Exhibit 10.3

 

CONVEYANCE,

ASSIGNMENT AND BILL OF SALE

 

STATE OF WYOMING

)

 

)

COUNTY OF CARBON

)

 

This CONVEYANCE, ASSIGNMENT AND BILL OF SALE (the “Conveyance”) from WGR Asset
Holding Company LLC, a Delaware limited liability company, having an address of
1201 Lake Robbins Drive, The Woodlands, TX 77380 (“Grantor”), to Warren Energy
Services, LLC, a Delaware limited liability company, whose address is 123 West
1st Street, Suite 400, Casper, WY 82601 (“Grantee”), is executed this 9th day of
October, 2012, but effective as of 7:00 a.m., local time, where the respective
Assets are located, on the 1st day of August, 2012 (“Effective Time”).

 

Reference is made to the Purchase and Sale Agreement more particularly described
in Section 4.2 of this Conveyance.  All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Purchase and Sale
Agreement.

 

ARTICLE 1

Conveyance of Assets

 

Section 1.1. Conveyance: Grantor, for good and valuable consideration in hand
paid, the receipt and sufficiency of which are hereby acknowledged, hereby
grants, bargains, sells, and conveys unto Grantee, all of Grantor’s right,
title, interest and estate, real or personal, recorded or unrecorded, movable or
immovable, tangible or intangible, in and to its fifty percent (50%) interest in
and to the following, excepting the Excluded Assets (collectively the “Assets”):

 

(a)                                 All contracts, agreements and instruments
identified on Schedule 1.2(a) to the Purchase and Sale Agreement (“Contracts”);

 

(b)                                 All easements, permits, licenses,
servitudes, rights-of-way, surface leases, fee interests in real property and
other surface rights appurtenant to, and used or held for use primarily in
connection with the System (hereinafter defined), including those identified on
Schedule 1.2(b) to the Purchase and Sale Agreement (“Surface Contracts”);

 

(c)                                  All equipment, machinery, fixtures and
other tangible personal property and improvements located on the System or used
or held for use primarily in connection with the operation of the System,
including those identified on Schedule 1.2(c) to the Purchase and Sale Agreement
(“Equipment”);

 

(d)                                 All rights of Grantor under or pursuant to
all warranties, representations and guarantees made by suppliers, manufacturers
and contractors (other than Affiliates of Grantor) to the extent relating to
products sold, or services provided, to Grantor to the extent used or held for
use in connection with or affecting any of the Assets;

 

(e)                                  All pipelines, gathering systems and
appurtenances thereto being part of the System or used, or held for use,
primarily in connection with the operation of the System (“Pipelines”);

 

(f)                                   All Hydrocarbon line pack existing within
the Pipelines from and after the Effective Time; and

 

(g)                                  All land files; gas contract files; gas
gathering and processing files; abstracts; title opinions; land surveys; maps;
engineering data and reports; and other books, records, data, files, and
accounting records, regardless of whether paper or electronic media, in each
case to the extent related primarily to the Assets, or used or held for use
primarily in connection with the maintenance or operation thereof, but excluding
(i) any books, records, data, files, maps and accounting records to the extent
disclosure or transfer is restricted by third-party agreement or applicable Law
and the necessary consents to transfer are not obtained pursuant to Section 7.8
of the Purchase and Sale Agreement, (ii) computer

 

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or communications software or intellectual property (including tapes, codes,
data and program documentation and all tangible manifestations and technical
information relating thereto), (iii) attorney-client privileged communications
and work product of Grantor’s legal counsel (other than title opinions),
(iv) reserve studies and evaluations, and (v) records relating to the
negotiation and consummation of the sale of the Assets (subject to such
exclusions, the “Records”); provided, however, that Grantor may retain the
originals of such Records as Grantor has determined may be required for
litigation, tax, accounting, and auditing purposes and provide Grantee with
copies thereof at Grantee’s cost until such purpose no longer reasonably exists;
and then Grantor shall promptly deliver such records to the address then
provided by Grantee.

 

As used herein, the term “System” means the natural gas gathering system and
appurtenances thereto that is depicted in the map attached as Exhibit A attached
hereto and made a part hereof.  Notwithstanding anything to the contrary, the
System shall not include any pipelines, equipment or other properties that are
located upstream of the inlet flange of the meters where Hydrocarbons are
delivered into the pipelines consisting of such natural gas gathering system.

