HomeMy WebLinkAbout951056Return Recorded Copy to:
Fortuna (US) L.P.
Suite 2000, 888 3" Street S.W.
Calgary, Alberta T2P 5C5
AMONG:
sOVERRIDING .ROYALTY AGREEMENT
THIS ASSIGNMENT dated the 10th day of September, 2009
FORTUNA (US) L.P., a Delaware Limited Partnership carrying
on business in the State of Wyoming ("Fortuna
(hereinafter. called "Royalty Payor").
and
INTREPID OIL GAS, LLC, a Colorado limited liability
company "Royalty Owner
ARTICLE 1
INTERPRETATION
G O 12 0
(Royalty Payor and Royalty .Owner collectively referred to as the "Parties" or,
individually, a "Party
WHEREAS, the Parties hereto desire to set forth the mutually agreed upon terms and
conditions governing the Overriding Royalty Interest.
NOW THEREFORE, FOR AND IN CONSIDERATION of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Royalty Owner and Royalty Payor agree as follows:
1.1 Definitions
Each capitalized term used in this Agreement will have the following meaning:
(a) "AMI Agreement" means the Area of Mutual Interest Agreement dated May 9, 2008 and
made effective March 25, 2008 between Fortuna (US) LP and Intrepid Oil Gas, LLC;
(b) "Business Day" means any day other than a Saturday, a Sunday or a statutory holiday in
the State of Wyoming;
RECEIVED 12/14/2009 at 12:10 PM
RECEIVING 951056
BOOK: 738 PAGE: 120
8777113
1 all JEANNE WAGNER
LINCOLN COUNTY CLERK, KEMMERER, WY
(c) "Existing Burdens" means all existing and valid burdens affecting the Leases including
the landowner's or lessor's royalty, overriding royalties, net profits interests, production
payments, and any other charges or existing burdens of a similar nature applicable thereto, but
excluding the Reserved Overriding Royalty;
(d) "Lands" means all rights, privileges and interests to explore for, drill or take Oil and Gas,
to the extent granted by the Leases, described in Schedule "A" attached hereto;
(e) "Leases" means the lease or leases described in Schedule "A" attached hereto;
(f) "Oil and Gas" means any and all petroleum, natural gas and other related hydrocarbon
substances of any kind or nature (including gas producible from shale or coal bearing
formations) that may be explored for, drilled for, extracted, produced, taken, saved and marketed
from the Lands in accordance with the terms of the Leases;
(g) "Reserved Overriding Royalty" means the overriding royalty calculated, conveyed and
granted to the Royalty Owner pursuant to the terms of the AMI Agreement and as further
described in Article 2 hereof.
1.2 Conflicting Terms
If any term or condition of this Agreement, whether express or implied, conflicts with or
is in variance with a term or condition in the Leases, then such term or condition in the Leases
shall prevail, and this Agreement shall be deemed to be amended to the extent necessary to give
effect to such term or condition in the Leases.
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ARTICLE 2
RESERVED OVERRIDING ROYALTY
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2.1 Assignment of Reserved Overriding Royalty
(a) Royalty Payor does hereby grant, transfer, and assign a non convertible overriding
royalty to the Royalty Owner equal to two percent (2 of all Oil and Gas produced and saved
from the Leases, (the. "Reserved Overriding Royalty free of all costs and expenses of
exploration, development, production, and operation; the Reserved Overriding Royalty shall be
calculated and payable in the same manner that the royalty under the applicable Lease is
calculated and shall be subject to its proportionate share of (i) any costs for dehydrating,
purifying, treating, boosting, compressing, gathering, processing and transporting to the point of
sale to the extent and only to the extent that such costs are deductible in determining the royalty
payable under the applicable Lease; and (ii) all taxes assessed on the Reserved Overriding
Royalty share of production or the proceeds of the sale thereof.
