Exhibit 10.1
PURCHASE AND SALE AGREEMENT
WEST GREYBULL PROJECT
BIG HORN COUNTY, WYOMING
This Purchase and Sale Agreement (“Agreement”), dated effective April 25, 2007,
is between Mélange International, LLC (“Mélange”), 475 Seventeenth Street,
Suite 540, Denver, Colorado 80202, Mike A. Tinker, individually and Desert Moon
Gas Company, a Colorado corporation (“Tinker”), P.O. Box 440733 Aurora, CO,
80044, Hannon & Associates, Inc. 820 16th St, Suite 630 Denver, CO 80202.
(“Hannon”), and Teton Energy Corporation (“TETON”), 410 17th St, Suite 1850
Denver, CO 80202. Mélange, Tinker and Hannon are collectively referred to herein
as “The Assignors”. Mélange, Tinker, Hannon and TETON are collectively referred
to herein as the “Parties.”
RECITALS
WHEREAS, The Assignors own record title and/or beneficial interests in and to
the leasehold estates created by the oil and gas leases (the “Current
Leasehold”) described in Exhibit 1, attached hereto; and
WHEREAS, The Assignors will assign to TETON 100% of their right, title and
interest in the Current Leasehold, subject to overriding royalty interests
herein reserved;
NOW, THEREFORE, in consideration of Four Hundred Eighty Eight Thousand Three
Hundred Twenty Five Dollars ($488,325.00), the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
Article 1.
DEFINITIONS
Whenever used in this Agreement, the following terms will have the below defined
meaning:

  1.1   Affiliate An affiliate of, or person affiliated with, a specified
person, is a person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified.     1.2   Agreement means this Agreement, inclusive of all
exhibits and attachments, as the same may be modified or amended from time to
time. The Agreement shall replace and supersede all previous agreements and
representations in their entirety.     1.3   Current Leasehold means the oil and
gas leases and other rights relating to exploration for and production of oil
and gas that are owned by the Assignors within the West Greybull Project, which
leases are more fully described in Exhibit 1 attached hereto.     1.4  
Additional Leasehold means the oil and gas leases and rights acquired by the
Parties in the specific AMI pursuant to AMI provisions herein.     1.5  
Leasehold means the Current Leasehold and the Additional Leasehold.     1.6  
Effective Date means April 25, 2007.     1.7   Existing Burdens means all
landowner royalties, overriding royalties and other burdens existing of record
on the effective date hereof and burdening the Current Leasehold, or existing
prior to, or

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created as a condition to the Parties’ acquisition of Additional Leasehold.
Existing Burdens also include existing overrides of the Assignors on the Current
Leasehold whether of record or not of record.

  1.8   Kirkwood Leasehold means that leasehold described on Exhibit 4 acquired
through a separate agreement by TETON from Kirkwood Oil & Gas LLC located within
the West Greybull Project.     1.9   Operator means TETON.     1.10   West
Greybull Project means those lands lying within the area outlined in red on the
Map attached hereto as Exhibit 2.

Article 2.
ORGANIZATION

  2.1   Business Purpose. The purpose for which the Parties enter into this
Agreement is to acquire, hold, maintain, explore, develop, operate, produce,
enjoy the benefits of, sell, or otherwise dispose of any Leasehold and to market
or otherwise deal with the production therefrom. Leasehold may include fee,
federal, state and tribal acreage or acreage held by any other entity.     2.2  
Term. This Agreement will commence on the Effective Date, and will continue
until this Agreement is terminated in accordance with its provisions.

Article 3.
WEST GREYBULL PROJECT

  3.1   Current Leasehold. The Assignors represent that they own oil and gas
leases totaling approximately 6,511 net acres that comprise the West Greybull
Project. A complete schedule of the oil and gas leases involved is included as
Exhibit 1 attached hereto.     3.2   Title Examination. Within five (5) days
following the execution of this Agreement, the Assignors will make available to
TETON, at TETON’s office, all title information pertaining to the Current
Leasehold. However, the Assignors acknowledges that all lease bonuses, rentals,
royalties, including minimum advance royalties, shut-in payments, and any other
payments which are required to perpetuate the Current Leasehold have been paid,
or satisfied to date, and all oil and gas leases covering the Current Leasehold
are in full force and effect. TETON shall have then have twenty one (21) days
from receipt of such title information to notify the Assignors of any material
title defects, which TETON may have identified as pertaining to the Current
Leasehold. TETON’s written notice shall identify any such defective Leases, the
nature of the defect and the number of net acres affected thereby. Any of the
Current Leasehold not identified in said written notice by TETON within said
thirty (30) days shall be deemed as acceptable title by Teton and paid for by
Teton at closing. A material title defect shall include, but not be limited to
any lease with a proportionate net revenue interest less than 81% (after
creation of the Assignors overriding royalty provided for in Section 3.3),
except in the case of Wyoming State Lease No. 06-00492, in which case a material
title defect exists if the proportionate net revenue interest of the Assignors
in that lease is less than 80.5% (after creation of the Assignors overriding
royalty provided for in Section 3.3). If an existing environmental hazard is
present that affects more than 50% of the surface overlying the existing
leasehold, Teton may elect to terminate this Agreement with no further
obligation to the Assignors. TETON shall have the right, but not the obligation,
to request that any of the Current Leasehold that it deems subject to a title
defect be omitted from this Agreement, and the assignment to TETON by the
Assignors will not include said leases. In

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addition, in the event that more than 20% of Current Leasehold (measured by net
acres) suffers from a material title defect, TETON may elect to terminate this
Agreement with no further obligation to the Assignors. In the event any leases
are omitted from this Agreement the consideration provided for in Article 6.1
shall be reduced by an amount equal to $75 per net acre multiplied by the number
of net acres affected by such title defects. If the Assignors cure title defects
to TETON’s satisfaction at any time within sixty (60) days after the date of
closing then title to the omitted leases will be deemed to be acceptable and the
Assignors will assign said leasehold to TETON pursuant to all terms and
conditions of this Agreement and TETON shall remit to the Assignors payment at
the rate stated herein.

