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Exhibit 10.1
FIRST AMENDMENT TO OPTION AGREEMENT
This First Amendment to Option
Agreement ("First Amendment"), dated as of
August 29, 2008, is by and between TexCal Energy
South Texas, L.P. whose address is 1021 Main Street,
Suite 2500, Houston, Texas 77002 ("Optionor"), and Denbury
Onshore, LLC, whose address is 5100 Tennyson Parkway,
Suite 1200, Plano, Texas 75024 ("Optionee"). Optionor
and Optionee are sometimes together referred to herein as
"Parties".
WHEREAS, Optionor and Optionee
entered into that certain Option Agreement dated November 1,
2006 (the "Option Agreement") pursuant to which Optionor granted
Optionee an Option to Purchase certain Assets, as defined in the
Option Agreement;
WHEREAS, Optionee has advised
Optionor that it will elect to exercise the Option to Purchase
subject to the agreement of Optionor to amend the Option Agreement
as requested by Optionee; and
WHEREAS, Optionor is agreeable to
the amendments proposed by Optionee as set forth herein;
NOW, THEREFORE, in consideration of
the mutual agreements, provisions and covenants contained herein
and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
Section 1.
Defined Terms. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned such terms in the
Option Agreement.
Section 2.
Option Exercise .
Optionee hereby exercises its Option to Purchase
the Assets, and accordingly, pursuant to the provisions of
Section 2.4 of the Option Agreement, hereby delivers to
Optionor the attached Option Exercise Notice in the form of
Exhibit "G" to the Option Agreement. The Exercise
Effective Time shall be 7:00 a.m. Central Standard Time on
January 1, 2009.
Section 3.
Amendments . The Option Agreement is hereby amended as
follows:
(a)
Section 2.7 is amended and restated to read in its entirety as
follows:
2.7
Development Plan and Capital Expenditure Commitment.
(a)
In the event Optionee exercises its option to purchase the
Assets, Optionee shall (i) prior to June 30, 2009, submit
to Optionor a development plan for the CO2 flood of the West
Hastings Unit (the "Development Plan"), which plan
1
shall include various milestones including
completion of a pipeline connecting the Jackson Dome Field in
Mississippi to the Hastings Field via Donaldsonville, Louisiana, or
other pipeline or alternative delivery system that would result in
a lower CO2 cost to the Hastings Field, a framework for spending
the Required Cumulative Capital Expenditure Amounts, and the
commencement of CO2 injection in the West H
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