LILIS ENERGY, INC. - FORM 8-K - EX-10.1 - PURCHASE AND SALE AGREEMENT FOR WILKIE FIELD PROSPECT.

Attached files

file	filename
8-K - FORM 8-K - LILIS ENERGY, INC.	f8k120409_recovery.htm
EX-99.1 - PRESS RELEASE. - LILIS ENERGY, INC.	f8k120409wx99i_recovery.htm
EX-10.2 - PROMISSORY NOTE - LILIS ENERGY, INC.	f8k120409wx10ii_recovery.htm

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

·	Dill East Field and Lukassen 14-34 well, Kimball County, Nebraska

·	Pieper #3-29 well, Washington County, Colorado

·	Omega Prospect, Banner County, Nebraska

·	Comanche Farms Prospect, Arapahoe County, Colorado

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated effective as of December 1, 2009 at 7:00 a.m. Mountain Time (the “Effective Time”), is between EDWARD MIKE DAVIS, L.L.C., a Nevada limited liability company, 200 Rancho Circle, Las Vegas, Nevada 89107 (“Seller”), and RECOVERY ENERGY, INC., a Nevada corporation, 1515 Wynkoop Street, Suite 200, Denver, Colorado 80202 (“Buyer”). Seller and Buyer are sometimes referred to in this Agreement, collectively, as the “Parties,” and individually, as a “Party.”

Recitals

A. Seller owns certain rights and interests in and to the Dill East Field (Wilke Lease) and the Lukassen 14-34 well, located in Kimball County, Nebraska, the Pieper 3-29 well, located in Washington County, Colorado, the Omega Prospect located in Banner County, Nebraska and the Comanche Farms Prospect located in Arapahoe County, Colorado (the “Assets” as defined below).

B. Seller desires to sell and assign to Buyer, and Buyer desires to purchase and acquire from Seller, the Assets in accordance with the terms and conditions hereof.

Agreement

IN CONSIDERATION OF ONE HUNDRED DOLLARS ($100.00), the mutual premises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. In accordance with the terms and conditions of this Agreement, Buyer agrees to purchase and acquire from Seller, and Seller agrees to sell, assign, transfer and convey to Buyer the following (collectively, the “Assets”):

(a) The leasehold estates created by the oil and gas leases (the “Leases) described in Exhibit A hereto, insofar as and only insofar as the Leases cover and relate to the land described in Exhibit A hereto (the “Land”), including:

(i)	an undivided eighty-seven and one-half percent (87.50%) working interest and seventy percent (70.00%) net revenue interest in, to and under the Wilke Dill East Field) Leases, covering the Land located in Kimball County, Nebraska, described in Exhibit A hereto;

(ii)	an undivided one hundred percent (100.00%) working interest and eighty percent (80.00%) net revenue interest in, to and under the Lukassen Leases, covering the Land located in Kimball County, Nebraska, described in Exhibit A hereto;

(iii)

an undivided one hundred percent (100.00%) working interest and eighty percent (80.00%) net revenue interest in, to and under the Pieper Lease, covering the Land located in Washington County, Colorado, described in Exhibit A hereto;

(iv)	an fifty percent (50.00%) working interest and a forty percent (40.00%) net revenue interest in, to and under the Omega Prospect Leases, covering the Land located in Banner County, Nebraska, described in Exhibit A hereto; and

(v)	an fifty percent (50.00%) working interest and a forty percent (40.00%) net revenue interest in, to and under the Comanche Farms Prospect Leases, covering the Land located in Arapahoe County, Colorado, described in Exhibit A hereto.

(b) The undivided interests in and to the wells located upon the Land and described in Exhibit A hereto (the “Wells”).

(c) The oil, gas, natural gas liquids, condensate and other hydrocarbons produced from the Land covered by the Leases, or attributable or allocable thereto, or to lands pooled or unitized therewith, from and after the Effective Time (the “Production”).

