Back to top

LEASE ACQUISITION AND PARTICIPATION AGREEMENT

Participation Agreement

LEASE ACQUISITION AND PARTICIPATION AGREEMENT | Document Parties: CADENCE RESOURCES CORP | Aurora Energy,  Ltd., You are currently viewing:
This Participation Agreement involves

CADENCE RESOURCES CORP | Aurora Energy, Ltd.,

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: LEASE ACQUISITION AND PARTICIPATION AGREEMENT
Governing Law: Michigan     Date: 1/14/2004
Industry: Gold and Silver    

50 of the Top 250 law firms use our Products every day

 

                  LEASE ACQUISITION AND PARTICIPATION AGREEMENT

                       Alpena County Antrim Shale Project

                             Alpena County, Michigan

 

     This Agreement is made and entered into on this 8th day of December,   2002,

between Aurora Energy,   Ltd., P.O. Box 961, Traverse City, Michigan   49685-0961,

herein   "Aurora",   and Cadence   Resources Corp. of 6 East Rose St. PO Box 2056.,

Walla, Walla, WA 99362, herein "Investor".

 

     Whereas,   Aurora   has   developed   or will   develop   certain   oil and/or gas

prospects in Alpena   County,   Michigan,   and has acquired oil and gas leaseholds

and   intends to acquire   additional   oil and gas   leaseholds   in Alpena   County,

Michigan;  

 

     Whereas,   Investor   desires   to   acquire   an   interest   in said oil and gas

leaseholds and the wells to be permitted, drilled and operated thereon; and,

 

     Whereas, Aurora and Investor desire to establish an Area of Mutual Interest

consisting   of all of Alpena   County,   Michigan,   and   develop   the same for the

production of hydrocarbons as provided for herein.

 

     Now therefore,   for and in consideration of the sums to be paid pursuant to

this   Agreement,   the mutual   promises   contained   herein and the benefits to be

derived   therefrom   Aurora and   Investor   agree as   follows:  

 

Section 1. Area of Mutual Interest

 

     1.01.   The lands   subject to this   Agreement and deemed the "Area of Mutual

Interest" or "AMI" shall include all of Alpena County, Michigan.   Projects known

as Treasure Island,   Ravine Creek, and Gerhke have been committed to Wells Fargo

Energy   Capital   and are   excluded   from this AMI   although   they are located in

Alpena County,   Michigan.   Also, as Aurora   develops   projects in Alcona County,

Michigan,   they   may at   Aurora's   option   be   included   in the AMI.   Notice   of

inclusion will be subject to Investor's approval.

 

Section 2. Oil and Gas Leases

 

     2.01. Aurora Leases.   Aurora is the owner of the oil and gas leases set out

on Exhibit I attached hereto (the "Aurora Leases").   For and in consideration of

the   sum   provided   for   in   Section   2.03   below,    the   receipt   of   which   is

acknowledged,   Aurora   sells,   assigns and sets over unto   Investor an undivided

Twenty-two and one-half percent (22.5%) interest before payout on a well-by-well

basis and an undivided   Twenty   percent   (20.0%)   after payout on a well by well

basis, in and to each of the Aurora Leases;   subject,   however, to the terms and

provisions of this Agreement.

 

 

 

<PAGE>

     2.02. Subsequently Acquired Leases. It is understood by the parties that it

may be   advisable   to acquire   additional   leases   within the AMI   (Subsequently

Acquired Leases).   Aurora, at its option,   may acquire such Leases on such terms

and for such   consideration   as Aurora deems   reasonable.   On each monthly Joint

Interest Billing statement,   Aurora shall provide Investor with an estimation of

Subsequently   Acquired   Leases   to be   obtained   by   Aurora   in the next   month,

including the   acquisition   costs for the same.   Based on these   estimated lease

acquisition   costs   Aurora shall   include on each Joint   Interest   Billing,   the

Investor's   proportionate   advance payment required for said lease acquisitions.

Reconciliation   to Investor's Joint Interest Billing shall be made   periodically

based on the actual costs of the leasing program.   Investor shall participate in

such Subsequently   Acquired Leases to the extent of an undivided   twenty-two and

one-half   percent (22.5%)   interest before payout on a well by well basis and an

undivided   twenty percent (20.0%) after payout on a well by well basis by paying

to Aurora   twenty-five   percent   (25%) of the actual   acquisition   costs for the

Subsequently Acquired Leases.   Payment by Investor shall be made within ten (10)

days of receipt of each Joint   Interest   Billing.   For purposes of this section,

lease   acquisition   costs shall include but shall not be limited to lease bonus,

surface use fees and land and legal fees.   If Investor does not make his payment

as   required   in this   paragraph,   he   forfeits   his   interest   to those   leases

acquired.

 

     2.03.   Payment by   Investor.   Contemporaneous   with the   execution   of this

Agreement,   Investor   shall pay to Aurora the sum of   Forty-seven   Thousand Five

Hundred   Dollars   ($47,500.00).   Said sum shall be applied   first to   Investor's

proportionate    share,   based   on   twenty-five    percent   (25%),   of   the   lease

acquisition costs of the Aurora Leases, then to Investor's   proportionate share,

based on   twenty-five   percent   (25%) of project   development   costs to the date

hereof.    Any   sums    remaining    thereafter    will   be   applied   to   Investor's

proportionate   share of the cost of the Test Well   provided   for in Section 3.01

below.