(b) If Royalty Payor owns less than 100% of the leasehold interest under the Lease, or in the
event the Lease covers less than the full fee mineral estate in the Lands covered by the Lease,
then the Reserved Overriding Royalty shall be reduced proportionately according to Royalty
Payor's interest in such Lease or the partial fee mineral interest covered by the Lease. This grant
of Reserved Overriding Royalty is made without warranty of title, either express or implied
except that "Royalty Fs'yon represents and s that the'ResdrVed Overriding Royalty` is free
and clean liens, ,burdens s and encumbrances arts igby, through of under Royalty'Payor.
(c) The ,ReserWved:'Overriiding Loyalty Will 'nc3t"Thelude Oil and -Gas that the Royalty Payor
reasonably uses ar unavoidably roses in the Royalty Payor's drilling and production operations
for the Lands. Those" drilling and production operations inelude, but are not limited to, the
proportionate use of Oil and Gas in batteries, treaters, "compressors, separators, satellites and
similar equipment serving Royalty Payor's Oil and Gas operations on the Lands, but does not
include the use of Oil and Gas for any enhanced recovery operations.
(d) The parties agree that Royalty Owner shall not be entitled to take its Reserved Overriding
Royalty share of the Oil and Gas in kind.
2.2 No Covenant to Develop
There shall be no obligation on Royalty Payor and no covenant is implied, to explore for,
develop or produce Oil and Gas from the Lands.
2.3 Date of Payment
Any cash payment required to be paid by Royalty Payor to Royalty Owner in respect of
the Reserved Overriding Royalty shall be made to Loyalty Owner on or prior to the tenth day of
the second month following the month in which the 01 and Gas to which such amount relates
were produced and marketed from the Lands.
2.4 Production Statement
At the same time as the cash payment pursuant to clause 2.3 herein is due, Royalty Payor
shall forward to Royalty Owner a written statement of Royalty Owner's Reserved Overriding
Royalty share due to it for the production in the month concerned showing production,
inventories and sales; and the said statement shall be conclusive of the amount thereof unless
Royalty Owner objects thereto by notice in writing specifying the particulars of any error or
deficiency therein within twenty -four (24) months after the end of the calendar year in which the
said statement was received.
2.5 Books and Records
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Royalty Payor shall keep and maintain in the Province of Alberta at all times during the
term hereof true and accurate books, statements, records, and accounts evidencing the quantity of
Oil and Gas produced from the Lands and the disposition thereof. Royalty Payor shall permit
Royalty Owner to inspect such records during normal business hours and to make extracts or
copies thereof and at all times permit Royalty Owner to ascertain the quantity, kind, and nature
of the Oil and Gas produced or taken from any well located on the Lands.
2.6 Assignment
Each Party may transfer or assign all or any part of its interest in the Lands and the
Reserved Overriding Royalty by providing the other Party with a recorded copy of such transfer
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or assignment in a format acceptable to Royalty Payor and which is sufficiently detailed to allow
for proper payment of the assigned interest. The notice provided for herein shall be given as
provided in clause 3.2 within ten (10) calendar days of receipt of the recorded document from the
county recorder. Upon receipt of notice of such transfer or assignment, the assigning Party shall
be released and discharged from any and all liability and obligations thereafter accruing under
this Agreement, or the Leases relating to the Lands, insofar as they relate to the interest so
transferred or assigned. Until receipt of notice as provided herein, Royalty Payor shall have no
obligation or liability vis -a -vis the Royalty Owner to its assignees for payment of the Reserved
Overriding Royalty.
2.7 Pooling and Unitization
Royalty Payor shall be entitled at any time and from time to time as a recurring right,
either before or after production, to pool or unitize all or a part of the Lands and any one or more
of the formations thereunder with any other lands for the purposes of creating a spacing unit for
drilling or production of the Oil and Gas or to unitize all or a part of the Lands with any other
lands or leases in the immediate vicinity for cooperative development of a structure or reservoir,
if such pooling or unitization becomes necessary or desirable in the opinion of the Royalty Payor
irrespective of whether authority similar to this exists with respect to such other lands or leases.
