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Document Preview Reserved Royalty Agreement |
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Title: |
Reserved Royalty Agreement |
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Entities: |
International Frontier Resources Ltd.; Pacific Royal Ventures Ltd.; Rodera Diamond Corporation; Pacific Rodera Ventures Inc. |
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Date: |
2002 |
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Size: |
Preview shows 8KB of 25KB total |
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Price: |
$40 |
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ID: |
#106566 |
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RESERVED ROYALTY AGREEMENT
SCHEDULE "B"
attached to and forming part of a Joint Venture Agreement dated October 2`, 1997 among International Frontier Resources Ltd., Pacific Royal Ventures Ltd. and Rodera Diamond Corporation,
This Agreement dated the 21st day of October, 1997.
BETWEEN:
INTERNATIONAL FRONTIER RESOURCES LTD., a body corporate having an office in Calgary, Alberta (hereinafter referred to as the "Frontier")
OF THE FIRST PART
- and -
INTERNATIONAL FRONTIER RESOURCES LTD., a body corporate having an office in Calgary, Alberta
OF THE SECOND PART
-and-
PACIFIC ROYAL VENTURES LTD., a body corporate having an office in Vancouver, British Columbia
OF THE THIRD PART
-and-
RODERA DIAMOND CORPORATION, a body corporate having an office in Vancouver, British Columbia
OF THE FOURTH PART
(the parties of the Second Part to the Fourth part inclusive hereinafter collectively referred to as the "Participant")
WHEREAS the parties hereto have entered into a Joint Venture Agreement dated the 31st of October, 1997 (hereinafter referred to as the "Joint Venture Agreement") pursuant to which the Participants have agreed, subject to the terms and provisions set forth therein, to earn an interest in the Prospects as defined therein and as more particularly described and set forth in the Joint Venture Agreement; and
WHEREAS the provisions of the Joint Venture Agreement contemplate Frontier reserving unto itself the Reserved Royalty.
NOW THEREFORE in consideration of the premises and other good and valuable consideration, the parties hereby agree as follows:
1. In this agreement, including any Schedules:
(a) "Business Day" means any day of the week except Saturday, Sunday or any statutory holiday in Alberta;
"Effective Time" means 8:00 a.m., Calgary time, on October 21, 1997;
"fair market value" means the price which a prudent operator could obtain from an independent third party, pursuant to an arm's length transaction, for disposition of Petroleum Substances, having regard to current prices in effect for similar Petroleum Substances, availability of markets, and economic conditions affecting the industry generally;
"Facilty Fee" means a proportionate share of the actual costs paid by the Participants to make merchantable and to deliver to market Petroleum Substances, other than crude oil and condensate, and includes, as applicable, the cost of gathering, compression, treatment, processing and transportation of such Petroleum Substances;
"Lands" means the lands described in Schedule "A" and lands that may in the future be described in Schedule "A", except as otherwise expressly noted in that Schedule, includes the Petroleum Substances, to the extent those rights are granted by the Leases;
"Leases" means, collectively, the various leases, reservations, permits, licences and other documents of title by virtue of which the holder is entitled to explore for, drill for, recover, remove or dispose of Petroleum Substances forming part of the Lands, being the leases, reservations, permits, licences and other documents of title described in Schedule "A", together with any renewal or replacement thereof;
"Petroleum and Natural Gas Rights" means the interests of Frontier described in Schedule "A" in respect of the Leases and the Lands;
"Petroleum Substances" means petroleum, natural gas and all related hydrocarbons, whether gaseous, liquid or solid, and all other substances that may be produced in association with them, whether hydrocarbons or not (including, but not limited to, sulphur); and
"Reserved Royalty" means five percent (5%) of the gross monthly production of Petroleum Substances produced from or allocated to the Petroleum and Natural Gas Rights.
2. Frontier reserves unto itself out of the Petroleum and Natural Gas Rights, effective as of the Effective Time, the Reserved Royalty, and the Participants hereby acknowledge such reservation.
3. (a) The reservation of the Reserved Royalty to Frontier will not include Petroleum Substances that the Participants reasonably use for drilling and production operations for the Lands, and will not include Petroleum Substances that the Participants unavoidably lose in those drilling and production operations. Those drilling and production operations include the use of those Petroleum Substances in batteries, treaters, compressors, separators, satellites and similar equipment serving only wells on the Lands, but do not include the use of Petroleum Substances for any enhanced recovery operations, as fuel stock for any battery or satellite serving wells in addition to wells on the Lands or for any gas plant or refinery.
(b) The Participants are hereby appointed as agent of Frontier with full power and authority to:
i) negotiate and enter into contracts for the sale of Frontier's share of Petroleum Substances; and
ii) take possession of and market Frontier's share of Petroleum Substances.
The Participants shall not enter into a contract for the sale of Frontier's share of Petroleum Substances for a price which is less than the price which the Participants receive for the sale of its own Petroleum Substances, together with the value of any collateral advantage which the Participants receive in consideration of the sale.
4. Each Participant shall be responsible for its pro rata working interest share as described in Schedule "A" of the Joint Venture Agreement of the obligations set forth herein relating to the Reserved Royalty. The obligations of the Participants shall be several to each individual Participant and shall not be joint or collective. The Participants shall have the right, upon written notice to Frontier, to appoint one of their number to represent all of the Participants in respect of payment of the Reserved Royalty and in respect of all notices and statements to be provided and accepted by the Participants pursuant to this Agreement.
5. The Participants shall be entitled to a Facility Fee from the sales proceeds received by the Participants in respect of all Petroleum Substances, other than crude oil and condensate, sold on behalf of Frontier.
6. When Frontier takes possession of and separately disposes of its share of Petroleum Substances:
(a) The Participants shall, at the Participants' sole cost and expense, remove basic sediment and water from Frontier's share of all crude oil in accordance with good oilfield practice so that applicable pipeline specifications will be met.
(b) At Frontier's request, the Participants shall provide Frontier, at Participants' cost, production tankage capacity for not less than ten (10) days accumulation of Frontier's share of Petroleum Substances other than natural gas and the Participants shall deliver same to Frontier, or its nominee, at the tank outlets in accordance with usual and customary pipeline and shipping practice.
(c) Subject to the foregoing, Frontier shall pay to the Participants, the Facility Fee attributable to Frontier's share of Petroleum Substances, other than crude oil and condensate.
7. If Frontier's share of Petroleum Substances is sold by the Participants at less than fair market value in any transaction, then the gross proceeds of the sale of such Petroleum Substances shall, for the purposes of quantifying the Reserved Royalty, be deemed to have been not less than the fair market value of those Petroleum Substances at the point of sale.
8. The Reserved Royalty shall not be subject to any royalties, burdens or other encumbrances payable in respect of the Petroleum and Natural Gas Rights on the Petroleum Substances produced from or allocated to the Petroleum and Natural Gas Rights.
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