Exhibit 10.1

 

June 7, 2017

 

Sent Via Email

David Bissmeyer, COO

Providence Energy Operators, LLC

Providence Energy Partners III, LP

16400 North Dallas Parkway, Suite 400

Dallas, TX 75248

 

Re:                             Credit Facility Amendment and
Expansion/Extension of AMI

 

Dear David:

 

Due to time constraints in preparing the formal paperwork memorializing an
extension of PetroShare Corp.’s (“PetroShare”) Revolving Line of Credit Facility
Agreement and the related Promissory Note with Providence Energy Partners III,
LP (“PEP III”), both dated October 13, 2016 and as amended on March 30, 2017
(the “PEP III Facility”), and the extension and expansion of the Area of Mutual
Interest (the “AMI”) between PetroShare and Providence Energy Operators, LLC
(“PEO”), this letter sets forth the basic terms and conditions to be included in
final documents related thereto.

 

The parties agree to amend the terms and conditions of the PEP III Facility as
follows:

 

1.                                      PEP III and PetroShare agree that the
PEP III Facility maturity date of June 13, 2017, as amended, will be immediately
and without further action by either party extended to July 18, 2017 to allow
time for the preparation of formal documents (the “Final Document Date”); prior
to the Final Document Date, the parties will work in good faith to prepare and
execute formal documentation implementing the provisions of this letter
agreement.

 

2.                                      Subject to the terms below and execution
of the formal documentation, PEP III and PetroShare agree to extend the due date
for the remaining principal balance and accrued interest to December 27, 2017
(“PEP III Extension Period”).

 

3.                                      Subject to execution of the formal
documentation, PEO and PetroShare agree to amend and expend the AMI to include
the following (the “PEO AMI Expansion Area”):

 

a.              All of T1S R67W, Adams Co. CO, plus a one mile boundary or halo
around the perimeter of the township (the “Original PEO AMI”);

 

b.              All of T1S R66W, T2S R66W and T1S R65W, Adams Co, and Sections
19 through 36, T1N R65W, Weld Co — South Brighton Area; and

 

c.               All of T7N R63W, Weld Co. — Northern Wattenberg Area — Morning
Gun, plus a one mile boundary or halo around the perimeter of the township.

 

4.                                      During the term of the PEP III Extension
Period, and with the approval of PEO, PEP III and PEO shall have an option to
participate in any new acquisitions in the AMI Expansion Area

 

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PEO and PEP III Credit Facility Amendment & AMI Expansion

 

on the basis of 45% PEO, 45% PetroShare, and 10% PEP III, subject to the
following qualifications:

 

a.              The new PEP III participation option would only apply to oil and
gas lease acquisitions that are offered in batch submissions equal to or greater
than 40 net acres (i.e., a minimum of 4 net acres to PEP III), not including
pending submissions as of the date of this letter, including but not limited to
those in Section 28 T1S R67W, Adams Co, CO;

 

b.              As to PEP III, the acquisition of mineral only interests will be
exempt from the agreement; and

 

c.               The 45/45/10 option would terminate the earlier of (i) when the
PEP III Facility is paid off in full, or (ii) December 27, 2017, following which
any option in favor of PEP III would terminate, but the option in favor of PEO
would continue and only as to the PEO Expansion Area.

 

5.                                      As partial consideration for the PEP III
Extension Period, the interest rate on the PEP III Credit Facility will be
increased to 10% per annum on a “go forward” basis commencing on the date of
this letter.

 

6.                                      Notwithstanding anything to the contrary
governing the Original PEO AMI, the PEO AMI Expansion Area to acquire a 50%
interest shall be extended to expire on June 1, 2019.

 

7.                                      In the event the PEP III Facility is
paid in full on or prior to the July 18, 2017 Final Document Date, then the
amendment to the PEO AMI Expansion Area will be modified to include the
following:

 

a.              All of the Original PEO AMI;

 

b.              Any new acreage acquisitions within any actual or proposed
drilling spacing unit not to exceed 1280 acres more or less (a “DSU”), which
includes, or is in an adjacent section that includes, acreage currently owned as
of the date of the letter by PEO and PetroShare in T1S R66W, T2S R66W and T1S
R65W, Adams Co and Sections 19 through 36, T1N R65W, Weld Co — South Brighton
Area;

 

c.               Any new acreage acquisitions within an actual or proposed DSU
not to exceed 1280 acres more or less, which includes, or is in an adjacent
section that includes, acreage currently owned by PEO and PetroShare in T7N
R63W, Weld Co. — Northern Wattenberg Area — Morning Gun;

 

d.              The expiration date of May 13, 2018 governing the Original PEO
AMI shall remain unchanged; and

 

e.               PEO shall have the right to acquire a 50% pro rata interest in
any acreage included in proposed DSU’s that included current acreage owned 50%
pro rata by PEO.

 

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PEO and PEP III Credit Facility Amendment & AMI Expansion

 

Please indicate your agreement to the above signing and sending back a copy of
this Letter by email.

 

Sincerely,

 

 

 

/s/ Paul D. Maniscalco

 

Paul D. Maniscalco

 

Chief Financial Officer

 

 

 

Agreed to and accepted by:

 

PROVIDENCE ENERGY OPERATORS, LLC

 

 

 

 

 

By:

/s/ David Bissmeyer

 

Title:

Chief Operating Officer

 

Date:

June 8, 2017

 

 

 

 

 

PROVIDENCE ENERGY PARTNER III, LP

 

 

 

 

 

By:

/s/ David Bissmeyer

 

Title:

Chief Operating Officer

 

Date:

June 8, 2017

 

 

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