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| 8-K - FORM 8-K - NEW FRONTIER ENERGY INC | nfe_8k.htm |
Exhibit 10.1
PURCHASE
AND SALE AGREEMENT
THIS
AGREEMENT (“Agreement”)
is dated as of June 4, 2010 (the “Effective
Date”), between New
Frontier Energy, Inc., a Colorado corporation (“Seller”),
and Carrizo Oil & Gas,
Inc., a Texas corporation (“Carrizo”). Each
of Seller and Carrizo may be referred to individually herein as a “Party”
and collectively as the “Parties.”
R
E C I T A L S
A. Seller
owns interests in oil and gas leases covering approximately 27,120 gross acres
and approximately 11,505 net acres. Said leases are described in
Appendix 1
hereto (the “Leases”).
B. Seller
desires to sell its entire interests in the Leases to Carrizo and Carrizo
desires to purchase said interests from Seller for the consideration and on the
terms and conditions, including Seller’s right to elect to re-acquire an
interest in the Leases, set forth in this Agreement.
C. Seller
and Carrizo desire to create an area of mutual interest as set forth in this
Agreement.
A
G R E E M E N T
Subject
to the terms and provisions of this Agreement and in consideration of the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, Seller and Carrizo agree as follows:
ARTICLE
1 – DEFINED TERMS
As used
in this Agreement, the following terms have the meanings ascribed to them
below:
“Approved Net
Leasehold Acreage” means the Net Leasehold Acres attributable to each of
the Leases that are acceptable to Carrizo in the exercise of its reasonable
discretion. In its determination of the Approved Net Leasehold Acres
attributable to a Lease, Carrizo will use the formula set forth in the
definition of Net Leasehold Acres below, provided, however, that Carrizo shall
have the option to exclude:
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(i)
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Leases
with respect to which Carrizo determines that there are material
environmental liabilities that are unacceptable to Carrizo in the good
faith exercise of reasonable discretion;
and
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(ii)
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interests
in Oil and Gas covered by the Leases and leasehold working interests in
the Leases that Carrizo determines, in the exercise of reasonable
discretion to be subject to Title
Defects.
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The
Approved Net Leasehold Acres attributable to leases excluded for the reasons set
forth in (i) and (ii), above (the “Excluded
Leases”) will be zero unless the reasons for exclusion are removed during
the Cure Period (defined in Section 2.3 below) to
the satisfaction of Carrizo in the exercise of its reasonable
discretion.
Burdens
means landowners’ royalties, overriding royalties, production payments, net
profits interests and all other burdens measured by or payable out of production
that do not exceed 16% of 8/8ths proportionately reduced (i.e., leases that can
be delivered to Carrizo at a net revenue interest greater than or equal to
84%).
1
Encumbrances
means pledges, liens, mortgages, security interests, contract obligations,
options, claims and other similar encumbrances.
Excluded
Leases has the meaning set forth in the definition of Approved Net
Leasehold Acreage above.
Good and
Defensible Title means, for each Lease, such record title
that (i) entitles Seller to receive throughout the life of such Lease
a net revenue interest in, to and from Oil and Gas in and under the formations
covered by such Lease, not less than 84% of 8/8ths, (ii) obligates
Seller to pay and bear throughout the life of such Lease a share of
the costs and risks of exploring, drilling, developing, operating and abandoning
that Lease insofar as such Lease covers and affects the
formations not greater than 100%, and (iii) is free and clear of all
Encumbrances except Permitted Encumbrances.
Net Leasehold
Acres means, with respect to each of the Leases, (i) the number of gross
acres covered by such Lease, times (ii) the percentage of the Oil and Gas
covered by such Lease, times (iii) the percentage of the estate of the
lessee in said Lease (working interest) owned by Seller. For example,
the number of Net Leasehold Acres attributable to a Lease covering an undivided
one half interest in the minerals in and under a 100 acre tract of land in which
Seller owns 90% of the estate of the original lessee in such Lease would be 45
Net Leasehold Acres. The 45 Net Leasehold Acres in this example is
derived as follows: 100 acres times 50% (the landowner’s mineral
interest) times (90% (Seller’s ownership percentage of the estate of the
original lessee).
