EXHIBIT 10.1
 
FARMOUT AGREEMENT
 
Compeer Area, Albet·ta
 
THIS AGREEMENT dated the 2nd  day of February, 2012.
 
BETWEEN:
 
HARVEST OPERATIONS CORP., a body corporate, having an office in the City of
Calgary, in the Province of Alberta,
(hereinafter referred to as "Harvest")
 
-and-
 
STRONGBOW   RESOURCES  INC.,
 a  body  corporate,   having  an  office  m  the  City  of  Houston, in the
State of Texas,
(hereinafter  referred to as "Strongbow")
 
WHEREAS  Harvest has agreed  to farmout to Strongbow  in the Farmout Lands as
set forth and described  in
 
Schedule "A" hereto;

NOW  THEREFORE,   in
consideration  of  the  premises,  covenants  and  agreements  of  the parties,
the parties hereby covenant and agree as follows:
 
1. 
Definitions

 
Each capitalized term used in this Agreement, including recitals, will have the
meaning given to it in the Farmout & Royalty Procedure and in addition:
 
(a)
"Contract  Depth"  shall  mean  a  mmnnum  total  vertical  depth  of  900 
meters  into  the  BakkenFormation or a total measured depth of
1950m  subsurface, whichever shall first occur; (b)"Effective Date" means
February 2, 20 12;

 
(c)
"Farmee" means Strongbow Resources Inc.;
 

 
(d)
"Farmor" means Harvest Operation Corp.;

 
(e)
"Farmout  Lands" means the lands set forth and described in Schedule "A" hereto;

 
(f)
"Farmout   &  Royalty   Procedure"   means   the   1997  CAPL   Farmout   & 
Royalty   Procedure incorporated  by reference  herein, subject to the elections
and amendments  set forth on Schedule ''8" attached hereto;

 
(g)
"Mutual  Interest Lands" means the area outlined in red excluding Twp 033 Rge
03W4M: Sec 14- P&NG to base Mannville as set forth in Schedule "C" attached
hereto;

 
(h)
"Test Well" means the proposed well location at I 02/05-29-033-02W4/00,  or as
otherwise may be agreed to in writing between the parties;

 
(i) 
"Title  Documents"  means the documents and any renewals or extensions thereof
or further Title Documents  issued  pursuant  thereto  insofar as they relate 
to the Farmout  Lands as set forth  in Schedule "A" attached hereto.

 
 
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2. 
Schedules

 
The following Schedules are attached hereto and are incorporated into this
Agreement:
 
Schedule  "A"  which  sets  forth  the  Farmout  Lands,  the  Title  Documents,  the  Pre-Farmout
Working Interest and the Encumbrances;
 
Schedule "B"  which sets forth the rates, elections and modifications to the
Farmout & Royalty Procedure;
 
Schedule "C" which sets forth the Mutual Interest Lands;
 
Schedule "D"  which sets forth  Fannor's well data requirement  sheet as
referred to in Article 9.00 of the Farmout & Royalty Procedure.
 
3. 
Qualified Operator

 
On or before March 30'", 2012 Farmee must obtain approval to hold EUB Licences
("Operator Status") from the Alberta Energy and Utilities Board. Farmee shall
provide the Farmor with documentation  supporting  the operator  status  prior
to the spud  date  of the Test  Well.  If the
Fannee   has  not  obtained   Operator   Status,  this  Agreement   will  terminate  and   the  non­
performance penalty as set out in Clause 6 will be in effect.
 
4. 
Test Well

 
(a)
On or before June  1, 2012 Farmee shall, subject to rig availability,  surface
accessibility  and regulatory approval and in accordance with Article 3.00 of
the Farmout & Royalty Procedure, spud the Test  Well at  I
02/05-29-033-02W4/00  on the Farmout Lands and continuously  drill down  to
Contract  Depth. Farmee shall  while drilling  to Contract    Depth cut two
full  bore cores one each from the Viking and Bakken formations.  Farmee shall
also run a DST in the Viking formation.  In the event that hydrocarbons are
noted in the core and geological cuttings in the Bakken, a DST will then be run
in the Bakken. A decision  will be mutually  reached between the parties whether
or not to continue with drilling a lateral in the Bakken section. If the Bakken
formation  proves non-productive  or uneconomic,  Farmee shall cut a window to
enable  for the drilling  of a lateral  into the Viking formation.  In
either  event,  the proposed lateral  would  be drilled  to
a  minimum  of  1,000  meters  to a  maximum  of  1,200  meters  of
horizontal  length.  In either event,  the total  measured depth  of the
Test  Well shall  be  1,950
meters  for  the  Test  Well.  Fannee  shall  complete  the Test  Well  in
the  Bakken  or  Viking formation  within the Farmout Lands prospective of
containing  petroleum and natural gas and equip or abandon same.

