EXHIBIT 10.59
 
AGREEMENT FOR PURCHASE OF TERM ASSIGNMENT

THIS AGREEMENT FOR PURCHASE OF TERM ASSIGNMENT (“Agreement”) is made and entered
into and made effective this 22nd day of February, 2013 ("Effective Date"), by
Berexco LLC, for itself and as agent for those parties hereinafter identified as
Internal Partners (Berexco LLC and said Internal Partners are hereinafter
collectively referred to as “Seller”), and Pacific Energy Development MSL LLC, a
Nevada limited liability company (hereinafter referred to as "Buyer").

For and in consideration of the mutual covenants herein contained, and the
payments, conveyances and agreements set forth and provided for herewith, Buyer
and Seller hereby agree as set forth below. All undefined, initially capitalized
terms used in this Agreement shall have the meanings that are ascribed to such
terms in Paragraph 24 of this Agreement.  All Exhibits referred to in this
Agreement are listed in Paragraph 23, are hereby incorporated in this Agreement
by reference and constitute a part of this Agreement.

1.           PURCHASE OF TERM ASSIGNMENT

Upon the terms and conditions and subject to the exclusions and reservations set
forth herein, Seller hereby agrees to transfer, sell, assign, and convey to
Buyer, for a set period of time commencing March 15, 2013 and expiring on
December 29, 2014 ("Primary Term"), and Buyer hereby agrees to purchase and
acquire for said Primary Term, all of Seller’s rights, titles and interests in
and to the Mississippi Formation underlying those producing and non-producing
oil and gas leases in the State of Kansas, more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference, insofar and
only insofar as said leases cover the lands described on Exhibit "A" (each, a
"Lease", and collectively, the "Leases"), but limited to production from wells
drilled by Buyer thereon and therein after the Closing Date (as such term is
hereinafter defined), including all of Seller's right, title, and interest in
and to such operating agreements, farmout agreements, pooling orders,
assignments and other such contracts and agreements applicable to the
Mississippi Formation in and under the Leases in which Seller has an assignable
interest, excluding any such agreements by and between, or amongst, Berexco LLC
and any of its Affiliates (the "Berexco Group") only, or by and between, or
amongst, the Berexco Group, or any of them, and any Internal Partner(s) only
(collectively, the “Contracts”), but all without warranty or representation as
to effectiveness or validity, or otherwise. The agreements excluded from the
definition of Contracts in the preceding sentence are hereinafter referred to as
the "Internal Contracts".

The Primary Term of the said conveyance by Seller to Buyer may be extended as to
the Mississippi Formation underlying one or more of the Leases pursuant to the
further provisions of this Agreement.  The said rights, titles and interests to
be sold by Seller and purchased by Buyer hereunder are sometimes hereinafter
referred to as the “Property”.

2.           MISSISSIPPI FORMATION

A.          For the purposes of this Agreement, the Mississippi Formation shall
be defined as the stratigraphic equivalent of all depths between 4,982 feet and
5,391 feet, inclusive, as shown on the Log-Tech Dual Compensated Porosity log
dated February 22, 2007 for the Peppard #3-20 well (API #15-033-21490-0000)
located near the center of the Southeast Quarter of the Southeast Quarter of the
Northwest Quarter of the Northeast Quarter of Section 20, Township 31 South,
Range 17 West (SE/4SE/4NW/4NE/4 Sec. 20-31s-17w), Comanche County, Kansas.

3.           PURCHASE PRICE

As consideration for the sale of the Seismic Data (as more particularly set
forth in Paragraph 8) and the Property for the Primary Term, Buyer shall pay
Seller the sum of Four Million Two Hundred Seven Thousand, One Hundred and
Seventeen Dollars ($4,207,117.00) (“Purchase Price”).  The Purchase Price shall
be paid by Buyer to Seller by wire transfer of immediately available funds at
the closing of the transaction contemplated hereby (“Closing”).  Concurrently
with the execution of this Agreement, Buyer shall execute the Escrow Agreement
attached hereto as Exhibit "B", which Escrow shall apply to the sum of Eight
Hundred and Sixty-four Thousand, Eight Hundred and Sixty-six Dollars
($864,866.00) plus accrued interest, less escrow fees ("Performance Deposit")
currently held by Seller's counsel, Hinkle Law Firm LLC, in a client trust
account in accordance with the terms and conditions of a previous escrow
agreement between Seller and Condor Energy Technology LLC.  At the Closing the
Performance Deposit shall be credited towards the Purchase Price.

 
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4.           TERM CONVEYANCE

The leasehold acres and net revenue interests to be conveyed by Seller to Buyer
in and to the Mississippi Formation under the Leases are more particularly
described on Exhibit "A".  Seller is conveying leasehold and contractual working
interest rights only, and is not conveying any royalty, mineral, or overriding
royalty interest which Seller or any other party may own in the Leases, and all
such interests are specifically excluded from the Property. Seller and Buyer
shall, concurrently with the tender of the Purchase Price by Buyer to Seller,
execute, acknowledge and deliver one or more Partial Term Assignment of Oil and
Gas Leases covering the Property, substantially in the form of Exhibit "C"
attached hereto and incorporated herein by reference ("Assignment").  The rights
and interests conveyed pursuant to the Assignment shall be expressly limited to
the duration of the Primary Term, it being expressly understood that no
unilateral action of Buyer, including without limitation the establishment by
Buyer of hydrocarbon production from the Property, shall serve to extend the
Primary Term of the Assignment as to any Lease. The Primary Term of the
Assignment may only be extended, and separately as to each Lease, through (i)
the proper exercise by Buyer of the Option (as such term is hereinafter
defined), or (ii) the earning by Buyer of a Secondary Term Assignment (as such
term is hereafter defined) pursuant to the provisions of Paragraph 11. below,
but not otherwise.  Buyer shall promptly file each Partial Term Assignment of
Oil and Gas Leases of record in the appropriate counties and states and furnish
Seller with copies of such recorded instrument(s).

5.           SELLER'S RESERVATIONS

A.          Seller reserves any and all rights not expressly conveyed to Buyer
in the Assignment, including, without limitation, all existing wells, equipment,
facilities, and other personal property on or related to the Property; all of
Seller's right, title and interest in and to all depths outside the Mississippi
Formation; the right to drill and complete new wells on the Leases for the
production of Hydrocarbons from formations other than the Mississippi Formation;
and all right, title and interest of Seller within the Mississippi Formation
necessary to allow Seller to re-enter, workover, complete, re-complete, fracture
treat, and produce Hydrocarbons from the Mississippi Formation in any well which
has been drilled on the Leases (or on lands unitized therewith) prior to the
execution of this Agreement (provided, however, Seller shall not convert an
existing vertical well into a horizontal well targeting production from the
Mississippi Formation).  It is expressly understood and agreed that Seller shall
not have the right to drill and complete wells on any Lease for production of
Hydrocarbons from the Mississippi Formation during the Primary Term, Extended
Primary Term (as such term is hereinafter defined), or during the term of any
Secondary Term Assignment (as such term is hereinafter defined) of such Lease.

B.           Seller shall except and reserve from the Assignment of the Leases
an overriding royalty interest in and to all Hydrocarbons produced from the
Property equal to the positive difference, if any, obtained by subtracting
leasehold burdens existing as of the Effective Date (as adjusted to reflect any
change in leasehold burdens arising as a result of renewals or extensions
effected thereafter) from: (i) twenty-two and one-half percent (22.5%) before
Payout (as such term is hereinafter defined); (ii) twenty-five percent (25%)
upon and after Payout, proportionately reduced to the extent Seller's working
interest in the Leases assigned is less than 100%. To the extent leasehold
burdens existing as of the Effective Date exceed these respective percentages,
Seller shall reserve no overriding royalty interest. It is the intention of
Seller to deliver to Buyer a leasehold net revenue interest equal to the lesser
of seventy-seven and one-half percent (77.5%) or Seller's actual net revenue
interest in and to the Leases  before Payout; and a leasehold net revenue
interest equal to the lesser of seventy-five percent (75%) or Seller's actual
net revenue interest in and to the Leases located after Payout.

C.           The term "Payout" as used herein shall mean that point in time, on
a well by well basis, when a well drilled by Buyer on the Property has sold the
following specified barrels of oil equivalent ("BOE"), in each case utilizing a
conversion factor for gas sales of 8 MCF per 1 barrel of oil: for a Vertical
Well (as such term is hereinafter defined): Ten Thousand (10,000) BOE; for
a Short-Lateral Horizontal Well (as such term is hereinafter defined):
Twenty-five Thousand (25,000) BOE; and for an Earning Well or Horizontal Well
(as such terms are hereinafter defined): Fifty Thousand (50,000)
BOE.  Commencing no later than the last day of the month following the month of
first production from a well drilled by Buyer on the Property, and no later than
the last day of each succeeding month, Buyer shall furnish Seller with a
statement showing the oil and gas production and sales from such well during the
preceding month, the cumulative sales of oil, gas, and barrels of oil equivalent
utilizing the aforesaid conversion factor, and the barrels of oil equivalent
remaining to be sold in order to reach Payout with respect to such well.  The
After-Payout increase in Seller's reserved overriding royalty interest shall be
effective immediately upon Payout of each such well, and Buyer shall ensure that
any retroactive adjustments to revenue distributions necessitated by Payout are
promptly made.  Upon Buyer's written confirmation of the occurrence of Payout as
to any well, Seller shall have the option of recording an affidavit or notice of
Payout in the records of the county and state in which such well is located, and
any third party shall have the right to rely on said notice or affidavit as
conclusive evidence that Payout has occurred; provided, however, Seller shall
first submit such notice or affidavit to Buyer for approval as to form and
substance prior to recording in the public records, such approval not to be
unreasonably withheld.
 
 
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D.          Seller, or its affiliated designee, reserves the continuing
preferential right and option, from time to time and at any time, but not the
obligation, to purchase all or any part of the oil and/or other liquid
Hydrocarbons (including condensate, distillate, and other liquids recovered from
the well stream by normal lease-separation methods) produced and saved from any
well drilled by Buyer on the Property.  The price paid therefor shall be
Seller's or Seller's affiliated designee's "posted" price, gravity adjusted,
applicable thereto for the particular crude type. Transportation charges may be
deducted where applicable.  Notwithstanding the foregoing, however, in no event
shall the price to be paid to Buyer for a sale of oil and/or liquid Hydrocarbons
be less than Buyer can receive from an arms length transaction with a bona fide
third party purchaser of such production, including bonuses, pursuant to a
written offer furnished to Seller or its affiliated designee no later than
forty-five (45) days in advance of an anticipated sale.  No oil or other liquid
Hydrocarbons shall be sold by Buyer from any well drilled on the Property until
Seller or its affiliated designee has had the chance to exercise its
preferential right and option as described above.  Buyer shall notify Seller or
its affiliated designee as far in advance as possible of impending
production.  Seller or its affiliated designee shall have a reasonable period of
time, not to exceed fifteen (15) days, to exercise or waive its preferential
right and option.  Any waiver of Seller's preferential right and option to
purchase such oil and/or liquid Hydrocarbons shall not preclude Seller from
later exercising such right and option.  In the event Buyer's exercises its
preferential right to purchase liquid Hydrocarbons pursuant to the provisions of
this Paragraph 5.D., Buyer and Seller shall enter into a Crude Oil Purchase
Contract substantially in the form of Exhibit "D" attached hereto and
incorporated herein by reference.

E.           Seller, or its affiliated designee, reserves the continuing
preferential right and option, from time to time and at any time, but not the
obligation, to purchase all or any part of the gas (the term "gas" to include
natural gas, casinghead gas and other gaseous substances and all constituents
thereof in the well stream other than the liquid Hydrocarbons described in
Paragraph 5.D. above) produced and saved by Buyer from any well drilled on the
Property on the same terms (or terms economically equivalent thereto) as those
under which Buyer proposes to sell or dispose of same to another bona fide
purchaser that is ready, willing and able to so purchase the gas.  No contract
for the sale or other disposition of the gas, or any part thereof, shall ever be
made by Buyer until Seller shall have either first exercised or waived in
writing its above-described preferential right and option with respect to the
gas.  Buyer shall notify Seller or its affiliated designee in writing of any
proposed disposition of the gas as much in advance as reasonably possible, and
Seller or its affiliated designee shall have a reasonable time, but no less than
thirty (30) days after receipt of written notice of all terms of each bona fide
offer to purchase gas, or part thereof, in which to notify Buyer of the election
to either exercise or waive the preferential right and option, in which event
Buyer and Seller shall enter into a mutually acceptable gas purchase contract
containing such terms. Any waiver of Seller's preferential right and option to
purchase such gas shall not preclude Seller from later exercising such right and
option.  Seller does not warrant any gas market for gas that may be produced
from the Property, nor does Seller agree to undertake any effort to ensure that
such gas is transported, marketed, or sold. In the event such gas is subject to
existing gas purchase contract(s) of Seller or Seller's affiliated designee,
Buyer agrees to comply with the terms of such contracts, and Seller agrees to
assist Buyer in selling such gas thereunder, or in attempting to secure a
release of such gas from such contract(s).  However, Seller shall have no
liability whatsoever with respect thereto, nor shall Seller have any obligation
to allow Buyer to utilize Seller's existing or future gas marketing arrangements
or sales facilities.

F.           Whether or not Seller exercises its preferential right to purchase
Hydrocarbons produced by Buyer from the Property pursuant to the provisions of
Paragraphs 5.D. and/or 5.E. above, Buyer shall ensure that Seller is immediately
provided with written notice of any and all changes of ownership affecting
surface, mineral, royalty, overriding royalty or other interests under or
relating to the Leases of which Buyer, and/or the purchaser of Buyer's
production is advised, including copies of all correspondence and documentation
pertaining thereto.
 
 
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6.           INFORMATION AND CONFIDENTIALITY

Seller makes no representation, express or implied, with respect to the accuracy
or completeness of any information, data or records now, heretofore, or
hereafter made available to Buyer, any Affiliate of Buyer, or any agent,
employee, consultant, or representative of either or both ("Buyer's
Representatives")", in connection with the transaction contemplated hereby,
including, without limitation, any description of the Property or Leases,
potential for production of Hydrocarbons from the Property, or any other matters
contained in any material furnished to Buyer, any Affiliate of Buyer, or Buyer's
Representatives, by Seller or by Seller's agents, employees, consultants,
representatives, or Broker (as such term is hereinafter defined).  All
information made available to Buyer, any Affiliate of Buyer, or Buyer's
Representatives in connection with this Agreement or the transaction
contemplated hereby, including specifically, but without limitation, any and all
information concerning environmental matters or title defects of any nature,
shall be maintained strictly confidential by Buyer in accordance with the terms
and provisions of that certain letter agreement dated March 8, 2012, by and
between Seller and SXTRA LLC, and attached hereto as Exhibit "E"
("Confidentiality Agreement"), and any and all information, data and records
provided by Seller to Buyer, any Affiliate of Buyer, or Buyer's Representatives
concerning the Property shall be considered Confidential Information (as said
term is defined in the Confidentiality Agreement).  Notwithstanding the terms
and provisions of the Confidentiality Agreement, from and after the Closing,
Buyer shall have the right to utilize the Evaluation Material (as said term is
defined in the Confidentiality Agreement) for the purpose of attempting to
further develop the Property as is contemplated herein, and Buyer's obligation
to maintain the confidentiality of the Evaluation Material shall not terminate
for a period of ten (10) years from the Closing Date.  Further, Buyer shall take
whatever reasonable steps may be necessary to ensure that any Affiliate of Buyer
and all Buyer's Representatives,  including without limitation SXTRA LLC and its
employees, comply with the provisions of the Confidentiality Agreement as
modified by this Paragraph 6. of this Agreement.