(d) The equipment, personal property, facilities, pipelines, improvements, fixtures, buildings and structures located upon the Land, and used in connection with the Leases, the Land or the Wells for the production, gathering, treatment, compression, transportation, processing, sale or disposal of hydrocarbons or water produced from the Land, or attributable thereto, including, without limitation, all the wells, well-bores, casing, tubing, gauges, valves, rods, flow lines, gear boxes, pumps, tanks, separators, gathering system, compressors, pipelines, fixtures, pits, buildings and improvements described in Exhibit A hereto (collectively, the “Equipment”).

(e) The surface rights incident or appurtenant to the Leases, the Land and the Wells, and all easements, rights-of-way, permits, licenses, servitudes, surface use agreements or other similar interests affecting the Land, the Leases and the Wells (collectively, the “Surface Rights”).

(f) The agreements, contracts, options, leases, licenses, permits and other documents related to the ownership or operation of the Leases, the Land, the Wells, the Production, the Equipment and the Surface Rights including, without limitation, all operating, unit, pooling, exploration, farm-out, participation, operating, unit, pooling, communitization, gathering, water disposal, processing, transportation and product purchase agreements, and options, permits, orders and decisions of state and federal regulatory authorities (collectively, the “Material Contracts”).

(g) Copies of Seller’s files and records related to the Leases, the Land and the Wells (the “Records”) including, without limitation, all of the following: (i) land, lease, title, contracts, rights of way, surveys, maps, plats, correspondence and other documents; (ii) division of interest and accounting records; (iii) severance, production and property tax records; and (iv) well, operations, engineering, environmental and maintenance records.

2. The working interest assigned by Seller to Buyer shall be subject to a 20% royalty and overriding royalty (the “Royalty”) burden, so that after closing of the sale contemplated by this Agreement, Buyer shall own an undivided eighty-seven and one-half percent (87.50%) working interest and seventy percent (70.00%) net revenue interest in the Wilke (Dill East Field) Leases and Wilke (Dill East Field) Wells, located in Kimball County, Nebraska, a one hundred percent (100.00%) working interest and eighty percent (80.00%) net revenue interest in the Lukassen Leases and the Lukassen 14-34 well, located in Kimball County, Nebraska, and the Pieper Lease and the Pieper 3-29 well, located in Washington County, Colorado, and an undivided fifty percent (50.00%) working interest and forty percent (40.00%) net revenue interest in the Omega Propsect Leases in Banner County, Nebraska and the Comanche Farms Prospect Leasese in Arapahoe County, Colorado. If Seller owns less than 100% of the leasehold interest created by the Leases, or in the event the Leases cover less than the full fee mineral estate in the Land covered by the Leases, then the Royalty shall be reduced proportionately with respect to Seller’s interest in such Lease or the partial mineral interest covered by the Lease.

3. The purchase price for the Assets shall be One Million Four Hundred Fifty Thousand (1,450,000) shares of restricted common stock of Buyer (the “Shares”), and Two Million Two Hundred Thousand Dollars ($2,200,000.00) (the “Cash”)(the Shares and the Cash shall be referred to, collectively, as the “Purchase Price”), as adjusted hereunder. The Shares shall be delivered to Seller at Closing. The cash portion of the Purchase Price shall be paid by Buyer to Seller on December 18, 2009 by bank wire to Seller’s account pursuant to the following wiring instructions:

Bank of America - Nevada; phone: 866-214-6822;

P.O. Box 98600

Las Vegas, NV 89193

Routing No. 026009593

Credit to the account of Edward Mike Davis, L.L.C., Account No. 4961570002.

4. Buyer shall (i) file a registration statement with the Securities and Exchange Commission with respect to the Shares (the “Registration”) not later than Monday, January 11, 2010, and (ii) thereafter diligently pursue the Registration to effectiveness. Buyer may include other equity securities of Buyer in the Registration as well, in Buyer’s discretion. In connection with the Registration, Seller shall execute such underwriting agreement and other documents as are customary under the circumstances and/or as are executed by all holders of stock included in the Registration. Buyer shall pay all underwriting commissions, filing fees and other expenses of the Registration. As a consequence of the Registration, the Shares will become “free trading stock” with no restrictions of any kind.

