NOTICE OF
CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE
OR
STRIKE ANY OF THE
FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED
FOR RECORD
IN THE PUBLIC RECORDS:
YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S
LICENSE NUMBER.
OIL, GAS AND MINERAL LEASE
THIS AGREEMENT made this 31st day of July 2005, between
Sandy Monferdini and wife Rosemary Monferdini,
Lessor (whether one or more), whose address is:
P.O. Box 1652, Alice, Texas 78332
and Thrust
Energy Corp., a Nevada corporation, having an
address of 807-1050
Burrard Street,
Vancouver,
B.C. V6Z 2S3.
1.
Lessor, in
consideration
of Ten Thousand and no/100
($10,000.00) U.S.
Dollars, receipt
of which is hereby acknowledged, and of the covenants
and
agreements of
Lessee hereinafter contained, does hereby grant,
lease and let
unto Lessee
the land covered hereby for the purposes and with
the exclusive
right of exploring, drilling, mining and operating for,
producing and owning
oil, gas, sulphur and all other minerals (whether or not similar to
those
mentioned), together
with the right to make surveys on said land, lay
pipe
lines, establish
and utilize facilities for surface or
subsurface disposal of
saltwater, construct roads and bridges, dig canals, build tanks,
power stations,
telephone tines, employee houses and other structures on said land,
necessary or
useful in Lessee's operations in exploring,
drilling for, producing, treating,
storing and
transporting minerals
produced from the land covered hereby or any
other land
adjacent thereto. The land covered hereby, herein called "said
land," is located in
the County of Jim Wells State of Texas and is described as
follows:
346.16 acres
of land, more or less, out of the "La Vaca' Jose
Maria Garcia
Survey, A- 166, situate in Jims Wells County, Texas, said tract
being Lots 1 - 3
and 14-16 of Section or Block No. 3 and Lots
4-13 of Section or Block No.2 of
the Theodore
Plummer's Re-Subdivision of the Camada Ranch as shown by
map or
plat recorded
in Volume I, Page 42, of the
Transcribed Map Records, Jim Wells
County, Texas, and
being more particularly described in that certain deed dated
January 14,
1980 from Joe Belle Sears Ryan, individually and
as Independent
Executrix of
the Estate of Jack R.
Ryan, to Sandy Monferdini and wife Rosemary
Monferdini, recorded
in Volume 390, Page 200, Deed Records of Jim Wells County,
Texas.
FOR ADDITIONAL
TERMS AND CONDITIONS SEE ADDENDUM (12-35)
ATTACHED HERETO AND
MADE A PART HEREOF.
This lease
also covers and includes, in addition
to that above described, all
land, if any, contiguous or adjacent to or
adjoining the land above described
and (a) owned or claimed by Lessor by limitation,
prescription, possession.
reversion or
unrecorded
instrument or (b) as
to which Lessor has a preference
right of acquisition. Lessor agrees to execute any supplemental
instrument
requested by
Lessee for a more complete or accurate
description of said land.
For the purpose of determining the amount of any
bonus, delay rental or other
payment hereunder,
said land shall be deemed to contain
346.16 acres, whether
actually containing
mote or less, and the above recital of acreage in any tract
shall be deemed to be the true acreage thereof.
Lessor accepts the
bonus and
agrees to accept the delay rental as lump
sum consideration for this lease and
all rights
and options hereunder.
2.
Unless sooner
terminated or longer
kept in force under other provisions
hereof, this
lease shall remain in
force for a term of Five (5) years from the
date hereof,
hereinafter
called "primary term," and as long thereafter as
operations, as
hereinafter
defined, are conducted upon said land with no
cessation for
more than ninety (90) consecutive days.
3.