  3.3   Net Revenue Interest. All Current Leasehold shall be subject to the
retention of overriding royalty interests by the Assignors or their designees.
Said overriding royalty interests shall equal the difference between the
existing burdens (whether or not of record as of the effective date hereof) and
nineteen percent (19%) with the exception of State of Wyoming Lease No.06-00492
recited on Exhibit 1, which said overriding royalty interests shall equal the
difference between the existing burdens and nineteen and one-half percent
(19.5%).     3.4   Data. Teton shall furnish to the Assignors, to the extent
allowed by law or license and availability, within ten (10) business days which
such data becomes available to Teton, all data specified in the attached
Geological Requirements Exhibit 5 on all wells drilled drilled within the AMI.
The Assignors will keep all such data and information strictly confidential, and
such data shall not be disclosed to any third party until made public by TETON
or appropriate state or federal regulatory agencies. Also to the extent allowed
by law or license, the Assignor agrees to provide TETON, within five days
following execution of this Agreement, copies of all geological and geophysical
data in their possession related to the Current Leasehold and West Greybull
Project including, without limitation, the Petra/Geographix data set or other
electronic data set.     3.5   Commitment Test Well. Prior to April 25, 2010,
TETON commits to commence or cause to be commenced the drilling of a well within
the West Greybull Project to a depth sufficient to adequately test the Greybull
Sandstone found at an approximate depth of 12,380’ in the Gulf Otto Fed Well
located in the SE1/4 of Sec. 26, T.52N.,R95W, Big Horn County, Wyoming, (the
“Commitment Test Well”). TETON shall cause the Commitment Test Well to be
drilled on a drilling/spacing unit comprising at least fifty percent (50%)
Current Leasehold or, Additional Leasehold. If no drilling/spacing unit has been
established by the Wyoming Oil and Gas Conservation Commission prior to the spud
date of the Commitment Test Well, the drilling/spacing unit for such well for
purposes of this section shall be the 160 acre quarter section on which the well
is to be drilled. If the drilling/spacing unit for TETON’s desired location for
the Commitment Test Well includes at least 50% Current Leasehold or Additional
Leasehold but access to such Current Leasehold or Additional Leasehold cannot be
obtained due to lease stipulations, unavailable access or other reason beyond
TETON’s reasonable control, then TETON shall be permitted to locate the
Commitment Test Well at an accessible location, which may be on a
drilling/spacing unit not including at least 50% Current Leasehold or Additional
Leasehold, but in that event the Assignors Overriding Royalty shall be not less
than two-percent (2.0%) of 8/8ths. If TETON fails to commence drilling the
Commitment Test Well on or before April 25, 2010 as provided for under this
Article 3.5, for any reason other than those covered by Article 9.5 herein,
TETON shall immediately reassign to the Assignors an undivided 100% of its
interests acquired hereunder free and clear of any liens, judgments or burdens
other than the overriding royalty interests provided for herein.     3.6   West
Greybull Project Wells — General. All operations by TETON with respect to West
Greybull Project Wells will be conducted in a good and workmanlike manner in
accordance with good oil field practice. TETON agrees to indemnify and hold the
Assignors harmless against all claims and causes of action associated with
TETON’s activities and operations conducted in association with this Agreement
but TETON shall have no liability to the Assignors except in the case of gross
negligence or willful misconduct by either Party.

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Article 4.
LEASE MANAGEMENT

  4.1   Rentals, Minimum Royalties and Production Accounting. Rental payments
and minimum royalty payments required under the terms of any of the Current
Leashold, which are due after the closing date, will be paid on behalf of the
Parties by TETON, except for any Current Leasehold which may be excluded
pursuant to the terms of Section 3.2. Rental payments and minimum royalty
payments required under Additional Leasehold within the West Greybull Project
AMI shall be paid by the party owning such leasehold. Should any lease be lost
as a result of the inadvertent failure to make proper payment of any rental,
option, shut-in well payment or minimum royalty, such loss will be borne by the
Parties jointly and there will be no recourse against or liability on the part
of the Party who failed to make such payment. Any failure to pay delay rentals
after the closing date on any federal lease that is a part of the Current
Leasehold (unless excluded pursuant to Section 3.2) or Additional Leasehold that
results in a reinstatement of said lease with a higher royalty burden shall not
serve to reduce the overriding royalties granted to the Assignors as set forth
in Paragraphs 3.3 and 5.1 herein.     4.2   Lease Records. On behalf of the
Parties, TETON, as Operator, will maintain appropriate land and lease records
relating to the West Greybull Project.     4.3   Joint Loss. Except as otherwise
expressly provided in this Article 4, any loss or liability incurred by the
Parties from any error or omission by a Party in performance of its obligations
under this Article 4 will be borne by the Parties jointly.