5. Ownership of the Assets shall be transferred from Seller to Buyer at Closing, but effective as of the Effective Time. All costs and expenses attributable to the Assets incurred prior to the Effective Time shall be the responsibility and obligation of Seller, and Seller shall be entitled to all of the proceeds from the sale of production attributable to the Assets prior to the Effective Time. In addition, at the Closing, Buyer shall pay Seller for the value of all oil in the tanks and line fill at the Effective Time at the contract price which Seller is receiving from the purchaser of production from the Assets for the month in which the Closing occurs. The determination of the amount of oil in the tanks shall be done by gauging at the Effective Time which shall be jointly measured and observed by representatives of Seller and Buyer. All costs and expenses attributable to the Assets and incurred at or after the Effective Time shall be the responsibility and obligation of Buyer, and Buyer shall be entitled to all proceeds from the sale of production attributable to the Assets at or after the Effective Time. Buyer shall be responsible for and shall pay all of the operating expenses, direct charges and operator’s overhead attributable to the Assets from and after the Effective Time.

6. Seller hereby represents and warrants to Buyer that the following representations and warranties shall be true and correct at and as of Closing:

(a) Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and is authorized to do business in the State of Colorado and the State of Nebraska.

(b) Seller has all requisite power and authority to carry on its business as presently conducted, to enter into this Agreement, and perform its obligations under this Agreement. The consummation of the transactions contemplated by this Agreement will not violate nor be in conflict with any provision of Seller’s articles of organization or organizational documents, or any agreement or instrument to which Seller is a party or is bound, or any judgment, decree, order, writ, injunction, statute, rule or regulation applicable to Seller. The execution, delivery and performance of this Agreement, and the transactions contemplated hereby, have been duly and validly authorized by all requisite action on the part of Seller.

(c) This Agreement has been duly executed and delivered on behalf of Seller, and, at the Closing, all documents and instruments required hereunder to be executed and delivered by Seller shall have been duly executed and delivered. This Agreement does, and such documents and instruments shall, constitute legal, valid and binding obligations of Seller enforceable in accordance with their terms.

(d) Seller hereby agrees to warrant and defend the title to the Assets against all liens, encumbrances and defects of title arising by, through, or under Seller, but not otherwise. The Assets are free and clear of all mortgages, liens or other encumbrances.

(e) To Seller’s knowledge, all rentals and royalties under the Leases have been timely and fully paid.

(f) Seller has paid all ad valorem, property, production, severance, excise taxes and assessments attributable to the Leases, the Land and the Production.

(g) Seller has not received notice of any breach, default or violation under any of the Leases or the Material Contracts. No claim, demand, filing, cause of action, administrative proceeding, lawsuit or other litigation has been served upon Seller or notice received by Seller or, to Seller’s knowledge, threatened with respect to any of the Assets.

(l) To Seller’s knowledge, there are no consents required to be obtained for, and no preferential rights to purchase exercisable in connection with, the assignment of the Assets by Seller to Buyer hereunder.

(m) To Seller’s knowledge, there are no outstanding authorities for expenditure or other commitments to make capital expenditures which are binding on the Assets, and which Seller reasonably anticipates will require expenditures in excess of Twenty-five Thousand Dollars ($25,000.00) per item.

(n) Seller’s interest in the Assets is not subject to any contract for the sale of the production attributable to periods after the Effective Time, other than contracts that may be terminated by thirty (30) days prior written notice. To Seller’s knowledge, Seller’s interest in the Assets is not subject to or burdened by any obligation under a sales, take-or-pay, gas balancing, marketing, hedging, forward sale or similar arrangement, to deliver the production attributable to such interest in the Assets without receiving payment at the time of or subsequent to delivery, or to deliver the Production in the future for which payment has already been received (e.g., a “forward” sale contract).