7.           TITLE AND DUE DILIGENCE REVIEW

A.          Seller and Condor Energy Technology LLC ("Condor"), an Affiliate of
Buyer, were parties to that certain Agreement for Purchase of Term Assignment
dated November 30, 2012, which agreement was terminated by mutual agreement of
the parties on February 8, 2013. Pursuant to that agreement, Condor was provided
a period of sixty (60) days to conduct title and environmental due diligence on
the Property.  Buyer shall rely on the due diligence conducted by Condor, and
agrees that Schedule 7 attached hereto describes all defects related to the
Property.  Any defects, flaws, irregularities, or conditions relating to the
Leases or the Property, including, without limitation, defects related to title
or environmental condition, which  are not described on Schedule 7 are hereby
deemed waived by Buyer, and shall never form the basis for any reduction in the
Purchase Price or refusal of Buyer to close the transactions contemplated
hereby, nor shall any of such non-scheduled defects form the basis of any
lawsuit or other claim for relief of any nature, whether legal or equitable,
including, without limitation, any claims for damages or losses of any kind by
Buyer, its Affiliates, successors or assigns.

B.           There shall be no reduction in the Purchase Price at Closing on
account of any defect listed on Schedule 7, and the affected Leases shall be
conveyed to Buyer as contemplated herein. Seller shall have a period of ninety
(90) days after the Closing to cure all or any portion of such defects at its
sole cost and expense.  If by such date Seller is not able to cure any such
defect, and such defect is not waived by Buyer, the Lease (or portion thereof,
or interest therein) still affected by the defect shall be reassigned to Seller,
free and clear of any liens, mortgages, or other encumbrances placed thereon by
Buyer, and Buyer shall be entitled to a post-closing adjustment to the Purchase
Price, on a per acre basis for each net acre subject to a defect, in the amount
of $550.00 per net acre for acreage in Comanche, Harper, and Kiowa Counties,
Kansas, and $650.00 per net acre for acreage in Barber County, Kansas, as if
such Lease, or portion thereof, or interest therein, had been excluded from this
sale at Closing. Nothing herein shall be construed as obligating Seller to cure
any defects.

8.           SEISMIC ACQUISITION

It is understood the Purchase Price includes payment at the rate of Twenty-five
Thousand Dollars ($25,000.00) per square mile for acquisition of approximately
10.5 square miles of 3-D seismic data owned by Seller and covering the Leases
and other lands as more particularly described on the Seismic Data License
Agreement attached hereto as Exhibit "F" and by reference made a part
hereof.  At Closing, Seller shall deliver to Buyer processed 3D seismic data
volumes, load sheets, sonic log data within the volumes, and related synthetic
seismograms, shoot design, and acquisition parameters for such 3D seismic (the
"Seismic Data"), but subject to the said Seismic Data License Agreement, which
shall be executed by Buyer and Seller at or before Closing.
 
 
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9.           BUYER'S OPERATIONS UNDER TERM ASSIGNMENT

A.          Buyer anticipates exploring for production of Hydrocarbons from the
Property by the conduct of 3-D seismic operations and the drilling of horizontal
wells thereon.  For the purposes of this Agreement, the term "Horizontal Well"
shall mean a well drilled for the production of Hydrocarbons from the
Mississippi Formation with a lateral length of no less than Four Thousand feet
(4000'); the term "Short-Lateral Horizontal Well" shall mean a well drilled for
the production of Hydrocarbons from the Mississippi Formation with a lateral
length of no less than Two Thousand feet (2000').  Buyer shall have no
obligation to conduct any such seismic operations or horizontal drilling during
the Primary Term, but Buyer shall not have the right to extend the Primary Term
of the conveyance of any Lease unless Buyer shall have complied with the
requirements for drilling of horizontal wells set forth in Paragraph 10.A.
below.

In addition to Horizontal and Short-Lateral Horizontal Wells, Buyer shall have
the right to drill wells from the surface location with a lateral length of no
more than One Thousand feet (1000') for the production of Hydrocarbons from the
Mississippi Formation (each, a "Vertical Well"), provided however, unless
otherwise expressly consented to by Seller in writing, in the event Buyer drills
a Vertical Well on the Property, Buyer may not commence another Vertical Well on
the Property unless Buyer has first drilled at least the same number of
Horizontal Wells and Short-Lateral Horizontal Wells on the Property, in
aggregate, as the number of Vertical Wells. Other than Horizontal Wells,
Short-Lateral Horizontal Wells, and allowed Vertical Wells drilled for the
production of Hydrocarbons from the Mississippi Formation, Buyer shall have no
right to drill any well, horizontal or otherwise, for the production of
Hydrocarbons on any Lease. Buyer may drill one or more pilot wells for the
purpose of evaluating (but not producing Hydrocarbons from) the Mississippi
Formation (each, a "Pilot Well"), but any such Pilot Well which is not later
used to kick off and drill a Horizontal Well, Short-Lateral Horizontal Well, or
Earning Well shall not be completed for the production of Hydrocarbons from the
Mississippi Formation unless Buyer then has the right to drill a Vertical Well
under the provisions of this Paragraph 9.A., and, unless otherwise consented to
by Seller in writing, Buyer may not complete any such Pilot Well for the
production of Hydrocarbons from the Mississippi Formation unless such Pilot Well
is located no less than Six Hundred and Sixty feet (660') from any currently
existing well on the Leases.  Any such eligible Pilot Well so completed for the
production of Hydrocarbons from the Mississippi Formation shall be considered a
Vertical Well for all purposes under this Agreement.

B.           To the extent that Buyer conducts or participates in any seismic
survey including any of the Leases during the term of any assignment from Seller
to Buyer made hereunder, Buyer shall license to Seller, free of cost to Seller,
all raw and processed data (but excluding Buyer's review, analysis and
interpretation of the same) acquired or generated from the entirety of such
seismic survey.  Such license shall be substantially in the form of the Seismic
Data License Agreement attached hereto as Exhibit "F".

C.           Subject to the terms of the applicable Lease, and all Applicable
Laws, rules and regulations of any governmental authority with jurisdiction over
such matters, Buyer shall have the option, should it choose to do so, to drill
one or more vertical wells on the Leases for salt water disposal purposes into
depths below the top of the Arbuckle formation ("SWD Well").  For the purposes
of this Agreement, the top of the Arbuckle formation shall be defined as the
stratigraphic equivalent of 5,692 feet as shown on the Log-Tech Dual Compensated
Porosity log dated April 18, 2010 for the Berexco LLC Alton #1-3 well (API #
15-033-21568-0000) located near the center of the Northeast Quarter of the
Southwest Quarter of the Northwest Quarter of Section 3, Township 31 South,
Range 18 West (NE/4SW/4NW/4) Sec. 20-31s-17w, Comanche County, Kansas. No salt
water disposal into any other zone or formation underlying the Leases shall be
permitted.  Buyer shall be solely responsible for securing any and all
agreements, including but not limited to rights-of-way and salt water disposal
agreements, necessary to drill, operate and utilize any SWD Well for its
purposes, but any such agreement obtained by Buyer shall be drawn so as to allow
Seller the right to utilize such SWD Well for disposal of salt water produced
from wells operated by Seller, and to be assignable to Seller should such well
revert to Seller under the provisions of this Agreement.  To the extent of any
available capacity, Seller shall have the right to utilize any SWD Well drilled
by Buyer for such disposal purposes of Seller, limited only by the capacity of
such SWD Well to accept salt water produced by wells drilled by Buyer on the
Property. The first 300 barrels per day disposed by Seller into a SWD Well of
Buyer shall be free of any charge to Seller by Buyer; provided however, Seller
shall reimburse Buyer for any payments made by Buyer on Seller's behalf to allow
any such disposal by Seller under the terms of Buyer's landowner
agreement(s).  In the event Seller shall dispose of more than 300 barrels per
day into a SWD Well of Buyer, Seller shall pay monthly, upon receipt of billing
by Buyer, for its proportionate share of the direct costs incurred by Buyer in
the operation and maintenance of the SWD Well during that month.  Seller's
proportionate share of such costs shall be the percentage determined by dividing
the number of barrels disposed by Seller into Buyer's SWD Well by the total
number of barrels disposed into Buyer's SWD Well over the preceding six (6)
month period.  In the event Seller exercises its right to utilize any such SWD,
Seller shall be solely responsible for the costs of installing and maintaining
any and all lines, pipe, storage and metering facilities necessary or convenient
for utilization of said SWD Well by Seller.
 
 
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D.          Notwithstanding any provision or authority which may be contained in
the Leases, including any amendments thereof, unless otherwise specifically
agreed by Seller in writing subsequent to Closing (which agreement may be
withheld by Seller for any cause, or without cause), any well drilled by Buyer
involving the Property shall be drilled to produce only from lands covered by
the Leases, and Buyer shall not have the right to pool or unitize the Leases
with other leases covering lands not covered by the Leases, whether or not Buyer
may own such other leases covering such other lands. Buyer shall be solely
responsible for securing any and all amendments to the Leases necessary to
establish any production units desired by Buyer, but unless otherwise agreed by
Seller as provided above, all such production units shall encompass only lands
covered by the Leases, shall not exceed three hundred and twenty (320) acres for
a Horizontal Well and one-hundred and sixty (160) acres for a Short-Lateral
Horizontal Well, and shall be subject to prior written approval of Seller, which
approval shall not be unreasonably withheld. Notwithstanding the foregoing,
Buyer shall not have the right to alter or amend any existing production unit
covering the Property, nor shall Buyer apply to alter or amend any existing
spacing rules applicable to the Property.  To the extent Buyer drills a
producing well and the production therefrom is subject to an existing production
or spacing unit, all non-working interest revenues from such well shall be paid
in accordance with the terms of the agreement(s) under which such existing
production or spacing unit was established.

E.           Buyer shall conduct all of its operations on the Leases and locate
all of its exploration and production facilities in a manner so as to avoid any
damage to, and minimize interference with, Seller's wells and operations, and
Buyer shall advise and consult with Seller prior to commencement of any seismic,
drilling, completion, or other major operations on the Leases in order to avoid
any such damage or interference.  The location of all of Buyer's such facilities
shall be agreed upon between Buyer and Seller in advance; such agreement shall
not be unreasonably withheld by either party.  Each party shall have the right
to use the other's lease roads, including usage for rotary tools or other heavy
equipment.  In the event Buyer utilizes Seller's existing lease roads for rotary
tools or other heavy equipment, Buyer shall restore such roads to the same or
better condition as existed prior to such usage.  In the event Buyer utilizes
Seller's existing lease roads for normal operations hereunder, Buyer and Seller
shall share equally the cost and expense of maintaining said roads.  Similarly,
in the event Seller utilizes new lease roads constructed by Buyer for rotary
tools or other heavy equipment, Seller shall restore such roads to the same or
better condition as existed prior to such usage, and if Seller utilizes Buyer's
new lease roads for its normal operations, Seller and Buyer shall share equally
the cost and expense of maintaining such roads.

F.           Buyer shall not conduct vibroseis seismic operations or detonate
any seismic charges within three hundred feet (300') of any well currently
existing or hereafter drilled by Seller on the Leases unless otherwise
specifically consented to by Seller in writing. In addition, Buyer shall not
drill the wellbore of any Horizontal Well, Short-Lateral Horizontal Well, or
Pilot Well within three hundred feet (300'), and shall not drill the wellbore of
any Vertical Well within six hundred and sixty feet (660'), of any currently
existing well on the Leases unless otherwise specifically consented to by Seller
in writing.  Upon written request by Buyer, Seller will support any application
made by Buyer to the regulatory authorities necessary to permit the location
and/or production of wells drilled by Buyer in accordance with the foregoing.

G.          Buyer shall notify Seller immediately when the location for any
well, including Pilot and SWD Wells, on the Property is staked, when rotary
tools for the drilling thereof are moved to the location, and when actual
drilling is commenced.  After actual drilling has been commenced, and continuing
until such well has been completed, plugged and abandoned as a dry hole, or
operations thereof assumed by Seller, Buyer shall furnish Seller with a daily
Standard Data Set (as herein defined), as well as any and all other information
reasonably requested by Seller with respect to said well.  As used herein,
“Standard Data Set” shall mean the following, to the extent such reports and
logs are created:  (i) daily drilling reports; (ii) daily completion reports;
(iii) daily workover reports; (iv) final logs (any type, including mud log); and
(v) core reports (but not the core itself).  Seller shall hold any and all
information furnished by Buyer to Seller with respect to the Property in strict
confidence and shall not disclose any such information to any party except
officers, directors, shareholders, members, partners, managers, employees,
attorneys, accountants, engineers, and other agents or consultants of Seller on
a confidential basis.
 
 
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H.          During the drilling and completion of any well, including a Pilot
and SWD Wells, on the Property, Buyer shall, unless expressly prohibited by
Applicable Law, comply with all of the cementing, logging, reporting, production
information, and well data requirements set forth on Exhibit "G" attached hereto
and incorporated herein by reference.  Failure by Buyer to comply with such
requirements shall constitute a material breach of this Agreement if not cured
by Buyer within the applicable notice and cure period provided in Paragraph
18.C. Seller's representatives shall at all reasonable times, but at Seller's
sole cost and risk, have access to the rig floor, wellsites, production and
disposal facilities; provided, however, Seller shall provide Buyer with at least
twenty-four (24) hour notice prior to accessing any active rotary rig or frac
site.  In connection with all such access, Seller and its representatives shall
abide by all safety rules and other reasonable restrictions imposed by Buyer and
Seller shall, upon written request by Buyer, provide Buyer with such waivers of
liability and/or indemnities as Buyer may reasonably request, and with proof of
insurance.  Seller and Seller's representative shall also have access at all
reasonable times to any and all information concerning all Horizontal,
Short-Lateral Horizontal, Vertical, Pilot, and SWD Wells drilled by Buyer
involving the Property, including without limitation, the items addressed on the
said Exhibit "G", provided, however, Buyer shall not be obligated to provide
Seller with any interpretations, economic analysis or projections, or any other
intellectual property of Buyer.

I.            If in an effort to drill a Horizontal Well or Short-Lateral
Horizontal Well on a Lease assigned by Seller to Buyer hereunder, Buyer
encounters an impenetrable substance or mechanical difficulty which makes
further drilling impracticable, Buyer shall have the option, if applicable, to
attempt a completion in the Mississippi Formation in the lateral portion of such
well. Any well so completed as a commercial producer of Hydrocarbons shall be
considered as an "Earning Well" under the terms of this Agreement, but shall not
be considered a Horizontal Well or Short-Lateral Horizontal Well unless the
lateral length satisfies the definition of either such Well.

J.           Buyer shall not plug and abandon any well drilled by Buyer on the
Property without Seller's express written consent, in accordance with the
following:

(i)          If Buyer determines to plug and abandon any well drilled by Buyer
on a Lease without attempting completion, Buyer shall ensure Seller has been
furnished with all electric logs run in said well and all other required well
data, and shall not abandon such well until Buyer shall have furnished all such
logs and data and given Seller at least twenty-four (24) hours notice of Buyer's
intention to so abandon after having satisfied the aforesaid data requirements,
unless Seller consents to an earlier abandonment. In the event Seller does not
consent to plugging such well, Seller shall elect, within twenty-four (24) hours
after receipt of notice of Buyer's intention to abandon, or twenty-four (24)
hours after receipt of all electrical logs and other required well data,
whichever is the later, to take over operations of such well for its own
account.  Failure of Seller to respond to Buyer's notice within the time
provided shall be deemed as Seller's consent to plug and abandon such well.