 

Section 1.2.                                Excluded Assets: Excepting and
reserving to Grantor the following:

 

(a)                                 All corporate, financial, income and
franchise tax and legal records of Grantor that relate to Grantor’s business
generally (whether or not relating to the Assets), and all books, records and
files to the extent the same relate to the Excluded Assets and those records
retained by Grantor pursuant to Section 1.1(h) above and copies of any other
Records retained by Grantor pursuant to Section 1.5(a) of the Purchase and Sale
Agreement;

 

(b)                                 All geological and geophysical data
(including seismic data, including reprocessed data) and all logs, interpretive
data, technical evaluations, technical outputs, reserve estimates and economic
estimates;

 

(c)                                  All rights to any refund of Taxes or other
costs or expenses borne by Grantor or Grantor’s predecessors in interest and
title attributable to periods prior to the Effective Time;

 

(d)                                 Grantor’s area-wide bonds, permits and
licenses (including software licenses) or other permits, licenses or
authorizations used in the conduct of Grantor’s business generally;

 

(e)                                  Those items listed in Schedule 1.3(e) of
the Purchase and Sale Agreement; and

 

(f)                                   All trade credits, account receivables,
note receivables, and other receivables attributable to the Assets with respect
to any period of time prior to the Effective Time.

 

TO HAVE AND TO HOLD the Assets unto Grantee, its successors and assigns,
forever, subject, however, to the terms and conditions of this Conveyance.

 

ARTICLE 2

Limited Warranty and Disclaimers

 

Section 2.1                                   Special Limited Warranty: As of
the Closing Date, Grantor warrants to Grantee that it has Defensible Title
(hereinafter defined) with respect to the easements, rights-of-way, surface
leases and fee interests in real property identified on Schedule 1.2(b) to the
Purchase and Sale Agreement (“Real Property Interests”) against all persons
claiming or to claim the same or any part thereof by, through or under Grantor
or its Affiliates, but not otherwise.

 

As used herein, the term “Defensible Title” means that title of Grantor with
respect to the Real Property Interests, except for and subject to Permitted
Encumbrances (hereinafter defined), is free and clear of liens, encumbrances,
obligations, security interests, irregularities, pledges and other defects.

 

As used herein, the term “Permitted Encumbrances” means any or all of the
following:

 

(a)                                 Preference Rights applicable to the Assets;

 

(b)                                 Third-party consent requirements and similar
restrictions;

 

(c)                                  Liens for current Taxes or assessments not
yet delinquent or, if delinquent, being contested in good faith by appropriate
actions;

 

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(d)                                 Materialman’s, mechanic’s, repairman’s,
employee’s, contractor’s, operator’s and other similar liens or charges arising
in the ordinary course of business for amounts not yet delinquent (including any
amounts being withheld as provided by Law), or if delinquent, being contested in
good faith by appropriate actions;

 

(e)                                  All rights to consent by, required notices
to, filings with, or other actions by Governmental Bodies in connection with the
sale or conveyance of the Assets or interests therein if they are not required
or customarily obtained prior to the sale or conveyance;

 

(f)                                   Rights of reassignment arising upon final
intention to abandon or release the Assets, or any of them;

 

(g)                                  Easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface operations except
to the extent the same would interfere or would be reasonably likely to
interfere with the operation of the Assets;

 

(h)                                 Calls on Hydrocarbon production under
existing Contracts;

 

(i)                                     All rights reserved to or vested in any
Governmental Body to control or regulate any of the Assets in any manner and all
obligations and duties under all applicable laws, rules and orders of any such
Governmental Body or under any franchise, grant, license or permit issued by any
such Governmental Body;

 

(j)                                    Any encumbrance on or affecting the
Assets which Grantee expressly agrees herein to be assumed, bonded or paid by
Grantee at or prior to Closing or which is discharged by Grantor at or prior to
Closing;

 

(k)                                 Any other liens, charges, encumbrances,
defects or irregularities which do not, individually or in the aggregate,
materially interfere with the use or ownership of the Assets subject thereto or
affected thereby (as currently used or owned), and which would be accepted by a
reasonably prudent purchaser engaged in the business of owning and operating oil
and gas or gas gathering pipelines;

 

(l)                                     Imbalances associated with the Assets;

 

(m)                             defects based solely on (i) lack of information
in Grantor’s files, or (ii) references to a document(s) if such referenced
document(s) do not constitute a defect;

 

(n)                                 defects arising out of lack of corporate or
other entity authorization unless Grantee provides affirmative evidence that the
action was not authorized and results in another party’s actual and superior
claim of title to the relevant Real Property Interest;

 

(o)                                 defects that have been cured by applicable
Laws of limitations or prescription; and

 

(p)                                 defects specifically disclosed in writing by
Grantor to Grantee prior to the execution of the Purchase and Sale Agreement.