(h) The Records have been maintained in the ordinary course of Seller’s business, and Seller has not intentionally omitted any material information from the Records.

(i) Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code.

(j) There are no bankruptcy, reorganization or receivership proceedings pending, or, to Seller’s knowledge, threatened against Seller.

(k) Seller has not incurred any liability for brokers or finders fees relating to the transactions contemplated by this Agreement for which Buyer shall have any responsibility whatsoever.

(l) The Shares are being purchased for Seller’s own account, for investment purposes only, not for the account of any other person and not with a view to distribution, assignment or resale to others. Seller will not sell, hypothecate or otherwise transfer Seller’s Shares unless (i) the transfer is registered under the Securities Act of 1933, as amended (the “1933 Act”), and registered or qualified under applicable state securities laws, or (ii) Buyer has received a written opinion of counsel (which opinion and counsel are satisfactory to Buyer) that an exemption from the registration or qualification requirements of the 1933 Act and such state laws is available.

(m) Seller is familiar with and understands the current and proposed business activities of Buyer. Seller has been given the opportunity to obtain additional information from Buyer and to discuss the current and proposed business of Buyer with representatives of Buyer. Buyer has made available to Seller all documents and information that Seller has requested relating to an investment in the Shares. Seller has reviewed and approved the financial statements and other filings of Buyer of public record. With respect to tax and other economic considerations involved in this investment, Seller is not relying on any advice or opinions from Buyer or any person acting on its behalf. Seller has carefully considered and has, to the extent Seller believes appropriate, discussed with its legal, tax, accounting and financial advisors the suitability of an investment in the Shares for his or her particular tax and financial situation, and has determined that the Shares for which Seller is subscribing are a suitable investment. Seller (i) has adequate means for providing for Seller’s current financial needs and contingencies; (ii) has no need for liquidity in this investment; (iii) can afford a complete loss of the funds invested in the Shares; and (iv) does not have an overall commitment to illiquid investments that is disproportionate to Seller’s net worth (and Seller’s investment in the Shares will not cause such overall commitment to become excessive).

(n) Seller understands that an investment in the Shares is speculative in nature and involves a substantial degree of risk, including risk of losing all or a portion of Seller’s investment. Seller understands that the return of Seller’s money, not just the return on Seller’s money, is not assured. Seller, in reaching a decision to subscribe, has such knowledge and experience in financial and business matters that Seller is capable of reading and interpreting financial statements and evaluating the merits and risk of an investment in the Shares.

(o) Seller was not offered or sold the Shares, directly or indirectly, by means of any form of general advertising or general solicitation, including, but not limited to, the following: (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar medium of or broadcast over television or radio; or (ii) to the knowledge of Seller, any seminar or meeting whose attendees had been invited by any general solicitation or general advertising.

(p) Seller understands that Buyer’s determination that the exemption from the registration provisions of the 1933 Act based upon non-public offerings applicable to the offer and sale of the Shares, is based, in part, upon the representations, warranties, and agreements made by Seller herein. Seller consents to the disclosure of any such information, and any other information furnished to Buyer or related to this transaction, to any governmental authority, self-regulatory organization, or, to the extent required by law, to any other person.

(q) Seller is an “accredited investor,” as that term is defined in SEC Rule 501.

(r) Pending Registration, the certificate evidencing the Shares will reflect a legend in substantially the following form:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS THE TRANSACTION IS REGISTERED UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED FOR SALE UNDER APPLICABLE STATE SECURITIES LAWS, OR THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL THAT AN EXEMPTION FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.

7. Buyer hereby represents and warrants to Seller that the following representations and warranties shall be true and correct at and as of Closing:

(a) Buyer is a Nevada corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and is authorized to do business in the State of Colorado and the State of Nebraska.

(b) Buyer has all requisite power and authority to carry on its business as presently conducted, to enter into this Agreement, and perform its obligations under this Agreement. The consummation of the transactions contemplated by this Agreement will not violate nor be in conflict with any provision of Buyer’s articles of organization or organizational documents, or any agreement or instrument to which Buyer is a party or is bound, or any judgment, decree, order, writ, injunction, statute, rule or regulation applicable to Buyer. The execution, delivery and performance of this Agreement, and the transactions contemplated hereby, have been duly and validly authorized by all requisite action on the part of Buyer.