Oil and
Gas means oil, gas, condensate and other liquid or gaseous
hydrocarbons.
Permitted
Encumbrances means and includes the following:
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(a)
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production
burdens that do not reduce Seller’s net revenue interest in a Lease below
84% of 8/8ths;
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(b)
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Liens
for taxes or assessments or governmental charges not yet delinquent;
and
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(c)
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Easements,
rights-of-way, servitudes, permits, surface leases and other rights in
respect of surface operations incidental to the ownership of
the Leases provided that same do not materially interfere with
the operation, value or use of any of the
Leases.
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Title
Defect means any Encumbrance (or any claim of an Encumbrance) other than
a Permitted Encumbrance that would cause title to any Lease not to be
Good and Defensible Title.
ARTICLE
2 – PURCHASE AND SALE OF LEASES
2.1 Purchase and
Sale. Contemporaneously with: (i) the execution and delivery
of this Agreement by the Parties, (ii) the execution, acknowledgement and
delivery of the Assignment attached hereto as Appendix 2 by the
Parties (the “Assignment”),
and (iii) the wire transfer of funds by Carrizo to Seller pursuant to Section 2.2 below
(the events set forth in (i), (ii) and (iii) may be referred to as the “Closing”),
Seller hereby sells, transfers and conveys to Carrizo and Carrizo hereby accepts
the leasehold interests conveyed by the Assignment on the terms and conditions
contained in this Agreement.
2
2.2 Initial
Advance. Contemporaneously with the execution and delivery of
this Agreement by the Parties, Carrizo has advanced to Seller the sum of
$5,519,989.00 in immediately available funds (the “Initial
Advance”). The Initial Advance: (i) was made by wire transfer
to an account designated by Seller, (ii) was determined by multiplying Five
Hundred Dollars ($500.00) per Net Leasehold Acre times 11,039.978 Approved Net
Leasehold Acres.
2.3 Title and Environmental Due
Diligence. Carrizo and its representatives, with the consent
of the Seller and prior to the Closing, conducted inspections of the Leases and
the lands covered thereby and a review of title to the Leases. The
Initial Advance is based on the number of Approved Net Leasehold Acres covered
by the Leases as determined such inspection and
review. Contemporaneously with the execution and delivery of this
Agreement by the Parties, Carrizo is delivering to Seller a notice identifying
Title Defects or environmental conditions that were taken into account in
determining the Initial Advance and identifying any Excluded Leases and the
reasons for such exclusion (the “Defect
Notice”). A copy of the Defect Notice is attached to this
Agreement as Appendix
3. During the thirty (30) day period following the Closing
(the “Cure
Period”), Seller will have the right to cure any Title Defects referred
to in the Defect Notice at Seller’s expense and to attempt to remediate or
remove any environmental conditions that caused one or more Leases to be
Excluded Leases. On or before the expiration of the Cure Period,
Seller will give Carrizo notice of all Title Defects that Seller believes it has
cured and any change in environmental conditions that should be considered by
Carrizo in evaluating whether a Lease should be an Excluded
Lease. Seller will furnish Carrizo, with said notice, all title
curative materials reflecting that the Title Defects referred to in Seller’s
notice do not exist or have been cured and information as to the change in
environmental conditions that should be considered by Carrizo in evaluating
whether a Lease should be an Excluded Lease. Within five (5) days
after receiving said notice and title curative materials from Seller, Carrizo
will send a notice to Seller reflecting the number of Net Leasehold Acres that
were excluded by Carrizo in the determination of the Initial Advance on account
of Excluded Leases and that Carrizo, in the exercise of its reasonable
discretion, no longer deems to be Excluded Leases (the “Cured Net
Leasehold Acres”).
