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
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.
3.1 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 acquire and develop any of the Lands
that the parties so choose in accordance with the provisions of the
JOA. Without limitation, the JOA shall provide that 1048136 will
initially continue as the Operator and that the parties will
initially fund the acquisition of selected Lands and participate in
development programs in accordance with their respective working
interests, as set forth in subparagraph 3.3 hereof. The JOA shall
initially allow the parties to vote on the approval of programs in
accordance with their respective working interests.
3
If at any time during prior to
completion of the Initial Program, any of the parties fail to duly
pay or cure any default in the performance of any obligation of
this Agreement within a period of thirty (30) days after receipt of
a default notice from 1048136, 1048136 may terminate the this
Agreement respecting that party and assume the interests and
obligations of that party hereunder Exercise of such right by
1048136 shall be without prejudice to any other rights or remedies
1048136 may have at law or in equity as a result of such default of
this Agreement.
6.1 This
paragraph applies to all the Data and any other data, records,
projections, reports, calculations, opinions, maps, charts,
documents, and other information whatsoever, written or oral and
whether or not noted thereon to be confidential, pertaining to or
derived from the Data, disclosed or provided to the Companies,
their employees, or agents, or to which the Companies, their
employees, or agents are given access by 1048136,
except:
|
(a)
|
information which at the date hereof is in the
public domain;
|
|
(b)
|
information which after the date hereof is
published or otherwise becomes part of the public domain through no
fault of the Companies or any of their employees or
agents;
|
|
(c)
|
information which the Companies can show was in
their possession prior to the date hereof and was not acquired by
the Companies directly or indirectly from 1048136 or anyone under
an obligation of confidentiality to 1048136; and
|
|
(d)
|
information received by the Companies without
restriction as to disclosure from a third party who has the lawful
right to disclose the same.
|
6.2 Prior
to the Drop Dead Date the Companies shall keep all Data in strict
confidence and will not disclose or dispose of any of the same to
any third party; provided that:
|
(a)
|
information may be disclosed to those of the
Companies’ directors, officers, employees and agents who need
to access to Dat
|