As royalty, Lessee
covenants and agrees: (a) To deliver to the credit of
Lessor, in
the pipe line to which Lessee may connect its wells, the
equal
one-eighth part of all
oil produced and saved by Lessee from said land, or from
time to time, at the option of Lessee, to
pay Lessor the average posted market
price of such one-eighth part of such oil
as the wells as of the day it is run
to the pipe line or storage tanks, Lessor's
interest, in either case, to bear
one-eighth of
the cost of treating oil to render it
marketable pipe line oil;
(b) To pay Lessor on gas and casinghead gas produced
from said land (1) when
sold by Lessee, one-eighth of the amount realized by Lessee,
computed at the
mouth of the well, or (2) when used by Lessee off said land or in the
manufacture of gasoline or other products, the market value, at the
mouth of the
well, of one-eighth of such gas and casinghead gas, (c)
To pay Lesser on all
other minerals
mined and marketed or utilized by Lesser from said land,
one-tenth either
in kind or value at the well or mine at Lessees
election,
except that
on sulphur mined and marketed the royalty shall be one
dollar
($l.00) per long ton.
If; at the expiration
of the primary teem or at any time
or times thereafter,
there is any well an said land or on lands with which said
land or any portion thereof has been pooled,
capable of producing oil or gas,
and all such wells are shut-in, this lease shall,
nevertheless, continue in
force as though operations were being conducted on said land for so
tong as said
wells are shot-in, and
thereafter this lease may be continued in force as if no
shut-in had occurred. Lessee covenants and agrees to use reasonable
diligence to
produce, utilize,
or market the minerals capable of being
produced from said
wells, but
in the exercise of
such diligence, Lessee shall not be obligated to
install of
furnish facilities other than well facilities and ordinary
lease
facilities of
flow lines, separator,
and lease tank, and shall not be required
to settle labor trouble or to market gas upon terms unacceptable to
Lessee. If,
at any time or times after the expiration of
the primary term, all such wells
are shut-in for a
period of ninety consecutive days, and during such time there
are no operations on
said land, then at or before the expiration of said ninety
day period, Lessee shall pay or tender, by check or draft of
Lessee, as royalty,
a sum equal to the amount of annual delay rental
provided for in this lease.
Lessee shall
make like payments, or tenders at or before the end of each
anniversary of the expiration of said ninety day period if upon
such anniversary
this lease
is being continued in force solely by
reason of the provisions of
this paragraph. Each
such payment or tender shall be made to the parties who at
the time of payment would be entitled to
receive the royalties which would be
paid under
this lease if the wells were producing, and
may be deposited in a
depository hank
provided for below,
Nothing herein shall impair Lessee's right
to release
as provided in paragraph 5 hereof.
In event of assignment
of this
lease in whole or in part, liability for payment hereunder shall rest
exclusively on
the then owner or
owners of this tease, severally as to acreage
owned by each.
4.
Lessee is hereby
granted the right at its option, to pool or unitize any
land covered
by this lease with any other land covered
by this lease, and/or
with any other land, lease, or leases, as to any or all minerals or
horizons, so
as to establish units containing not more than 80 surface acres, plus
10%
acreage tolerance;
provided, however, units may be established as to any one or
more horizons, or existing units may be enlarged as to any one or
more horizons,
so as to contain not
more than 640 surface acres plus 10% acreage tolerance, if
limited to one or more of the following: (1) gas, other than
casinghead gas, (2)
liquid hydrocarbons
(condensate)
which are not liquids in the subsurface
reservoir, (3)
minerals produced from wells classified as gas wells by the
conservation agency
having jurisdiction. If larger units than any of those
herein permitted,
other at the time established, or after enlargement,
are
required under any
governmental rule or order, for the drilling or operation of
a well at a regular location, or for
obtaining maximum allowable from any well
to be drilled, drilling, or already drilled, any such unit may be
established or
enlarged to
conform to the size required by such
governmental order or rule.
Lessee shall
exercise said option as to each desired unit by executing
an
instrument identifying
such unit and filing
it for record in the public office
in which this lease is recorded. Each of said options maybe
exercised by Lesser
at any time and from time to time while this lease is
in force, and whether
before or after production has been
established either on said land, or on the
portion of said land
included in the unit, or on other land unitized therewith.