 
(b)
Farmor shall  be provided with all well information  pertaining to the
Test  Well on a current and confidential  basis, as outlined  in Clause 9.00 of
the Farmout & Royalty Procedure.  All risks and expenses associated with the
Test Well shall be borne solely by Fannee  100%, and the Farmor shall be
entirely free of any such costs, risk and expense.

 
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5.
Interest Earned

 
Subject  to  A1ticle 3.00  of  the  Farmout  &
 Royalty  Procedure,  upon  Farmee  having  drilled, completed, equipped  or
abandoned  the Test Well on the Farmout Lands, Fannee  shall earn an
undivided  one  hundred  percent  (100%)   of  Farmer's   Pre-Farmout  Working  Interest  in  the
Farmout  Lands  subject  to  a  non-conve1tible  Overriding  Royalty  payable  to  the  Farmor  as
provided for in Article 5.00 of the Farmout & Royalty Procedure
 
6. 
Non-Performance Penalty

(a)
In the event Farmee fails to comply with its Test Well commitment as set forth
in this Agreement, then the Farmee's  right to earn any further interest shall
terminate  upon written notice of default served  by Farmor  to
Farmee.  Fannee  shall  pay to Farmer  the sum of Three Hundred and  Fifty
Thousand  Dollars  ($350,000)  (CAD)  as  liquidated  damages  within  ten  (10)  business  days  of
receipt  of the  written  notice.  It is agreed  that the
Three  Hundred  and  Fifty Thousand  Dollars ($350,000) (CAD) is a genuine
pre-estimate of the damages and Farmor does not need to establish that any
actual damage occurred upon failure of Farmee to complete the Test Well
commitment, it being the intention of the parties to establish  the damage that
can be foreseen from the failure of Farmee to complete its Test Well commitment
at the time of making this Agreement.

 
(b)
Payment  by Fannee  of the genuine  pre-estimate  of damages  in no way
constitutes  earning  by Farmee under this Agreement  nor does it deprive Farmer
of any other rights at law or in equity, including damages and indemnity.

 
7.
Mutual Interest Lands

(a)
Article  8.00  of the  Farmout & Royalty  Procedure  shall apply  from the
Effective  Date and shall remain in full force for one (1) year from the
drilling rig release date of the Test Well.

 
(b)
Any Mutual  Interest Lands acquired  pursuant to this Article 8.00 of the
Farmout& Royalty Procedure by the Farmee shall be subject to a 5% Overriding
Royalty payable to the Farm or.

 
(c)
In the event the Farmee does not meet their requirements  pursuant to Clause 3
and 4 of thisAgreement, This Agreement and Mutual Interest Lands will be
terminated.

 
8.
Incorporation of the Farmout & Royalty Pr·ocedure

 
'l'o the extent that they do not conflict with the provisions of this Agreement,
the provisions of the Farmout & Royalty Procedure are incorporated herein.
 
9.
Indemnification

 
Farmee  shall  indemnify  and  save  Fanner  harmless  from  all  actions,  lawsuits  and  adverse
claims created  or caused as a result of any operations  conducted  by Farmee
pursuant to this Agreement on the Farmout Lands.
 
 
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10.
Confidentiality  and Public Announcements

 
Except in connection with required regulatory disclosures, the parties shall
keep confidential all information obtained  from the other party in
connection  with the Farmout Lands and shall not release any information
concerning this Agreement and the operation and transactions herein provided
for, without the prior written consent of the other party, which consent shall
not be unreasonably withheld. Farmee shall not issue any press release or other
public announcements concerning this Agreement and the operations and
transactions herein provided for, without the prior written consent of the
Farmor, which consent shall not be unreasonably withheld. In particular, any
press release or other public announcement issued by Farmee shall not disclose
or infer the identityof Fannor.
 