2.4 Conveyance of Cured Net
Leasehold Acres and Payment Therefor. As soon as practicable
after Carrizo has given Seller notice of the number of Net Leasehold Acres
Carrizo has determined are Cured Net Leasehold Acres, the parties shall perform
the following actions:
(i) Seller
shall execute, acknowledge and deliver to Carrizo an assignment substantially in
the form attached hereto as Appendix 2 conveying
the Cured Net Leasehold Acres to Carrizo to the extent such Cured Net Leasehold
Acres were not conveyed to Carrizo by the Assignment referred to in Section 2.1 above;
and
(ii) Carrizo
shall pay to Seller Five Hundred Dollars ($500.00) per Net Leasehold Acre
multiplied by the number of Cured Net Leasehold Acres.
ARTICLE
3 – Option Leases
3.1 Option
Leases. The Leases described in Appendix 6 hereto
(the “Option
Leases”) contain provisions granting the lessee the right or option to
renew or extend such leases for one year at the end of their primary terms by
paying the lessor $10 per Net Leasehold Acre covered thereby. It is
contemplated that the Option Leases will be amended to provide, among other
amendments, that the extension payment will be increased to up to $40 per Net
Leasehold Acre covered by such leases. Carrizo agrees to bear and pay
two thirds of such additional extension payments and Seller agrees to bear and
pay one third of such additional extension payments (in each case, up to but not
in excess of $40 per Net Leasehold Acre covered by such Option Lease) if and
when such additional extension payments are made to the lessors of the Option
Leases, provided that such additional payments are made on or before the first
anniversary of the Effective Date.
3
ARTICLE
4 – Post-Closing Obligation to Acquire Seismic Data and Drill Wells or to
Reassign.
4.1 Reassignment; Retained
Tracts. “Drilling
Period” means the period of time commencing on the date of Closing and
ending on the last day of the 18th month thereafter. Unless Carrizo
(i) commences the drilling of three Carry Wells on the lands covered by the
Leases or on lands pooled therewith prior to the expiration of the Drilling
Period as specified in Section 4.3, Carrizo
must convey to Seller the interests conveyed by Seller to Carrizo pursuant to
Article 1
hereof free and clear of any burdens or other encumbrances created after the
Closing Date by, through or under Carrizo, its successors and assigns; provided
that Carrizo shall reserve from such conveyance 640 gross acres (which need not
be contiguous) covered by the Leases and selected by Carrizo around each
horizontal well spudded before the end of the Drilling Period (without regard to
whether such horizontal well qualifies as a Carry Well as defined in Section 4.3
below). Said 640 acre tracts (the “Retained
Tracts”) shall be in as near the form of a square as practicable and
shall include acreage from the Lease or Leases covering lands closest to the
horizontal well, and shall not overlap with any other Retained
Tract. For the avoidance of doubt the Retained Tracts may comprise
more acreage than that covered by the Lease upon which the related horizontal
well was drilled and/or more acreage than that included in the pooled unit
created around the related horizontal well.
4.2 Seismic
Data. Carrizo intends to acquire 3D seismic data on lands of
its sole choosing and covered by the Leases and to evaluate such seismic
data. To the extent permissible under any applicable licenses or
agreements with third parties, Carrizo shall provide Seller with a copy of the
latest processed version of any 2D or 3D seismic data acquired by or for Carrizo
covering the all or any part of the lands covered by the Leases. If
provision of the data is restricted by third-party agreements, Carrizo shall
make its interpretation of the restricted data available to Seller if
permissible under such agreements. Any and all such data and
information provided by Carrizo to Seller shall be provided as an accommodation
only, without representation or warranty of any kind by Carrizo, and without
right of reliance thereon by Seller.
