This Lease Agreement involves
Title: EXTENSION AND AMENDMENT RE OIL AND GAS LEASES
Industry: Oil and Gas Operations Sector: Energy
EXTENSION AND AMENDMENT RE OIL AND GAS LEASES
Reference is made to the following:
1. Oil and Gas Lease dated March 24, 2005, a memorandum of which is recorded in Volume 960, Page 696, Official Public Records of Val Verde County, Texas, as amended by Agreement RE Oil and Gas Lease dated effective as of December 12, 2008, a memorandum of which is recorded in Volume 960, Page 696, Official Public Records of Val Verde County, Texas (“ Lease 1 ”), by and between Carson Ranches Limited Partnership, as Lessor, and Global Mineral Solutions, L.P., as Lessee, covering those certain 9,989.20 acres of land in Val Verde County, Texas, more particularly described on attached Exhibit A .
2. Oil and Gas Lease dated effective as of August 29, 2008, and Supplemental Agreement of even date, a memorandum of which is recorded in Volume ___, Page ___, Official Public Records of Val Verde County, Texas, as amended by Amendment of Oil and Gas Lease dated effective as of October 31, 2008, recorded in Volume ___, Page ___, Official Public Records of Val Verde County, Texas (“ Lease 2 ”), by and between Carson Ranches Limited Partnership, as Lessor , and Global Mineral Solutions, L.P., as Lessee , covering those certain 3,352.10 acres of land in Val Verde County, Texas, more particularly described on attached Exhibit A-1 .
For all purposes of this instrument, Lease 1 and Lease 2 shall sometimes be herein referred to collectively as the “Leases”, and the acreage covered by both of the Leases shall sometime be herein referred to collectively as the “Lands”.
Whereas, PRE Exploration LLC, (formerly known as Providence Exploration LLC) as present owner and holder of all rights of the Lessee in the Leases, has requested the undersigned party, I. W. Carson LLC, who is the present owner of all executive rights in the Lands, to grant an extension of the primary term of the Leases and to amend the Leases in accordance with the further terms and provisions set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned do hereby AGREE that the Leases are amended as follows:
Extension of Primary Terms
The primary term of each of the Leases is hereby extended to February 29, 2013 (the “ Extended Primary Term ”). Lessor and Lessee agree to execute, and Lessee agrees to record, the Memorandum of Extension and Amendment of Oil and Gas Leases attached hereto as Exhibit B to evidence such extension and amendment. Lessee agrees not to record the Memorandum of Extension and Amendment of Oil and Gas Leases until payment to Lessor of all of the cash considerations set forth below in Paragraph II.
As consideration for the execution of this instrument by Lessor, Lessee agrees to pay Lessor the following amounts:
A. The sum of Five Hundred Thousand and no/100 Dollars ($500,000.00), which shall be due and payable on or before February 29, 2010; and
B. The sum of Eight Hundred Thirty Four Thousand One Hundred Thirty Dollars ($834,130.00), which shall be due and payable on or before June 20, 2010.
Each of the Leases contains a provision obligating Lessee to drill certain wells during the primary terms of said Leases as more fully set forth in the Leases. Lessor agrees to waive any obligation for Lessee to drill any wells which have not been drilled to date under the express drilling obligation provisions of either of the Leases, and in lieu and exchange for such waiver, Lessee agrees to drill a minimum of two (2) test wells on the Lands covered by either of the Leases prior to the expiration of the Extended Primary Term, each of which must be at least a Strawn test well (the “ Obligation Wells ”). For the purposes of this provision, the term “drill” shall mean that a well has been drilled to a depth sufficient to test the Strawn formation and has either been completed as a producer of oil and/or gas, or has been plugged and abandoned. The drilling of the Obligation Wells shall satisfy any and all of Lessee’s expressed and/or implied covenants or duties, if any, to Lessor under either of the Leases with respect to the drilling of wells during the Extended Primary Term.
Letter of Credit
Lessor is presently the holder of an Irrevocable Standby Letter of Credit (the “ Original LOC ”) in the principal amount of One Million and no/100 Dollars ($1,000,000.00), issued by Treaty Oak Bank, Austin, Texas (the “ Issuing Bank ”), to secure Lessee’s payments under Lease 1. Lessor and Lessee agree that such LOC should be replaced by a new LOC (the “ New LOC ”) which will secure the drilling of the wells provided for in Paragraph III above. The form of the New LOC is attached as Exhibit C . Lessor agrees promptly following full execution of this instrument by all parties to deliver to the Issuing Bank the Original LOC in exchange for the delivery by the Issuing Bank to Lessor of the New