11.
Permitted Assignments

 
Farmee shall  not, during  the period that it has a right to earn
an  interest  hereunder,  encumber, grant  or  assign  any  legal  or
equitable  interest  in this  Agreement,  the  Title  Documents  or the Farmout
Lands without the prior written consent of Fannor.   If after
obtaining  Farmor's consent,
Farmce   makes  any  such  assignment,   then  Farmee  shall  continue   to  be  bound  by  and  be
responsible for carrying out the terms and conditions of this Agreement and
Farmor shall only be required to look to Farmee for performance hereunder.
 
Upon Farmee having earned its interest hereunder, any further assignment shall
be subject to the provisions of the Assignment  Procedure.
 
12.
Address for Service

 
The  address  for service  of each  party hereto for notices  issued  pursuant
to this Agreement,   and the Farmout & Royalty Procedure is as follows:
 

  Farmor:
 
Harvest Operations Corp.
2100, 330-5'" Avenue SW Calgary, Alberta
T2P OL4
Attention: Land Manager
Farmee:
 
 
Houston Office: Strongbow Resources Inc.
600, 333 North Sam Houston Parkway East 
Houston, Texas 
77060 
Attention: Bob Wesolek 

 
     
Calgary Office:
Strongbow Resources Inc.
C/0 APEX Energy Consultants Inc.
700, 815 - 811 Avenue SW Calgary, AB T2P 3P2
Attention: Michael Kamis
 

 
 
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13.
Miscellaneous

 

(a)
Each of the pa1iies represents and warrants that it now has or is entitled to
have full right, full power and absolute authority to enter into this Agreement.
 
(b)
If any term or condition of this Agreement conflicts with any Schedule attached
hereto, the provisions of the body of this Agreement shall prevail. In the event
of any conflict or inconsistency between the provisions of this Agreement and
those of the Title Documents, the provisions of the Title Documents shall
prevail.
 
(c)
This Agreement  shall  for all  purposes  be
construed  and  interpreted  according  to the laws of Alberta.  The courts
having jurisdiction  with respect to matters relating to this Agreement shall be
the courts of Alberta.
 
(d)
The parties shall  from time to time and at all times do all such further  acts
and execute  and deliver all such further deeds and documents as shall be
reasonably required in order to perform fully and carry out the terms of this
Agreement.
 
(e)
This Agreement supersedes all other agreements, documents, letters and understandings,
whether written or oral, among the parties in respect of the Farmout Lands.
 
(f)
The two year period for seeking a remedial order under Section 3( I )(a) of the
Limitations Act, R.S.A. 2000 c.L-12, as amended,  for any claim (as defined  in
the Act) arising  in connection with this Agreement is extended to four years.
 
(g)
This  Agreement may be executed in
counterpart  and all of those counterparts when taken together shall have the
same effect as if all Parties had executed one document.
 
(h) Time shall be of the essence in this Agreement.

 
 
 
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IN WITNESS WHEREOF the parties have executed this Agreement.
 

HARVEST OPERATIONS CORP.   STRONGBOW RESOURCES INC.                    
[stbr_ex10101.jpg]   Per: /s/ Robert Martin             Name:  Robert Martin    
        Title:  Chief Exceutive Officer  

 
 
This is the execution page to a Farmout Agreement dated the 2nd
day of February, 201 2 between Harvest
 
Operations Corp. and Strongbow Resources Inc.
 
 
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SCHEDULE "A"
 
This Schedule "A" attached to and made pa1i of a Farmout Agreement dated the 2nd
day of February, 2012
between Harvest Operations Corp. and Strongbow Resources Inc. 