4.3 Carry
Wells. In order to avoid its reassigment obligations under
Section 4.1
above, Carrizo must: (1) commence drilling not less than three Carry Wells
before the end of the Drilling Period at locations of Carrizo’s choice on the
Leases or on lands pooled therewith, and (2) carry Seller for a 33 1/3 percent
working interest on all costs through the tanks of each of said three Carry
Wells; provided, however that Seller’s working interest in a Carry
Well shall be proportionately reduced if the Leases owned by Carrizo do not
cover 100% of the drilling and spacing unit that shall be established for such
Carry Well, if Carrizo does not own 100% of the lessee’s interest in such
leases, or if the landowners in said Leases do not own the full mineral interest
in the lands covered thereby. In the event that such proportionate
reduction results in Seller being carried for less than the equivalent of 100%
of one well, in the aggregate, with respect to the first three Carry Wells,
Carrizo shall have the obligation to carry Seller in an additional well or
wells, during or after the Drilling Period, so that Seller is carried for the
equivalent of 100% of one well. In addition, Seller shall
proportionately benefit from any non-consent penalty paid to Carrizo with
respect to any of the wells in which it is being carried. By way of
clarity, it is the intent of this Carry Well provision that Seller’s position in
a Carry Well shall be equal to 33 1/3 percent of Carrizo’s working interest in
such well. As used herein, the term “Carry
Well” means a well that satisfies both of the following conditions:
(1) such well is drilled as a horizontal well in the Niobrara formation
(i.e., a well in which the wellbore deviates from approximate vertical
orientation to approximate horizontal orientation in order to drill within and
test a geological interval, using deviation equipment, services and technology);
and (2) such well is spudded after Carrizo acquires 3D seismic data
covering all or a portion of the Leases unless either: (a) Seller has agreed in
writing that such well qualifies as a Carry Well notwithstanding that it is
drilled prior to Carrizo’s acquisition of 3D seismic data covering all or a
portion of the Leases, or (b) such well is drilled in Section 26, Township 8
North, Range 61 West, 6th P.M., Weld County, Colorado. No provision
of this Agreement prohibits or restricts Carrizo from drilling a well or wells
on the Leases during the Drilling Period that do not qualify as Carry Wells as
defined in this paragraph 4.3 or retaining Retained Tracts (as defined in Section 4.1) for such
horizontal wells.
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4.4 Seller’s One Time Election
to Re-Acquire Leasehold Interests. If Carrizo commences
drilling three Carry Wells before the end of the Drilling Period, Carrizo shall
so notify Seller within 20 days after drilling operations cease on the third
Carry Well (“Carrizo’s Carry
Well Notice”). Upon such notice, Seller shall have the option
to re-acquire an undivided 1/3rd working interest in the Leases [excluding
Leases or portion of Leases that are: (a) included within a Retained
Tract (as defined in Section 4.1) for any
well that is not a Carry Well, or (b) included within a drilling and spacing
unit acre unit for a Carry Well]. In order to exercise Seller’s
option, Seller must perform the following actions within 30 calendar days after
Seller receives Carrizo’s Carry Well Notice: (1) give Carrizo written notice of
Seller’s election to acquire said undivided 1/3 working interest; and (2) pay to
Carrizo 1/3rd of the total amount that Carrizo paid to Seller to buy Seller’s
interest in the Leases under Article I above, plus 1/3 of any amount that
Carrizo has paid to renew, extend or replace the Leases during the Drilling
Period. If Seller timely exercises its option under this Section 4.4, then
Carrizo shall assign to Seller a 1/3rd undivided interest in the Leases
[excluding Leases or portion of Leases that are: (a) included within a
Retained Tract (as defined in Section 4.1) for any
well that is not a Carry Well, or (b) included within a drilling and spacing
unit for a Carry Well] by assignment substantially in the form attached hereto
as Appendix
2. Said interest shall be liable for its pro rata share of
costs and expenses other than the costs carried by Carrizo through the tanks as
provided in Section
4.3 above. If Seller does not timely exercise its option under this Section 4.4, then
Seller shall be deemed to have relinquished its rights and options under this
Section 4.4 to
re-acquire interests in the Leases.