 

Grantor makes no, and expressly disclaims any, other warranty of title to the
Assets.  Grantee shall not be entitled to protection under Grantor’s special
warranty of title in this Conveyance against any matter that would cause Grantor
not to have Defensible Title that is disclosed in writing to Grantee or of which
Grantee has actual knowledge prior to the date of the Purchase and Sale
Agreement.

 

Section 2.2                                   Disclaimers:  EXCEPT AS AND TO THE
EXTENT EXPRESSLY SET FORTH IN ARTICLE 5 OF THE PURCHASE AND SALE AGREEMENT,
CONFIRMED IN THE CERTIFICATE OF GRANTOR DELIVERED PURSUANT TO
SECTION 9.2(b) THEREOF, OR IN THIS CONVEYANCE, (I) GRANTOR MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, AND (II) GRANTOR
EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION,
WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING)
TO GRANTEE OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR
REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, ANY OPINION, INFORMATION,
PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO GRANTEE BY ANY OFFICER,
DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF GRANTOR OR
ANY OF ITS AFFILIATES).

 

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EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 5 OF THE PURCHASE AND SALE
AGREEMENT, CONFIRMED IN THE CERTIFICATE OF GRANTOR DELIVERED PURSUANT TO SECTION
9.2(b) THEREOF, OR IN THIS CONVEYANCE, AND WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, GRANTOR EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY,
EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE
CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF
ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (IV) ANY ESTIMATES
OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE
PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS,
(VII) THE CONTENT, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, REPORTS,
BROCHURES, CHARTS OR STATEMENTS PREPARED BY THIRD PARTIES, (VIII) ANY OTHER
MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO
GRANTEE OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,
REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THE PURCHASE AND SALE AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO, AND FURTHER DISCLAIMS ANY EXPRESS, STATUTORY OR IMPLIED REPRESENTATION
OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY
UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT GRANTEE SHALL BE DEEMED TO BE
OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS
IS” AND “WHERE IS” WITH ALL FAULTS AND THAT GRANTEE HAS MADE OR CAUSED TO BE
MADE SUCH INSPECTIONS AS GRANTEE DEEMS APPROPRIATE, OR (IX) ANY IMPLIED OR
EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT.

 

GRANTOR HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY
MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL
LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE PROTECTION OF
HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER
ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THE PURCHASE AND SALE
AGREEMENT, THIS CONVEYANCE OR OTHERWISE SHALL BE CONSTRUED AS SUCH A
REPRESENTATION OR WARRANTY, AND GRANTEE SHALL BE DEEMED TO BE TAKING THE ASSETS
“AS IS” AND “WHERE IS” FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION.

 

ARTICLE 3

Assumption of Obligations

 

Section 3.1. Assumed Grantor Obligations:  Without limiting Grantee’s rights to
indemnity under Article 11 of the Purchase and Sale Agreement, effective on the
date of this Conveyance, Grantee assumes and agrees to fulfill, perform, pay and
discharge the Assumed Seller Obligations.

 

Section 3.2. Subject to Contracts:  Grantee (a) is taking the Assets subject to
the terms of, among others, the Contracts and the Surface Contracts, to the
extent the Contracts and Surface Contracts are valid, binding and enforceable on
the date of this Conveyance, and (b) without limiting Grantee’s rights to
indemnity under Article 11 of the Purchase and Sale Agreement, hereby assumes
and agrees to fulfill, perform, pay and discharge Grantor’s obligations under
such Contracts and Surface Contracts from and after the date of this Conveyance.

 

Section 3.3. NORM:  Grantee acknowledges that the Assets have been used for the
gathering and transportation of Hydrocarbons and that there may be petroleum,
produced water, wastes, or other substances or materials located in, on or under
the System or associated with the Assets.  Equipment and sites included in the
Assets may contain asbestos, hazardous substances, or NORM.  NORM may affix or
attach itself to the inside of pipes, materials, and equipment as scale, or in
other forms.  The pipes, materials, and equipment included in the Assets may
contain NORM and other wastes or

 

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hazardous substances.  NORM containing material and/or other wastes or hazardous
substances may have come in contact with various environmental media, including
without limitation, water, soils or sediment.  Special procedures may be
required for the assessment, remediation, removal, transportation, or disposal
of environmental media, wastes, asbestos, hazardous substances, and NORM from
the Assets.