A unit established hereunder shall be valid and
effective for all purposes of
this lease even though
there may be mineral, royalty, or leasehold interests in
lands within
the unit which are not effectively pooled or unitized. Any
operations conducted
on any part of such unitized land shall be considered, for
all purposes, except the payment of royalty, operations conducted
upon said land
under this
lease. There shall be allocated to the
land covered by this, lease
within each
such unit (or to each
separate tract within the unit if this lease
covers separate tracts
within the unit) that proportion of the total production
of unitized
minerals from the unit, after deducting any
used in lease or unit
operations, which
the number of surface acres in such land (or in
each such
separate tract)
covered by this lease within the unit bears to the total number
of surface
acres in the unit, and the production so allocated shall be
considered for
all purposes, including payment or delivery of royalty,
overriding royalty
and any other payments out of
production, to be the entire
production of
unitized minerals from the land to which allocated
in the same
manner as though
produced therefrom under the terms of this lease. The owner of
the reversionary
estate of any term royalty or mineral
estate agrees that the
accrual of
royalties pursuant to
this paragraph or of shut-in royalties from a
well on the unit shall satisfy any limitation
of limitation of term requiring
production of
oil or gas. The formation of any unit
hereunder which includes
land not covered by this lease shall not have the effect of exchanging
or
transferring any
interest under this
lease (including, without limitation, any
delay rental
and shut-in royalty which may become payable under
this lease)
between parties
owning interests in land covered by this lease and
parties
owning interests in
land not covered by this lease. Neither shall it impair the
right of Lesser to release as provided in paragraph 5 hereof,
except that Lessee
may not so release as
to lands within a unit while there are operations thereon
for unitized
minerals unless all
pooled leases are released as to lands within
the unit. At any time
while this lease is in force Lessee may dissolve any unit
established hereunder by filing for record in the public office
where this tease
is recorded
a declaration to that effect, if at that time no
operations are
being conducted
thereon for unitized minerals. Subject to the provisions of
this paragraph
4, a unit once established hereunder
shall remain in force so
long as any lease subject thereto shall
remain in force. If
this lease now or
hereafter covers separate tracts, no pooling or unitization of
royalty interests
as between
any such separate tracts is intended
or shall be implied or result
merely from
the inclusion of such
separate tracts within this lease but Lessee
shall nevertheless
have the right to pool or unitize as provided in this
paragraph 4
with consequent allocation of production as herein
provided. As
used in this paragraph 4, the words "separate tract' mean any tract
with royalty
ownership differing,
now or hereafter, either as to parties or
amounts, from
that as to any other part of the leased premises.
5.
If operations
are not conducted on said land on or before the
first
anniversary date
hereof, this tease
shall terminate as to both parties, unless
Lessee on or before said date shall, subject
to the further provisions hereof,
pay or tender to
Lessor or to Lessor's credit in the Wells Fargo Bank at 600 B.
Main St., Alice, Texas 78332 or its successors, which shall
continue as the
depository, regardless
of changes in ownership of delay
rental, royalties, or
other moneys,
the sum $1,730.75 U.S. which shall operate
as delay rental and
rover the privilege of deferring operations for one year
from said date. In
like manner
and upon like payments or lenders, operations may be further
deferred for
like periods of one
year each during the primary term. If at any
time that Lessee pays or tenders delay
rental, royalties, or other moneys, two
or more parties are, or claim to be entitled to receive
same, Lessee may, in
lieu of any other method of payment therein provided, pay or tender
such rent at
royalties, or
other money, in the manner herein specified,
either jointly to
such parties
or separately to each in accordance with their respective
ownerships thereof,
as Lessee may elect.