4.5 Consequences of Failure to
Drill Carry Wells; Force Majeure. Except as expressly provided
in Section 4.1
above, Seller shall have no remedy or recourse against the Carrizo for failing
to drill three Carry Wells prior to the expiration of the Drilling
Period. So long as the last of the three Carry Wells is spudded
within the Drilling Period, Carrizo may avoid it’s reassignment obligations
under Section
4.1 above, notwithstanding that one or more of said Carry Wells may be
completed, or plugged and abandoned as a dry hole, after expiration of the
Drilling Period so long as Carrizo conducts completion or abandonment
operations on said Carry Wells with due diligence. When permitting,
drilling, completion, plugging or other operations by Carrizo hereunder are
delayed or interrupted by operation of Force Majeure (see Section 7.6), the
time of such delay or interruption shall not be counted against Carrizo and the
Drilling Period shall be extended for a period of time equal to that during
which Carrizo is so delayed or prevented from conducting the activities
necessary to avoid its reassignment obligations under Section
4.1.
4.6 Well
Information. Seller shall have the right, at its sole risk and
expense, to have access to the derrick floor and to observe all operations on
all wells drilled by Carrizo on the Leases or lands pooled
therewith. Carrizo shall provide to Seller copies of all applications
and reports filed with applicable regulatory agencies, whether or not treated as
confidential by such agencies, pertaining to operations on the Leases or on
lands pooled therewith, daily drilling reports, well logs, core analyses, frac
analyses and reports obtained from wells drilled by Carrizo. Seller
shall maintain all data and information provided to it by Buyer under this Section 4.6 or
otherwise in connection with Carrizo’s operations on the Leases and the seismic
data referred to in Section 4.2 above in
confidence except that Seller may disclose data to lenders or potential
purchasers of Seller’s interests in the Leases or a portion thereof upon the
execution by such recipient of a confidentiality agreement. Sellers
shall not be entitled to corporate or accounting records of Carrizo, except as
access to such records is provided by the audit provisions of the Operating
Agreement attached hereto as Appendix
4 and incorporated herein. This section 4.6 shall only apply
to the Carry Wells and any other wells drilled pursuant to this Agreement where
Seller is a participating party, including any additional wells in which Seller
is carried pursuant to Section 4.3 of this Article.
5
ARTICLE
5 – Area of Mutual Interest; Operational Provisions
5.1 Right to Participate in
AMI. As used herein,
the term “area of mutual interest,” “AMI” or
“AMI
Acreage” means all government sections within which Seller owns Leases at
the time of the Closing, and all contiguous and cornering government sections
thereto, but specifically excluding all of Sections 2 and 5 of Township 7 North,
Range 60 West, 6th P.M. All acquisitions after the date hereof of
leases within the AMI by the parties hereto shall be governed by the provisions
of AMI Agreement. attached hereto as Appendix 5 and
incorporated herein.
5.2 Acquisition of Renewal or
Replacement Leases or Extensions of a Lease. If any
party proposes to renew or extend a Lease or to obtain a lease to
replace a Lease that expired, such party shall offer the interests
proposed to be acquired to the other party in accordance with the procedures set
forth in the AMI Agreement, except that Seller shall be carried on such renewal,
extension or replacement costs, and shall be deemed to have elected to
participate in the acquisition of such interests, during the Drilling
Period. Each party shall have the right to participate in the
acquisition of such interests in the following proportions: Carrizo, 66 2/3rds
percent; Seller, 33 1/3rd percent. If any party proposes to renew or
extend a Lease or to obtain a lease to replace a Lease that has expired, and the
other party elects or is deemed to have elected not to participate in the
acquisition of such interest in accordance with the procedures set forth in the
AMI Agreement, then the acquiring party shall be entitled to acquire and hold
such interest for its own account.
5.3 Operations and Cost
Sharing. The Operating Agreement in the form attached as Appendix 4 hereto
(the “Operating
Agreement”) shall govern all operations on any jointly owned leases and
wells within the AMI. The Operating Agreement shall be deemed a
separate agreement: (i) with respect to each drilling and spacing unit to
be established around each Carry Well or other well drilled by the Parties, and
(ii) with respect to AMI Acreage and Acreage not included in such a
unit until such time as any portions of such acreage are so included in such a
unit. The Operating Agreement shall be binding on the parties when
this Agreement is fully executed notwithstanding that parties have not signed
the Operating Agreement. Any well drilled by Carrizo hereunder shall
be operated by Carrizo. If Carrizo sells all of its interests in all
wells drilled on the applicable acreage and the AMI Acreage, then the purchaser
of Carrizo’s interests shall have the right to take over as the Operator from
Carrizo; provided such Purchaser is a reputable operator with prior experience
in drilling and completing unconventional shale wells. In the event
of a conflict between this Agreement and the Operating Agreement, this Agreement
shall be controlling; provided, however, that if
there is a conflict between the tax partnership provisions contained in Exhibit
G to the Operating Agreement and this Agreement, said tax partnership provisions
shall be controlling.