Article 5.
AREA OF MUTUAL INTEREST

  5.1   AMI. In consideration that is derived through the mutual benefit of the
parties, the Parties agree that all lands set forth below will constitute an
Area of Mutual Interest (“AMI”) between the Parties:

Township 52 North, Range 95West 6th P.M.
Sections 1 thru 36 (entire Township)
 
Township 51 North, Range 95 West 6th P.M.
Sections 1 thru 36 (entire Township)
 
Big Horn County, Wyoming
Township 52 North Range 94 West
Sections 5, 6, 7, 8, 17, 18, 19, 20, 29, 30, 31 and 32
 
Township 51 North Range 94 West
Sections 5, 6 and 7
And being the same lands located within the West Greybull Project Area as
defined herein.
 
The AMI between the Parties will continue in effect for the term commencing with
the Effective Date hereof and ending April 25, 2010 unless sooner terminated by
the express written consent of both Parties. In the event that any Party
acquires any oil and gas leasehold, oil and gas leases, mineral rights, royalty
interests or other rights of entitlement to oil and gas interests covering any
lands within the AMI during the term of the AMI, then such acquiring Party shall
provide written notice thereof to each other Party within thirty (30) days of
such acquisition, advising of the costs and terms of the acquisition. If the
Assignors or any one of them are the acquiring party, TETON shall have thirty
(30) days from its receipt of such notice to furnish the acquiring Party with
reimbursement for the acquisition costs of such lease(s) and the acquiring Party
shall promptly thereafter assign to TETON all right, title and interest in such
lease(s), reserving to itself an overriding royalty interest of two and

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one-half percent ( 2.5%) in the proportions Mélange l/3rd, Tinker l/3rd and
Hannon l/3rd . If TETON is the acquiring party, then it shall assign to the
Assignors, or to its designees, an overriding royalty interest in such lease(s)
in an amount equal to two and one-half percent (2.5%) to the Assignorsl in the
same proportions as stated above. In the event the acquired leasehold existing
burdens excluding the the Assignors two and one half percent (2.5%) overriding
royalty interest totals nineteen percent (19%), then the the Assignors two and
one half percent (2.5%) overriding royalty interest shall be reduced to an
amount, so that the net revenue interest in the lease(s) is eighty one percent
(81%). In any event however, the the Assignors overriding royalty amount shall
not be less than one-percent (1%). If the interests being acquired are other
than oil and gas leasehold or rights to earn oil and gas leasehold, and are
non-cost bearing interests, the Parties’ interests shall be in the proportions
fifty percent (50%) to TETON, and fifty percent (50%) to the Assignors.
Article 6.
ASSIGNMENTS AND CONSIDERATION

  6.1   Assignments and Consideration. Closing shall occur on May 18th, 2007. At
closing, TETON shall remit to the Assignors cash consideration equal to the
number of net acres of leasehold assigned multiplied by $75.00 for a total
consideration of $488,325.00, subject to adjustment for title defects as
provided in Section 3.2. The Assignors shall advise TETON in writing prior to
the date of closing the proportionate amount of such payment payable to Mélange,
Tinker, and Hannon, respectively.         The Assignors shall assign to TETON
one hundred percent (100%) of the Assignors’ interest, as to all depths, subject
to the retained/reserved overriding royalty interests provided for herein, in
the Current Leasehold. All assignments from the Assignors to TETON shall be on a
form of assignment attached hereto as Exhibit 3. In addition, the Assignors
shall deliver assignments of federal and state leases on the required forms.
Once all assignments have been fully executed by the Parties, TETON shall be
responsible for submitting all assignments to the proper agency for approval or
to the proper county for recording. All reservations of overriding royalty, as
stated above in Article 3.3, shall be expressly stated.     6.2   Reassignment
Obligation. If TETON receives an assignment under this Agreement or acquires a
lease subject to this Agreement and thereafter elects to surrender, let expire,
abandon or release said lease, TETON will notify the remaining Parties not less
than sixty (60) days in advance of such surrender, expiration, abandonment or
release. At the request of some or all of the remaining Parties, which request
must be made within thirty (30) days of receipt of such notice, TETON will then
immediately assign those rights to the requesting Parties and, upon receipt of
that assignment, the requesting Parties will pay (if applicable) TETON the
reasonable salvage value of any material or equipment received, less the
estimated costs of reclamation and surface restoration. Any wells affected by
such assignment and not taken over by some or all of the remaining Parties will
be plugged and abandoned, according to state and federal regulations, at the
owning Parties’ sole cost, risk and expense.     6.3   Special Warranty. The
Assignors agree to warrant the title to the Current Leasehold as to claims made
by through or under the Assignors, but not otherwise.

Article 7.
TERMINATION

  7.1   Termination. This Agreement will terminate upon the occurrence of any of
the following:

      7.1.a. the expiration of the term provided for in Article 2.2.

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      7.1.b. the mutual written agreement of all Parties to this Agreement.    
    7.1.c. In the event closing does not occur as provided in Article 6. herein.