 

Section 3. Development of AMI

 

     3.01. Test Well. Aurora agrees to commence the drilling of ten wells within

the AMI on or before December 31, 2002 (the "Test Well"). The Test Well shall be

in the   Black   Bean   Antrim   unit,   located   in T30N & T31N of R6E & 7E,   Alpena

County,   Michigan.   Investor   agrees to participate in the drilling of said Test

Well to the extent of an   undivided   five   percent   (25%),   which will result on

Investor acquiring an undivided   twenty-two and one-half percent (22.5%) working

interest   before payout on a well by well basis and an undivided   twenty percent

(20.0%)   working   interest   after   payout on a well by well   basis   pursuant   to

Section   5.02   below.   Within   ten (10) days prior to the   estimated   spud date,

Investor shall pay its proportionate   share of the estimated   dry-hole costs for

the Test Well as set out on the AFE   attached   hereto and made a part   hereof as

Exhibit II. In the event Investor elects to participate in the completion of the

Test

 

 

 

<PAGE>

 

 

Well,    Investor   will   pay   its    proportionate    share   of   completion    costs

simultaneously   with making its election to participate in the completion of the

Test Well.

 

     3.02.   Subsequent   Wells.   During   the term of this   Agreement,   Aurora may

propose the drilling of a well or wells within the AMI, other than the Test Well

(which consists of 10 wells),   to test any formation   ("Subsequent   Well").   The

Subsequent Well or Wells may be proposed on a well-by-well or unit basis. Aurora

shall   provide   Investor   with a   summary   of its   intended   operations   and the

estimated   development costs.   Within twenty (20) days of receipt of the notice,

Investor shall notify Aurora of its election to   participate or not   participate

in the proposed   Subsequent   Well.   Failure to respond   within   twenty (20) days

shall be deemed an election not to participate. Investor shall have the right to

participate   in any   proposed   Subsequent   Well to the   extent   of an   undivided

twenty-five   percent   (25%)   working   interest,   which will   result in   Investor

acquiring an undivided   twenty-two and one-half percent (22.5%) working interest

before payout on a well by well basis and an undivided   twenty   percent   (20.0%)

working   interest   after payout on a well by well basis pursuant to Section 5.02

below.   In the event Investor   elects not to   participate in a Subsequent   Well,

Aurora shall refund to Investor the leasehold acquisition costs paid by Investor

for   those   leases   contained   in the   drilling   unit for the   Subsequent   Well.

Investor   shall then   forthwith   re-assign   to Aurora its interest in the leases

contained in the drilling unit for the Subsequent   Well, and Investor shall have

no further interest in said Subsequent Well. In the event Investor elects not to

participate in a Subsequent   Well within an established   pooled or unitized area

as   provided   for in   Section   4.02   below   in   which   Investor   had   previously

participated,   the interest of Investor in that pooled or unitized area shall be

based on the   wells in which   Investor   has   participated   divided   by the total

number of wells in the pooled or unitized area,   proportionately   reduced by the

undivided interest in said wells acquired by Investor hereunder.

 

     3.03. Subsequent Operations.   During the term of this Agreement, Aurora may

propose   to   rework,    re-complete,    deepen   or   sidetrack   an   existing    well

(hereinafter   collectively,    "Subsequent   Operations").   Aurora   shall   provide

Investor with a summary of its proposed Subsequent   Operations and the estimated

costs.   Within twenty (20) days of receipt of the notice,   Investor shall notify

Aurora   of its   election   to   participate   or not   participate   in the   proposed

Subsequent   Operations.   Failure to   respond   within   twenty   (20) days shall be

deemed an   election   not to   participate.   In the event one (1) or more   working

interest   owners of the   existing   well   elect not to   participate,   Aurora   may

proceed with the   Subsequent   Operations   provided that parties   owning at least

fifty   percent   (50%) of the   working   interest   in the   existing   well elect to

participate,   but upon the following   terms:   Aurora shall   purchase the working

interest   of the working   interest   owners who elect not to   participate   in the

Subsequent Operations (the "Non-Consenting Parties"). The amount of compensation

to be paid for the Non-Consenting Parties' working interest in the existing well

shall be the one hundred percent (100%) of the   NonConsenting   Parties'   capital

cost of the existing well less fifty   percent   (50%) of the revenue   received by

the Non-Consenting Party for production from the existing well.

 

 

 

 

<PAGE>

 

 

Notwithstanding   anything   set   forth   herein,   parties   having at least a fifty

percent   (50%)   working   interest in the Aurora Leases and/or AMI, may propose a

Subsequent   Well(s) and parties   having at least a fifty   percent   (50%) working

interest   in an   existing   well   may   propose   Subsequent   Operations.   In   such

instances,   if Aurora   elects   not to   participate,   Aurora   shall   nevertheless

operate   such well if   requested by the working   interest   owners.   In addition,

Aurora's working interest in such proposed   Subsequent Well shall default to the

other working   interest   owners who elect to   participate   and Aurora's   working

interest in an existing well for which Subsequent   Operations are proposed shall

be   purchased   by the   working   interest   owners   who   elect to   participate   in

accordance with the terms set forth in this Section.

 

Section 4. Well Spacing, Pooling of Interests

 

     4.01.   Drilling Units.   Each Test Well and Subsequent Well shall be drilled

on a   permitted   unit   of a size   authorized   by the   regulatory   agency   having

jurisdiction.

 

     4.02. Pooling of Interests. At such time that Aurora has confirmed the

commercial feasibility of an area within t


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window