5.4 Partnership
Election. The tax partnership provisions contained in Exhibit
G to the Operating Agreement shall govern the relationship of the parties under
this Agreement for tax purposes. Said tax partnership provisions
shall be effective as of the date of this Agreement.
5.5 Ingress and
Egress. To the extent that it may lawfully do so, Seller
hereby grants Carrizo the right of ingress and egress over, across and under any
portion of the Acreage and Leases and over, across and
under any other lands and/or leases owned by Seller in the vicinity of
the Acreage and Leases in order for Carrizo to have the
right of ingress and egress to and from the Acreage and Leases and to
lay and maintain pipelines and other facilities to treat, store, transport Oil
and Gas from the Leases, the Acreage and any leases jointly acquired
within the AMI.
6
ARTICLE
6 – Representations
6.1 Representations of
Carrizo. Carrizo represents to Seller as follows:
(a) Carrizo
is a Texas corporation duly organized, validly existing and in good standing
under the laws of the State of Texas, and is duly qualified to carry on its
business in all jurisdictions in which it is conducting business.
(b) Carrizo
has all requisite power and authority to carry on business as presently
conducted, to enter this Agreement, and to perform its obligations under this
Agreement. The consummation of the transactions contemplated hereby
will not violate, nor be in conflict with, any provision of Carrizo’s Articles
of Incorporation, Bylaws or other governing documents, or any agreement or
instrument to which Carrizo is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Carrizo.
(c) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all requisite
action or the part of Carrizo.
(d) This
Agreement and the Assignments have been duly executed and delivered on behalf of
Carrizo and constitute legal, valid and binding obligations of Carrizo,
enforceable in accordance with their terms.
(e) Carrizo
has not incurred any liability, contingent or otherwise, for brokers’ or
finders’ fees relating to the transactions contemplated hereby for which Seller
shall have any responsibility whatsoever.
6.2 Representations of
Seller. Seller represents to Carrizo as follows:
(a) Seller is
a Colorado corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado, and is duly qualified to carry on its
business in all jurisdictions in which it is conducting business.
(b) Seller
has all requisite power and authority to carry on business as presently
conducted, to enter this Agreement, and to 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 Incorporation, Bylaws or other governing documents, or any agreement
or instrument to which Seller is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Seller.
(c) The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all requisite
action or the part of Seller.
(d) This
Agreement and the Assignments have been duly executed and delivered on behalf of
Seller and constitute legal, valid and binding obligations of Seller,
enforceable in accordance with their terms.
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(e) Seller
has not incurred any liability, contingent or otherwise, for brokers’ or
finders’ fees relating to the transactions contemplated hereby for which Buyer
shall have any responsibility whatsoever.
(f) Seller is
not a “foreign person” within the meaning of Section 1445 and 7701 of the
Internal Revenue Code of 1986, as amended from time to time, and the regulations
promulgated and the rulings issued thereunder.
ARTICLE
7 – Miscellaneous
7.1 Further
Assurances. The Parties shall execute, acknowledge and deliver
or cause to be executed, acknowledged and delivered such instruments and take
such other action as may be necessary or advisable to carry out their
obligations under this Agreement and under any exhibit, document, certificate or
other instrument delivered pursuant hereto
7.2 Notices. All
notices and other communications that are required or that may be given under
the provisions of this Agreement shall be in writing and the same shall be
deemed to have been given on the same day if delivered in person, by email, by
overnight courier or by facsimile to the facsimile number herein below for the
party to whom the notice is given, or on the third day thereafter if placed in
the United States mails, registered or certified mail with postage prepaid and
addressed to the party at the address hereinafter specified. The
addresses and facsimile numbers of the Parties for all purposes under this
Agreement and for all notices hereunder shall be:
| If to Seller: |
New
Frontier Energy, Inc.