Article 8.
MISCELLANEOUS

  8.1   Amendments. This Agreement may be amended only by written instrument
executed by all Parties.     8.2   Overriding Royalty Interests. The overriding
royalty interests provided for herein shall be treated as a lease burden
existing on the effective date of this Agreement and not as a subsequently
created interest. Said overriding royalties shall not merge with any working
interest assigned or retained herein.         The overriding royalties provided
for hereunder shall apply to any extension or renewal of the Leasehold, insofar
as such extension and renewal leases include lands covered by the Leasehold. For
the purposes of this provision a renewal of an oil and gas lease is the taking
by any party to this Agreement of any oil and/or gas lease within one year of
the expiration, termination, or release of the preceding lease and a top lease.
A renewal of a federal or state oil and gas lease is the taking by any party to
this Agreement of any oil and gas lease offered at the next federal or state
lease sale at which all or a part of the acreage covered by the preceding
federal or state lease subject to this Agreement is offered for lease, as long
as any party hereto has made a request to the BLM or State, within six
(6) months from the expiration or termination of the preceding federal or state
lease, to post such acreage for lease. The overriding royalties assigned
hereunder shall apply to any extension or renewal of the Leasehold and such
assignments of overriding royalties on renewals and extensions are to be
provided in recordable form to the Assignors, or to its designees, within
30 days of the acquiring party’s acquisition of the lease(s).         Further,
any overriding royalty reserved by or assigned to the Assignors pursuant to this
Agreement shall (i) be reduced proportionately to the leasehold working
interests and the mineral estates leased thereby, which are burdened by said
overriding royalty; (ii) be free of all drilling, development, production,
operating and overhead costs and expenses; (iii) bear and pay its proportionate
share of gross production taxes, pipeline taxes, ad valorem taxes and other
taxes assessed against the gross production attributable to said overriding
royalty interests; (iv) shall be computed upon the same basis as royalties
payable to the United States on production from the West Greybull Project are
calculated, in accordance with CFR code Chapter II, 206.150 thru 206.160
inclusive and payable to the Minerals Management Service.     8.3   Applicable
Law. This Agreement shall be interpreted under the laws of the State of Colorado
without giving effect to any choice of law or conflict of laws provision or
ruole that would constitute application of the laws of any jurisdiction other
than the State of Colorado. With respect to any claims asserted or court
proceedings initiated relating in whole or in part to this Agreement, the
Parties consent to venue and jurisdiction in the Colorado District Court for the
City and County of Denver (Second Judicial District) and in the Federal District
Court for the District of Colorado.     8.4   Counterpart. This Agreement may be
executed in counterpart and will be binding upon the Parties and their heirs,
successors, assigns, and legal representatives.     8.5   Force Majeure. If any
Party is rendered unable, wholly or in part, by force majeure to carry out its
obligations under this Agreement, other than the obligation to indemnify or make
money payments or furnish security, that Party shall give to all other Parties
prompt written notice of the force majeure with reasonably full particulars
concerning it; thereupon, the obligations of the Party giving the notice, so far
as they are affected by the force majeure, will be suspended during, but no
longer than, the continuance of the force majeure. The term “force majeure,” as
here employed,

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means an act of God, strike, lockout, or other industrial disturbance, act of
the public enemy, war, blockade, public riot, lightning, fire, storm, flood, or
other act of Nature, explosion, governmental action, governmental delay,
litigation, restraint, injunction, unavailability of equipment, drilling
permits, and any other cause, whether of the kind specifically enumerated above
or otherwise, which is not reasonably within the control of the Party claiming
suspension.
8.5a The affected Party must use all reasonable diligence to remove the force
majeure situation as quickly as practicable. The requirement that any force
majeure must be remedied with all reasonable dispatch does not require the
settlement of litigation or the settlement of strikes, lockouts, or other labor
difficulty by the Party involved, contrary to its wishes; how all such
difficulties are handled will be entirely within the discretion of the Party
concerned.

  8.6   Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective legal representatives,
successors, and assigns. No assignment by a Party shall in any way diminish or
otherwise adversely affect the rights, interest, or obligations of any other
Party. If any Party to this Agreement assigns or conveys all or a portion of its
interest in this Agreement, said assignment or conveyance shall be specifically
made subject to all of the terms and provisions of this Agreement. The Party
assigning or conveying an interest shall notify all other Parties in writing of
the conveyance and provide all other Parties with appropriate documents and
information concerning the successor in interest.     8.7   Event of Conflict.
In the event of any conflict or inconsistency between the provisions of this
Agreement and those of the Exhibits, the provisions of this Agreement shall
prevail. If any term or condition of this Agreement conflicts with a term or
condition of the Current or Additional Leasehold, then such term or condition of
the Current or Additional Leaseholds shall prevail and this Agreement will be
deemed to be amended accordingly.     8.8   Representations and Warranties.    
    8.8a. TETON Representation - TETON represents, warrants, and agrees to and
with the Assignors hereto that TETON has all requisite power and authority to
enter into and to perform its obligations under this Agreement subject to
TETON’s receipt of approval of this Agreement from its Board of Directors on or
before May 4, 2007, which approval shall be an absolute condition. TETON
represents that any prior agreements which it has entered into with a third
party covering the West Greybull Project Area, will not prevent the full
performance of this Agreement by TETON. TETON shall furnish to the Assignors
prior to the execution of this Agreement evidence that it has obtained a release
or amendment of its prior agreement with Patriot Exploration Co., Inc. which
might prevent performance of this Agreement by TETON.         8.8b. The
Assignors Representation - Each Assignor represents, warrants, and agrees that
it has all requisite power and authority to enter into and to perform its
obligations under this Agreement and that there are no conflicts or impediments
to any undertakings herein.     8.9   Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.    
8.10   Assignment. The parties shall have the right, at any time, to assign all
or a portion of its rights or any interest in the Leasehold to a third party; it
being understood that said third party shall be bound by the terms and
conditions set forth herein.     8.11   Kirkwood Contingency. TETON’s obligation
to close the transaction contemplated by this Agreement is contingent upon the
execution of a purchase and sale agreement with Kirkwood Oil & Gas, LLC covering
the Kirkwood Leasehold on substantially similar terms as contained in this
Agreement, excluding the AMI, AMI ORRI and data requirements.