(c) This Agreement has been duly executed and delivered on behalf of Buyer, and, at the Closing, all documents and instruments required hereunder to be executed and delivered by Buyer shall have been duly executed and delivered. This Agreement does, and such documents and instruments shall, constitute legal, valid and binding obligations of Buyer enforceable in accordance with their terms.

(d) There are no bankruptcy, reorganization or receivership proceedings pending, or, to Buyer’s knowledge, threatened against Buyer.

(e) Buyer has not incurred any liability for brokers or finders fees relating to the transactions contemplated by this Agreement for which Seller shall have any responsibility whatsoever.

8. The purchase and sale of the Assets pursuant to this Agreement (the “Closing”) shall occur at on or before December 7, 2009, by fax or electronically, or such other date as Buyer and Seller may mutually agree in writing, electronically. At the Closing, the following shall occur:

(a) Seller shall execute, acknowledge and deliver to Buyer (in sufficient counterparts to facilitate recording) an assignment, conveyance and bill of sale (the “Assignment”) covering the Assets, substantially in the form of Exhibit B hereto, with sufficient counterparts for filing in the appropriate governmental offices.

(b) Buyer shall deliver to Seller the Shares.

(c) On or before December 18, 2009, Buyer shall pay Seller the Cash by wire transfer to Seller’s account in accordance with the terms and conditions hereof.

(d) Buyer and Seller shall execute, acknowledge and deliver transfer orders or letters in lieu of transfer orders directing all purchasers of production to make payment of proceeds attributable to production from the Assets to Buyer after the Effective Time.

(e) Buyer shall transfer operations of the Assets to Buyer, or Buyer’s contract operator.

(f) Seller shall deliver to Buyer copies of the Records.

9. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT AND THE ASSIGNMENT, THIS AGREEMENT IS MADE WITHOUT ANY OTHER WARRANTIES OR COVENANTS, EXPRESSED OR IMPLIED IN FACT OR IN LAW, AS TO TITLE, MERCHANTABILITY, DURABILITY, USE, OPERATION, OR FITNESS FOR ANY PARTICULAR PURPOSE, AND SELLER DOES NOT IN ANY WAY REPRESENT OR WARRANT THE ACCURACY OR COMPLETENESS OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER. BUYER HEREBY AGREES THAT IT HAS INSPECTED OR HAS BEEN GIVEN THE OPPORTUNITY TO INSPECT THE ASSETS, INCLUDING THE LEASES AND ASSOCIATED AGREEMENTS, WELLS, PERSONAL PROPERTY, AND EQUIPMENT ASSIGNED AND CONVEYED HEREIN AND, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT AND THE ASSIGNMENT, BUYER ACCEPTS THE SAME “AS IS, WHERE IS” AND “WITH ALL FAULTS.”

10. All production, severance, excise and other taxes (other than income taxes) relating to production of oil, gas and condensate attributable to the Assets prior to the Effective Time shall be paid by Seller, and all such taxes relating to such production on or after the Effective Time shall be paid by Buyer. Buyer shall be responsible for any and all state and local taxes or fees imposed on the transfer of the Assets.

11. Seller and Buyer shall use their commercially reasonable efforts in good faith to obtain all of the consents or waivers of preferential rights, if any, that are required to be obtained with respect to the transfer of the Assets to Buyer.