Any payment hereunder
may be made by
check or draft of Lessee deposited in the mail of
delivered to Lessor or too
depository bank on or
before the last date for payment. Said delay rental shall
be apportionable
as to said land on an acreage basis, and a
failure to make
proper payment or lender of delay rental as to any portion of said
land or as to
any interest therein
shall not affect this lease as to any portion of said land
or as to any interest
therein as to which proper payment or tender is made. Any
payment or
tender which is made
in an attempt to make proper payment but which
is erroneous
in whole or in part as to parties, amounts,
or depository shall
nevertheless be
sufficient
to prevent termination
of this lease and to extend
the tone within which
operations maybe conducted in the same manner as though a
proper payment had been made; provided, however, Lessee shall
correct such error
within thirty
(30) days after Lessee has received
written notice thereof from
Lessor. Lessee
may at any time and from time to time execute
and deliver to
Lessor or file for
record a release or releases of this lease as to any part or
all of said land or of any mineral or horizon thereunder, and thereby
be
relieved of
all obligations as to the released acreage or
interest. If this
lease is so released as to all minerals and horizons
under a portion of said
land, the delay rental and other payments computed in accordance
therewith shall
thereupon be
reduced in the proportion that the acreage
released bears to the
acreage which
was covered by this lease immediately prior to such
release.
6.
If at any time or
times during the primary term operations are conducted
on said land and if all operations are discontinued, this lease
shall thereafter
terminate on
its anniversary date next following
the ninetieth day after such
discontinuance unless
on or before such anniversary date Lessee either(1)
conducts operations
or (2) commences or
resumes the payment or tender of delay
rental; provided, however, if such anniversary date is at the end
of the primary
term, or if there is no further anniversary date of the primary
term, this lease
shall terminate
at the end of such term or on the ninetieth day after
discontinuance of
all operations, whichever is the later
date, unless on such
later date
either (1) Lessee is conducting
operations or (2) the shut-in well
provisions of
paragraph 3 or the provisions of paragraph 11 are
applicable.
Whenever used in this
lease the word 'operations' shall mean operations for and
any of the following: drilling, testing,
completing, reworking, recompleting,
deepening, plugging
back or repairing of a well in search for or in an endeavor
to obtain production
of oil, gas, sulphur or other minerals, excavating a mine,
production of
oil, gas, sulphur or other mineral, whether or not in
paying
quantities.
7.
Lessee shall
have the use, free
from royalty, of water, other than from
Lessor's waterwells,
and of oil and gas produced from said land in all
operations hereunder.
Lessee shall have the right at any time to remove
all
machinery and
fixtures placed on said land, including the right to
draw and
remove casing.
No well shall be drilled nearer than 200
feet to the house or
barn now on said land without the consent
of the Lessor. Lessee
shall pay for
damages caused
by its operations to growing crops and timber on said
land.
8.
The rights
and estate of any party hereto may be
assigned from time to
time in whole or in part and as to any mineral or horizon. All of
the covenants,
obligations, and
considerations
of this lease shall extend to and be
binding
upon the parties hereto, their heirs, successors, assigns, and successive
assigns. No
change or division in
the ownership of said land, royalties, delay
rental, or other moneys, or any part thereof, howsoever effected,
shall increase
the obligations or diminish the rights of Lessee, including, but
not limited to,
the location
and drilling of wells and the measurement of production.
Notwithstanding any
other actual or constructive knowledge or notice thereof of
or to Lessee, its
successors or assigns, no change or division in the ownership
of said land or of the royalties, delay rental, or other moneys, or
the right to
receive the
same, howsoever effected, shall be binding upon the then
record
owner of this lease until thirty (30) days after there
has been furnished to
such record
owner at his or its principal place of business by Lessor or
Lessor's heirs,
successors,
or assigns, notice of such change or division,
supported by either
originals or duly certified copies of the instruments which
have been properly
filed for record and which evidence such change or division,
and of such court records and proceedings,
transcripts, or other documents as
shall be necessary in the opinion of such record owner to establish
the validity
of such change or
division, if any such change in ownership occurs by reason of
the death of the owner, Lessee may,
nevertheless pay or lender such royalties,
delay rental, or other moneys, or part thereof, to the credit of
the decedent in
a depository bank
provided for above. In
the event of assignment of this lease
as to any part (whether divided or undivided) of
said land, the delay rental
payable hereunder
shall be apportionable as between the several leasehold
owners, ratably
according to the surface area or undivided
interests of each,
and default
in delay rental
payment by one shall not affect the eight of other
leasehold owners
hereunder.
9.