 

ARTICLE 4

Miscellaneous

 

Section 4.1. Further Assurances: After Closing, without further consideration,
Grantor and Grantee each agrees to take such further actions and to execute,
acknowledge and deliver all such further documents as are reasonably requested
by the other party for carrying out the purposes of this Conveyance.

 

Section 4.2. Conveyance Subject to Purchase and Sale Agreement: This Conveyance
is expressly subject to the terms and conditions of that certain Purchase and
Sale Agreement by and between WGR Asset Holding Company LLC as “Seller”, and
Double Eagle Petroleum Co. as “Purchaser”, dated August     , 2012 (as it may be
amended, the “Purchase and Sale Agreement”).  If there is a conflict between the
terms of this Conveyance and the Purchase and Sale Agreement, the terms of the
Purchase and Sale Agreement shall control.

 

Section 4.3. Successors and Assigns: This Conveyance shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.

 

Section 4.4. Titles and Captions: All article or section titles or captions in
this Conveyance are for convenience only, shall not be deemed part of this
Conveyance and in no way define, limit, extend, or describe the scope or intent
of any provisions hereof.  Except to the extent otherwise stated in this
Conveyance, references to “Articles” and “Sections” are to Articles and Sections
of this Conveyance, and references to “Exhibits” are to Exhibits attached to
this Conveyance, which are made parts hereof for all purposes.

 

Section 4.5. Filings.  As a matter of convenience and not as a limitation to the
Assets transferred by this Conveyance, the parties hereto may file counterparts
of this Conveyance that only include the descriptions of those Assets that are
located in the jurisdiction where such Conveyance is filed.  A fully-executed
original of this Conveyance (including the descriptions of all Assets
transferred by this Conveyance) shall be maintained at the offices of Grantee.

 

Section 4.6. Government Assignments.  Separate assignments may be executed on
forms approved by Governmental Bodies in sufficient counterparts to satisfy
applicable statutory and regulatory requirements.  Those assignments shall be
deemed to contain the special warranty of title of Grantor and all of the
exceptions, reservations, rights, titles, powers and privileges set forth herein
as fully and only to the extent as though they were set forth in each such
assignment.  In the event of any conflict between the terms of this Conveyance
and such other assignments, the terms of this Conveyance shall govern and
control.

 

Section 4.7. Governing Law: This Conveyance and the rights of the parties
hereunder shall be governed by, and construed in accordance with, the laws of
the State of Texas without regard to principles of conflicts of laws otherwise
applicable to such determinations.

 

Section 4.8. Counterparts:  This Conveyance may be executed in any number of
counterparts, and by different parties in separate counterparts, and each
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts shall constitute but one instrument.

 

EXECUTED on the date first written above.

 

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Signature Page to Conveyance between

WGR Asset Holding Company LLC

and

Warren Energy Services, LLC

 

Grantor:

Grantee:

 

 

WGR ASSET HOLDING COMPANY LLC,

WARREN ENERGY SERVICES, LLC,

a Delaware limited liability company

a Delaware limited liability company

 

 

 

By and through its Sole Manager:

 

 

 

WARREN E&P, INC.,

 

a New Mexico corporation

 

 

By:

/s/ A. Scott Moore

 

By:

/s/ Ellis G. Vickers

 

A. Scott Moore,

 

 

ELLIS G. VICKERS, Senior Vice President

 

Vice President Marketing

 

 

 

 

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STATE OF COLORADO

§

 

§

COUNTY OF DENVER

§

 

The foregoing instrument was acknowledged before me on the 9th day of October,
2012 by A. Scott Moore, the VP, Marketing of WGR Asset Holding Company LLC, a
Delaware limited liability company, on behalf of said limited liability company.

 

Witness my hand and official seal.

 

 

(SEAL)

 

 

/s/ Lorri L. Simpson

 

Notary Public in and for
the State of                             

 

 

 

Lorri L. Simpson

 

(Printed Name of Notary)

 

 

 

My commission expires: 4/27/2013

 

 

STATE OF COLORADO

§

 

§

COUNTY OF DENVER

§

 

The foregoing instrument was acknowledged before me on the 9th day of October,
2012 by Ellis G. Vickers, the Senior Vice President of Warren E&P, Inc., a New
Mexico corporation, the Sole Manager of Warren Energy Services, LLC, a Delaware
limited liability company, on behalf of said limited liability company.

 

Witness my hand and official seal.

 

 

(SEAL)

 

 

/s/ Vincent Bernal

 

Notary Public in and for
the State of                                   

 

 

 

Vincent Bernal

 

(Printed Name of Notary)

 

 

 

My commission expires: 11/04/15

 

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