12. The Wilke (Dill East Field) Leases, the Omega Prospect Leases and the Comanche Prospect Leasese shall each be subject to and burdened by a separate operating agreement (the “Operating Agreement”) in the form of the A.A.P.L. Form 610-1989 Model Form Operating Agreement. The Operating Agreement shall govern and control all operations conducted upon the Land. Pursuant to the terms of the Operating Agreement, Buyer, or Buyer’s contract operator, shall be the Operator; except with regard to the Omega Prospect Lease and the Comanche Prospect Leases, Seller shall remain as Operator until the first well located on such prospect is drilled, and then Buyer, or Buyer’s contract operator shall be Operator thereafter. The Operating Agreement shall provide a non-consent penalty equal to four hundred percent (400%) for drilling and one hundred percent (100%) for surface equipment. Pursuant to the Operating Agreement, the COPAS overhead rate for drilling a well shall be equal to $5,000.00 per month, and for operating a well shall be equal to $500.00 per month.

13. If Buyer fails to pay Seller the Cash on or before December 18, 2007, Seller shall have the right to terminate this Agreement by written notice delivered to Buyer on or before January 10, 2009. If Seller elects to terminate this Agreement hereunder, Buyer shall promptly reassign to Seller the Assets, with a special warranty of title by, through and under Buyer, but not otherwise, Seller shall promptly transfer and deliver to Buyer the Shares, and this Agreement shall terminate.

14. All exhibits attached to this Agreement are hereby incorporated by reference herein and made a part hereof for all purposes as if set forth in their entirety herein. This Agreement, including the exhibits attached hereto, constitutes the entire agreement between the Parties as to the subject matter of this Agreement and supersedes all prior agreements, understandings, negotiations and discussions of the Parties, whether oral or written. No supplement, amendment, alteration, modification or waiver of this Agreement shall be binding unless executed in writing by the Parties. All other drafts whether written or oral of this Agreement are rescinded and this Agreement supersedes any prior draft of this Agreement whether written or oral, including all previous letters or emails rescinding or cancelling the selling and buying of the Assets.

15. The rights of Seller and Buyer may be assigned and the provisions of this Agreement shall extend to their successors and assigns, provided, however, no assignment shall relieve successors or assigns of its obligations under this Agreement.

16. This Agreement shall be governed and construed in accordance with the laws of the State of Colorado. In the event of any dispute arising out of or relating to this Agreement, the prevailing Party shall be entitled to recover from the other Party court costs and reasonable attorneys’ fees.

17. Any notice required or permitted by this Agreement shall be given in writing by personal service, overnight delivery service, e-mail, facsimile or by certified mail, return receipt requested, postage prepaid, as follows:

If to Seller: Edward Mike Davis, LLC 200 Rancho Circle Las Vegas, Nevada 89107 Attention: Edward Mike Davis Fax: (702) 877-0272 E-Mail: mike@emdllc.com
If to Buyer: Recovery Energy, Inc. 1515 Wynkoop, Suite 200 Denver, Colorado 80202 Attention: Jeffrey Beunier, President Fax: (888) 887-4449 E-Mail: jbeunier@recoveryenergyco.com	With a copy to: Robert G. Lewis, Esq. Ducker Montgomery 1560 Broadway, Suite 1400 Denver, Colorado 80202 Fax: (303) 861-4017 E-Mail: rlewis@duckerlaw.com

(or such other address as designated in writing by either Party to the other) and shall be deemed to have been given as of the date of receipt by the intended Party.

18. The Parties agree to execute, acknowledge and deliver such additional instruments, agreements or other documents, and take such other action as may be necessary or advisable to consummate the transactions contemplated by this Agreement. The Parties acknowledge that they and their respective counsel have negotiated and drafted this Agreement jointly and agree that the rule of construction that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation or construction of this Agreement.

19. This Agreement may be executed in counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute for all purposes one agreement. Facsimiles and electronic copies of this Agreement shall be effective as originals.

IN WITNESS WHEREOF, Buyer and Seller have executed and delivered this Agreement on the dates below the signatures hereto, to be effective for all purposes as of the Effective Time.

SELLER:

Edward Mike Davis, L.L.C.

By: __/s/ Edward Mike Davis___

Edward Mike Davis, Manager

Date: December 4 , 2009

BUYER:

Recovery Energy, Inc.