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  8.12   Disclosure of Agreement. The Assignors, shall advise anyone inquiring
about the Current Leasehold that such leasehold is under contract and not
available for sale or discussion. The Assignors shall not, however, identify
TETON as the buyer or disclose any other information concerning the purchase and
sale until TETON has publicly disclosed such information or it becomes generally
known to the public through no actions undertaken by the Assignor in
contravention of the confidentiality provisions herein. Copies of all public
disclosures made by TETON prior to closing will promptly be furnished to Mike
Tinker by electronic mail. The Assignors acknowledge that TETON is subject to
reporting requirements of the Securities Exchange Act of 1934, that TETON’s
common stock is traded publicly, and that federal and state securities laws
impose significant restrictions concerning the use or disclosure of non-public
information in general and in buying or selling, or discussing with others the
possibility of buying or selling, TETON securities by person who have access to
information concerning TETON that is not generally available to members of the
public.     8.13   Entire Agreement. This Agreement embodies the entire
agreement between the Parties with respect to the subject matter of this
Agreement, superseding all prior oral or written agreements, understandings,
solicitations of interest or offers related to the subject matter of this
Agreement, and may be amended, supplemented, or altered only by a written
instrument signed by all the Parties.     8.14   Transaction Costs. Each Party
will be solely responsible for all costs incurred by it in connection with this
Agreement and the transaction contemplated hereby, with no right to recovery or
contribution from any other Party. Neither the Assignors nor TETON shall have
any liability to any third party for commissions or broker’s fees for which the
other Party may be liable.     8.15   Counterpart. This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party; provided that a
facsimile signature shall be considered due execution and shall be binding upon
the signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.     8.16   Notices. Any notices, consents,
waivers or other communications required or permitted to be given under the
terms of this Agreement must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); (iii) one day
after electronically mailed either in the text of an email message or attached
in a commonly readable electronic format, and the sender has received no
generated notice that the client email message has not been successfully
delivered; or (iv) one (1) Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses, facsimile numbers, and email addresses
for such communications shall be:

Attn: Mike A. Tinker
Desert Moon Gas Company
P.O. Box 440733
Aurora, CO 80044
PH 303-752-1084
FAX: 303-752-1084
Email: tinkjl@msn.com
Attn: Gary Stewart
Mélange International, LLC
475 17th St, Suite 540
Denver, Co 80202
PH 303-298-9415
FAX 303-298-0729

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Email: gary@eMelange.net
Hannon & Associates, Inc.
820 16th St, Suite 630
Denver, CO 80202
Email: hannon@qwest.net
Teton Energy Corporation
410 17th Street, Suite 1850
Denver, CO 80202
PH 303 565-4604
FAX 303 565-4606
Email: rbosher@teton-energy.com
IN WITNESS WHEREOF, this Agreement is executed as of April 25, 2007.

                  MÉLANGE INTERNATIONAL, LLC   HANNON & ASSOCIATES, INC.
 
               
By:
  /s/ Gary C. Stewart       By:   /s/ Ted Hannon
 
               
 
  Gary C. Stewart, Manager           Ted Hannon President
 
               
 
  /s/ Mike A. Tinker            
 
               
 
  Mike A. Tinker, individually            
 
                DESERT MOON GAS COMPANY        
 
                /s/ Mike A. Tinker                           Mike A. Tinker
President            
 
                TETON ENERGY CORPORATION        
 
               
By:
  /s/ Dominic Bazile            
 
                Dominic Bazile, COO and EVP        

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EXHIBIT “1”
 
To Purchase and Sale Agreement dated effective April 25, 2007, Melange
International, LLC et al and Teton Energy Corporation
WEST GREYBULL PROSPECT
BIG HORN COUNTY, WYOMING

                                                              GROSS     Melange,
etal,   SERIAL NO.   EFFECTIVE DATE     EXPIRATION DATE     LEGAL DESCRIPTION  
ACRES     Net Acres  
WYW-158652
    10/1/2003       9/30/2013     T52N,R95W.     347.38       347.38  
 
                  Sec. 25: L 1-3.NE/4, E/2NW/4                
 
                                   
WYW-158653
    10/1/2003       9/30/2013     T52N,R95W.     640.00       640.00  
 
                  Sec. 29: All                
 
                                   
WYW-160121
    4/1/2004       3/31/2014     T52N,R95W.     960.00       960.00  
 
                  Sec. 26: N/2,                
 
                  Sec. 27: All                
 
                                   
WYW-160123
    4/1/2004       3/31/2014     T52N,R95W.     634.00       634.00  
 
                  Sec. 35: N/2,N/2SE/4, SE/4SE/4,                
 
                  SW/4, SE/4SE/4, Excl 6.0                
 
                  ac. in RSVR ROW                
 
                                   
St WY 06-00492
    6/2/2006       6/2/2011     T52N,R95W     592.38       592.38  
 
                  Sec. 36: Tr 62 (ALL)                
 