1801
Broadway, Suite 920
Denver,
CO 80202
Attn.: Mr.
Samyak Veera - President
Tel.
No. (646) 797-2750
FAX
No. (815) 346-5814
|
| If to Carrizo: |
Carrizo
Oil & Gas, Inc.
1000
Louisiana, Suite 1500
Houston,
Texas 77002
Attn.:
Mr. Richard Smith
Tel.
No. (713) 328-1027
FAX
No. (713) 328-1035
|
From time
to time any party may designate another address or facsimile number or telephone
number for all purposes of this Agreement by notifying the other party of such
change in accordance with the provisions hereof.
7.3 Entire
Agreement. This Agreement constitutes the entire agreements
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, written and oral. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto.
7.4 Announcements. Each
party covenants and agrees with the other that, subject to applicable law, each
party shall promptly advise and consult with the other and obtain the other's
written consent before issuing any press release with respect to this Agreement
or the transactions described herein.
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7.5 Confidentiality. The
parties agree to keep all information pertaining to this Agreement confidential
and not release such information to outside parties without the consent of the
other parties except to the extent: (1) disclosure is required in the reasonable
opinion of the disclosing party under applicable law or by a governmental
authority or recognized self regulatory organization, (2) disclosure is required
to enforce a party’s rights under this Agreement, and (3) disclosure is
made in any documents the parties have agreed in writing to place of record in a
public office.
7.6 Force
Majeure. If Carrizo is rendered unable, wholly or in part, by
force majeure to carry
out its obligations within the deadlines established under this Agreement, it
will give Seller prompt written notice of the force majeure event with
reasonably full particulars concerning it. The obligations or
deadlines of Carrizo shall be suspended during the continuation of the force majeure
event. Carrizo shall use all reasonable diligence to remove the force majeure as quickly as
possible. The term “force majeure” as employed
herein shall mean an act of God, strike, lockout or other industrial
disturbance, act of the public enemy, war, blockade, public riot, lightening,
fire, storm, flood, explosion, governmental restraint, governmental inaction,
failure of title, restriction upon or prohibition of surface rights,
nonavailability of drilling equipment or other equipment or personnel at
reasonable commercial rates; and any other cause, whether of the kind
specifically enumerated or otherwise, which is not reasonably within the control
of Carrizo. For the avoidance of doubt any moratorium on the issuance of
drilling permits or the prohibition of drilling activity by any governmental
agency will be considered an act of force majeure under this
Agreement.
7.7 Binding Effect;
Benefits. This Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors and
assigns. Nothing expressed or implied in this Agreement is intended
to or shall be construed to give any person other than the parties to this
Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement, it being
the intention of the parties to this Agreement that this Agreement shall be for
the sole and exclusive benefit of such parties or such successor or assigns and
for the benefit of no other person.
7.8 Assignment. This
Agreement shall extend to and be binding upon not only the parties hereto, but
their respective successors and assigns.
7.9 Governing Law. This
Agreement and the transactions contemplated hereby shall be construed in
accordance with, and governed by, the laws of the State of
Colorado.
7.10 BINDING
ARBITRATION. ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE EXISTENCE OF TITLE DEFECTS OR ENVIRONMENTAL
LIABILITIES, THE BREACH, TERMINATION, ENFORCEMENT, INTERPRETATION OR VALIDITY OF
THIS AGREEMENT, INCLUDING THE DETERMINATION OF THE SCOPE OR APPLICABILITY OF
THIS AGREEMENT TO ARBITRATE, SHALL BE DETERMINED BY ARBITRATION IN THE STATE OF
COLORADO IN ACCORDANCE WITH THE PREVAILING COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION. JUDGMENT ON THE AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. THIS CLAUSE SHALL NOT
PRECLUDE THE PARTIES FROM SEEKING PROVISIONAL REMEDIES IN AID OF ARBITRATION
FROM A COURT OF APPROPRIATE JURISDICTION. THE ARBITRATORS SHALL NOT
AWARD CONSEQUENTIAL OR PUNITIVE DAMAGES TO EITHER PARTY. THE COSTS
AND EXPENSES OF THE ARBITRATION PROCEEDING, INCLUDING THE FEES OF THE ARBITRATOR
AND ALL COSTS AND EXPENSES, INCLUDING LEGAL FEES AND WITNESS FEES, INCURRED BY
THE PREVAILING PARTY, SHALL BE BORNE BY THE LOSING PARTY.