By: _____/s/ Jeffrey A. Beunier_________

Jeffrey Beunier, President

Date: December 4 , 2009

EXHIBIT A

Attached to and made a part of that certain Purchase and Sale Agreement

dated effective December 1, 2009

between Edward Mike Davis, L.L.C. and Recovery Energy, Inc.

WILKE (DILL EAST FIELD) LEASES and LANDS:

Lessor:	Gary L. Schneider, Individually and as heir of Maxine Schneider, deceased
Lessee:	Edward Mike Davis, L.L.C.
Dated:	May 20, 2008
Recorded:	Book 206 OG, Page 44
Description:	Township 15 North, Range 56 West
	Section 5: S/2

Lessor:	Peggy Atkins and Howard Atkins, wife and husband
Lessee:	Edward Mike Davis, L.L.C.
Dated:	May 20, 2008
Recorded:	Book 206 OG, Page 48
Description:	Township 15 North, Range 56 West
	Section 5: S/2

Lessor:	Galeen B. Hergenrader and Kenneth Hergenrader, wife and husband
Lessee:	Edward Mike Davis, L.L.C.
Dated:	May 16, 2008
Recorded:	Book 206 OG, Page 52
Description:	Township 15 North, Range 56 West
	Section 5: S/2

Lessor:	Paula Wilke, a/k/a Paula J. Wilke and Erwin Wilke, Jr., wife and husband
Lessee:	Edward Mike Davis, L.L.C.
Dated:	June 26, 2008
Recorded:	Book 206 OG, Page 132
Description:	Township 15 North, Range 56 West
	Section 5: S/2
Amendment of Oil and Gas Dated: July 9, 2008
Recorded:	Book 206 OG, Page 221
Description:	Township 15 North, Range 56 West
	Section 5: S/2

WILKE (DILL EAST FIELD) WELLS

Well Name:	Wilke 24-5
Located:	SE/4SW/4 of Section 5, T15N-R56W, Kimball County, NE
API: 26105226270000 Working Interest: 87.50% Net Revenue Interest: 70.00%
Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Well Name: Wilke 23-5

Located: NE/4SW/4 of Section 5, T15N-R56W, Kimball County, NE

API: 26105226250000

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Well Name: Wilke 34-5

Located: SW/4SE/4 of Section 5, T15N-R56W, Kimball County, NE

API: 26105226290000 Working Interest: 87.50% Net Revenue Interest: 70.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Well Name: Wilke 33-5

Located: NW/4SE/4 of Section 5, T15N-R56W, Kimball County, NE

API: 26105226280000 Working Interest: 87.50% Net Revenue Interest: 70.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Well Name: Wilke 44-5

Located: SE/4SE/4 of Section 5, T15N-R56W, Kimball County, NE

API: 26105226320000 Working Interest: 87.50% Net Revenue Interest: 70.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Well Name: Wilke 14-5

Located: SW/4SW/4 of Section 5, T15N-R56W, Kimball County, NE

API: 26105226520000 Working Interest: 87.50% Net Revenue Interest: 70.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Wilke Tank Battery consisting of 8 400 bbl tanks and an 8 foot treater.

LUKASSEN LEASES and LANDS:

Lessor: Antelope Energy Company, LLC, a Colorado limited liability company

Lessee: Edward Mike Davis, L.L.C.

Dated: August 4, 2008

Recorded: Book 206 OG, Page 647

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 16 NORTH, RANGE 56 WEST, 6th P.M.

Section 34: S/2SW/4SW/4

Lessor: Marian J. Payne, a single woman

Lessee: Edward Mike Davis, L.L.C.

Dated: July 25, 2008

Recorded: Book 206 OG, Page 487

Correction of Description Recorded: Book 207, Page 354

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor:

Judith Ann Mays, a married woman dealing in her sole and separate property

Lessee: Edward Mike Davis, L.L.C.

Dated: July 25, 2008

Recorded: Book 206 OG, Page 487

Correction of Description Recorded: Book 207, Page 356

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor:

William O. Smith a/k/a William Otis Smith and Rita Marie Smith, husband and wife

Lessee: Edward Mike Davis, L.L.C.