                                   
D. Mayland
    11/7/2006       11/7/2011     T52N,R95W     166.37       83.18  
 
                  Sec. 33: L 10,11 ,7, of Rsvy Tr 123                
 
                  51N,95W                
 
                  Sec. 4 L12,10,8, of Rsvy Tr 122                
 
                  L. 9, 11,12 of Rsvy Tr 123                
 
                                   
D. Mayland
    11/30/2006       11/30/2011     T52N,R95W     160.00       80.00  
 
                  Sec. 11:SW/4 a/d/a L k,l,m,n of Tr 53                
 
                                   
Martin Mayland & Diana Mayland Trustees
    11/7/2006       11/7/2011     T52N,R95W     544.12       352.06  

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EXHIBIT “1”
 
To Purchase and Sale Agreement dated effective April 25, 2007, Melange
International, LLC et al and Teton Energy Corporation
WEST GREYBULL PROSPECT
BIG HORN COUNTY, WYOMING

                                            EXPIRATION           Melange, etal,
  SERIAL NO.   EFFECTIVE DATE     DATE     LEGAL DESCRIPTION   GROSS ACRES    
Net Acres  
 
                  Rsvy Tr 117,                
 
                  Sec. 34: SE/4SW/4,SW/4SE/4,                
 
                  Sec. 15: SW/4                
 
                  51N,95W                
 
                  Rsvy Tr 117 in sec. 6,                
 
                  Sec. 3: L.7,8,11,14,15,SE/4SW/4                
 
                                   
Donald Dalley Winters, et al
    11/7/2006       11/7/2011     T51N,R95W Rsvy Tr 107 in Sec. 2 &     649.46  
    575.09  
 
                 
11, Rsvy Tr 105 in
               
 
                 
Sec 2,11, & 12,
               
 
                 
W/2 of Rsvy Tr 106
               
 
                  Sec. 1: SW/4SW/4,                
 
                  Sec. 2: L9,15,16,19,SW/4NW/4                
 
                  Sec. 3: L17, SE/4NE/4                
 
                  Sec. 11: L 1,16,17                
 
                  Sec. 12: L 1,4,6,7,17NE/4NW/4                
 
                                   
John J. Bullinger & Sons, LLC
    11/30/2006       11/30/2011     T51N, R95 W,6th P.M. Resurvey Tr75 (Original
Survey was SE1/4 NE 1/4 of Sec 23 and N 1/2 NW 1/4 and SW 1/4NW 1/4 of Sec 24)
(157.87 ac.)     1,041.68       970.74  
 
                  Part of Rsvy Tract 76 (Original Survey was NE 1/4 NE 1/4 of
Section 23, exc a 30.36 ac tract                
 
                  Rsvy Tract 79 (Original Survey was SE 1/4 NW 1/4 , SW 1/4 NE
1/4, NW 1/4 SE 1/4 and NE 1/4 SW 1/4 of Section 13) (150.61 ac.)                
 
                  Ptn of Rsvy Tr 80 (Original Survey was SE 1/4 SW 1/4 and S1/2
SE 1/4 of Section 1 I,SW1/4 SW1/4 of Sec 12, W 1/2 W 1/2 of Sec 13, and E1/2 E
1/2 of Sec 14, except a strip of land 340 feet wide along the East line of Tract
81 (490.69 ac.)                
 
                  T51N . R95W,6th P.M.                
 
                  Rsvy TR 67 in Sec’s 6,7 (201.88 ac)                  
WYW-173874
    2/1/2007       1/31/2017     T52N,R95W 6th P. M..     160.00       160.00   

2 of 3

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EXHIBIT “1”
To Purchase and Sale Agreement dated effective April 25, 2007, Melange
International, LLC et al and Teton Energy Corporation
WEST GREYBULL PROSPECT
BIG HORN COUNTY, WYOMING

                                                                    Melange,
etal,   SERIAL NO.   EFFECTIVE DATE     EXPIRATION DATE     LEGAL DESCRIPTION  
GROSS ACRES     Net Acres  
WYW-174082
    4/1/2007       3/31/2017     T52N,R95W 6th P. M..     920.00       920.00  
 
                  Sec. 23: N/2NE/4, NE/4NW/4,                
 
                  S/2N/2, S/2                
 
                  Sec. 24: W/2NW/4,SW/4, E/2SE/4                
 
                                   
Richard D. Hammond
    1/5/2007       1/512     T51N , R 95 W,6th P.M.     476.57       178.71  
 
                  Ptns of Rsvy TR 80 in Sec 14 (12.47 ac)                
 
                  Ptns of Rsvy TR 81 in Sec 14 (9.54 ac)                
 
                  Ptns of Rsvy Tr 82 in Sec. 14 & 15 (454.56 ac.)              
 
 
                                   
Carol Wade House
    1/25/07       1/25/12     T51N, R 95 W,6th P.M.                
 