The basis and manner of such pooling or unitization, the manner of allocating pooled or unitized
lands, and the contents of any agreement pertaining thereto shall be in the sole discretion and
determination of Royalty Payor, and when so determined shall be binding upon Royalty Owner.
Upon any such pooling or unitization the Reserved Overriding Royalty shall be paid on the basis
of production deemed to be produced from or allocated to Lands under the plan of unitization or
pooling and not upon the basis of actual production from the Lands.
Furthermore, Royalty Payor reserves the right to pool, communitize, unitize, or to
establish a development contract, a working interest unit, or a combination agreement; and
Royalty Owner shall be deemed committed to any such agreement for pooling, communitization,
unitization, or other cooperative agreement and bound thereby without Royalty Payor having to
obtain the separate consent or joinder of the Royalty Owner or its assignees.
3.1 Taxes
8777113
ARTICLE 3
ADDITIONAL PROVISIONS
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610.)123
Each Party hereto shall be liable for all taxes and other charges levied or assessed against
its interest as set out herein in the Oil and Gas, and in lieu of payment by Royalty Owner of its
share thereof Royalty Payor may, but is not obligated to make, such payment and deduct the
amount thereof from any money payable by it to Royalty Owner. Notwithstanding the
foregoing, the Reserved Overriding Royalty share of Royalty Owner shall be paid by Royalty
Payor to Royalty Owner free of any deduction for Lessor's royalty, Royalty Payor being solely
responsible for payment thereof. The payment on behalf of Royalty Owner by Royalty Payor of
any tax or other charge pursuant to the provisions of this clause 3.1 shall not in any way relieve
Royalty Owner from its obligation and responsibility to reimburse Royalty Payor for its share of
such costs.
l ttAiae 4elst its at q her vor l ,i,ations 1egt free pi,pei Wte by this Agreement to be
given dr ;sent by one :tarty arty'`to she .other :-shall, `:c1.cept' where othen'gise provided herein, be in
writing tzd' delivered `1 §y hand, _or" rtiailed posthge p 'epacI bx `te ar srnitted, by facsimile to the
addresses as foahm.
8777113
is fl.O2a1ty at er
•rntre c iP& as`L C
Suite 'f700, 700 -17 Street
Denver, CO 80202
Attention: Land Manager
Fax: (303) 298- 7502
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Ri ovalty Pavor
Fortuna (USy L.P.
Attention: Senior Manager, Land
c/o 888 3 Street S.W., Suite 2000
Calgary, Alberta, Canada T2P 5C5
F ax: (403) 693-2536
(N
(a) Hand delivered notices shall be conclusively deemed to have been received when actually
delivered if during -a` Business Day. If hand delivery is not during a Business Day such notice
shall be conclusively deemed to )ave been received by addressee at the commencement of the
next Business Day If' a notice is mailed by prepaid pest it shall to conclusively deemed to have
been received by the addressee, on the fifth Business Day followug,`the mailing thereof Notices
transmitted by facsimile shall be 'conclusively deemed to have been received when actually
delivered if during; a Busines Day. If facsimile is not delivered during a Business Day such
notice shall be conclusively' deemed to have been received by addressee at the commencement of
the next 'Business
(b) When ahy disruption of the postal system is in effect or threatened, notices shall be hand
delivered or sent by facsimile:
(c) Any notice sent pursuant to the terms of this Agreement shall make reference to the
relevant time period within which any return notice is due, if applicable
(d) Parties may from time to time change their respective addresses for service or their
respective fax numbers or both by giving written notice to the other Parties.