Dated: May 16, 2008

Recorded: Book 206 OG, Page 33

Correction of Description Recorded: Book 207, Page 352

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor:

Rita J. Bingaman f/k/a Rita Jeanne Smith and Gary P. Bingaman, wife and husband

Lessee: Edward Mike Davis, L.L.C.

Dated: May 16, 2008

Recorded: Book 206 OG, Page 29

Correction of Description Recorded: Book 207, Page 350

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor:

Mary L. Soper, individually and as Trustee of the Ronald R. Soper Family Trust, dated October 4, 1995

Lessee: Edward Mike Davis, L.L.C.

Dated: July 15, 2009

Recorded: Book 208 OG, Page 760

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor: Steven Knigge, a single man

Lessee: Edward Mike Davis, L.L.C.

Dated: July 15, 2009

Recorded: Book 208 OG, Page 763

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor: Linda McDowall, f.k.a. Linda Wilson, a single woman

Lessee: Edward Mike Davis, L.L.C.

Dated: July 15, 2009

Recorded: Book 208 OG, Page 766

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

Lessor: Marla Knigge,f.k.a. Marla Teasley, a single woman

Lessee: Edward Mike Davis, L.L.C.

Dated: July 15, 2009

Recorded: Book 208 OG, Page 769

Covering: INSOFAR AND ONLY INSOFAR AS THE LEASE COVERS:

TOWNSHIP 15 NORTH, RANGE 56 WEST, 6th P.M.

Section 3: N/2 of Lot 4, also described as N/2NW/4NW/4

LUKASSEN WELL

Well Name: Lukassen 14-34

Located: S/2SW/4SW/4 of Section 34, T16N-R56W, Kimball County, NE

API: 26105226450000 Working Interest: 100.00% Net Revenue Interest: 80.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Lukassen Tank Battery consisting of 3 – 400 bbl tanks and a 4 foot treater

PIEPER LEASE and LANDS:

Lessor: Dean Reed and Beaulah Reed, husband and wife

Lessee: King Resources Company

Dated: August 10, 1966

Recorded: Book 583, Page 71

Description: Township 1 North, Range 53 West

Section 29: NE/4

PIEPER WELL

Well Name: Pieper #3-29

Located: NE/4 of Section 29, T1N-R53W, Washington County, CO

API: 05-121-08367 Working Interest: 100.00% Net Revenue Interest: 80.00%

Equipment and Inventory: consisting of a pumping unit, rods, tubing and casing

Pieper Tank Battery consisting of 2 – PR&R 500 bolted bbl tanks and a 6 X 20 vertical inside leg cold weather treater

OMEGA PROSPECT LEASES and LANDS:

Lessor:

Katharine E. Nelson,, Individually and as Trustee of the Katharine E. Nelson Living Trust, dated 5-19-2003

Lessee: Edward Mike Davis, L.L.C.

Dated: September 20, 2008

Recorded: Book 131 OG, Page 455, in Banner County, Nebraska

Description: Township 17 North, Range 55 West, 6th P.M.

Section 11: NE, S2

Lessor:

Ruth L. Pile, individually and as Trustee of the Ruth L. Pile Revocable Trust, dated 6-26-1998

Lessee: Edward Mike Davis, L.L.C.

Dated: October 9, 2008

Recorded: Book 131 OG, Page 459, in Banner County, Nebraska

Description: Township 17 North, Range 55 West, 6th P.M.

Section 11: W/22

COMANCHE FARMS PROSPECT LEASES and LANDS:

Lessor: State of Colorado Lease # OG 8056.4

State Board of Land Commissioners

Lessee: Contex Energy Company

Dated: August 19, 2004

Recorded: Reception Number B 4199551, in Arapahoe County, Colorado

Description: Township 4 South, Range 62 West, 6th P.M.

Section 36: ALL

Attached files

LILIS ENERGY, INC. Reports

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