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PURCHASE AND SALE AGREEMENT

Purchase and Sale Agreement

PURCHASE AND SALE AGREEMENT | Document Parties: QUEST OIL CORP | W.A. Walker  | Clyde L. Shinkle  | Nancy Ann Shinkle  | Michael James Shinkle  | Darleen Raulston You are currently viewing:
This Purchase and Sale Agreement involves

QUEST OIL CORP | W.A. Walker | Clyde L. Shinkle | Nancy Ann Shinkle | Michael James Shinkle | Darleen Raulston

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Title: PURCHASE AND SALE AGREEMENT
Governing Law: Kansas     Date: 10/17/2006

PURCHASE AND SALE AGREEMENT, Parties: quest oil corp , w.a. walker  , clyde l. shinkle  , nancy ann shinkle  , michael james shinkle  , darleen raulston
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Exhibit 10.2


 

 

PURCHASE AND SALE AGREEMENT

 

 

This Purchase and Sale Agreement (“ Agreement ”) is made on May 30 th , 2006 and shall become effective 45 days hence forth (the “Effective Date”) and is made by and between, W.A. Walker (“ Walker ”) and Quest Oil Corporation, a Nevada corporation, (“ Quest ”) and is ratified by Clyde L. Shinkle (“ CLS ”), Nancy Ann Glover (formerly Nancy Ann Shinkle and hereinafter, “ NAS ”), Michael James Shinkle (“ MJS ”) and Darleen Raulston (“ DR ”). (CLS, NSA, MJS and DR are collectively referred to herein as “ Shinkle ”).

 

I.

 

The Lease

 

WHEREAS, on July 15, 2004, Shinkle entered into an oil and gas lease with Walker (the “ 2004 Shinkle Lease ”), thereby leasing to Walker, oil, gas and water rights (“ OGWR ”) underlying property (which shall be referred to herein as the “ Shinkle Property ” and which shall be described more completely in (i) the 2004 Shinkle Lease (a copy of which is attached hereto and incorporated herein as “ Exhibit A ”), and (ii) the last paragraph of this Section 1).

 

WHEREAS, the 2004 Shinkle Lease provides for (i) a one year term (the “ Term ”), and (ii) for the Term to be extended should there be any production (to “ Produce ” or “ Production ”) of oil or gas or water (“ OGW ”) in the subject property.

 

WHEREAS, since the execution of the 2004 Shinkle Lease there has been Production of OGW; and such Production of OGW has been evidenced by an Affidavit of Production (attached hereto as “ Exhibit B ” and hereinafter referred to as the “ Affidavit ”).

 

WHEREAS, as a result of the aforesaid Production, the 2004 Shinkle Lease and the assignments related thereto, are in full force and effect and are legally valid and shall remain so long as there is production of OGW.

 

WHEREAS, in order to legally confirm and ratify the legal validity and current effectiveness of the rights underlying the 2004 Shinkle Lease as well as the current interests of Walker and Shinkle in the same, Shinkle has executed the attached Ratification Agreement (attached hereto as “ Exhibit C ” and hereinafter referred to as the “ Ratification ”).

 

WHEREAS, on June 29, 2005, Walker executed an agreement (a copy of which is attached hereto as “ Exhibit D ”) that assigned a 75% Net Revenue Interest (hereinafter referred to as “ NRI ” the definition of which is contained in the 2004 Shinkle Lease) in the OGWR to the Shinkle Property to Milestone Energy Capital LLC (“ Milestone ”). As a result of the Exhibit D agreement, Shinkle retained a 12.5% royalty interest (hereinafter referred to as “ RI ” and the definition of which is contained in the 2004 Shinkle Lease) and Walker retained a 12.5% NRI in the OGWR in the Shinkle Property.

 

WHEREAS, on February 27, 2006 and May 17, 2006, Milestone executed agreements (copies of which are attached hereto as “ Exhibit E ” and “ Exhibit F ” respectively) with Walker which conveyed all of Milestone’s interest in the OGWR in the Shinkle Property to Walker.

 

WHEREAS, as of the date of this Assignment of Lease, with respect to ownership of the OGWR in the Shinkle Property, Shinkle owns a 12.5% RI, and Walker owns a 100% working interest and an 87.5% NRI.

 

WHEREAS, the 2004 Shinkle Lease which is the subject of this Assignment of Lease and which is related to the Shinkle Property is duly recorded in Book 50 of Leases at Page 505, Office of Register of Deeds of Greenwood County, Kansas.

 

 

II.

 

Terms and Conditions

 

NOW THEREFORE, in consideration of the following, and other good and valuable consideration, receipt of which is hereby acknowledged, Walker agrees to sell, assign, transfer, and convey to Quest, subject to the terms of the consulting agreement, all (100%) of Walker's right, title, and interest in the 2004 Shinkle Lease, the interests underlying the documents in Exhibits D, E and F and the real property covered by the 2004 Shinkle Lease, on the terms and conditions set forth below.

 

A.   Consideration.

 

1.   Consulting Agreement with W.A. Walker . Quest shall enter into a consulting agreement with W.A. Walker (attached as “ Exhibit G ”).

 

2.   Restricted Common Shares . (a) 500,000 restricted common shares of Quest; and (b) 700,000 restricted common shares of Quest (“ Balance Shares ”). On a pro-rata basis, the Balance Shares shall be adjusted down should Quest not recover in gross revenues (net of bonuses and royalties to Walker and Shinkle), within 18 months of the closing date, 110% of the sum of: (a) $68,000; (b) $300,000; and (c) the actual cash spent on the Minimum Commitment (as defined below).

 

3.   Minimum Commitment . Within 45 days from the Effective Date, Quest agrees to commence a work-over program of the 20 existing wells on the Shinkle Property requiring a capital investment of not less than $80,000 (the “ Minimum Commitment ”).

 

B.   Due Diligence.

 

Quest shall have 45 days from the date of execution of this Assignment of Lease to conduct due diligence.

 

C.   Costs.

 

All parties shall bear their own costs and fees.

 

 

III.

 

Quest to Perform 2004 Shinkle Lease

 

Quest accepts, on the terms and condit


 
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