In the event Lessor considers that Lessee
has not complied with all its
obligations hereunder,
both express and
implied, Lessor shall notify Lessee in
writing, setting
out specifically in what respects Lessee has breached
this
contract. Lessee
shall then have sixty (60) days after
receipt of said notice
within which to meet or commence to meet all or any part of the
breaches alleged
by Lessor. The service
of said notice shall be precedent to the bringing of any
action by Lessor on said lease for any cause, and no such action
shall be
brought until
the lapse of sixty (60) days after service of such
notice on
Lessee. Neither
the service of said
notice nor the doing of any acts by Lessee
aimed to meet all or any of the alleged breaches shall be deemed an
admission or
presumption that
Lessee has failed to perform all its obligations hereunder. If
this lease is canceled
for any cause, it shall nevertheless remain in force and
effect as to (1) sufficient acreage around each well as to which there
are
operations to
constitute a drilling
or maximum allowable unit under applicable
governmental
regulations, (but in no event less than forty acres), such
acreage
to be designated by Lessee as nearly as practicable in the
form of a square
centered at
the well, or in such
shape as then existing spacing rules require;
and (2) any part of said land included in a pooled unit on
which there are
operations. Lessee
shall also have such easements on said land as are necessary
to operations
on the acreage so retained.
10.
Lessor hereby
warrants and agrees to
defend title to said land against
the claims
of all persons
whomsoever. Lessor's
rights and interests hereunder
shall be charged primarily with any mortgages, taxes or other
liens, or interest
and other charges on said land, but Lessor agrees that
Lessee shall have the
right at any time to pay or reduce same for Lessor, either
before or after
maturity, and
be subrogated to the rights of the
holder thereof and to deduct
amounts so
paid from royalties or other payments
payable or which may become
payable to Lessor and for assigns under this lease. If this lease covers a less
interest in the oil,
gas, sulphur, or other minerals in all or any part of said
land than the entire
and undivided fee simple estate (whether Lessor's interest
is herein specified or not), or no interest
therein, then the royalties, delay
rental, and
other moneys accruing from any part as
to which this lease covers
less than such full interest shall be paid only in the
proportion which the
interest therein,
if any, covered by this lease, bears to the whole and
undivided fee simple estate therein. All royalty interest covered by
this lease
(whether or
not owned by Lessor) shall be paid out of the royalty herein
provided. This
lease shall be binding upon each party
who executes it without
regard to whether it is executed by all those named herein as Lessor.
11.
If, while this lease is in force, at, or after the
expiration of the
primary term hereof, it is not being continued in force by reason
of the shut-in
well provisions
of paragraph 3 hereof,
and Lessee is not conducting operations
on said land by reason of (1) any law, order,
rule or regulation, (whether or
not subsequently
determined
to be invalid) or (2) any other cause,
whether
similar or
dissimilar,
(except financial) beyond the reasonable control of
Lessee, the
primary term and the delay rental provisions hereof shall be
extended until
the first anniversary
date hereof occurring ninety (90) or more
days following the removal of such delaying cause, and this lease
maybe extended
thereafter by
operations
as if such delay had not occurred.
IN WITNESS WHEREOF, this instrument is executed on the date first
above written.
LESSOR:
LESSEE:
/s/ Sandy Monferdini
Thrust Energy Corp., a Nevada corporation
Sandy Monferdini
/s/ Rosemary
Monferdini
By: /s/Thomas
Mills
Rosemary Monferdini
Name: Thomas
Mills
Title: President
By: /s/Sandy
Monferdini
LESSOR
Sandy Monferdini
her attorney in fact
STATE OF
COUNTY OF
ACKNOWLEDGMENT
This instrument
was acknowledged
before me on the 19th day of August, 2005, by
Sandy Monferdini
individually
and as agent for Rosemary Monferdini.
