County Line Energy
Corp.
PARTICIPATION
AGREEMENT
Highway 21,
Alberta
THIS
AGREEMENT made this
21 st day of December, A.D., 2006.
BETWEEN:
COUNTY
LINE
ENERGY CORP., a body corporate, having an office
in the City of Calgary in the Province of Alberta, (hereinafter
called "the Grantor")
-
and -
NUANCE
EXPLORATION LTD., a
body corporate, having an office in the City of Vancouver in the
Province of British Columbia, (hereinafter called "the
Participant")
WHEREAS, pursuant to an Agreement (hereinafter referred
to as "the Farmout Agreement") dated the 1 st day of
December, A.D., 2006, and made between BMW Energy Inc.(hereinafter
referred to as "Farmor") and the Grantor, it is provided that the
Grantor by performing certain obligations in the Farmout Agreement
contained, will become entitled to earn an interest in certain
lands therein contained, all as more particularly described in the
Farmout Agreement (a copy of the Farmout Agreement is attached
hereto as Schedule "A"); and,
WHEREAS the Participant desires to participate with the
Grantor as if it had been an original party to the Farmout
Agreement by assuming a share of the obligations therein contained
and earning a share of the interest to be earned
thereunder.
NOW
THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and of the
covenants and agreements of the Parties as hereinafter set forth,
the Parties do hereby covenant and agree as follows:
1.
INTERPRETATION
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(a)
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The headings of
the clauses of this Agreement are inserted for convenience of
reference only and shall not affect the meaning or construction
thereof.
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(b)
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The terms and
expressions used herein shall have the same meanings as are
ascribed to such terms and expressions under the Farmout
Agreement.
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(c)
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Wherever the
plural or masculine or neuter is used the same shall be construed
as meaning singular, or feminine, or body politic or corporate, or
vice versa as the context so requires.
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2.
APPOINTMENT OF
OPERATOR
Grantor is
appointed as Operator as between Grantor and Participant with
respect to all operations conducted hereunder and is authorized
solely to deal with Farmor on behalf of the Parties in respect of
all matters arising out of
Except as
modified by the terms of this Agreement, all of the terms and
conditions of the Farmout Agreement together with its operating
provisions shall control the operation of the Parties and shall be
deemed to be incorporated herein as if included mutatis
mutandis.
4.
TRUST CONDITIONS AND
TERM
The Participant
understands that its earned working interest will not be recognized
by Farmor until earned and consequently Grantor agrees to hold
Participant's earned Working Interests in and to the Farmout
Agreement in trust for the Participant until such time as
Participant becomes a recognized party to the Farmout
Agreement.
5.
REIMBURSEMENT OF SEISMIC
COSTS
Along with an
executed copy of this Agreement, Participant agrees to reimburse
Grantor the gross costs of acquiring and interpreting any and all
seismic carried out by Grantor in developing a drillable geological
prospect on the Farmout Lands. By so doing the Participant shall
thereafter own an undivided 100% ownership of such seismic data.
The gross costs incurred by Grantor in that regard to the date
hereof is $95,000 ($82,650 US).
6.
LAND SALE
PARTICIPATION
The
Participant, by completing the conditions of Clause 5, shall earn
the right to participate in the Alberta Crown Land Sale with the
Grantor, subject to the terms and conditions of the Farmout
Agreement, with the Participant paying 50% of the Land Sale costs
should a drillable anomaly be located after the seismic review and
interpretation. Grantor and Farmor shall be solely vested with the
right and authority to determine the bid price of the Land Sale
parcel.
7.
FARMOUT TERMS AND
EARNING
Grantor solely
shall be vested with the right and authority to elect to drill the
Test Well pursuant to the terms and conditions of the Farmout
Agreement.
The Participant
shall bear, pay for and assume 50% of all of the costs, expenses
and risks of the Drilling and either abandonment or Completion and
Equipping of the Test Well.
By bearing and
paying for costs as aforesaid and if Participant is not otherwise
in default pursuant to the terms hereof, Participant shall earn 50%
of Grantor's interest as per the Farmout Agreement and be subject
always to the terms and conditions of
the Farmout
Agreement and this Agreement.
Grantor agrees
to prepare and submit to Participant in advance proper and
reasonable "Authorities for Expenditure" (AFE's) for any operation
carried out under the Farmout Agreement.
Grantor shall
be vested with the authority to issue to Participant Cash Call
invoices based upon the said AFE's. The under noted terms and
conditions shall a