(ii)          If Buyer determines to plug and abandon any well drilled by Buyer
on a Lease after completion (or after attempting completion), Buyer shall
provide notice to Seller of Buyer's intention to abandon and Seller shall,
within thirty (30) days from receipt of such notice, either consent to such
plugging and abandonment, or elect to take over operations of such well for its
own account.  Failure of Seller to respond to Buyer's notice within the time
provided shall be deemed as Seller's consent to plug and abandon such well.

(iii)        In the event Seller gives its consent to the plugging and
abandonment of any well drilled by Buyer hereunder, Buyer shall promptly plug
and abandon such well in accordance with all the requirements of any
governmental body having jurisdiction.  In the event Seller elects to take over
such well, Seller shall pay Buyer the net salvage value (after plugging and
abandonment expense) of the recoverable equipment in the hole, if any, and the
well's surface equipment, if any, and effective as of its election, shall assume
operations of the well at its sole cost, risk, and expense, which shall include
assumption of responsibility for compliance with any directive of any
governmental agency having jurisdiction over such well.  In such event, Buyer
shall forfeit any and all right to the well so taken over by Seller, and shall
promptly reassign to Seller, all Leases of which, by completion of such well,
Buyer has either earned or would have earned, in whole or in part, a Secondary
Term Assignment, with Buyer retaining only rights to the wellbore(s) of any
other wells owned by Buyer then producing in commercial quantities on such
Lease(s) and that portion of any Lease(s) of which Buyer has either earned or
would have earned  a Secondary Term Assignment with respect to such other
producing wells.  Such reassignment shall be in form and content acceptable to
Seller, but shall include provision for Seller's assumption of any and all
liabilities with respect to the well and Lease(s) assigned and indemnification
of Buyer with respect thereto. Any such Lease(s) so reassigned to Seller shall
no longer be subject to the terms of this Agreement.
 
 
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K.          At all times while conducting operations on the Property, Buyer
shall comply with the workers compensation laws of the state where the
operations are being conducted and shall carry and maintain in full force and
effect insurance, in form and content, and with (an) insurance provider(s)
reasonably acceptable to Seller in its sole discretion, having the minimum
limits of liability described on Exhibit "H" attached hereto and incorporated
herein by reference.  Prior to commencement of any operations hereunder, Buyer
shall provide Seller with all information reasonably requested by Seller
relative to such insurance, including without limitation copies of the relevant
insurance policies, and secure Seller's written acceptance thereof, and shall
cause the insurance company or companies with whom the said insurance is carried
to include Seller (specifically including the Internal Partners) as Primary,
Non-Contributory Additional Insureds and provide a waiver of subrogation in
favor of Seller on each of said policies, to issue certificates of insurance
representing such insurance to be in full force and effect, and to issue
endorsements to the policies representing such insurance to extend the coverage
thereof to Seller.  Buyer shall at all times keep the Property free and clear of
all labor, mechanics' and materialmen's liens, whether through bonding over such
liens or through any other means of releasing such liens available at law or in
equity.

L.           Buyer shall be responsible for obtaining all necessary Permits or
other documentation required under state or federal law or otherwise by public
authorities relative to its operations on the Property, including, without
limitation, all necessary bonds, plugging or otherwise, and shall comply with
all Permits, statutes, rules, regulations, and orders of any governmental
authority with respect to its operations on the Property, including, without
limitation, any governmental request or requirement in conjunction with Buyer's
operations to repair, restore mechanical integrity, plug, re-plug and/or abandon
any well of whatsoever type, status or classification located on the Leases,
whether or not drilled by Buyer, or to take any cleanup or other action with
respect thereto. Buyer shall be responsible for all costs associated with
obtaining such Permits or other documentation, and with compliance with such
Permits, statutes, rules, regulations, and orders, and shall indemnify and hold
Seller harmless from any and all liabilities with respect thereto or arising
therefrom.  In addition to the foregoing, Buyer shall, prior to commencement by
Buyer of each well drilled by Buyer on the Property, furnish a surety bond in
favor of Seller in the amount of Twenty-five Thousand Dollars ($25,000.00),
executed by Buyer as principal, and by a corporate surety acceptable to Seller
and authorized to do business in the state in which the well is located.  Such
bond shall be in form and content satisfactory to Seller, guaranteeing the
plugging and abandonment of each such well in accordance with all rules and
regulations of the constituted authorities.

M.         Buyer shall comply in all respects with all of the express and
implied covenants of the Leases to the extent such Leases cover the Property,
including, but not limited to, any necessary environmental or pollution clean-up
occasioned by Buyer's operations, and plugging and abandonment of all wells
drilled by Buyer on the Leases (unless assumed by Seller pursuant to Paragraph
9.J.(iii) above).  Prior to conducting any operations on the Leases, Buyer shall
make satisfactory arrangements with the owners of all surface rights to be
affected by such operations for ingress and egress, and shall conduct its
operations in a manner to disturb or utilize no more of the surface of the lands
than is necessary to conduct prudent operations thereon. Upon plugging and
abandonment by Buyer of any well drilled on the Leases, Buyer shall promptly
remove all of its equipment, shall restore surface of the lands as nearly as is
reasonably practicable to its condition prior to the drilling of such well, and
shall comply with any additional or more stringent surface restoration or
clean-up requirements under the applicable Lease.

N.          In conducting its operations on the Property, Buyer shall be acting
independently of Seller, and none of such operations shall be considered as
joint, it being expressly understood that this Agreement does not constitute any
type of joint venture or partnership of any nature, mining or otherwise.  Unless
assumed by Seller under the provisions of Paragraph 9.J.(iii) above, Seller
shall have no responsibility or liability whatsoever in connection with the
conduct of any operations, drilling or otherwise, undertaken and prosecuted by
Buyer on the Leases and Property. All such operations shall be at Buyer's sole
cost, risk, and expense.
 
 
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10.         LEASE EXPIRATIONS AND BUYER'S OPTION TO EXTEND PRIMARY TERM;
NON-INTERFERENCE

A.          In the event and only in the event Buyer shall have completed
drilling operations on no less than three (3) Horizontal Wells on the Property
by December 29, 2014 (the "Option Date"), Buyer shall have the option (the
"Option"), to extend the Primary Term of the then valid Leases for a period of
one (1) year, or until the expiration date of such Lease, whichever is the
earlier (the "Extended Primary Term") by paying Seller the sum of Two Hundred
Dollars ($200.00) per net acre (as shown on Exhibit "A") covered by each of the
Leases for which the Option is exercised. For the purposes of the preceding
sentence, the completion of drilling operations of two (2) Short-Lateral
Horizontal Wells shall be considered the completion of drilling operations on
one (1) Horizontal Well.  The completion of drilling operations on Vertical
Wells or Earning Wells shall not be considered in determining whether Buyer
shall have earned the right to exercise the Option. Provided Buyer has completed
the required drilling by the Option Date, Buyer may exercise the Option by
notifying Seller in writing, no later than the Option Date, of the Leases for
which Buyer wishes to exercise the Option, and by paying Seller therefor as set
forth above, within three (3) Business Days thereafter. Failure of Buyer to give
such notice as to any Lease, or to make payment for such Lease, within the times
provided, shall be deemed an election by Buyer not to exercise the Option with
respect to such Lease.

B.          Buyer shall not be obligated to exercise the Option with respect to
all of the Leases, but if Buyer elects to exercise the Option with respect to
any Lease, Buyer must exercise the Option with respect to all of the then valid
Leases included with such Lease within any pre-existing production or spacing
unit, and with respect to all of the acreage covered by a Lease, excluding only
such Leases or acreage for which Buyer has earned a Secondary Term Assignment.

C.          In the event Buyer timely exercises the Option with respect to a
Lease, Seller shall, within fifteen (15) days from receipt of Buyer's payment,
execute and deliver to Buyer one or more Extension of Partial Term Assignment of
Oil and Gas Leases covering the Leases for which the Option has been exercised,
substantially in the form of Exhibit "I" attached hereto and incorporated herein
by reference.

D.          In the event Buyer has commenced the actual drilling, below surface
casing, of a well on a Lease prior to the expiration of the Primary Term or
Extended Primary Term, with rotary tools capable of drilling such well to
completion, the expiration of the Primary Term or Extended Primary Term of such
Lease shall be deferred, and Buyer shall have the right to continue the drilling
of such well to total depth, and if applicable earn a Secondary Term Assignment
of such Lease as is provided in Paragraph 11.  Otherwise, Buyer shall not have
the right to extend the Primary Term of any Lease except through exercise of the
Option, which may only be exercised as is provided in Paragraph 10.A. above; the
provisions of this Paragraph 10.D. shall not be construed to alter the
requirement that Buyer must have completed drilling operations on no less than
three (3) Horizontal Wells (or the equivalent thereof as provided in Paragraph
10.A above) by the Option Date in order to have the right to exercise the
Option.

E.           As is set forth on Exhibit "A", the primary term of certain Leases
not currently held by production expires prior to the Option Date, and/or prior
to the expiration of the Extended Primary Term if the Option is exercised with
respect to such Lease(s).  In addition, certain Leases currently held by
production could expire in accordance with their terms prior to the Option Date,
the expiration of the Primary Term, or the expiration of the Extended Primary
Term, due to lack of continued production or other circumstances. Seller shall
endeavor to advise Buyer in advance of the pending expiration of any Lease which
has been assigned to Buyer hereunder and is within the Primary Term or Extended
Primary Term of any such assignment, but shall incur no liability to Buyer for
failure to do so, it being expressly understood Seller shall have no obligation
to maintain any Lease in force and effect through renewal, extension,
re-establishment of production, or otherwise, and shall have no liability
whatsoever to Buyer or otherwise with respect thereto.  It is expressly
understood that the terms "Primary Term" and "Extended Primary Term" as used in
this Agreement bear no relationship to the primary term, or to the extended
primary term, as same may affect the duration of any Lease as between the lessor
and lessee thereof.  Instead, the terms "Primary Term" and "Extended Primary
Term" as used herein relate solely to the duration of the term assignments
contemplated under this Agreement, and the interests to be conveyed thereunder
may terminate earlier than is contemplated herein to the extent any of the
underlying leasehold interests terminate.  It is further understood that Buyer
cannot exercise the Option with respect to any lease which has expired, and in
the event Buyer exercises the Option and makes payment therefor with respect to
any such expired Lease, Seller shall promptly refund any such erroneous payment
made.
 
 
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F.           Upon written notice to Seller, Buyer shall have the right and
option, but not the obligation, at its sole cost and expense, to attempt to
extend or renew any Lease which expires or is expiring prior to the Option Date,
the expiration of the Primary Term, or the expiration of the Extended Primary
Term (if the Option has been exercised with respect to such Lease). If requested
by Buyer to do so, Seller will attempt to extend or renew any such Lease, but at
Buyer's cost and expense, and without any liability for failure to do so.  Any
Lease so extended or renewed shall be subject to the terms of this Agreement as
fully as if such Lease had been in full force and effect for its extended or
renewed term as of the Closing Date.  If not taken in Seller's name, such Lease
shall immediately be assigned to Seller without cost, reservation or
encumbrance.  Seller will then make a partial term assignment of such extended
or renewed Lease to Buyer, insofar as such Lease covers the Property, in
accordance with the provisions of this Agreement; provided, however, if possible
under the terms and provisions of such renewed or extended Lease, the term of
such partial assignment shall be for the Extended Primary Term.

G.           Except as provided by Paragraph 10.F., Buyer shall not make any
attempt to lease, renew, extend, top-lease, or otherwise acquire any interest in
the lands covered by any Lease, or otherwise attempt to interfere in any manner
with Seller's ownership of any Lease, including but not limited to the direct or
indirect support of litigation, for a period of two (2) years following the
expiration of such Lease, or five (5) years from the Closing Date, whichever is
the later date. Buyer shall take whatever reasonable steps may be necessary to
ensure that Buyer's employees, consultants, and agents, including without
limitation SXTRA LLC and its employees, comply with the provisions of this
Paragraph 10.F.

11.         SECONDARY TERM ASSIGNMENT

A.          In the event Buyer drills a well on a Lease, or on a production unit
approved by Seller (a "Unit") which includes a Lease, in each case within the
Primary Term or, if applicable, the Extended Primary Term of such Lease, and
such well is completed as a commercial producer of oil and/or gas (a "Producing
Well"), Seller shall execute and deliver to Buyer an assignment of such
Lease(s), effective as of first sales of oil and/or gas from such well, and,
subject to the provisions of Paragraph 11.B., for so long thereafter as such
Producing Well produces in paying quantities from the Mississippi Formation (the
"Secondary Term Assignment").  Such assignment shall be limited to the Lease or
Leases on which such well is drilled, insofar as such Lease(s) cover the
Property, and shall be further limited for a Horizontal Well to a maximum of
Three Hundred and Twenty (320) contiguous gross acres covered by such Lease(s),
for a Short-Lateral Horizontal Well to a maximum of One Hundred and Sixty (160)
contiguous gross acres covered by such Lease(s), and for a Vertical Well to the
ten (10) acre governmental quarter-quarter-quarter section covered by such
Lease(s) on which such Vertical Well is located; provided, however, in the event
Seller has approved a production unit for such a Horizontal Well or
Short-Lateral Horizontal Well which includes oil and gas leases other than the
Leases, such Secondary Term Assignment shall be limited to the acreage covered
by the Lease(s) which is (are) included in such production unit. In the event
Buyer completes an Earning Well on a Lease as a commercial producer of oil
and/or gas, the Secondary Term Assignment shall be limited to the wellbore of
such Earning Well. A Pilot Well shall not earn a Secondary Term Assignment. Any
Secondary Term Assignment shall be made substantially in the form of Exhibit "J"
attached hereto and incorporated herein by reference.  Buyer shall promptly file
each such Secondary Term Assignment of record in the appropriate county and
state and furnish Seller with copies of such recorded instrument(s). Seller
shall except and reserve from all Secondary Term Assignments the applicable
overriding royalty interest as described in Paragraph 5.B, and each Secondary
Term Assignment shall, subject to the terms of this Agreement, control the
rights and obligations of the parties with respect to the interests conveyed
under said Secondary Term Assignment, and shall supersede any Primary Term
Assignment to the extent, and only to the extent, said Primary Term Assignment
covers the same interests as the relevant Secondary Term Assignment.

B.           In the event a Producing Well ceases to produce in commercial
quantities, Buyer shall have the option to commence operations for the reworking
of such Producing Well in order to restore commercial production from the
Mississippi Formation therefrom, and/or for the drilling and completion of a new
well for production from the Mississippi Formation hereunder on the same Lease
or Unit on which such Producing Well is located (a "New Well").  Any such
reworking operations shall be commenced within ninety (90) days from such
cessation of commercial production, and any such drilling operations shall be
commenced within ninety (90) days from such cessation of commercial production
or ninety (90) days from termination of such reworking operations, whichever is
the later date. The Secondary Term Assignment applicable to the Producing Well
from which commercial production has ceased shall not terminate so long as such
reworking or drilling/completion operations are diligently and continuously
prosecuted with no cessation of more than thirty (30) consecutive days. Any
cessation of operations for longer than thirty (30) days shall be considered
termination of such operations as of the initial date of the
cessation.  Notwithstanding the foregoing, Buyer shall not have a period of time
in which to commence such operations which is longer than allowed by the
applicable Lease(s).
 
 
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In the event Buyer elects to drill a New Well, and such New Well is completed as
commercial producer from the Mississippi Formation, the Secondary Term
Assignment applicable to the Producing Well from which commercial production has
ceased shall not terminate with respect to any acreage covered by a Lease of
which Buyer would have earned a Secondary Term Assignment for completion such
New Well.

