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Title: |
Development Agreement |
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Date: |
2005 |
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Preview shows 15KB of 60KB total |
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$42 |
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#1458696 |
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<SEQUENCE>4
<FILENAME>doc4.txt
<TEXT>
DEVELOPMENT AGREEMENT
PRADO FIELD
BY AND BETWEEN:
NEW CENTURY ENERGY CORPORATION,
AQUATIC CELLULOSE INTERNATIONAL CORPORATION
AND
STRONG PETROLEUM GROUP, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
I. Parties 1
1.01. New Century 1
1.02. Aquatic 1
1.03. Strong 1
II. Interests 1
III. Work Program 1
3.01. Payment of $XXXXXXX 1
3.02. Strong Responsible for the Work Program 2
3.03. Scope of the Work Program 2
3.04. Work Program Account 3
3.05. Work Program Statements and Records 3
3.06. Expenditures in excess $2,000,000.00 4
3.07. Engineering, Geological, and Geophysical Expenses
Includible only to $100,000 4
3.08. Overhead 4
3.09. Title and Legal Expenses 4
3.10. Vendors 5
3.11. Strong Will Charge Market Rates 5
3.12. Transportation Charges 5
3.13. No Lease Operating Expenses to Work Program Account 5
ii
<PAGE>
PAGE
IV. Revenue Interests Operations and Accounting 6
4.01. Interests in Revenues 6
4.02. Order of Operations 6
4.03. Administration of Revenues and Expenses 6
4.04. Working Files Transfer 6
4.05. If Assignment Not Earned 7
4.06. Prudent Operator Standard 7
4.07. Access to Books, Records and Data 7
4.08. Force Majeure 8
V. Assignment 8
5.01. Conditions Precedent to Assignment 8
5.02. Delivery of the Assignment 9
5.03. Memorandum Pending Assignment 9
VI. New Century Group's Option to Increase Its Interest 9
6.01. Option to Increase Working Interest 9
6.02. Notice of Election and Payment 10
VII. Joint Operating Agreement and COPAS Agreement 10
7.01. Joint Operating Agreement 10
7.02. COPAS Agreement 10
VIII. Acquisition of Assets in Area of Mutual Interest 10
IX. Representations of Strong 11
9.01. Organization 11
iii
<PAGE>
PAGE
9.02. Authority 11
9.03. Knowledge of Operations 12
9.04. Access to Property 12
9.05. No Breach of Statute, Decree or Contract 12
9.06. Strong's Property Investigations 12
9.07. Binding Obligation 13
9.08. No Litigation or Adverse Events 13
9.09. Further Distribution 13
9.10. Permits 13
X. Representations of New Century Group 14
10.01. Organization 14
10.02. Authority 14
10.03. Binding Obligation 14
10.04. No Breach of Statute, Decree or Contract 14
10.05. No Litigation or Adverse Events 15
10.06. Taxes 15
10.07. Accuracy of Documents 15
10.08. Disclaimer of Warranty 15
10.09. Payments 16
10.10. Working Interests 16
10.11. Net Revenue Interests 16
iv
<PAGE>
PAGE
10.12. Compliance with Laws 16
10.13. Necessary Action 16
10.14. No Default 17
10.15. Operations 17
10.16. Existing Burdens 17
10.17. Inspection of Records 18
10.18. Permits 18
10.19. Environmental Condition of Assets 18
XI. Taxes 19
11.01. Apportionment of Ad Valorem and Property Taxes 19
11.02. Sales Taxes, Filing fees, Etc. 19
11.03. Other taxes 19
XII. General Provisions 20
12.01. Applicable Law 20
12.02. Arbitration of Disputes 20
12.03. No Representations 20
12.04. Non-alienation Pending Completion 21
12.05. Public Announcements 21
12.06. Amendments only in Writing 21
12.07. No Partnership 21
12.08. Closing Obligations 21
v
<PAGE>
PAGE
12.09. Survival 22
12.10. Payments 22
12.11. Further Assurances 23
12.12. Headings, Time of Essences, etc. 23
12.13. Notifications 23
12.14. Construction 23
12.15. Entire Agreement 24
Exhibits to Agreement:
A. Description of Prado Assets.
B. Area of Mutual Interest.
C. Assignment.
D. Joint Operating Agreement.
E. Memorandum Regarding Development Agreement.
vi
<PAGE>
DEVELOPMENT AGREEMENT
PRADO FIELD REDEVELOPMENT
This Development Agreement (the "Agreement") is made by and between New
Century Energy Corporation and Aquatic Cellulose International Corporation
(together, the "New Century Group") and Strong Petroleum Group, Inc. ("Strong").
The Effective Date of this Agreement shall be April 1, 2005 ("Effective Date").
The Parties hereby agree as follows:
I. PARTIES
1.01. NEW CENTURY. New Century Energy Corporation is a corporation
organized and existing under the laws of Colorado, with offices located at 5851
San Felipe, Suite 775, Houston, Texas 77057.
1.02. AQUATIC. Aquatic Cellulose International Corporation is a
corporation organized and existing under the laws of Nevada, with offices
located at 2504 43rd Street, Suite 5, Vernon, British Columbia, Canada VIT 6L1.
1.03. STRONG. Strong Petroleum Group, Inc. is corporation organized
and existing under the laws of Texas, with offices at 6161 Savoy Drive, Suite
1030, Houston, Texas 77036.
II. INTERESTS
The New Century Group or its affiliates own certain interests in oil and
gas leases, wells, and equipment located and being utilized in the Prado Field
in Jim Hogg County, Texas (the "Prado Assets"). These interests are described
in Exhibit A hereto, which is incorporated by reference into this Agreement.
III. WORK PROGRAM
3.01. PAYMENT OF $XXXXXX. Upon receipt of the KMF Consent as described
in section 12.08, Strong shall, by wire transfer, pay XXXXXXXX ($XXXXXXX), to
the New Century Group. This represents a total payment of XXXXXXXXX ($XXXXXXXX)
less the deposit of XXXXXXXXXXX ($XXXXXXX), to the New Century Group. This
payment shall be a condition precedent to any obligations of the New Century
Group, and no assignment of interest as otherwise described herein shall be made
unless and until such payment is made.
1
<PAGE>
3.02. STRONG RESPONSIBLE FOR THE WORK PROGRAM. The parties agree that
Strong shall complete a program of development and redevelopment of the Prado
Assets (the "Work Program"). The Work Program shall begin as soon as is
reasonably practicable. Strong shall have sole responsibility for the costs of
the Work Program, calculated in accordance with sections 3.04 - 3.13, up to the
amount of $2,000,000.00.
3.03. SCOPE OF THE WORK PROGRAM. The Work Program shall, at a minimum,
include the following activities:
a. Strong will conduct a comprehensive study in the Prado Field with
initial focus on by-pass pay, "wedge" up-dip field extension
locations, and drilling locations for the Yegua horizon;
b. Strong will run a slick line, and where possible swab to
determine the plugged back total depth and production capability
of the existing shut-in wells; and where merited perform
workovers to include such possible activities as to run a case
hole log, pull the tubing, squeeze, and re-perforate in the same
zone or re-complete in a new zone, including testing and
completing through production facilities. In lieu of working over
wells, Strong may, at its election, substitute the drilling of
new well(s), or the workover of other wells in adjacent acreage
hereafter acquired and/or re-enter wells that are presently
shut-in or plugged and abandoned. The alternative operations
shall be pursued as necessary in combination with other workovers
until the Work Program required expenditure of $2,000,000 is met.
c. Strong will drill, test, and complete, if commercially viable, a
minimum of two (2) new wells to a TVD not to exceed five thousand
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