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Title Documents
Farmout Lands
Pre-Farmout
VVorking Interest
Encumbrances
Alberta P&NG Licence
5310090903
Twp 033 Rge 02 W4M: Sec 19, 21, 28,29 & 32
ALL P&NG
100%
None
       
Expiry:
September 29, 2012
Twp 033 Rge 03 W4M: Sec 25 & 36
ALL P&NG
             
Twp 034 Rge 03 W4M: Sec 1
ALL P&NG
   

 
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SCHEDULE "B"
 
This Schedule  "B" attached  to and made part of a Farmout Agreement dated  the
2nd day of February,
2012 between  Harvest  Operations Corp. and Strongbow Resources  Inc. 

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Rates, Elections and Modifications to the 1997 FARMOUT & ROYALTY  PROCEDURE:
 
 

1. Clause 1.01 (f)- Effective Date: February 2, 2012         2. Clause 1.01 (t)-
Payout (if Article 6.00 applies): N/A         3.
Clause 1.02- Incorporation Of Provisions From 1990 CAPL Operating Procedure:
        Clause 311 -Insurance: Alternate A       4. Article 4.00- Option Wells:
will _____ /will not_X_apply.       5. Article 5.00- Overriding Royalty: will_X_
I will not _____ apply.      
6.
Subclause 5.01A, if applicable- Quantification of Overriding Royalty: (a)
            (a)
Crude Oil
Alternate 2
If Alternate I is selected, ______ %
If Alternate 2 is selected, 1/23.8365, min 5% max 15 %
            (b)
Other
Alternate I
If Alternate I is selected, 15%
If Alternate 2 is selected, _____  % in (i) and _____ % in (ii).
       
7.
Clause 5.04B, if applicable- Permitted Deductions:
Alternate I and 2         If Alternate 2 is selected: 40%         8. Article
6.00- Conversion of Overriding Royalty: will ______ / will not _X_ apply.      
 
If Article 6.00 applies, conversion to ______ % of Working Interest in Clause
6.04 A.
      9. Article 8.00 (Area of Mutual Interest): will_X_/will not _____ apply.  
    10. Clause 11.02- Reimbursement of Land Maintenance Costs: will_ /will not
_X_ apply.       If applies, reimbursement of$ __________________  

 
 
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SCHEDULE "C"
 
This Schedule "C" attached to and made patt of a Farm out Agreement dated the 2nd day of February, 2012
between Harvest Operati ons Corp. and Strongbow Resources Inc. 

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MUTUAL INTEREST LANDS
 
As Outlined in Red

[stbr_ex10102.jpg]
 
 
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SCHEDULE "D"
 
This Sched ule "D" attached to
and made pa11of a Farmout Agreement dated the 2 day of February, 2012
between Harvest Operations Corp. and Strongbow Resources Inc.
 

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WELL DATA REQUIREMENT SHEET 

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TO: 
Drilling and Completions administrator

 
WELL: 
ALL NON-OPERATED LOCATIONS (including LOR/ORR, Farmouts, etc)

 

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INFORMATION REQUIRED PRIOR TO DRILLING
 
NUMBER OF COPIES
          Construction Reports, including costs     1  
Survey Plan
    1  
Application for Well License
    1  
Approved Well License, and applicable Amendments
    1  
Drilling Program and Geological  Prognosis
    1  
AFE/Cost Estimate
    1            
INFORMATION REQUIRED DURING AND AFTER DRILLING
                 
Daily Drilling Reports
    1  
Regulatory Reports
    1  
Logs and Surveys- including LAS for logs
    1  
Cores Analysis (if applicable)
    1  
Drill Stem Test Reports and Charts (if applicable)
    1  
Core Analysis (if applicable)
    1  
Oil, Water and Gas Analysis (if applicable)
    1  
Geological Report (if applicable)
    1  
New Oil Well Report (if applicable)
    1  
Final Completion or Abandonment Report
    1  
Daily Completion Reports
    1  
Completion Logs
    1  
Initial Production/Fiow/AOF- or any other Production Reports
    1  
All subsequent Workover & Service Reports
    1  

 

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Please send all of the above mentioned information to the attention of:
 
Non-Op Administrator        non.op@harvestenergy.ca
 
Phone:                 (403) 265-1178
 
Fax:                      (403) 265-3490
 
Mailing Address:
 
Harvest Operations Corp.
2100, 330 - 51 Avenue SW
Calgary, ABT2P OL4
 
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