AND THAT RIDGEWOOD HAVE VOLUNTARILY AND
KNOWINGLY CONSENTED TO THIS WAIVER. THE PARTIES AGREE THAT FOR THE PURPOSES
OF THIS WAIVER OF THE IMPLIED WARRANTY OF TITLE, CHEVRON AND THEIR
AFFILIATES SHALL BE CONSIDERED AS THE SELLER.
RIDGEWOOD ACKNOWLEDGES THAT (i) IT IS A SOPHISTICATED INVESTOR
AND OPERATOR IN THE OIL AND GAS BUSINESS; (ii) IT UNDERSTANDS THE RISKS
INVOLVED IN OIL AND GAS EXPLORATION AND DEVELOPMENT; AND (iii) IT
UNDERSTANDS THAT UNDER ITS PARTICIPATION RIDGEWOOD ASSUMES ALL OF THE RISKS
ATTENDANT TO THE EXPLORATION AND PRODUCTION OPERATIONS CONTEMPLATED UNDER
Ridgewood North Jaguar PA
November 1, 2006
Page 12
THIS PA AND THAT THE RIDGEWOOD INVESTMENT MADE HEREUNDER IN THOSE
OPERATIONS CONDUCTED UNDER THIS PA IS FULLY AT RISK.
Please indicate your agreement to the terms and conditions as set forth in this
PA by executing two originals of this PA in the space provided and returning one
executed original on or before November 22, 2006.
AGREED TO AND ACCEPTED this 15th day of November, 2006
Chevron U.S.A. Inc.
By: /s/ G. R. Cain
--------------
G.R. Cain
Assistant Secretary
AGREED TO AND ACCEPTED this 20th day of November, 2006.
Ridgewood Energy Corporation
By: /s/ Greg Tabor
---------------
Greg Tabor
Title: Executive Vice President
------------------------
Ridgewood North Jaguar PA
November 1, 2006
Page 13
EXHIBIT "A"
-----------
North Jaguar Prospect
---------------------
Attached to and made apart of that certain Participation Agreement dated the 1st
day of November 2006, by and between Chevron U.S.A. Inc. and Ridgewood Energy
Corporation
OCS Block: Viosca Knoll Block 207 being 5,760 acres.
- ---------
Lease: OCS-G 13980
- -----
Chevron Leasehold Interest:
- ---------------------------
One Hundred Percent of eight eights (100% of 8/8ths) from the surface of the
earth to the stratigraphic equivalent of the sub sea depth of 15,083' as seen in
the Samedan Oil Corporation OCS-G 13982 Well No. 1 drilled in Viosca Knoll Block
252, further subject to rights and obligations as set out in the Proposal for
Development Operation Letter Agreement dated October 10, 2006, between Chevron
U.S.A. Inc. and Coldren Resources, LP.
Twenty-five percent of eight eights (25% of 8/8ths) below the stratigraphic
equivalent of the sub sea depth of 15,083' as seen in the Samedan Oil
Corporation OCS-G 13982 Well No. 1 drilled in Viosca Knoll Block 252.
Lease Burdens:
- --------------
1/6 of 8/8ths Lessor's royalty in all depths.
2% of 8/8ths overriding royalty in favor of Noble Energy, Inc., from the surface
of the earth to the stratigraphic equivalent of the sub sea depth of 15,083' as
seen in the Samedan Oil Corporation OCS-G 13982 Well No. 1 drilled in Viosca
Knoll Block 252.
2% of 8/8ths overriding royalty in favor of Coldren Resources, LP from the
surface of the earth to the stratigraphic equivalent of the sub sea depth of
15,083' as seen in the Samedan Oil Corporation OCS-G 13982 Well No. 1 drilled in
Viosca Knoll Block 252.
Chevron Interest Before Casing Point (BCP"): Thirty percent (30%)
- -------------------------------------------
Ridgewood Interest BCP: Seventy Percent (70%)
- -----------------------
o Ridgewood will have and bear the obligation of paying its
disproportionate share of the Initial Well AFE Cost of sidetracking,
drilling and logging up to Casing Point or until one hundred fifteen
percent (115 %) of the associated AFE to drill the Initial Well,
whichever occurs first, have been spent in the drilling of said
Initial Well and/or any Substitute Well(s).
Chevron Interest After Casing Point ("ACP"): Sixty percent (60 %)
- -------------------------------------------
Ridgewood Interest ACP: Forty Percent (40 %)
- -----------------------
Ridgewood North Jaguar PA
Exhibit A
BCP and ACP Interest:
- ---------------------
Both Chevron's and Ridgewood's BCP and ACP interest in the Initial Well are
derived from Chevron's above referenced leasehold interest and only as it
pertains to the depths from the surface of the earth down to the stratigraphic
equivalent of the sub sea depth of 15,083' as seen in the Samedan Oil
Corporation OCS-G 13982 Well No. 1 drilled in Viosca Knoll Block 252. Chevron's
and Ridgewood's ACP Interest in the depths below the stratigraphic equivalent of
the sub sea depth of 15,083' as seen in the Samedan Oil Corporation OCS-G 13982
Well No. 1 drilled in Viosca Knoll Block 252 will be proportionately reduced to
reflect Chevron's twenty-five percent of eight eights (25% 8/8ths) ownership.
Operator: Chevron U.S.A. Inc.
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