EXHIBIT 10.2
SARATOGA RESOURCES INC,
A TEXAS CORPORATION
301 CONGRESS AVE, SUITE 1550
AUSTIN, TEXAS 78701
Phone (512) 478-5717
Fax (512) 478-5733
March 22, 1999
Via Telefax (972)
470-0628
Mr. Dave Braman,
President
DBX Geophysical
Corporation
10134 Panther
Ridge
Dallas, Texas
75243
Re: Letter
Agreement
Stonewall Prospect
Adcock Farms #1 Well
Dawson County, Texas
Dear Mr. Braman:
Article I
Saratoga Resources,
Inc., a Texas
Corporation,
301 Congress
Avenue,
Suite 1550 Austin,
Texas 78701, ("Saratoga") has reviewed the documentation
prepared and furnished by DBX
Geophysical
Corporation,
10134 Panther Ridge,
Dallas, Texas 75243, ("DBX") related to the geologic merit and
developmental
potential of the above
referenced
"Prospect" and the
associated 29 square mile
Area of Mutual Interest, ("AMI") as more fully identified on the AMI Plat
attached hereto as Exhibit
"A". Saratoga and DBX shall collectively be
referred
to as the ("Parties") and
individually as a ("Party").
Article II
Although DBX is not currently vested with any leasehold interest
within
the AMI, DBX has access to, and an option to
acquire ownership of, certain
proprietary 3-D seismic data, ("Data") covering the AMI. To facilitate the
acquisition of the Data, DBX and their potential investors have the right
to
view, work, process and/or reprocess the Data within the AMI
for the limited
purpose of generating
prospects to raise the necessary funds, (through promoted
working interest
participants) to exercise DBX's option to acquire the Data.
DBX
has identified certain prospects located within the boundaries of the AMI,
including the prospect
associated with the
Adcock Farms #1 Well, ("Adcock Farms
Prospect"). Saratoga is
interested in acquiring a license to utilize the Data to
promote exploration capital and entice the "Saratoga Partners", (promoted
working interest participants
acquired by Saratoga for the purpose of developing
prospects within the AMI), to invest such capital to acquire the necessary
leasehold acreage to develop the Adcock Farms Prospect and other prospects
within the AMI.
<PAGE>
Article III
Now therefore,
for Ten Dollars,
($10.00) and other
good and valuable
consideration in hand paid by
Saratoga, the receipt
and sufficiency of which is
hereby acknowledged, DBX grants and conveys to Saratoga
the exclusive right to
acquire a license to the Data
and all leasehold
interest in the AMI
during the
term of and in accordance with this Agreement. Saratoga agrees to make best
efforts to acquire
the Data in
accordance
with this Agreement and cause the
Adcock Farms Prospect and
other relevant prospects within the AMI to be acquired
and developed by the Saratoga Partners. The Parties agree that the first
prospect to be developed
within the AMI shall
be the Adcock Farms prospect. In
consideration of the
foregoing, the Parties
agree that the Data acquisition and
proposed exploration and development of
prospects located
within the AMI shall
be in accordance with the following terms and conditions of this Letter
Agreement,
("Agreement").
Article IV
Upon execution of this Agreement, Saratoga shall commence the
necessary
due diligence to determine the status of record title, the status of the
leasehold estate and the rights of any
parties vested with an interest in
the
Adcock Farms Prospect,
including the rights of any parties conducting
operations
thereon. The Parties agree that
Saratoga shall not acquire legal title to
any
leasehold interest in the name of Saratoga.
Saratoga shall cause the
Saratoga
Partners to make best efforts
to negotiate and
secure the leasehold
estate of
any relevant prospect from the rightful owners. Legal title to the
leasehold
interest acquired by the Saratoga Partners shall be held in the name of
the
individual or entity mutually
agreed upon by the Saratoga Partners. In addition,
the Saratoga Partners shall designate the party to serve as the operator
of
record of any prospect
obtained under the
terms of this Agreement. The Parties
agree that the Saratoga
Partners and any entity selected by such parties to hold
legal title to the
acquired leasehold or selected to be the
operator of record
shall be subject to this
Agreement and shall be
considered as part of the class
comprising the Saratoga
Partners.
Article V
As additional
consideration,
Saratoga agrees to cause the Saratoga
Partners to deliver a 3%
overriding royalty interest, ("Override") to DBX in any
leasehold acquired by the Saratoga
Partners in the Adcock
Farms Prospect.
DBX
shall be entitled to an
Assignment of the
Override from the
Saratoga
Partners
upon request. The Override shall be proportionately reduced to the
leasehold
interest originally
acquired by the
Saratoga Partners.
Under the terms of this
Agreement, all such leases shall be subject to the Override when acquired
whether or not a formal assignment has been executed and delivered by the
Saratoga Partners to
DBX.
2
<PAGE>
Article VI
The Parties agree that DBX shall be free to view, work,
process
and/or
reprocess the Data within the AMI during the
term of this
Agreement.
However,
DBX grants to and agrees that
Saratoga shall be vested with an exclusive option
to acquire any prospect generated by DBX within the AMI. In the even DBX
generated additional prospects within the AMI, other than the Adcock Farms
Prospect, ("Additional
Prospects") DBX shall present the final prospect
package,
including all relevant
data, to Saratoga after which Saratoga shall have an
option for 30 days,
("Option Period") to
review the data,
collaborate with DBX
on the merits of the prospect
and conduct an