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7.11 Specific
Performance. The parties agree and acknowledge that money
damages may not be an adequate remedy for a breach of a provision of this
Agreement by either party. As such, either party, in its sole
discretion, may apply to a court for
specific performance and/or injunctive
relief in order to enforce or prevent any violations of the provisions of this
Agreement by the other party.
7.12 Expenses. Except
as otherwise specifically provided in this Agreement, all fees, costs and
expenses incurred by Carrizo or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid by
the party incurring the same, including with limitation, legal and accounting
fees, costs and expenses.
7.13 Cost. If
any legal action, arbitration or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with this Agreement, the prevailing party or
parties shall be entitled to recover reasonable attorney’s fees and other costs
incurred in such action, arbitration or other proceeding, in addition to other
relief to which it may be entitled.
7.14 Severability. Each
section, subsection and lesser section of this Agreement constitutes a separate
and distinct undertaking, covenant or provision hereof. In the event
that any provision of this Agreement shall be determined to be invalid or
unenforceable, such provision shall be deemed limited by construction in scope
and effect to the minimum extent necessary to render the same valid and
enforceable, and, in the event such a limiting construction is impossible, such
invalid or unenforceable provision shall be deemed severed from this Agreement,
but every other provision of this Agreement shall remain in full force and
effect.
7.15 Presumption Concerning
Interpretation and Construction. Notwithstanding the fact that
preliminary drafts of this Agreement were prepared by counsel for Carrizo, the
parties hereto and their respective counsel have had opportunity to review and
participate in the drafting of the final form of this
Agreement. Accordingly, in the event of any ambiguity in the
provisions of this Agreement, there shall be no presumption in favor of any
party hereto with respect to the interpretation or construction
thereof.
7.16 Survival. Except
as specifically set forth herein, the representations, warranties, covenants,
and agreements of the parties hereto shall survive the termination of this
Agreement.
7.17 Headings. The
section and subsection headings used in this Agreement are inserted for
convenience only and shall be disregarded in construing this
Agreement.
7.18 Recording Supplement to
Operating Agreement. Contemporaneously with the execution of
this Agreement, the parties will execute and acknowledge the Recording
Supplement to Operating Agreement and Financing Statement (“Recording
Supplement”) attached as Exhibit H to the Operating
Agreement.
7.19 Counterparts and Facsimile
Signatures. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement. Furthermore, this Agreement
may be executed by the facsimile signature of any party hereto, it being agreed
that the facsimile signature of any party hereto shall be deemed an original for
all purposes.
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ARTICLE
8 – APPENDICES
8.1 Appendices. The
following Appendices, attached hereto, are incorporated herein and made a part
hereof for all purposes.
Appendix
1 Description
of Leases
Appendix
2 Form
of Assignment
Appendix
3 Defect
Notice
Appendix
4 Form
of Operating Agreement
Appendix
5 Area
of Mutual Interest
EXECUTED
to be effective as of the Effective Date.
|
NEW
FRONTIER ENERGY, INC.
|
|||
|
|
By:
|
/s/ Tristan Farel | |
| Name: |
Tristan
Farel
|
||
| Title: |
Chief
Financial Officer
New
Frontier Energy, Inc.
|
||
|
|
|||
| CARRIZO OIL & GAS, INC. | |||
|
|
By:
|
/s/ Richard Smith | |
| Name: | Richard Smith | ||
| Title: |
Vice
President - Land
Carrizzo Oil & Gas, Inc.
|
||
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