3.3 Force Majeure
The obligations of the Parties hereto shall be suspended and there shall be no liability for
damages during the time and to the extent that any Party hereto is prevented from complying
with its obligations under this Agreement in part or in whole by strikes, lock -outs, acts of God or
enemies of the State, war, blockades, riots, laws, orders, or regulations of govemmental bodies or
agencies, unavoidable accidents, delays in transportation, inability to obtain necessary materials
in the open market, or any other cause, except financial, whether similar or dissimilar to those
specifically enumerated, beyond the reasonable control of the Party hereto affected. The Party
hereto whose obligations under this Agreement are suspended shall give notice, including
reasonably full particulars, of the cause of such suspension, to the other Party or Parties hereto
within a reasonable time after the occurrence hereof. The performance of such obligations shall
0 125
begin or be resumed within a reasonable time after such cause has been removed. No Party
hereto shall be required against its will to settle any labour dispute.
4.1 Duration of Reserved Overriding Royalty
Subject to the terms contained herein, the Reserved Overriding Royalty shall continue for
the life of the Leases or unless the Parties agree otherwise in writing. The Reserved Overriding
Royalty shall apply to any extensions or renewals of the Leases acquired during the term of the
AMI Agreement. All terms, covenants, and conditions in this Agreement relating to the Reserved
Overriding Royalty shall run with and be binding upon the Leases, the Lands, and the estates
affected thereby for the duration of this Agreement.
4.2 Entire Agreement
This Agreement supersedes and replaces all previous agreements, whether written or oral,
memoranda, and correspondence among the Parties hereto with respect to the subject matter of
this Agreement except for the AMI Agreement.
4.3 Severable Clauses
ARTICLE 4
MISCELLANEOUS
Should any clause, provision, condition of this Agreement be or become illegal or
unenforceable, it shall be considered separate and severable from this Agreement and the
remaining provisions and conditions shall continue in full force and be binding upon the Parties
hereto as though the said clause, provision, or condition has never been included.
4.4 Compliance with Laws
The Parties hereto covenant, so long as this Agreement is in force and effect, to comply
with any and all regulations and other laws with respect to anything done, or purported to be
done, pursuant to this Agreement, and with respect to the operations carried out hereunder.
4.5 Waiver
No waiver by any Party hereof of any term of this Agreement shall take effect or be
binding upon that Party unless the same be expressed in writing and any waiver so given shall
extend only to the particular breach so waived and shall not limit or affect any rights with respect
to any other or future breach.
4.6 Time of the Essence
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Time is of the essence of this Agreement.
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4.7 Choke of Laws Co l.26
This Agreement shall, in ail ;respects, be subject',to, interpreted, construed and enforced in
accordance with and under the Laws of the State of Wyoming and applicable laws of the United
States of America and shall, in all respects, be treated'' as a contract made in the State of
Wyoming. The Parties hereto irrevocably attorn and submit to the exclusive jurisdiction of the
courts of the State of Wyoming and courts of appeal therefrom in respect of all matters arising
out of or in connection with this Agreement, provided, however, that any Party may remove an
action filed in State of Wyoming Courts to the United. States District Court if subject matter and
diversity requirements for removal are gn Each Party irrevocably waives its right to a jury trial
with'respect to matters contained herein.
4.8 Authority to Bind
FUSI GP Inc. for the Royalty Payor represents that it has the full right and authority to
enter into this Agreement and bind its partnership.
4.9 Counterpart Execution
This Agreement may be executed in counterpart, no one copy of which need be executed
by each of the Parties hereto. When copies have been executed by each of the Parties hereto, all
copies together shall constitute one agreement and shall be a valid and binding contract among
the Parties as of the date first above written.
4.10 Enurement
This Agreement shall be binding upon and shall enure to the benefit of each of the Parties
hereto and their respective heirs, executors, administrators, trustees, receivers, successors and
permitted assigns.
8777113
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IN WITNESS WHEREOF this Overriding Royalty Agreement is dated as first w17
but shall be effective as to each of the respective leases as of the lease's effective date.
ROYALTY PAYOR
FORTUNA (US) L.P.
by its general partner FUSI GP Inc.