In the event Buyer does not elect to commence reworking operations or
drilling/completion operations within the time provided, or if reworking
operations are timely commenced and prosecuted but are not successful in
restoring commercial production from the Mississippi Formation in such Producing
Well, or if operations for a New Well are timely commenced and prosecuted, but
do not result in commercial production from the Mississippi Formation, the
Secondary Term Assignment applicable to such Producing Well shall thereupon
terminate; provided, however, in the event Buyer has drilled (an) additional
well or wells hereunder then producing from the Mississippi Formation in
commercial quantities on a Lease or Unit covered by the Secondary Term
Assignment applicable to such Producing Well, the Secondary Term Assignment
shall not terminate with respect to that portion of any Lease(s) of which Buyer
would have earned a Secondary Term Assignment by completion of such additional
well(s).

Notwithstanding the termination of any Secondary Term Assignment, Buyer shall
remain liable for all of its obligations hereunder with respect Buyer's
operations on the Lands and Lease(s) covered by such Secondary Term Assignment
unless assumed by Seller under the provisions of Paragraph 9.J.(iii).

12.         ASSUMPTION OF LIABILITES

From and after the Closing, Buyer shall assume and be responsible, on a going
forward basis, for all future (but not past) duties, liabilities and obligations
of Seller of whatsoever nature, express or implied, with respect to the
Property, including, without limitation, those arising under or by virtue of any
of the Contracts, or any other lease, contract, agreement, document, permit, or
applicable statute or rule, regulation or order of any governmental
authority.  Without limiting the generality of the foregoing, Buyer shall assume
and be responsible for any and all claims, demands, and causes of action of
every kind and character, brought by or in favor of any Person, company,
corporation, governmental agency or other entity, for damage to the Property or
to the environment, for pollution, or for the condition of the Wells and Leases,
or any lands and premises, arising out of Buyer's actions or operations with
respect to the Property or any portion thereof, shall indemnify and hold Seller
harmless from and against any and all liability with respect thereto, and shall
carry all such insurance, including umbrella coverage, necessary to satisfy such
responsibilities and indemnities.  Such assumption, responsibility and indemnity
shall apply to all such claims, demands or causes of actions arising directly or
indirectly from or incident to, the use, occupation, operation, maintenance or
abandonment of the Property by Buyer.  Notwithstanding the foregoing, however,
Buyer shall not assume, and shall have no responsibility whatsoever with respect
to, any of the Internal Contracts,  nor shall Buyer assume or be liable for any
claims, demands and causes of action which arise from the Internal Contracts, or
from acts or omissions occurring prior to the Closing Date or otherwise arising
from the acts or omissions of Seller, the Berexco Group or the Internal
Partners.  Notwithstanding anything contained in this Agreement which could be
construed to the contrary, Buyer shall have no right to review or inspect the
Internal Contracts.

13.         REPRESENTATIONS, WARRANTIES, COVENANTS, INDEMNITIES

A.          As to all of the Property, Seller represents and warrants to Buyer
as follows:

(i)           Berexco LLC is acting as agent hereunder for those parties listed
on Exhibit "K" (the "Internal Partners") attached hereto and made a part hereof,
and has all requisite power and authority to enter into this Agreement for
itself and the Internal Partners, and to perform its obligations and those of
the Internal Partners hereunder. The consummation of the transactions
contemplated by this Agreement will not violate or be in conflict with any
provision of Seller's by-laws or governing documents, or, unless listed on
Schedule 7, with any material agreement, or instrument to which Berexco LLC or
any Internal Partner is a party or by which it is bound, or any judgment,
decree, order, statute, rule or regulation applicable to Seller, or an Internal
Partner.  No Internal Contract contains a preferential right, maintenance of
uniform ownership requirement, or other restriction on transfer applicable to
the transactions contemplated hereby.  Berexco LLC will fully indemnify and hold
Buyer harmless from and against any and all liability asserted by any of the
Internal Partners or the Berexco Group arising from Buyer's reliance upon these
representations as Berexco LLC's authority to consummate the transactions
contemplated hereby on behalf of the Internal Partners, to represent the Berexco
Group and Internal Partners with respect to any Contract by, between, or amongst
them, and as Buyer's authority to make payment of the Purchase Price (including
any post-Closing adjustments thereto), issue notices, and do any other act or
thing required or contemplated by this Agreement, solely to Berexco LLC as agent
for the Internal Partners.
 
 
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(ii)          Seller is validly existing, and, if applicable, in good standing,
under the laws of the jurisdiction of its organization. The execution, delivery
and performance of this Agreement and the transactions contemplated hereunder
have been duly and validly authorized by all requisite action on the part of
Seller.

(iii)        This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Seller at Closing will
constitute, valid, legal and binding obligations of Seller in accordance with
their respective terms.

(iv)        Except as listed on Exhibit "L" attached hereto and made a part
hereof, to Seller’s knowledge, as of the date hereof, no suit, action or other
Proceeding is pending before any court or governmental agency to which Seller is
named a party and which might result in impairment or loss of Seller’s title to
any part of the Property, that might hinder or impede operation of the Property,
or that might otherwise materially and adversely affect the value of the
Property, and to the knowledge of Seller, no such suit, action or other
Proceeding is threatened.  Seller shall promptly notify Buyer of any such
Proceeding arising prior to the Closing.

(v)         Except for the gas purchase contracts listed on Exhibit "M" attached
hereto and made a part hereof, to the knowledge of Seller, no Person has any
call upon, option to purchase or similar right to obtain production from all or
any part of the Property.

(vi)        Seller is not obligated by virtue of a prepayment arrangement,
make-up right under a production sales contract containing a “take or pay” or
similar provision, production payment or any other arrangement, to deliver
Hydrocarbons or proceeds from the sale thereof, attributable to the Property at
some future time.
 
(vii)       There are no bankruptcy, reorganization or arrangement Proceedings
pending, being contemplated by, or to Seller’s knowledge, threatened against
Seller.

(viii)      Exhibit "N" attached hereto and made a part hereof is a listing of
all currently existing wells on the Leases to which Buyer may drill or conduct
seismic operations no closer than the distances set forth in Paragraphs 9.A. and
9.F. of this Agreement.

(ix)         Seller is not a "foreign person" within the meaning of Section 1445
of the Internal Revenue Code.

The phrases "knowledge of Seller", "Seller's knowledge", and any other
variations thereof, shall mean the actual knowledge of Adam E. Beren or Charles
B. Spradlin, Jr.

B.           From and after the date of execution of this Agreement until the
Closing Date, Seller shall not, nor shall any of its officers, directors,
employees or agents, directly or indirectly, solicit, initiate, pursue,
consider, or otherwise participate in any discussions or negotiations with, or
provide any information to or otherwise cooperate in any way with, any Person,
concerning (i) any competing offers with respect to the Property or Seller's
rights with respect thereto, or (ii) any offer or indication of interest with
respect to any transaction involving the sale, transfer, license, or other
disposition of the Property. Seller shall immediately terminate any such actions
pending on the date of execution of this Agreement. From and after the date of
execution of this Agreement and until the Closing, except as may be otherwise
consented to by Buyer in writing, Seller shall not dedicate, sell, farmout,
encumber or dispose of any of the Property, nor shall Seller drill any new well
on the Property for production of Hydrocarbons from the Mississippi Formation.
 
 
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C.           Seller has made and shall make no other warranty or representation,
express or implied, as to the accuracy or completeness of any data, information
or materials heretofore or hereafter furnished or conveyed to Buyer, any
Affiliate of Buyer, or Buyer's Representatives in connection with the Property,
whether made by Seller or its employees, officers, representatives or agents,
including without limitation Riviera-Ensley Energy Advisors ("Broker"), and
whether as to the ability, capacity or potential of the Property to produce
Hydrocarbons, at any particular rate or in any particular quantity, or
otherwise.  Any and all such data, information or other materials which may have
been furnished or conveyed to Buyer, any Affiliate of Buyer, or Buer's
Representatives was so furnished or conveyed as a convenience, and any reliance
upon or use thereof shall be at Buyer's sole risk.  Buyer is fully aware of all
facts and information related to the contemplated operations, condition, and
value of the Property, has not relied on Seller or its agents, including without
limitation, Broker, for any such facts or information.  Seller has made and
makes no representation whatsoever as to the title to the lands covered
hereunder, or by the Leases or Contracts appertaining thereto, nor does Seller
make any representation as to the effectiveness or validity of any the Leases or
the Contracts, and all such lands, Leases and Contracts shall be assigned
without warranty, either express or implied, of title, effectiveness, validity
or otherwise, except that Seller shall warrant and defend title from and against
any party claiming by, through or under Seller, an Internal Partner, or the
Berexco Group, but not otherwise.

D.          Buyer represents and warrants to Seller as follows:

(i)          Buyer has all requisite power and authority to enter into this
Agreement, to purchase the Property on the terms described in this Agreement,
and to perform its other obligations under this Agreement. The consummation of
the transactions contemplated by this Agreement will not violate, or be in
conflict with, any provision of Buyer's charter, by-laws or governing documents,
or any material agreement or instrument to which Buyer is a party or by which
Buyer is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Buyer.

(ii)         Buyer is validly existing, and, if applicable, in good standing,
under the laws of the jurisdiction of its organization. The execution, delivery
and performance of this Agreement and the transactions contemplated hereunder
have been duly and validly authorized by all requisite action on the part of
Buyer.
 
(iii)        This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Buyer at Closing will
constitute, legal, valid and binding obligations of Buyer in accordance with
their respective terms.

(iv)        Buyer has examined the Property for all purposes, and is not relying
on any prior description of the Property, whether written or verbal, which may
have been delivered by Seller or its employees, officers, representatives, or
agents, including without limitation Broker.

(v)         Buyer hereby certifies and acknowledges that it has or will obtain
all necessary Permits, approvals or other authorities necessary under applicable
state and federal law to accept assignment of the Property and conduct the
operations contemplated hereby thereon, and will hold Seller harmless from and
against any and all liability with respect thereto.

(vi)        To Buyer’s knowledge, as of the date hereof, no suit, action or
other Proceeding is pending before any court or governmental agency which might
result in impairment of Buyer's ability to pay the Purchase Price and accept
assignment of the Property, and to conduct the operations contemplated hereby
thereon, and to the knowledge of Buyer, no such suit, action or other Proceeding
is threatened.  Buyer shall promptly notify Seller of any such Proceeding
arising prior to the Closing.

(vii)       There are no bankruptcy, reorganization or arrangement Proceedings
pending, being contemplated by, or to Buyer’s knowledge, threatened against
Buyer or any of its members.

E.           Buyer warrants and represents that it is actively engaged in the
oil and gas business, and is an experienced and knowledgeable investor in the
oil and gas business, familiar with the risks attendant to the conduct of
activities in the oil and gas business in general, and the rights and interests
covered by this Agreement in particular. Buyer acknowledges and covenants that
it has been given the full opportunity to ask questions, and Seller has answered
all inquiries, if any, which Buyer has put to it concerning the rights and
interests covered by, and the terms and conditions of, this Agreement.
 
 
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F.           Buyer warrants and represents that it is acquiring the interests
covered by this Agreement for its own account as an investment and not with a
view to the resale or distribution of all or any part of such interests, and
that the representations and warranties of Buyer herein shall be deemed to be
made by, and shall be binding upon Buyer and its Affiliates, and their
respective assigns.  Buyer recognizes and understands that the interest it is
acquiring hereunder has not been registered under the Securities Act of 1933, as
amended, or under the securities act of any State, and that Buyer therefore
recognizes that it must bear the economic risk of investment for an indefinite
period of time.  Buyer specifically waives the applicability of the Kansas
Consumer Protection Act and all similar laws of other jurisdictions to the
transactions contemplated hereby.  Buyer warrants and represents that prior to
entering into this Agreement, Buyer was advised by, and has relied solely upon,
its own legal, tax and other professional counsel concerning this Agreement, the
Property, and the value thereof.

G.          No broker or finder other than Broker has acted for or on behalf of
Seller in connection with this Agreement or the transactions contemplated
hereby, and no broker or finder other than Broker is entitled to any brokerage
or finder's fees or commission with respect thereto based in any way on
agreements, arrangements or understandings made by or on behalf of
Seller.  Seller shall be solely responsible and shall hold Buyer harmless from
any commission, fee or expense due Broker, and both Buyer and Seller agree to
indemnify and hold each other harmless from and against any fees or expenses
claimed by any other brokers or finders in connection with this Agreement or the
transaction contemplated hereby.

H.          Buyer shall defend, indemnify and hold Seller harmless from and
against any and all liabilities, debts, claims, damages, and loss incurred in
connection with Buyer's operations hereunder on the Property.  Seller shall
defend, indemnify and hold Buyer harmless from and against any and all
liabilities, debts, claims, damages and loss incurred in connection with
Seller's operations on the Leases outside of this Agreement, including with
respect to all prior acts or omissions of, and operations conducted by, Seller
or its predecessors on the Leases. The indemnities of Seller and Buyer in this
Paragraph 13.H. shall survive the Closing.
 
14.         CLOSING

A.          Unless otherwise agreed to by the parties, the Closing shall take
place at the offices of Seller on March 15, 2013 , or on such other later date
as may, prior to that date, be requested by Buyer in writing, but in no event
later than March 29, 2013

(the "Closing Date"), or at such  place, or in such other manner, as may be
determined by mutual agreement of the parties.

B.          At Closing, Seller shall deliver to Buyer (or its designee) the
following:

(i)          one or more fully executed and recordable Partial Term Assignments
of Oil and Gas Leases substantially in the form of Exhibit "C" attached hereto,
and such other documents as may be reasonably necessary to convey the Property
to Buyer in accordance with the provisions hereof;

(ii)         the executed Seismic Data License Agreement and the Seismic Data;

(iii)        a certification from Seller in form substantially similar to that
attached hereto and made a part hereof as Exhibit "O", that such Person is not a
"foreign person" within the meaning of Section 1445 of the Internal Revenue
Code; and

(iv)        such other and further Closing documents as Buyer may reasonably
request prior to Closing.

C.          At Closing, Buyer shall deliver to Seller the following:

(i)          bank wire transfer of immediately available funds in the amount of
the Purchase Price less the Performance Deposit,  payable to the order of
Seller;
 
 
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(ii)         the executed Seismic Data License Agreement;

(iii)        a certificate of good standing evidencing Buyer's qualification to
transact business in the state of Kansas,  and Buyer's state of formation; and

(iv)        such other and further Closing documents as Seller may reasonably
request prior to Closing.

D.          Unless waived by Seller, at Closing, Buyer shall execute, and Seller
shall cause Beredco LLC to execute, a drilling contract in the form of Exhibit
"P" attached hereto and made a part hereof providing for the drilling of the
first five (5) Horizontal Wells on the Property (and/or an equivalent thereof,
as is provided below), and the drilling of the first five (5) SWD Wells on the
Property, by rotary rig(s) owned by Beredco LLC; provided, however, nothing
herein shall be construed to require Buyer to drill any wells on the
Property.  For the purposes of this Paragraph 14.D., two (2) of the
first-drilled Short-Lateral Horizontal Wells, and eight (8) of the first-drilled
Vertical, SWD or Pilot Wells, shall be considered the equivalent of one (1)
Horizontal Well.  For all wells drilled by Beredco LLC pursuant to the drilling
contract executed at Closing, Buyer shall pre-pay Beredco LLC the sum of Five
Hundred Thousand Dollars  ($500,000.00) prior to commencement of drilling of the
initial  Horizontal Well; Two Hundred and Fifty Thousand Dollars ($250,000.00)
prior to commencement of drilling of the initial Short-Lateral Horizontal Well,
and One Hundred and Fifty Thousand Dollars ($150,000.00) prior to commencement
of the initial Vertical, SWD or Pilot Well, with each such pre-payment to be
applied against the billings by Beredco LLC to Buyer under the drilling contract
for the applicable well.  Following the drilling of the initial Horizontal Well,
initial Short-Lateral Horizontal, and initial Vertical, SWD or Pilot Well,
respectively, the prepayment due with respect to the second and subsequent of
each such wells shall be based on the actual cost of the applicable immediately
preceding well.  Prior to commencement of drilling of each well requiring
prepayment from Buyer, Beredco LLC shall invoice Buyer for the prepayment
amount, and shall thereafter provide monthly statements to Buyer reconciling
prepayments received against actual expenses incurred for such prior month.
Beredco LLC shall promptly refund any prepayment amounts received from Buyer
with respect to any well to the extent the prepayment amount paid exceeds the
actual cost of such well, unless Buyer specifically requests in writing to
Beredco LLC that the refund amount due to Buyer be credited against the
prepayment amount due from Buyer for a specific future well to be drilled by
Beredco LLC.

