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Joint Venture Partnership Agreement

JV Contract

JOINT VENTURE PARTNERSHIP AGREEMENT | Document Parties: PLATINA ENERGY GROUP INC. | Permian Energy Services, L.P  | DayStar Oil  Gas Corporation You are currently viewing:
This Joint Venture JV Agreement involves

PLATINA ENERGY GROUP INC. | Permian Energy Services, L.P | DayStar Oil Gas Corporation

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Title: JOINT VENTURE PARTNERSHIP AGREEMENT
Date: 6/29/2005

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                              JOINT VENTURE PARTNERSHIP AGREEMENT

 

 

This AGREEMENT, when executed by R.J. Clark representing, Permian Energy

Services, L.P ("PES"), and Paul Cothran, representing DayStar Oil & Gas

Corporation, ("DAYSTAR") will constitute a full and binding agreement

enforceable under the legal statutes of the state of Texas.

 

WHEREAS, DAYSTAR currently owns and/or has exclusive ownership rights to

oil and gas producing acreage in Harris County, Texas, that includes the

Cherry, Coe, and Sterling-Redfern Leases hereinafter referred to as the

"Humble Field Leases".

 

WHEREAS, DAYSTAR has agreed to allow PES to install its proprietary thermal

recovery equipment, hereinafter referred to as the Thermal Pulse Unit

("TPU") for the purpose of stimulating and producing selected oil wells;

 

WHEREAS, both DAYSTAR and PES recognize the commercial benefits to the use

of the TPU technology, both parties agree to hold all elements, written and

oral, pertaining to the Humble Field Leases and all other related information

such as marketing strategies, operational and reservoir techniques, and

mechanical designs in strict confidence for a period of time consistent with

the duration of the longest active producing lease involving the TPU.

 

THEREFORE, DAYSTAR and PES agree in good faith and best efforts on the

following:

 

I. TERM & CANCELLATIONS

 

1. The initial term of this AGREEMENT shall be for a period of NINETY (90)

days.   This term shall be referred to as the "Test & Evaluation Period". The

term of the Test and Evaluation Period shall begin following the first day of

active operation of the TPU at any individual well within the Humble Field

Lease.

 

2. This AGREEMENT can only be extended if PES exercises its option on

purchasing the working interest in the Humble Field Leases.  

 

3. PES, at its sole discretion, will have the exclusive right to suspend

and/or to terminate the use of the TPU on any well during the Test &

Evaluation Period by giving three (3) days advanced, written notice to

DAYSTAR.  

 

a. PES will have the unrestricted right to remove, at its sole expense, all

TPU equipment, and other equipment, surface and down hole, that it paid for

during the course of the well lease program.  

b. PES will leave the location in a "no worse" condition upon abandonment

of the production.

 

4. DAYSTAR can cancel this AGREEMENT if PES fails to deliver the TPU equipment

in a timely manner and/or if the equipment fails to operate within safety

guidelines prescribed by DAYSTAR.

 

5. DAYSTAR can cancel this AGREEMENT if the TPU makes no measurable

improvement in the oil and gas production in first three (3) producing

wells providing all mechanical equipment, surface and subsurface, work

within standard operating parameters.

 

II.    WORKING INTEREST OWNERSHIP AND OPTIONS

     

1. DAYSTAR shall give PES a ONE HUNDRED AND TWENTY (120) day option period

to purchase FIFTY PERCENT (50%) working interest in each of the Humble

Field Leases for a total price of TWO HUNDRED THOUSDAND DOLLARS ($200,000).  

This option must be exercised by PES in writing within TEN (10) working days

prior to the end of the Test & Evaluation Period or March 31, 2005 whichever

comes first.

 

2. Should PES exercise its option to purchase the working interest in the

Humble Field Leases, DAYSTAR will allow PES to pay for the Working Interest

in production payments and/or regular installment payments to be made and

finalized within a TWO (2) year period.  

 

a. PES will allow DAYSTAR to offset and to retain TWENTY FIVE PERCENT (25%)

of its net, monthly revenue from its working interest revenue to be used for

payment until the TWO HUNDRED THOUSDAND ($200,000) debt is paid.

b. DAYSTAR will not charge any interest for the deferred payment plan on the

working interest.

 

6. DAYSTAR will give PES the Right of First Refusal to participate up to FIFTY

PERCENT (50%) of the Working Interests on any future leases that might be

acquired in the shallow Caprock structure of the Humble Salt Dome Field.  

 

a. The shallow Caprock structure is defined as any oil and gas bearing

structure less than ONE THOUSAND FEET (1000) below the surface of the ground.  

b. Payment for these leases shall be made at the time of closing and custody

transfer.  

 

III.    RIGHTS & RESPONSIBILITIES OF DAYSTAR

 

1. DAYSTAR will designate the Operator of Record for the Humble Field Leases,

and that designee will perform all clerical and fiduciary duties such as

compiling production reports and making payments for royalty, tax, working

interests disbursement, and operational costs.   Cost for Operator of Record

will be consistent with industry standards.    

 

2. DAYSTAR will permit PES's full access to all available well files and

production records for the purpose of evaluating potential candidate wells

for stimulation and subsequent ongoing production.   Furthermore, DAYSTAR

will detail all past stimulation techniques used on prospective wells and

their historical reaction to the stimulation.

 

3. DAYSTAR will afford PES full access to the physical property known as

the Humble Field Leases.

 

4. DAYSTAR will supply petroleum and reservoir engineering services as

DAYSTAR deems it necessary at no charge for the TPU stimulation project(s),

and make suggestions as to the best candidates for the TPU stimulation.

 

5. DAYSTAR will supply its existing field personnel at no cost to the Joint

Venture and coordinate their activity so that they might assist PES in its

efforts to stimulate and to produce selected wells. Cost for roustabout

services and other Labor support will be shared equally by both parties.   

Should this AGREEMENT be extended beyond the Test & Evaluation Period, DAYSTAR

will pay its proportionate amount as required by its Working Interest.

 

6. DAYSTAR will provide and pay for all well head fittings, hoses, valves,

flow lines, injection lines, surface tanks, and electrical service necessary

to connect the TPU to any singular or multiple wells, production and

injection, during the Test and Evaluation Period.   Should this AGREEMENT

be extended beyond the Test & Evaluation Period, DAYSTAR will pay its

proportionate amount as required by its Working Interest.

 

7. DAYSTAR will pay for all bottom hole cleanout costs, i.e. rig time, reverse

rig, spot acid jobs to any singular or multiple well during the Test and

Evaluation Period or until PES exercises its option to purchase the working

interest.   Should this AGREEMENT be extended beyond the Test & Evaluation

Period, DAYSTAR will pa


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