8777113
gihryn
Adam Wolfenden
Attomey -in -Fact for FUSI GP INC.,
as general partner of Fortuna (US) L.F.
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ROYALTY OWNER
INTREPID OIL GAS LLC
by: Intr 'd roduction Corporation
Its: Ma
U'1
Jornayvaz, III
Execution page to an Overriding Royalty Agreement dated the 10th day of September, 2009 among Fortuna (US)
L.P., and Intrepid Oil Gas LLC
ACKNOWLEDGEMENT
STATE OF OLoRA DO
ss.
COUNTY OF Doo J i
(COLORADO AND WYOMING FORM)
The foregoing instrument was acknowledged before me this 13th day of NO /ell 8C4. 2009,
by R o R r' P ..otaNYJH Z. PREs of INTREPID PRODUCTION
COMPANY, Manager of INTREPID OIL GAS, LLC, a Colorado limited liability company,
on behalf of company as manager of the limited liability company.
Witness my hand and official seal
My commission expires:
(NOTARIAL SEAL)
8777113
00‘
,y4TARy
PUBL C
ti
!!!l111
sion Expires
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eOi 12S
Province of Alberta
Dominion of Canada
On this the day of D c 4 2009, before me, the undersigned personally
appeared Adam Wolfenden, who acknowledged himself to be the Attorney -in -Fact for FUSI
GP INC, a corporation, as the general partner of FORTUNA (US) L.P., and that he, being
authorized so to do, executed the foregoing instrument for the purposes therein contained.
In witness whereof I hereunto set my hand and official seal.
My commission expires: at the pleasure of
Her Majesty Queen Elizabeth II
8777113
ACKNOWLEDGEMENT
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Notary Public
C'O i29
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TIM J. KFS %LtR
Barrikter itora v
R �en
4
6r 444 \44ef4��� �tP r
�`�Ap
Lease
File No.
Legal Description
Interest
Permitted
Encumbrances
Acres
(Gross)
Diane E. Doornbos,
Successor Co- Trustee of
the Charles F. Doombos
Revocable Trust under
Trust Agreement dated
August 1, 1990
(129909)
T26N/R115W. 6th P.M.
100%
LOR 18.75% on 100%
prod., pd 100% by
Fortuna
80.00
Section 27: Part of
Resurvey Tract 53 (f/k/a
.NE'/.NW'%)
Part of Resurvey Tract 60
(f/k/a NW1/4SW
Lincoln County, Wyoming
WY 08 -00546
(129027)
T26N/R115W. 6th P.M
100%
LOR 16.67% on 100%
prod., pd 100% by
Fortuna
640.00
Resurvey Tract 47 (f/k/a
All Section 16).
Lincoln County, Wyoming
Diane E. Doornbos,
Successor Co- Trustee of
the Charles F. Doombos
Revocable Trust under
Trust Agreement dated
August 1, 1990
(129962)
T26N/R115W. 6th P.M.
100%
LOR 18.75% on 100%
prod., pd 100% by
Fortuna
40.00
Section 28: Part of
Resurvey Tract 60 (f/k/a
NE' /.SE'
Lincoln County, Wyoming
Diane E. Doombos,
Successor Co- Trustee of
the Charles F. Doombos
Revocable Trust under
Trust Agreement dated
August 1, 1990
(129968)
T26N/R115W. 6th P.M.
100%
LOR 18.75% on 100%
prod., pd 100% by
Fortuna
40.00
Section 22: Part of
Resurvey Tract 53 (f/k/a
SE'/.NW'h)
Lincoln County, Wyoming
8777113
Schedule "A"
to an Overriding Royalty Agreement dated the 10th day of September, 2009
among Fortuna (US) L.P. and Intrepid Oil' Gas, LLC.
FORTUNA
LANDS, LEASES, P &NG RIGHTS AND ENCUMBRANCES
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