15.         CLOSING CONDITIONS

A.          The obligations of Seller under this Agreement are subject, at the
option of Seller, to the satisfaction at or prior to Closing of the following
conditions:  (i) all representations and warranties of Buyer contained in this
Agreement shall be true in all material respects at and as of Closing as if such
representations and warranties were made at and as of Closing, and (ii) Buyer
shall have performed and satisfied all agreements required by this Agreement to
be performed and satisfied by Buyer at or prior to Closing. To the extent that
Seller terminates this Agreement due to any failure of Buyer to complete any of
the closing conditions above, and Seller is not in material breach of this
Agreement, then the Performance Deposit shall be immediately paid to Seller.

B.           The obligations of Buyer under this Agreement are subject, at the
option of Buyer, to the satisfaction at or prior to Closing of the following
conditions:  (i) all representations and warranties of Seller contained in this
Agreement shall be true in all material respects at and as of Closing as if such
representations were made at and as of Closing, and (ii) Seller shall have
performed and satisfied all covenants and conditions required by this Agreement
to be performed and satisfied by Seller at or prior to Closing. To the extent
that Buyer terminates this Agreement due to any failure of Seller to complete
any of the closing conditions above, and Buyer is not in material breach of this
Agreement, then the Performance Deposit shall be immediately paid to Buyer. If
Buyer proceeds to Closing with knowledge of any condition above not being met by
Seller, such condition will be deemed waived by Buyer as a condition to close
and Buyer hereby waives any claim for breach of a covenant, representation or
warranty or for any indemnity related to such condition which would otherwise be
owed pursuant to this Agreement.

16.         POST-CLOSING ADJUSTMENTS

No later than one hundred and twenty (120) days after Closing, Seller shall
prepare a statement setting forth any adjustments required under the provisions
of Paragraph 7.B. hereof, and showing the calculation of the final settlement
price based upon such statement ("Final Settlement Price").  Seller shall submit
such statement to Buyer and, upon receipt by Seller of any assignment from Buyer
required under the provisions of Paragraph 7.B., Seller shall pay to Buyer, in
immediately available funds, the amount, if any, by which the Purchase Price
exceeded the Final Settlement Price.
 
 
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17.         TAXES

Any and all sales, conveyance or other similar taxes imposed as a result of the
transactions contemplated by this Agreement, other than any income taxes of
Seller, shall be paid by and are the responsibility of Buyer.  Buyer shall also
be responsible for the payment of all severance, ad valorem or other taxes
levied against Buyer's share of any production from any well drilled by Buyer on
the Leases. Seller shall be responsible for the payment of all severance, ad
valorem or other taxes levied against Seller's share of any production from any
well on the Leases.  If requested by Seller, Buyer shall submit any ad valorem
tax renditions to Seller on wells drilled by Buyer no later than fifteen (15)
days prior to filing such renditions with the applicable county(ies), in order
that Seller may review and make suggestions on adjusting such renditions prior
to filing.

18.         DEFAULT

A.          Should Buyer default in its obligations hereunder in any material
respect prior to Closing, including but not limited to, a failure to be present
at the designated time for the Closing hereof, Seller's sole remedy shall be to
receive payment of the Performance Deposit from the Hinkle Law Firm LLC client
trust account and retain such Performance Deposit as liquidated damages and to
terminate this Agreement, Seller hereby waiving all other legal or equitable
remedies, including without limitation, damages or a suit for specific
performance. BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THE EXTENT OF ACTUAL
DAMAGES WHICH SELLER WOULD SUFFER AS A RESULT OF BUYER'S DEFAULT WOULD BE
EXTREMELY DIFFICULT TO ASCERTAIN AND HAVE AGREED, AFTER SPECIFIC NEGOTIATION,
THAT THE AMOUNT OF THE PERFORMANCE DEPOSIT IS A FAIR AND REASONABLE ESTIMATE OF
SUCH DAMAGES UNDER THE CIRCUMSTANCES, IS INTENDED TO CONSTITUTE A FIXED AMOUNT
OF LIQUIDATED DAMAGES, AND DOES NOT CONSTITUTE A PENALTY.
 
 
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B.           Should Seller default in its obligations hereunder in any material
respect prior to Closing, including but not limited to, a failure to be present
at the designated time for the Closing hereof, Buyer's sole remedy shall be the
immediate return of the Performance Deposit plus payment of an additional amount
from Seller equal to thirty percent (30%) of the amount of the Performance
Deposit and to terminate this Agreement, Buyer hereby waiving all other legal or
equitable remedies, including without limitation, damages or a suit for specific
performance. BUYER AND SELLER HEREBY ACKNOWLEDGE THAT THE EXTENT OF ACTUAL
DAMAGES WHICH BUYER WOULD SUFFER AS A RESULT OF SELLER'S DEFAULT WOULD BE
EXTREMELY DIFFICULT TO ASCERTAIN AND HAVE AGREED, AFTER SPECIFIC NEGOTIATION,
THAT THIRTY PERCENT (30%) OF THE PERFORMANCE DEPOSIT IS A FAIR AND REASONABLE
ESTIMATE OF SUCH DAMAGES UNDER THE CIRCUMSTANCES, IS INTENDED TO CONSTITUTE A
FIXED AMOUNT OF LIQUIDATED DAMAGES, AND DOES NOT CONSTITUTE A PENALTY.

C.           In the event either party is in default in any material respect of
any provision of this Agreement after Closing, the non-defaulting party, as a
condition precedent to its remedies, must give the defaulting party written
notice of the default in strict accordance with the notice requirements of this
Agreement.  The defaulting party shall have thirty (30) Business Days from
receipt of such notice to commence curing the default and shall thereafter
diligently pursue the completion thereof, but in no event shall such cure period
extend beyond ninety (90) days, unless a longer period is mutually agreed by the
parties.  If the default is timely cured, this Agreement shall continue in full
force and effect.  If the default is not timely cured, the non-defaulting party
may pursue its applicable remedies set forth in the following Paragraphs 18.D.
and 18.E.

D.          If Buyer fails to comply with any of the material provisions of this
Agreement after Closing and fails to cure the same within the applicable cure
periods, Seller may, upon the first such occurrence, elect to terminate the
Primary Term (including any Extended Primary Term) of any or all of the Leases
assigned to Buyer hereunder that are directly related to, or are the subject
matter of, Buyer's material uncured default.  Any such election to terminate by
Seller shall be made no later than thirty (30) days following the expiration of
the applicable cure period.  If Buyer thereafter again fails to comply with any
of the material provisions of this Agreement and fails to cure the same within
the applicable cure periods, Seller may elect, no later than thirty (30) days
following the expiration of the applicable cure period, to terminate the Primary
Term (including any Extended Primary Term) of any or all of the Leases assigned
to Buyer hereunder that are directly related to, or are the subject matter of,
Buyer's material uncured default, and, in the event Buyer's uncured defaults (on
a cumulative basis) have given rise to claims in excess of Fifty
Thousand  Dollars ($50,000) and/or have resulted from Buyer's failure to comply
with the provisions of Paragraphs 6., 9.A., 9. D., 9.F., 9.H., 9.J., 9.K., 9.L.,
9.M., 10.G., 19., 20., 21., or 22.D. of this Agreement, Seller may elect, no
later than thirty (30) days following the expiration of the applicable cure
period, to terminate this Agreement and/or, at Seller's option, immediately
terminate the Primary Term (including any Extended Primary Term) of any or all
other Leases assigned to Buyer hereunder.  Notwithstanding any such termination,
Seller shall not have the right to unilaterally terminate any Secondary Term
Assignment which Buyer has earned under the provisions of this Agreement. In
exercising any such election to terminate, Seller shall not waive, or otherwise
be precluded from exercising, any other rights or remedies, at law or in equity,
which it may have for the breach of the Agreement by Buyer or for Buyer's
failure to perform this Agreement in whole or in part.

E.           If Seller fails to comply with any of the material provisions of
this Agreement after Closing, and fails to cure the same within the applicable
cure periods, Buyer may pursue any and all rights or remedies, at law or in
equity, which it may have for the breach of the Agreement by Seller or for
Seller's failure to perform this Agreement in whole or in part, including
specific performance of this Agreement as it relates to delivery of any
Assignment, Extension of Primary Term Assignment, or Secondary Term Assignment
without the necessity of proving irreparable harm.
 
 
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19.         NON-ASSIGNABILITY

This Agreement is personal in nature.  Neither this Agreement, the Leases, nor
any interest in the Property shall be assigned, conveyed, transferred, or
otherwise disposed of by Buyer in any manner (collectively, a "Transfer"), in
whole or in part, without the express written consent of Seller, which consent
may be withheld by Seller for any cause, or for no cause, provided however,
Seller specifically acknowledges that Buyer may, without Seller's consent,
assign this Agreement once to any entity into or with which Buyer may be merged,
consolidated or reorganized or to any Affiliate of Buyer (a “Permitted
Transfer”).  Seller acknowledges that one or more of the members comprising
Buyer (“Buyer Members”) are publicly traded entities as of the date of this
Agreement, and, subject to the provisions of Paragraph 20. below, that any sale,
assignment or other transfer of the stock of Buyer Members by a shareholder(s)
shall not be deemed an assignment of this Agreement by operation of law or
otherwise.   Should consent to any Transfer be given, or if a Permitted Transfer
should occur, no further Transfer shall be made without further written consent
from Seller, which consent may also be withheld by Seller for any cause, or for
no cause. Any Transfer permitted hereunder shall expressly reference and be made
subject to this Agreement, including the Transfer restrictions in this
paragraph. Buyer shall keep the Property free and clear of any and all liens of
any nature, provided, however, and notwithstanding the foregoing, Buyer may
mortgage, pledge, hypothecate or in any manner encumber this Agreement or the
Property to fund the cost of any wells or Buyer's other activities with respect
to the Property, but any such mortgage, pledge, hypothecation or encumbrance
shall expressly reference and be made expressly subject to this Agreement, and
shall be made expressly subordinate and expressly subject to Seller's rights
under the terms of this Agreement. Any Transfer, mortgage, pledge,
hypothecations, or other encumbrance made or created in violation of the
provisions of this Paragraph 19. shall be null and void.

20.         PREFERENTIAL RIGHT

Notwithstanding the provisions of Paragraph 19. above, Buyer shall have the
right to Transfer all, but not less than all, of its right, title and interest
in any Lease of which Buyer has earned a Secondary Term Assignment, but no such
Transfer may be made unless and until Buyer shall have given Seller written
notice of the offer received by Buyer therefor, with full information concerning
the proposed sale, which shall include the name and address of the prospective
purchaser (who must be ready, willing, and able to purchase), the purchase
price, and all other terms  on which the Transfer is to be made.  Seller shall
have a period of fifteen (15) days from receipt of such notice in which to elect
to purchase Buyer's interest for the stated consideration and on the same terms
and conditions; provided, however, Seller shall have no such preferential right
to purchase in the case of a Transfer to an Affiliate or in the case of any
sale, assignment or other transfer of the stock of Buyer Members by a
shareholder; provided, further, that any change of control of Buyer during the
time Buyer holds such Lease pursuant to a Secondary Term Assignment made
hereunder, or of an Affiliate transferee or other transferee of Buyer following
the Transfer thereto of such Lease which is subject to a Secondary Term
Assignment made hereunder, shall be considered a Transfer subject to Seller's
option to exercise its preferential right under the provisions of this Paragraph
20 with respect such Lease.  In the event of any Transfer for consideration
other than cash or other consideration with quantifiable value (e.g. marketable
securities or debt), or in the event of a change of control of Buyer during the
time Buyer holds such Lease pursuant to a Secondary Term Assignment made
hereunder, or of an Affiliate transferee or other transferee of Buyer following
the Transfer thereto of such Lease which is subject to a Secondary Term
Assignment made hereunder, Seller's option to exercise its preferential right
shall be based upon a price equal to the value allocated in good faith to the
Property to be Transferred, or if no such allocation was made in the transaction
giving rise to the Transfer, the preferential right shall be based upon the
applicable price per net mineral acre set forth in Paragraph 7.B. of this
Agreement.

For the purposes of this Paragraph 20, a "change of control" of Buyer, or of an
Affiliate transferee or other transferee of Buyer, shall mean a transaction or
series of related transactions within a six-month period which result in the
security holders of such entity immediately prior to such transaction or series
or related transaction no longer holding, directly or indirectly, more than 50%
of the voting securities of the entity immediately following such transaction or
series of related transactions.

 
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21.         NOTICES

Any notice, request, waiver, demand or consent required or permitted to be given
hereunder shall be in writing and delivered by U.S. mail or courier service,
addressed to a party at the below addresses. The delivery date of such shall be
the date the same is deposited in an official United States Post Office, postage
prepaid, certified or registered mail, return receipt requested, or the date
delivered by such courier service with the service fee prepaid.
 

SELLER:   BUYER:       Berexco LLC   Pacific Energy Development MSL LLC 2020 N.
Bramblewood   4125 Blackhawk Plaza Circle, Suite 201 Wichita, Kansas  67206  
Danville, California 94506 Attn:  Mr. Adam E. Beren   Attn:   Mr. Frank
Ingriselli With copy to:  Mr. Charles Spradlin       Facsimile: 925-403-0703
Facsimile:  316-265-7372    

 
22.         MISCELLANEOUS

A.          Time shall be of the essence of this Agreement.  This Agreement
states the entire agreement between the parties, superceding any and all prior
communications or agreements between the parties with respect to the subject
matter contained herein, and may be supplemented, altered, amended, modified or
revoked only by a writing signed by both parties. Should any conflict arise
between the terms and conditions of any prior communication or agreement between
the parties hereto, oral or written, and this Agreement, then, in such event,
this Agreement shall control.  No amendment, modification, supplement or waiver
of the terms of this Agreement shall be binding unless executed in writing by
both parties hereto.

B.           Seller and Buyer hereby agree from time to time after the Closing,
to execute, acknowledge and deliver all such other documents, instruments, or
forms as may reasonably be required in connection with the terms and provisions
of this Agreement, and to perform and take such actions as may be necessary or
appropriate in connection with the performance of the transactions which are
contemplated by this Agreement.

C.           The indemnities, representations, warranties and agreements
contained in this Agreement and in any certificate or other instrument delivered
by or on behalf of either party pursuant to this Agreement shall survive the
Closing.