                  Section 1: NW/4SE/4, and a ptn of the SW/4SE/4     48.00      
18.00  
 
                                   
 
                  Totals     7,339.96       6,511.54  

3 of 3

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EXHIBIT “2”
to Purchase and Sale Agreement Melange International, LLC, et al and Teton
Energy Corporation
(MAP) [d48917d4891700.gif]
WEST GREYBULL PROJECT AREA
BIG HORN COUNTY, WYOMING

 

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EXHIBIT 3
To Purchase and Sale Agreement dated effective April 25, 2007, between Mélange
International, LLC, et al, and Teton Energy Corporation.
ASSIGNMENT OF OIL AND GAS LEASE(S)
KNOW ALL MEN BY THESE PRESENTS:
     THIS ASSIGNMENT is made and entered into this            day
of                      , 2007, by and between Mélange International, LLC
(“Mélange”), 475 Seventeenth Street, Suite 540, Denver, Colorado 80202, Desert
Moon Gas Company and Mike A. Tinker (“Tinker”), P.O. Box-440733, Aurora, CO,
80044, and Hannon & Associates, Inc. 820 16th St, Suite 630 Denver, CO 80202.
hereinafter collectively referred to as “Assignor,” and Teton Energy Corporation
(“TETON”), 410 17th St, Suite 1850, Denver, CO 80202, hereinafter referred to as
“Assignee”.
W I T N E S S E T H :
     THAT, Assignor is the owner of certain leasehold interests in the oil and
gas lease(s) described on Exhibit “A” attached hereto and made a part hereof
covering the lands described in Exhibit “A” attached hereto and made a part
hereof.
     THAT, for and in consideration of Ten Dollars ($10.00+) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and subject to Assignor’s reservation herein of the overriding
royalty interest set forth below, Assignor does hereby grant, assign, transfer,
set over, and convey unto Assignee, its successors and assigns, all of
Assignor’s right, title, interest, in and to the oil and gas lease(s), covering
the lands described on Exhibit “A” attached hereto.
     Assignor does hereby EXCEPT AND RESERVE unto itself, its successors and
assigns, an overriding royalty interest equal to the difference between lease
burdens existing of record as of the date hereof and nineteen percent (19%),
thus delivering to Assignee an eighty one percent (81%) net revenue interest, of
all of the oil, gas and other hydrocarbons produced, saved and sold from the oil
and gas lease(s), covering the lands as described on Exhibit “A” with the
exception of the State of Wyoming Lease No. 06             00497, in which
Assignor does except and reserve an royalty interest equal to the difference
between lease burdens existing of record as of the date hereof and nineteen and
one-half percent (19.5%), thus delivering to Assignee an eighty and one half
percent (80.5%) net revenue interest in such lease. The overriding royalty
interest herein reserved shall apply to extensions or renewals of the lease(s)
described on Exhibit “A” and is subject to all the terms and conditions of the
Purchase and Sale Agreement dated effective April 25, 2007, between Assignor and
Assignee.
     If any of the oil and gas leases assigned covers less than the entire and
undivided mineral estate or if Assignor’s interest in any of the leases is less
than the full and undivided leasehold estate in and to the lands described on
Exhibit “A”, the overriding royalty interest herein reserved and excepted shall
be proportionately reduced to correspond with the leasehold interest assigned
hereby.
     This Assignment of Oil and Gas Lease is executed simultaneously with that
certain Federal Form of Assignment of Record Title Interest dated the
                     day of                      2007, covering the Federal
leases and State Form Assignment dated the                      day of,
                     2007, covering the State Lease(s) described on Exhibit “A”.
The interest conveyed by such Assignments are parallel, and not in addition, to
the interest herein conveyed. In the event further Assignments or documents are
required after the date hereof by any governmental authority Assignor will upon
Assignee’s request, execute, acknowledge and deliver or cause to be executed and
delivered, all such documents or instruments necessary to effectuate this
Assignment.
     The interests assigned herein are subject to 1) all terms and conditions of
the oil and gas leases; 2) all instruments existing of record in Assignor’s
chain of title; and 3) that certain Purchase and Sale Agreement dated effective
April 25th, 2007 between Teton Energy Corporation and Mélange International,
LLC, et al,. In the event there is a conflict between the terms of this
Assignment and the terms of said Purchase and Sale Agreement, the Purchase and
Sale Agreement shall prevail.

 

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     This Assignment is given without representation or warranty of title,
either express or implied, except all parties claiming by through or under
Assignor, but not otherwise.
     This Assignment shall be binding upon and will inure to the benefit of
Assignor and Assignee, their successors and assigns.
SIGNED EXECUTED AND DELIVERED this                      day of
                                         2007.

                  MÉLANGE INTERNATIONAL, LLC       HANNON & ASSOCIATES, INC.    
 
               
By:
          By:    
 
 
 
        Gary C. Stewart, Manager      
 
        Ted Hannon, President    
 
                Desert Moon Gas Company            
 
               
BY:
               
 
 
 
Mike A. Tinker      
 
Mike A. Tinker    
 
  President            

ACKNOWLEDGMENT
COUNTY OF                                         )
                                                                )
STATE OF COLORADO )
     The foregoing instrument was acknowledged before me this
                     day of                     , 2007 by Mike A. Tinker,
     WITNESS my hand and official seal.
     Notary Public in and for the State of Colorado
My Commission Expires:                                        

 

