1048136
ALBERTA LTD.
c/o
2760 – 200 Granville Square
200
Granville Street
Vancouver, British
Columbia
Canada V6C
1S4
August 10,
2005
|
Cascade Energy, Inc.
Suite 820, 3405 Folsom Blvd.,
Folsom, CA 95630
Attention: Mr. Chris Foster -
CFO
|
Silver Star Energy Inc.
Suite 800, 11300 West Olympic Blvd.,
Los Angeles, CA 90064
Attention:
Mr. Robert McIntosh -
CEO
|
Fidelis Energy Inc.
5151 East Broadway,
Tucson, Arizona 85711
Attention: Mr. Sterling Klein -
CFO
|
Gentlemen:
Re:
Data Sharing
Agreement Among 1048136 Alberta Ltd. ("1048136"), Cascade Energy,
Inc. ("CSCE"), Silver Star Energy Inc. ("SVSE") and Fidelis Energy
Inc. ("FDEI")
This Agreement outlines
the terms upon which 1048136 will share certain proprietary oil and
gas engineering data that it owns respecting several prospective
areas in the State of Kansas.
Pursuant to an agreement
(the "Wildes Agreement") dated the 5 th day of June,
2005, between 1048136 and Wildes Exploration, LLC ("Wildes"),
1048136 purchased, among other things, certain magnetic data
acquired by airborne surveys over lands (the "Lands") in the State
of Kansas that cover an area of approximately 1,000,000 acres, as
well as interpretations of such data (including scaled digital
plots defining potential prospects, maps and other related data)
(all such data purchased by 1048136 by the Wildes Agreement, or
derived from such data, is collectively referred to herein as the
"Data"). The Lands are described more particularly in Exhibit
"A" to the Wildes Agreement, a copy of which agreement is attached
hereto as Schedule "A". A five (5%) percent gross overriding
royalty (the "Royalty") has been reserved by Wildes for any "Oil
and Gas Interests" (as defined in the Wildes Agreement) acquired by
1048136, or any other party who has reviewed the Data, prior to
December 31, 2015 (the "Drop Dead Date"). The Royalty shall
encumber the Lands, in addition to any other lessor royalties and
other encumbrances affecting the Lands, as and when such Lands are
developed pursuant hereto.
Subject to compliance
with the terms and conditions hereof, 1048136 will sell to the
parties hereto an interest in the Data and the right to use the
Data to develop the Lands in the manner hereinafter set
forth.
1.
Interpretation
(a)
The headings of the
clauses of this Agreement are inserted for convenience of reference
only and shall not affect the meaning or construction
thereof.
(b)
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.
2.
Sale of
Data
Subject to the terms
hereof and the Royalty, 1048136 agrees to sell the following
interests in the Data to the parties as follows:
CSCE –
25%
FDEI –
25%
SVSE –
20%
(collectively the
"Companies")
in consideration for the
Companies conducting and completing the development programs and
fulfilling the other terms and conditions set forth in
hereinbelow.
3.
Earning
Program
3.1
The Companies agree to
pay, in proportion to the interests in the Data that they are
entitled to earn under this Agreement, the costs of the
acquisition, by way of lease or otherwise, of up to two (2)
sections of the Lands (the "Initial Lands"), selected by 1048136,
for a two (2) well drilling program such Initial Lands. The
Companies agree to advance to 1048136 their respective share of the
funds required to complete acquisition of the Initial Lands
forthwith upon the receipt of written notification from 1048136
that it has selected appropriate Initial Lands, and negotiated
terms with the underlying owners of such Initial Lands, in order to
secure the Initial Lands.
3.2
Upon the completion of
the acquisition of the Initial Lands, the Companies shall fully
fund, drill, abandon, or complete, as the case may be, two (2) oil
and/or gas wells (collectively the "Earning Wells") on the Initial
Lands in accordance with this Agreement, against the receipt of
authorizations for expenditure from 1048136. Prior to the
drilling, abandonment and or completion of the Earning Wells, the
Companies will have earned no interest in the Data, the Earning
Wells, or any part thereof. 1048136 shall be the operator
(the "Operator") of all aspects the selection and acquisition of
the Initial Lands and the drilling of the Earning Wells.
3.3
Upon the drilling,
abandonment, or completion, as the case may be, of the Earning
Wells, the Companies shall have earned the undivided interests in
the Data set forth in paragraph 2 hereof, provided that the Data
shall only be used by the Companies thereafter in the manner set
forth in this Agreement. Subject to the Royalty, and any
lessor royalties or other encumbrances flowing with the Initial
Lands, the working interests of the parties in the Earning Wells
and the Initial Lands shall be as follows:
CSCE –
25%
FDEI –
25%
SVSE –
20%
1048136 –
30%
3.4
Notwithstanding 1048136
shall be the Operator of all aspects of the acquisition of the
Initial Lands as well as the drilling, abandonment and or
completion of the Earning Wells (the "Initial Program"), it shall
be carried by the Companies on all costs incurred by the Companies
through the Initial Program.
4.
Follow-Up
Programs/Joint Operating Agreement
Upon the completion of
the Initial Program, the parties shall enter into an industry
standard joint operating agreement (the "JOA") for the purpose of
jointly utilizing the Data to