Carol B. Acker
Notary Public,
State of Texas
My Comm. Exp. 10-10-2006
<PAGE>
PROVINCE OF
BRITISH )
COLUMBIA, CANADA
)
)
CITY OF VANCOUVER
)
The
Oil, Gas and Mineral Lease, as between Sandy Monferdini and
wife
Rosemary Monferdini
(as Lessor) and Thrust
Energy Corp. (as Lessee) dated July
31, 2005 for certain
oil, gas and mineral lands in Jim Wells County, Texas, was
acknowledged before
me on the 8th day of August, 2005, by Thomas Mills,
President of
Thrust Energy Corp., a Nevada corporation, on behalf of said
corporation.
Notary Public
in and for the
province of British Columbia, Canada
My Commission
Expires: December 31, 2005
Joseph A.S.
Fogarassy
Barrister &
Solicitor
800-885 West
Georgia Street
Vancouver, B.C.
V6C 3H1
Telephone
604-687-5700
<PAGE>
ADDENDUM
ATTACHED TO
AND BY REFERENCE MADE A PART OF THAT
CERTAIN OIL, GAS AND MINERAL
LEASE MADE
AND ENTERED INTO BY AND BETWEEN SANDY
MONFERDINI AND WIFE ROSEMARY
MONFERDINI, AS LESSOR, AND THRUST ENERGY CORP., A NEVADA
CORPORATION, AS LESSEE,
UNDER DATE
OF JULY 31, 2005.
12.
Notwithstanding
anything to
the contrary, in the event of conflict
between the
provisions
of this ADDENDUM and
the printed pages of the Oil, Gas
and Mineral
Lease, the terms of this ADDENDUM shall
control and supersede the
provisions of
the printed Oil, Gas and Mineral Lease.
13. SUBSTANCES
COVERED: This
Lease covers oil, gas,
casinghead gas, other
gaseous substances
and associated hydrocarbons in either a liquid or
gaseous
phase or state and such minerals as may be produced in
association with the
production of oil,
gas, casinghead gas, other gaseous substances and associated
hydrocarbons;
provided, however,
that nothing in this Lease shall be deemed to
authorize the
gasification
or in situ combustion
of coal or lignite, and this
Lease shall not be deemed to cover either coal or lignite. The
classification of
a well as either a gas well or oil well
by the Texas Railroad Commission shall
be conclusive
in respect of its classification
under the terms of this Lease.
14. ADDITIONAL
ROYALTY PROVISIONS: Notwithstanding
anything herein to the
contrary, the
Lessee shall pay to the Lessor royalties as follows:
a.
It is agreed and understood by Lessor and Lessee that all royalty
payments referred to in this Agreement as one-eighth (1/8) shall be
construed to
be and are hereby changed to be
one-fourth (1/4), this shall include oil, gas,
sulfur and
associated liquid or
liquifiable hydrocarbons. It is further agreed
and understood
that Lessee shall pay the Lessor a
royalty equal to one-fourth
(1/4) of the gross proceeds of sale of all oil and/or gas and
saved in any
combination from
the leased premises as further set forth below.
b.
Should oil be produced from any well, the gross proceeds of sale of
lease
products of such oil
shall be free to the Lessor of any cost to whichever point
is first encountered: 1) the point of sale to an independent
nonaffiliated third
party purchaser;
or 2) to an affiliated purchaser, provided the
sale is at
prevailing market
rates; or 3) the point of entry into an independent
nonaffiliated third
party owned pipeline
system; or 4) the point of entry into
an affiliate
owned pipeline system, provided transportation rates are at
prevailing markets
rates. Upon written request by the Lessor, written
justification of
changes made by the
Lessee must be submitted and agreed to in
writing by
the Lessor.
c.
Should gas,
including casinghead gas, be produced and saved from any
well, the gross
proceeds of sale of lease products of said gas shall be free to
the Lessor of any cost
to whichever point is first encountered: 1) the point of
entry into a facility to remove CO2, H2S, N2 or obtain plant
products; or 2) the
point of entry into an independent nonaffiliated third
party owned pipeline
system; or,
3) the point of entry into a pipeline system owned by a gas
distribution company,
or any subsidiary or such gas distribution company, which
is regulated by the
Railroad Commission of Texas or, 4) the point of entry into
an affiliated pipeline
system, if the rates charged by such pipeline system are
reasonable, as
co