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CORPORATE ACKNOWLEDGMENT
COUNTY OF                                          )
                                                                  )
STATE OF COLORADO                      )
     The foregoing instrument was acknowledged before me this
                     day of                      , 2007 by Mike A. Tinker, as
President of Desert Moon Gas Company,
     WITNESS my hand and official seal.
     Notary Public in and for the State of Colorado
My Commission Expires:                                        
CORPORATE ACKNOWLEDGMENT
COUNTY OF                                          )
                                                                  )
STATE OF COLORADO                    )
     The foregoing instrument was acknowledged before me this           day of
                    , 2007 by Gary Stewart, as Manager of Mélange International.
LLC,
      WITNESS my hand and official seal.
      Notary Public in and for the State of Colorado                    
My Commission Expires:
COUNTY OF                                         )
                                                                  )
STATE OF COLORADO                    )
     The foregoing instrument was acknowledged before me this        
              day of                                           , 2007 by Ted
Hannon, as President of Hannon & Associates, Inc.,
     WITNESS my hand and official seal.
     Notary Public in and for the State of Colorado
My Commission Expires:                                         

 

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EXHIBIT “4”
     To Purchase and Sale Agreement dated effective April 25, 2007, Melange
International, LLC, et al, and Teton Energy Corporation

                                                  EFFECTIVE     EXPIRATION      
  %INTEREST     GROSS     NET   SERIAL NO.   DATE     DATE     LEGAL DESCRIPTION
  OWNED     ACRES     ACRES  
WYW-160120
    4/1/2004       3/31/2014     T52N.R95W.     100.00 %     933.53       933.53
 
 
                  Sec. 15: TR 41A, 60B,60C,60D                        
 
                  Sec. 16: Tr 41A                        
 
                  Sec. 21: Tr 41 A                        
 
                  Sec. 22: SW/4NW/4, S/2, L 5,8,9,                        
 
                                Tr 41A, 60B,60C,60D                        
 
                  Sec. 24: NE/4, E/2NW/4, W/2SE/4                        
 
                                           
WYW-160122
    4/1/2004       3/31/2014     T52N.R95W.     100.00 %     678.00       678.00
 
 
                  Sec. 33: NE/4                        
 
                  Sec. 34: N/2, N/2SW/4, NW/4SE/4,                        
 
                  E/2SE/4 excl 2.0 ac in Resvr ROW                        
 
                                           
 
                                           
WYW-163270
    6/1/2005       5/31/2015     T52N.R95W.     100.00 %     1,560.24      
1,560.24  
 
                  Sec. 16: SW/4SW/4,L 17,20,21,25                        
 
                                Tr 41B,41C46I,46P                        
 
                  Sec. 17: S/2SE/4,L13.15,16,                        
 
                                19-21, 24Tr 46I,                        
 
                                46j,46K,46L,46M,46N,                        
 
                                46O,46P,47I                        
 
                  Sec. 18: SW/4NE/4, SE/4, L13,15,                        
 
                                TR 47I                        
 
                  Sec. 20: ALL                        
 
                                           
WYW-163272
    6/1/2005       5/31/2015     T52N.R95W.     100.00 %     640.00       640.00
 
 
                  Sec. 28: ALL                     3811.77  

1 of 1

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EXHIBIT “5”
To Purchase and Sale Agreement dated effective April 25, 2007, between Melange
International, LLC, et al and Teton Energy Corporation
GEOLOGIC REQUIREMENTS
The contact information is as follows:

         
 
       
Melange International, LLC
  Desert Moon Gas Company   Hannon & Associates, Inc
475 17th Street, Suite 540
  P.O. Box 440733   820 16th St, Suite 630
Denver, CO 80202
  Aurora, CO 80044   Denver, CO 80202
Telephone: 303-298-9415
  Telephone: 303-752-1084    
Facsimile: 303-298-0729
  Fax: 303-752-1084    
Attn: Gary C. Stewart
  Attn: Mike A. Tinker   Attn: Ted Harnnon
e-mail: gary@emelange.net
  e-mail: tinkj1@msn.com   Email: hannon@qwest.net

     Melange International, LLC, will keep all information strictly confidential
until made public by Teton or a federal or state regulatory agency, other than
to Tinker and Hannon
1. PROGRESS REPORTS: Teton agrees to e-mail to Melange International, LLC daily
written operations reports within ten (10) business days from receipt by Teton
of activity, including without limitation the current mud log, if available. The
first such report is to include the well name, location (legal description),
proposed total depth, deepest objective formation and spud date.
2. WELL LOGS AND SURVEYS: When well has been drilled to contract depth, Teton
shall cause to be made the well formation logs and surveys set forth below and
shall furnish, within ten (10) business days from receipt by Teton to Melange
International, LLC, with one (1) final print of these surveys plus any
additional logs or surveys run during the drilling of the well, and LAS
formatted data of all such logs and information.
3. REPORTS, LOGS, CHARTS: In addition to reports, logs, and charts required
elsewhere in this agreement, Teton agrees to furnish Melange International, LLC,
within ten (10) business days from receipt by Teton with the following (if
acquired):

  A.   One copy of all core analysis, gas analysis and water analysis.     B.  
One copy of all drill stem test reports.     C.   One copy of the mud log
e-mailed daily.     D.   One copy of final mud log.     E.   One copy of the
completion report, initial potential test(s).     F.   One copy of reports and
charts of all bottom hole pressure surveys.     G.   One copy of all logging
suites, including cased hole logs, provided in both paper and digital LAS
format.     H.   One copy of dipmeter and/or velocity survey if run.     I.  
One copy of any directional surveys.
    J.   One copy of any and all stimulation and completion data and reports,
including without limitation, detailed frac reports, acidizations, flowback
reports, pressure buildups and analysis, frac fluid types, cement jobs, casing
programs etc.     K.   Digital Copies of the above data in original digital
format including but not limited to LAS files for all well logs and mud logs, if
available.