D.          There shall be no press release or public communication by either
party concerning this Agreement and/or the transactions contemplated hereby
except with the express written consent of the other party, including the
express written consent of the other party of the use of such party's identity
or any characterization or material information concerning this Agreement, the
transactions contemplated hereby and/or such party to be included in such press
release or public communication.  The provisions of this Paragraph 22.D. shall
not prevent, or require consent for, a public disclosure or communication which
the party making such disclosure or communication (the "Disclosing Party") is
specifically required to make pursuant to Applicable Law, rule or regulation;
provided, however, in such event the disclosing party shall not reveal the
identity of the other party unless specifically required by law or regulation to
do so, and shall limit any other disclosure concerning this Agreement, the
transactions contemplated hereby, and the other party to only such information
as is, in the reasonable judgement of the Disclosing Party (upon advice of
counsel), specifically required by law or regulation to be disclosed. However,
prior to any such required disclosure, including any supplemental required
disclosure, the Disclosing Party  shall provide the other party with a draft of
the proposed disclosure for such party's review and comment. The Disclosing
Party shall in good faith consider making any changes to such disclosure as may
be requested by the other party after consultation with the other party and its
counsel concerning the disclosure requirements and analysis of what information
is specifically required by Applicable Law, rule or regulation to be released;
provided that the final content of any such disclosure and the timing of its
release shall be in the ultimate discretion of the Disclosing Party. After the
Closing Date, Buyer shall have the right to publicly disclose any information
(via press releases and other announcements) related to its activities on the
Property, including, without limitation, well activity, including drilling
locations, IP rates, logs, production data, reserve reports, etc., provided that
no such general activity disclosures shall name or identify Seller, or disclose
any of the terms of this Agreement, without Seller’s prior written consent.  For
the purposes of this Paragraph 22.D., Applicable Law, rule or regulation
includes, without limitation, the rules and regulations of the United States
Securities and Exchange Commission as well as any applicable quasi-governmental
body, such as a stock exchange on which a party's shares are listed.
 
 
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E.           The paragraph headings used in this Agreement are for reference and
guidance purposes only and shall have no significance in, and do not affect in
any way, the meaning or interpretation of this Agreement.

F.           If any term or other provision of this Agreement is judicially
determined to be invalid, illegal, or incapable of being enforced under any rule
of law, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substances of
the transaction contemplated hereby are not affected in a materially adverse
manner with respect to either party.
 
G.          Without regard to principles of conflicts of law, this Agreement
shall be construed and enforced in accordance with and governed by the laws of
the state of Kansas applicable to contracts made and to be performed entirely
within such state and the laws of the United States of America.  EACH PARTY
HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT.  Each of the parties hereby (a)
irrevocably submits to the exclusive jurisdiction of the state and federal
courts of Sedgwick County, Kansas, for the purposes of any suit, action or
Proceeding arising out of or relating to this Agreement, and (b) waives, and
agrees not to assert in any such suit, action or Proceeding, any claim that (i)
it is not personally subject to the jurisdiction of such court or of any other
court to which Proceedings in such court may be appealed; (ii) such suit, action
or Proceeding is brought in an inconvenient forum; or, (iii) the venue of such
suit, action or Proceeding is improper.

H.          NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY NEITHER PARTY SHALL
HAVE ANY OBLIGATIONS WITH RESPECT TO THIS AGREEMENT, OR OTHERWISE IN CONNECTION
HEREWITH, FOR ANY SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.

I.            Notwithstanding anything herein to the contrary, Seller’s
cumulative liability for indemnity obligations and damages for any breach of
this Agreement shall not exceed the actual Purchase Price paid by Buyer. The
sole and exclusive remedy of Buyer with respect to the Property shall be
pursuant to the express provisions of this Agreement.

J.           Each party hereto agrees that it will not voluntarily undertake any
course of action inconsistent with the provisions or intent of this Agreement,
and will use its reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things reasonably necessary and proper, or
advisable under Applicable Laws to consummate the transactions contemplated by
this Agreement.

K.          This Agreement and all other provisions hereof shall be deemed to be
covenants running with the Lands and shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors, and permitted assigns.

L.           This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same Agreement. Facsimile signatures of the parties hereto shall be sufficient,
and shall be treated as original signatures, for all purposes under this
Agreement.

M.         It is not the intention of the Parties to create a partnership, joint
venture, mining partnership or association taxable as a corporation, and neither
this Agreement nor any operations hereunder shall be construed as creating any
such relationship. The liability of the parties hereto shall be several and
separate, and not joint or collective, and each of the parties hereto shall be
responsible for its obligations only.  Nothing contained herein shall be
construed to constitute any party hereto as a partner or agent of any other
party, and each party hereby waives, disclaims and releases any and all
fiduciary duties hereunder.

O.          Subject to the provisions of Paragraphs 19. and 20., this Agreement
and the terms, conditions and covenants hereof shall be binding upon the parties
hereto and their respective successors and assigns.
 
 
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23.         EXHIBITS AND SCHEDULE

The below listed Exhibits and Schedule are referred to in this Agreement, are
incorporated into this Agreement by reference, and constitute a part of this
Agreement.  Both Buyer and Seller have received a full and complete set of
Exhibits and Schedule as of the execution date of this Agreement.
 
Exhibit "A"
Leases
Exhibit "B"
Escrow Agreement
Exhibit "C"
Partial Term Assignment of Oil and Gas Leases
Exhibit "D"
Crude Oil Purchase Contract
Exhibit "E"
Confidentiality Agreement
Exhibit "F"
Seismic Data License Agreement
Exhibit "G"
Well Operational and Data Requirements
Exhibit "H"
Insurance Requirements
Exhibit "I"
Extension of Partial Term Assignment of Oil and Gas Leases
Exhibit "J"
Secondary Term Assignment
Exhibit "K"
Internal Partners
Exhibit "L"
Suits, Actions, Proceedings
Exhibit "M"
Gas Purchase Contracts
Exhibit "N"
Current Wells for Setback Requirements
Exhibit "O"
FIRPTA Certificate
Exhibit "P"
Drilling Contract
Schedule 7
Defects

 
24.         CERTAIN DEFINED TERMS:

As used in this Agreement , each of the following terms has the meaning given it
below:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person.  For the purposes of this
Agreement, “control” when used with respect to any Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

“Applicable Law” means any statute, law, rule, or regulation or any judgment,
order, writ, injunction, or decree of any Governmental Entity to which a
specified Person or property is subject.

“Business Day” shall mean a day other than a Saturday or Sunday or a day on
which commercial banks in the State of Kansas are required to be closed for
business.

“Governmental Entity” means any court or tribunal in any jurisdiction (domestic
or foreign) or any federal, state, municipal, or other governmental body,
agency, authority, department, commission, board, bureau, or instrumentality
(domestic or foreign).

“Hydrocarbons” shall mean oil, gas, other liquid or gaseous hydrocarbons, and/or
other minerals, or any of them or any combination thereof.

“Permits” means licenses, permits, franchises, consents, approvals, variances,
exemptions, and other authorizations of or from Governmental Entities.

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, enterprise, unincorporated
organization, or Governmental Entity.
 
 
21

--------------------------------------------------------------------------------

 

“Proceedings” means all proceedings, actions, claims, suits, investigations, and
inquiries by or before any arbitrator or Governmental Entity.

25.         CERTAIN ADDITIONAL DEFINED TERMS

In addition to such terms as are defined in the preamble to this Agreement and
in Paragraph 24. above, the following terms are used in this Agreement as
defined in the Paragraphs set forth below opposite such terms:
 
"Primary Term"
Paragraph 1.
"Lease or Leases"
Paragraph 1.
"Contracts"
Paragraph 1.
"Property"
Paragraph 1.
"Berexco Group"
Paragraph 1.
"Internal Contracts"
Paragraph 1.
"Closing"
Paragraph 3.A.
"Purchase Price"
Paragraph 3.A.
"Performance Deposit"
Paragraph 3.A.
"Assignment"
Paragraph 4.
"Payout"
Paragraph 5.C.
"BOE"
Paragraph 5.C.
"Buyer's Representatives"
Paragraph 6.
"Confidentiality Agreement"
Paragraph 6.
"Condor"
Paragraph 7.A.
"Seismic Data"
Paragraph 8
"Horizontal Well"
Paragraph 9.A.
"Short-Lateral Horizontal Well"
Paragraph 9.A.
"Vertical Well"
Paragraph 9.A.
"Pilot Well"
Paragraph 9.A.
"SWD Well"
Paragraph 9.C.
"Standard Data Set"
Paragraph 9.G.
"Earning Well"
Paragraph 9.I.
"Option Date"
Paragraph 10.A.
"Option"
Paragraph 10.A.
"Extended Primary Term"
Paragraph 10.A.
"Unit"
Paragraph 11.A.
"Producing Well"
Paragraph 11.A.
"Secondary Term Assignment"
Paragraph 11.A.
"Internal Partners"
Paragraph 13.A.
"Broker"
Paragraph 13.C.
"Closing Date"
Paragraph 14.A.
"Final Settlement Price"
Paragraph 16.
"Transfer"
Paragraph 19.
"Permitted Transfer"
Paragraph 19.
"Buyer Members"
Paragraph 19.
"Disclosing Party"
Paragraph 22.

 
 
22

--------------------------------------------------------------------------------

 

IN WITNESS HEREOF, the parties hereto have entered into and executed this
Agreement as of the date first above written.
 

SELLER:         Berexco LLC           
By:
/s/ Adam E. Beren          Adam E. Beren, President        
BUYER:
 
Pacific Energy Development MSL LLC
        By:    /s/ Frank C. Ingriselli      Frank Ingriselli, President  

 
 
 
23

--------------------------------------------------------------------------------

 
 
EXHIBIT A
 
 
LEASE NO.
LESSOR
LESSEE
LEASE DATE
BOOK
PAGE
LANDS
STATE
COUNTY
GROSS ACRES
NET ACRES
EXPIRATION DATE
BPO NRI
APO
NRI
X-9982
Clarence O. Jenkins and Maurine E. Jenkins, Co-Trustees of the Clarence O.
Jenkins Trust dated January 7, 1988; and the Maurine E. Jenkins Trust dated
January 7, 1988
BEREXCO INC.
2/20/2008
20
2108
Township 29 South, Range 17 West
Sec. 30:  Lot 1, a/k/a NW/4NW/4; Lots 2, 3 and 4; NE/4NW/4, NW/4NE/4, SE/4SW/4
KS
Kiowa
276.4
276.4
2/20/2014
0.775
0.75
X-9987
John Yohn and Lucile Yohn, Trustees of the John Yohn Revocable Trust dated
January 24, 2000; and as Trustees of the Lucile Yohn Revocable Trust dated
January 24, 2000
BEREXCO INC.
2/12/2008
20
2112
Township 29 South, Range 17 West
Sec. 30:  E/2E/2, SW/4NE/4, SE/4NW/4, NW/4SE/4, NE/4SW/4
KS
Kiowa
320
320
2/12/2014
0.775
0.75
X-10001
Steve Peters, also known as Stephen R. Peters, a single man
BEREXCO INC.
2/12/2008
20
2113
Township 29 South, Range 18 West
Sec. 25:  W/2W/2
KS
Kiowa
160
160
2/12/2014
0.775
0.75
X-9984
Clarence O. Jenkins and Maurine E. Jenkins, Co-Trustees of the Clarence O.
Jenkins Trust dated January 7, 1998; and the Maurine E. Jenkins Trust dated
January 8, 1998
BEREXCO INC.
2/20/2008
20
2110
Township 29 South, Range 18 West
Sec. 25:  E/2W/2, E/2
KS
Kiowa
480
480
2/20/2014
0.775
0.75
JOHNSON 1-34
F. M. Johnson and Effie Johnson
O. O. Vieux
7/3/1964
7
55
Township 30 South, Range 18 West
Sec. 34:  NW/4
KS
Kiowa
160
156.66
HBP
0.775
0.75
SMITH 1-34 GMC
Edith Smith and Ronald W. Smith, wife and husband
William H. Pine
6/1/1964
7
433
Township 30 South, Range 18 West
Sec. 34:  S/2
KS
Kiowa
320
156.66
HBP
0.775
0.75
SMITH 1-34 GMC
George Smith and Maude Smith, husband and wife; Lola Robbins and Carl Robbins,
wife and husband; and Irene Farthing and E. D. Farthing, wife and husband
William H. Pine
6/1/1964
7
431
Township 30 South, Range 18 West
Sec. 34:  S/2
KS
Kiowa
"  "
156.66
HBP
0.775
0.75
SMITH 1-34 GMC
Harold L. & Mary Alice McKenney, husband and wife
Graham-Michaelis Drilling Company
7/29/1964
7
273
Township 30 South, Range 18 West
Sec. 34:  NE/4
KS
Kiowa
160
156.66
HBP
0.775
0.75
                           
MORTON UNIT
Earl Sooter and Geraldine Morton Sooter, husand and wife; and Warren A. Stumm
and Nadine Morton Stumm, husband and wife
Graham-Michaelis Drilling Company
9/23/1966
10
39
Township 30 South, Range 18 West
Sec. 35:  NW/4
KS
Kiowa
160
34.63
HBP
0.775
0.75
MORTON UNIT
Earl Sneed, Individually and Earl Sneed, as Trustee under the Last Will and
Testament of Nellie J. Sneed, Deceased
Graham-Michaelis Drilling Company
2/10/1966
10
55
Township 30 South, Range 18 West
Sec. 35:  NW/4
KS
Kiowa
"  "
69.26
HBP
0.775
0.75
MORTON UNIT
Jessie Marie Morton, a widow; Irene Burkhart and Luther Burkhart, her husband;
Jessie Warrene Wetzelberg and Hugo Wetzelberg, her husband
Graham-Michaelis Drilling Company
12/22/1965
9
279
Township 30 South, Range 18 West
Sec. 35:  NW/4
KS
Kiowa
"  "
34.63
HBP
0.775
0.75
MORTON UNIT
Alton Unruh and Virginia Unruh, husband and wife
Graham-Michaelis Drilling Company
12/21/1965
9
269
Township 30 South, Range 18 West
Sec. 35:  SE/4
KS
Kiowa
160
138.51
HBP
0.775
0.75

 
 
Page 1 of 5

--------------------------------------------------------------------------------

 
 
LEASE NO.
LESSOR
LESSEE
LEASE DATE
BOOK
 
PAGE
LANDS
STATE
COUNTY
GROSS ACRES
NET ACRES
EXPIRATION DATE
BPO NRI
APO
NRI
MORTON UNIT
Carl E. Robbins and Lola B. Robbins, a/k/a Lois Robbins, his wife
Robert H. Kirk
7/12/1965
9
79
Township 30 South, Range 18 West
Sec. 35:  SW/4
KS
Kiowa
160
69.25
HBP
0.775
0.75
 
Southland Royalty Company
Cities Service Oil Company
8/19/1966
xx
xx
Township 30 South, Range 18 West
Sec. 35:  SW/4 (0'-5120')
KS
Kiowa
"  "
69.25
HBP
0.775
0.75
MORTON UNIT
Ralph Schmidt and Lillian Schmidt, his wife
Robert H. Kirk
1/21/1965
K-1
178
Township 30 South, Range 18 West
Sec. 35:  NE/4
KS
Kiowa
160
138.51
HBP
0.775
0.75
                                       
Kiowa County total:
   
2516.4
2417.08
                                 
ACHENBACH 'B'
Leonard J. Achenbach and June E. Achenbach, husband and wife
Adolph Beren, H. H. Beren and I. H. Beren, d/b/a Okmar Oil Company, a
co-partnership
9/13/1972
141
575
INSOFAR AND ONLY INSOFAR AS LEASE COVERS:
Township 35 South, Range 13 West
Sec. 2:  SW/4
KS
Barber
160
160
HBP
0.775
0.75
FARLEY 3-29
Effie Alta Farley, a widow, Pauline c. Farley, a single woman, Henry J. Farley,
a single man, Howard Farley, a single man, Loren Farley and Nancy Farley, his
wife
W. J. Coppinger
1/3/1948
48
121
INSOFAR AND ONLY INSOFAR AS LEASE COVERS:
Township 34 South, Range 14 West
Sec. 29:  W/2
KS
Barber
320
320
HBP
0.775
0.75
FARLEY 6-32
Effie Alta Farley, a widow, Pauline c. Farley, a single woman, Henry J. Farley,
a single man, Howard Farley, a single man, Loren Farley and Nancy Farley, his
wife
W. J. Coppinger
1/3/1948
48
121
INSOFAR AND ONLY INSOFAR AS LEASE COVERS:
Township 34 South, Range 14 West
Sec. 32:  NW/4 and SE/4
KS
Barber
320
320
HBP
0.775
0.75
FARLEY 7-32
Effie Alta Farley, a widow, Pauline c. Farley, a single woman, Henry J. Farley,
a single man, Howard Farley, a single man, Loren Farley and Nancy Farley, his
wife
W. J. Coppinger
1/3/1948
48
121
INSOFAR AND ONLY INSOFAR AS LEASE COVERS:
Township 34 South, Range 14 West
Sec. 32:  NE/4 and SW/4
KS
Barber
320
320
HBP
0.757813
0.75
PIERSON
Julia Pierson and Philip A. Daum, as Testamentary Trustees under the Last Will &
Testament of Mary B. Pierson, deceased, and Julia Pierson and Philip A. Daum, as
Trustees appointed by the District Court of Barber Co., KS, as Trustees for the
contingent remaindermen under the Last Will and Testament of Mary B. Pierson,
deceased
Beren Corporation
11/27/1973
146
409
Township 35 South, Range 13 West
Sec. 10:  S/2
KS
Barber
320
320
HBP
0.775
0.75

 
 
Page 2 of 5

--------------------------------------------------------------------------------

 
 
LEASE NO.
LESSOR
LESSEE
LEASE DATE
BOOK
 
PAGE
LANDS
 
STATE
 
COUNTY
GROSS ACRES
NET ACRES
EXPIRATION DATE
BPO
NRI
APO
NRI
PIERSON
Julia Pierson and Philip A. Daum, as Testamentary Trustees under the Last Will &
Testament of Mary B. Pierson, deceased, and Julia Pierson and Philip A. Daum, as
Trustees appointed by the District Court of Barber Co., KS, as Trustees for the
contingent re
Beren Corporation
11/27/1973
146
413
Township 35 South, Range 13 West
Sec. 15:  Lots 1, 2, 3 and 4 and N/2N/2
KS
Barber
330
330
HBP
0.775
0.75
PIERSON
Barbara E. Cox and Felton E. Cox, wife and husband
Okmar Oil Co.
10/21/1972
141
571
Township 35 South, Range 13 West
Sec. 14:  NW/4
KS
Barber
160
160
HBP
0.775
0.75
C-151
Charles E. Achenbach, a single man, and Connie Silvas, a single woman
Berexco LLC
11/26/2010
329
25
Township 35 South, Range 13 West
Sec. 11:  SW/4
KS
Barber
160
160
11/26/2013
0.775
0.75

C-153
Charles E. Achenbach, a single man, and Connie Silvas, a single woman
Berexco LLC
11/26/2010
329
31
Township 35 South, Range 13 West
Sec. 11:  NW/4
KS
Barber
160
160
11/26/2013
0.775
0.75
                                       
Barber County total:
   
2250
2250
                                 
KENNEDY 1-16
George E. Kennedy and Carrie E. Kennedy, husband and wife
Graham-Michaelis Drilling Company
12/3/1965
28
9
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 8:  SE/4
Sec. 16: NW/4
Sec. 17: NE/4
KS
Comanche
480
404.51
HBP
0.775
0.75
KENNEDY 1-16
Winifred A. Unangst, a widow
Graham-Michaelis Drilling Company
5/21/1968
32
182
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 17: SE/4
KS
Comanche
160
67.42
HBP
0.775
0.75
KENNEDY 1-16
James A. Griffin, a/k/a J.A. Griffin and Jim Griffin, a single man
Graham-Michaelis Drilling Company
5/21/1968
32
181
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 17: SE/4
KS
Comanche
"  "
67.42
HBP
0.775
0.75
PEPPERD 1-20
George E. Kennedy and Carrie E. Kennedy, husband and wife
Graham-Michaelis Drilling Company
12/3/1965
28
9
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 20:  All that part of the W/2NW/4 lying north of the Santa Fe Railroad
KS
Comanche
66.08
62.98
HBP
0.775
0.75

 
 
Page 3 of 5

--------------------------------------------------------------------------------

 

 
LEASE NO.
 
LESSOR
 
LESSEE
LEASE DATE
BOOK
 
PAGE
 
LANDS
 
STATE
 
COUNTY
GROSS ACRES
NET ACRES
EXPIRATION DATE
BPO NRI
APO
NRI
PEPPERD 1-20
Winifred A. Unangst, a widow
Graham-Michaelis Drilling Company
5/21/1968
32
182
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 20:  N/2 except that part of the W/2NW/4 lying north of the center line of
A.T.& S.F. railroad right of way; and the NW/4SW/4
KS
Comanche
293.9
139.59
HBP
0.775
0.75
PEPPERD 1-20
James A. Griffin, a/k/a J.A. Griffin and Jim Griffin, a single man
Graham-Michaelis Drilling Company
5/21/1968
32
181
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 20:  N/2 except that part of the W/2NW/4 lying north of the center line of
A.T.& S.F. railroad right of way; and the NW/4SW/4
KS
Comanche
"  "
139.58
HBP
0.775
0.75
PEPPERD 1-20
Thomas C. Pepperd (also known as T. C. Pepperd), a widower, and Frances Ridge, a
widow, and Geneva Pepperd, a single person
James A. Yarnell
5/23/1962
22
474
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 20:  W/2SE/4; E/2SW/4, SW/4SW/4
KS
Comanche
200
190.62
HBP
0.775
0.75
PEPPERD 1-20
Thomas C. Pepperd (also known as T. C. Pepperd), a widower, and Frances Ridge, a
widow, and Geneva Pepperd, a single person
James A. Yarnell
5/23/1962
22
473
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 17 West
Sec. 20:  E/2SE/4
KS
Comanche
80
76.25
HBP
0.775
0.75
                                       
Comanche County total:
   
1279.98
1148.37
                                 
DOOLIN
William W. Doolin and Opal M. Doolin, his wife
Elmer M. Oak
12/6/1949
30
4
Towship 31 South, Range 9 West
Sec. 9:  SE/4
KS
Harper
160
160
HBP
0.775
0.75
DOOLIN
Olga V. Doolin, a/k/a Olga Doolin, and D. D. Doolin, wife and husband
Petroleum, Inc.
3/5/1958
48
141
Towship 31 South, Range 9 West
Sec. 16:  N/2NE/4
KS
Harper
80
80
HBP
0.775
0.75
DOOLIN
Daniel D. Doolin and Olga Doolin, his wife
Elmer M. Oak
12/6/1949
29
385
Towship 31 South, Range 9 West
Sec. 16:  S/2NE/4
KS
Harper
80
80
HBP
0.775
0.75
DRAKE
Lois Herman and Floyd Herman, wife and husband
Beren Corporation
4/11/1979
78
1603
Township 31 South, Range 9 West
Sec. 11:  South 100 acres of the SE/4
KS
Harper
100
3.84
HBP
0.775
0.75
DRAKE
Maurice D. Drake, a single man
John L. Bedwell
7/19/1979
78
1830
Township 31 South, Range 9 West
Sec. 11:  South 100 acres of the SE/4
KS
Harper
"  "
38.41
HBP
0.775
0.75
DRAKE
Bertha Prewitt, a/k/a Bertha E. Prewitt, a widow; Guy E. Prewitt and Maryetta
Prewitt, his wife; Raymond Prewitt and Melba Prewitt
John L. Bedwell
7/12/1979
78
1831
Township 31 South, Range 9 West
Sec. 11:  South 100 acres of the SE/4
KS
Harper
"  "
46.09
HBP
0.775
0.75
DRAKE
Marjory B. Leslie and William Leslie, her husband
John L. Bedwell
7/20/1979
78
1832
Township 31 South, Range 9 West
Sec. 11:  South 100 acres of the SE/4
KS
Harper
"  "
3.84
HBP
0.775
0.75
DRAKE-RYAN
Leo W. Ryan and Ethel G. Ryan, husband and wife
Elmer M. Oak
10/17/1950
30
638
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 9 West
Sec. 11:  N/2SW/4
KS
Harper
80
80
HBP
0.75
0.75
DRAKE-RYAN
Earl Drake and Grace Drake, husband and wife
Elmer M. Oak
10/17/1950
30
637
INSOFAR AND ONLY INSOFAR AS SAID LEASE COVERS:
Township 31 South, Range 9 West
Sec. 11:  S/2SW/4
KS
Harper
80
80
HBP
0.75
0.75

 
 
Page 4 of 5

--------------------------------------------------------------------------------

 

 
LEASE NO.
 
LESSOR
 
LESSEE
LEASE DATE
BOOK
PAGE
LANDS
 
STATE
 
COUNTY
GROSS ACRES
NET ACRES
EXPIRATION DATE
BPO NRI
APO
NRI
DUNCAN-MILLER
Byron H. Duncan
Beren Corporation
4/10/1979
78
1764
Township 31 South, Range 9 West
Sec. 11:  North 60 acres of the SE/4
KS
Harper
60
27.66
HBP
0.775
0.75
DUNCAN-MILLER
George L. Miller and Eva M. Miller, his wife
John L. Bedwell
7/19/1979
78
1829
Township 31 South, Range 9 West
Sec. 11:  North 60 acres of the SE/4
KS
Harper
"  "
27.65
HBP
0.775
0.75
VIRGINIA
Edwin e. J. McGuire a/k/a E. J. McGuire and Virginia McGuire, husband and wife;
Raub Snyder and Florence Snyder, husband and wife; A. Paul Snyder and Frances
Snyder, husband and wife; Pearl Winchell Whiteside and Edward Whiteside, wife
and husband; Mary L. Scott and Hershel H. Scott, wife and husband; June L.
McGriff and F. Carl McGriff, wife and husband
Beren Corporation
4/25/1975
77
736
Township 31 South, Range 9 West
Sec. 11:  NW/4
KS
Harper
160
160
HBP
0.775
0.75
WINGATE
Earl Wingate, a single man, and Loren Wingate, a single man
Beren Corporation
2/28/1978
78
860
Township 31 South, Range 9 West
Sec. 11:  NE/4
KS
Harper
160
160
HBP
0.775
0.75
                                       
Harper County total:
   
960
947.49
                                             
STATE OF KANSAS TOTAL:
   
7006.38
6762.94
                                             
GRAND TOTAL:
   
7006.38
6762.94
     

 
 
 
Page 5 of 5

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EXHIBIT "B"

ESCROW AGREEMENT
 
This Escrow Agreement (the “Agreement”) is made and entered into this 22nd day
of February, 2012 (the “Effective Date”), by and among Berexco LLC,
a  Kansas limited liability company (“Seller”), Pacific Energy Development MSL
LLC, a Nevada limited liability company (“Buyer”), and Hinkle Law Firm, LLC, a
Kansas limited liability company (“Escrow Agent”).

WITNESSETH:

WHEREAS, Buyer and Seller are parties to that certain Agreement for Purchase of
Term Assignment dated February 22, 2013 (the “AFPOTA”);

WHEREAS, Seller previously entered into a similar Agreement for Purchase of Term
Assignment with Condor Energy Technology LLC (“Condor”), an affiliate of Buyer,
dated November 30, 2012 (the “Condor AFPOTA”);

WHEREAS, pursuant to the Condor AFPOTA, the parties thereto and Escrow Agent
entered into an Escrow Agreement dated November 30, 2012 (the “Condor Escrow
Agreement”), under which Condor paid into escrow the sum of Eight Hundred and
Sixty-four Thousand, Eight Hundred and Sixty-six and No/100 Dollars
($864,866.00) which was referred to in the Condor AFPOTA as the “Performance
Deposit”;

WHEREAS, in a letter agreement dated February 8, 2013, Seller and Condor
mutually agreed to terminate the Condor AFPOTA, and Condor assigned all its
right, title and interest in and to the Condor Escrow Agreement and the
Performance Deposit to PEDEVCO Corp. (“PEDEVCO”), an affiliate of Buyer;

WHEREAS, Buyer, Seller and PEDEVCO desire to terminate the Condor Escrow
Agreement; transfer PEDEVCO’s interests in and to the Performance Deposit to
Buyer; have the Performance Deposit under the Condor AFPOTA, plus interest, less
escrow fees, become the Performance Deposit under the AFPOTA; and enter into a
new Escrow Agreement covering said Performance Deposit as contemplated by the
AFPOTA; and
 
WHEREAS, Escrow Agent is willing to terminate the Condor Escrow Agreement and
hold and/or release the Performance Deposit in accordance with the terms and
provisions of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

1.   Term.  This Agreement shall be effective and in full force and effect and
binding upon the parties hereto, from the Effective Date until the final
distribution and/or release by Escrow Agent of all of the Performance Deposit,
whereupon this Agreement shall terminate and the parties shall have no further
obligations hereunder, unless expressly set forth herein.

2.   Appointment of Escrow Agent.  Seller and Buyer hereby appoint Hinkle Law
Firm, LLC to serve as Escrow Agent, and the Escrow Agent hereby accepts and
agrees to perform its obligation as set forth in the terms of this
Agreement.  Escrow Agent shall not be bound by the terms and provisions of the
AFPOTA nor any amendments or modifications thereto unless it expressly agrees,
in writing, to be bound by such terms and provisions.
 
 
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3.   Management of Deposit.  Buyer and Seller agree that the Performance Deposit
being held by Escrow Agent pursuant to the Condor AFPOTA and the Condor Escrow
Agreement shall be, and is hereby deemed to be, the Performance Deposit under
the AFPOTA.  Escrow Agent hereby agrees to hold the Performance Deposit in
accordance with the terms and provisions of this Agreement.  Buyer and Seller
agree that Escrow Agent shall be entitled to keep the Performance Deposit in an
account with INTRUST BANK, N.A., Wichita, Kansas which account has been
established by Escrow Agent for the sole purpose of holding the Performance
Deposit (the “Escrow Account”).  The Performance Deposit shall be and remain the
property of the Buyer and shall be deemed to be held in trust for the benefit of
Buyer.  Escrow Agent shall disburse the Performance Deposit in accordance with
the terms of this Agreement.

4.   Escrow Information.  The Performance Deposit shall be deposited in the
Escrow Account, which Escrow Account shall be a separately segregated interest
bearing account.  Any interest earned by the principal in the Performance
Deposit shall be accumulated in the Escrow Account, shall be considered a part
of the Performance Deposit and shall be released by Escrow Agent as Escrow Agent
shall be directed as provided herein; provided, however, any dispute concerning
release of the Performance Deposit shall be resolved in accordance with the
dispute resolution mechanism set forth in this Agreement.  Buyer and Seller
shall provide Escrow Agent with their respective taxpayer ID numbers
concurrently with the execution of this Agreement.

5.   Disbursements of Performance Deposit.  Escrow Agent shall disburse the
Performance Deposit in accordance with the following terms:

(a)  Upon receipt of written notice from Seller that the Closing has occurred as
provided for in the AFPOTA, Escrow Agent shall disburse the entire amount of the
Performance Deposit, including any accrued interest, less any escrow fees, to
Seller.

(b)  In any other situation, Buyer and Seller may, at any time, provide an
agreed written notice to Escrow Agent, requesting that funds be released (the
“Funds Release Notice”).  To be valid, the Funds Release Notice must be executed
by both Buyer and Seller, must state the amount of such funds to be released,
and must state to whom the funds are to be released.

6.   Dispute Resolution Mechanism.  In the event of any disagreement between any
of the parties to this Agreement, or between them or either of any of them and
any other person, resulting in adverse claims or demands being made in
connection with this Agreement or in the event that Escrow Agent may, in good
faith, question any action that should be taken hereunder, Escrow Agent may, at
Escrow Agent’s option, (i) refuse to comply with any claim or demand on it, or
refuse to take any other action hereunder, so long as such disagreement
continues or such doubt exists, and in any such event Escrow Agent shall not be
or become liable to any person for its failure or refusal to act, and Escrow
Agent shall be entitled to continue to so refrain from acting until the rights
of Seller and Buyer shall have been fully and finally adjudicated by arbitration
or by a court of competent jurisdiction, or all differences shall have been
adjusted and all doubt resolved by agreement among all of the interested
persons, or (ii) file an action in interpleader to resolve such disagreement and
deposit with the registrar of the court in which it files such action any and
all of the Performance Deposit in its possession and, thereupon, it shall stand
fully relieved and discharged of any further duties under the Agreement.  The
rights of the Escrow Agent under this paragraph are cumulative of all other
rights which it may have by law or otherwise.

7.   Duties of Escrow Agent.  The duties of Escrow Agent shall be limited to
those expressly set forth in this Agreement, including but not limited to: (i)
accepting the Performance Deposit, (ii) disbursing the Performance Deposit,
and/or (iii) reporting earnings on interest to the IRS.

8.   Liability and Protection of Escrow Account.

(a)  Powers – Generally.  Escrow Agent shall have only the rights, powers,
privileges and duties expressly set forth in this Agreement, together with those
rights, powers, and privileges reasonably incident thereto, and is not a party
to, and is not bound by, or charged with notice of any agreement other than this
Agreement.
 
 
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(b)  Actions on Notice, etc.  Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, certificate, receipt, authorization,
power of attorney or other document which Escrow Agent, in good faith,
reasonably believes to be genuine and to be signed by the proper party or
parties.

(c)  Advice of Counsel.  Escrow Agent may rely on the advice of its legal
counsel (including any attorneys with Hinkle Law Firm, LLC) in the event of any
dispute or question as to the construction of any of the provisions hereof or
its duties hereunder, and shall incur no liability as a result of reliance on
such advice.

(d)  Resignation.  Escrow Agent shall have the right to resign hereunder upon
ten (10) days prior written notice to Seller and Buyer.  If Escrow Agent resigns
or otherwise fails or refuses to act as Escrow Agent, then Seller and Buyer
shall use their reasonable business efforts to agree upon a substitute Escrow
Agent.  In addition, Escrow Agent may be removed by the mutual agreement of
Seller and Buyer.
 
(e)  Liability – Negligent Acts.  Escrow Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement, except
for acts which constitute gross negligence, or willful misconduct or which
constitute a breach of its duties hereunder.

(f)  Insurance.  Escrow Agent is not an insurer for the safety of the
Performance Deposit.  Escrow Agent shall not be liable or responsible for a loss
of any of the funds by reason of bank failure.

9.   Compensation for Services.  Escrow Agent shall be entitled to an Escrow Fee
for the services set out in this Agreement which is equal to (i)  the sum of
$300.00 per hour for work performed; (ii) all costs, fees, and other expenses
incurred by Escrow Agent in establishing a bank account for the Performance
Deposit; (iii) the costs associated with the transfer of any of the Performance
Deposit including, but not limited to, wire transfer costs and/or cashier’s
check expenses; and (iv) reasonable costs and expenses incurred by Escrow Agent
including, but not limited to, long distance telephone costs and copy
charges.  Buyer and Seller shall be jointly and severally liable for the payment
of such compensation but the final responsibility shall lie with Seller.  Escrow
Agent shall be entitled to deduct any and all compensation due from the
Performance Deposit prior to making any disbursements.

10. Indemnity.  Seller and Buyer agree, jointly and severally, to indemnify and
hold Escrow Agent harmless from and against all costs, damages, judgments,
attorneys’ fees, expenses and obligations and liabilities of any kind or nature
which Escrow Agent may incur or sustain in connection with or arising out of
this Agreement, except to the extent due to Escrow Agent’s gross negligence,
willful misconduct, or breach of its duties hereunder.  In addition, each party
agrees to indemnify Escrow Agent from all costs, legal fees, and expenses
incurred by Escrow Agent (including those legal fees of attorneys who practice
with Escrow Agent) in connection with or arising out of (i) seeking recovery
from such party under or pursuant to the terms of this indemnity paragraph; (ii)
defending any litigation which arises out of or relates to this Agreement or the
alleged breach thereof by any party, including Escrow Agent; and (iii)  seeking
recovery of any compensation which is due Escrow Agent.  Escrow Agent shall be
entitled to deduct any and all such amounts due or alleged to be due from the
Performance Deposit.

11. Survival.  The terms and provisions of paragraphs 9 and 10 of this Agreement
shall survive termination or expiration of this Agreement.
 
 
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12. Liability, Duties and Obligations of Escrow Agent.  The parties hereby agree
as follows:

a.   Escrow Agent undertakes to perform only such obligations as are expressly
set forth herein.

b.   Escrow Agent shall not be liable for any action taken by it in good faith
and reasonably assumed by it to be authorized or within the rights and powers
conferred upon it herein.

c.   It is understood that Escrow Agent shall not be required to achieve any
minimum return on said Performance Deposit.

13. Waiver.  Neither this Agreement nor any provisions hereof may be waived
except by instrument in writing signed by the parties against which the
enforcement of such waiver is sought and then only to the extent set forth in
such instrument.

14. Books and Records.  Escrow Agent shall maintain proper books and records for
the Escrow Account.  All amounts to be paid or disbursed by Escrow Agent under
this Agreement shall be paid solely out of the Performance Deposit.

15. Notices.  Any notices to be given hereunder shall be given by (i) placing
the notice in the United States mail, certified or registered, properly stamped,
(ii) overnight delivery service, (iii) facsimile, or (iv) by personal delivery,
in each case addressed to the location shown below or such other addresses as
the respective party may direct in writing to the other, or to such
address.  Such notice shall be deemed effective (A) two (2) days after such
placing in the mail when delivered by U.S. Mail Service, (B) on the day actually
delivered by an overnight delivery service, (C) upon confirmation of the
completion of the fax (electronic or otherwise) when delivered by fax, or (D)
upon such personal delivery:
 

 
If to BUYER:       
Pacific Energy Development MSL LLC
   
4125 Blackhawk Plaza Circle, Suite 201
   
Danville, California 94506
   
Attn: Mr. Frank Ingriselli
   
Fax No.: 925-403-0703
       
If to SELLER:          
Berexco LLC
   
2020 N. Bramblewood
   
Wichita, Kansas 67206
   
Attn: Mr. Adam E. Beren
   
With copy to: Mr. Charles Spradlin
   
Fax No.: 316-265-7372
       
If to ESCROW AGENT: 
Hinkle Law Firm, LLC
   
8621 East 21st Street North, Suite 200
   
Wichita, Kansas 67206-2991
   
Attn:  John Broomes
   
Facsimile:  316-630-8375

 
16. Amendments.  No amendments or changes to this Agreement shall become
effective unless in writing and signed by Seller, Buyer and Escrow Agent.
 
 
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17. Superseding Effect.  This Agreement shall govern the obligations and rights
of the parties notwithstanding the terms and provisions of the AFPOTA.  Escrow
Agent shall not be bound by the terms and provisions of the AFPOTA.

18. Invalidity.  In the case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any of the provisions hereof, and this Agreement shall be construed as if that
provision had never been contained herein.

19. Time.  Time is of the essence in the performance of each provision of this
Agreement.

20. Counterparts and Facsimile Signatures.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and which together shall
constitute one and the same agreement.  Signatures sent by one party to the
other via facsimile transmission shall be deemed original signatures, binding
upon the party so sending such signature, and shall be and hereby are deemed
original signatures.

21. Successors and Assigns.  The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of each of the parties hereto, their
successors and permitted assigns.

22. Governing Law.  This Agreement shall be governed by the laws of the State of
Kansas.

23. Assignment of Performance Deposit.  PEDEVCO Corp. hereby assigns all its
right, title, and interest in and to the Performance Deposit to Buyer.

24. Termination of Condor Escrow Agreement.  The Condor Escrow Agreement is
hereby terminated.

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the day and year first above written.
 

BUYER              
Pacific Energy Development MSL LLC
              By: /s/ Clark R. Moore         Clark R. Moore        
Executive Vice President and General Counsel
                SELLER              
Berexco LLC
                By:
/s/ Adam E. Beren
        Adam E. Beren, President      

 
 
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ESCROW AGENT:               Hinkle Law Firm, LLC                 By:
/s/ John Broomes
        John Broomes, Member      

 
AND JOINING FOR PURPOSES OF TERMINATING THE CONDOR ESCROW AGREEMENT AND
TRANSFERRING ITS INTERESTS IN THE PERFORMANCE DEPOSIT TO BUYER:
 
PEDEVCO Corp.
                By:
/s/ Clark R. Moore
        Clark R. Moore         Executive Vice President and General Counsel    
 

 
 
 
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EXHIBIT “C”
 
PARTIAL TERM ASSIGNMENT OF OIL AND GAS LEASES
 
STATE OF ___________________§
 
COUNTY OF__________________§

This Partial Term Assignment of Oil and Gas Leases (the “Assignment”) is made
and entered into as of the 15th day of March, 2013 (the “Effective Date”), by
and between Berexco LLC, _________________________________________
 

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hereinafter collectively referred to as “Assignor”, whether one or more, and
Pacific Energy Development MSL LLC, hereinafter referred to as “Assignee”.

W I T N E S S E T H:

Assignor, in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand
paid, and other good and valuable consideration, and of the other agreements of
Assignee herein contained, the receipt and sufficiency of which are hereby
acknowledged, does hereby transfer, assign and convey unto Assignee, subject to
the exceptions, reservations, conditions and other provisions hereinafter set
out, all of Assignor’s right, title and interest in and to the leasehold and
contractual working interest rights in and to the Oil and Gas Leases described
on Exhibit “A attached hereto,such lease(s) being hereinafter sometimes referred
to as “the Leases”, and in the "Contracts" as such term is defined in the
Agreement (as hereinafter defined), INSOFAR AND ONLY INSOFAR as the Leases and
Contracts cover the Mississippi formation underlying lands described in Exhibit
“A”, limited to production therefrom from wells drilled by Assignee thereon
after the Effective Date.  The Mississippi formation is defined as the
stratigraphic equivalent of all depths between 4,982 feet and 5,391 feet,
inclusive, as shown on the Log-Tech Dual Compensated Porosity log dated February
22, 2007 for the Peppard #3-20 well (API #15-033-21490-0000) located near the
center of the Southeast Quarter of the Southeast Quarter of the Northwest
Quarter of the Northeast Quarter of Section 20, Township 31 South, Range 17 West
(SE/4SE/4NW/4NE/4 Sec. 20-31s-17w), Comanche County, Kansas.

Subject to the terms and conditions of the Leases, this Assignment shall be for
a term commencing on the ­Effective Date and ending December 29, 2014, and shall
terminate in all respects upon the expiration of such term.

This Assignment is delivered pursuant, and is made expressly subject, to the
terms and conditions of that certain Agreement for Purchase of Term Assignment
dated February 22, 2013, by and between Berexco LLC, et al., and Pacific Energy
Development MSLLLC, which agreement is on file in the office of Berexco LLC at
2020 N. Bramblewood, Wichita, KS 67206 (the “Agreement”).  Assignor and Assignee
intend that the terms of the Agreement remain separate and distinct from, and
not merge into, the terms of this Assignment.  To the extent of any conflict
between the terms and conditions of this Assignment and the Agreement, the terms
of the Agreement shall govern and prevail.

Assignor hereby reserves unto Assignor and excepts from this Assignment:

a)           Any and all rights not expressly conveyed to Assignee in this
Assignment, including, without limitation, all existing wells, equipment,
facilities, and other personal property on or related to the Leases; all of
Assignor's right, title and interest in and to all depths outside the
Mississippi Formation; the right to drill and complete new wells on the Leases
for the production of hydrocarbons from formations other than the Mississippi
Formation; and all right, title and interest of Assignor within the Mississippi
Formation necessary to allow Assignor to re-enter, workover, complete,
re-complete, fracture treat, and produce hydrocarbons from the Mississippi
Formation in any well which has been drilled on the Leases (or on lands unitized
therewith) prior to the execution of the Agreement (provided, however, Assignor
shall not convert an existing vertical well into a horizontal well targeting
production from the Mississippi Formation).

b)           An overriding royalty interest in and to all hydrocarbons produced
from the Property equal to the positive difference, if any, obtained by
subtracting leasehold burdens existing as of the Effective Date from: (i)
twenty-two and one-half percent (22.5%) before Payout (as such term is
hereinafter defined); (ii) twenty-five percent (25%) upon and after Payout,
proportionately reduced to the extent Assignor's working interest in the Lease
assigned is less than 100%.   To the extent leasehold burdens existing as of the
Effective Date exceed these respective percentages, Assignor reserves no
overriding royalty interest. It is the intention of Assignor to deliver to
Assignee a leasehold net revenue interest in each Lease equal to the lesser of
seventy-seven and one-half percent (77.5%) or Assignor's actual net revenue
interest in and to Leases before Payout; and a leasehold net revenue interest
equal to the lesser of seventy-five percent (75%) or Assignor’s actual net
revenue interest in and to Leases after Payout. The term "Payout" as used herein
shall mean “Payout” as defined in the Agreement.
 
 
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c)           The continuing preferential right and option, from time to time and
at any time, but not the obligation, to purchase all or any part of the
hydrocarbons produced and saved by Assignee from any well drilled by Assignee on
the Leases, upon the terms and conditions described in the Agreement.

THIS ASSIGNMENT IS MADE WITHOUT ANY WARRANTY OF TITLE, EXPRESS, IMPLIED,
STATUTORY, OR AT COMMON LAW; EXCEPT THAT ASSIGNOR SHALL WARRANT AND DEFEND TITLE
FROM AND AGAINST ANY PARTY CLAIMING BY, THROUGH OR UNDER ASSIGNOR, BUT NOT
OTHERWISE.  ANY OTHER COVENANTS, WARRANTIES AND REPRESENTATIONS, WHETHER OF
TITLE OR OTHERWISE, ARE HEREBY EXPRESSLY DISCLAIMED BY ASSIGNOR, AND ASSIGNEE
ACCEPTS THIS ASSIGNMENT WITH FULL KNOWLEDGE OF SAME.  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ASSIGNOR SPECIFICALLY MAKES NO REPRESENTATION,
COVENANT, OR WARRANTY, EXPRESS, IMPLIED, STATUTORY, OR AT COMMON LAW, AS TO THE
VALIDITY OF ANY OF THE LEASES, CONTRACTS OR AGREEMENTS COVERED HEREBY, OR AS TO
THE ACCURACY OF ANY DATA, INFORMATION OR MATERIALS DELIVERED TO ASSIGNEE BY
WHATSOEVER MEANS WITH RESPECT TO THE LEASES CONVEYED HEREBY, OR CONCERNING THE
QUALITY OR QUANTITY OF HYDROCARBON PRODUCTION OR RESERVES, IF ANY, ATTRIBUTABLE
TO THE LEASES CONVEYED, OR THE ABILITY OF THE LEASES TO PRODUCE HYDROCARBONS, OR
THE PRICES AT WHICH ASSIGNEE WILL BE ENTITLED TO RECEIVE PAYMENT FOR ANY SUCH
HYDROCARBONS, OR OTHERWISE. ANY AND ALL SUCH DATA, INFORMATION AND OTHER
MATERIALS FURNISHED BY ASSIGNOR AND ITS REPRESENTATIVES WAS PROVIDED TO ASSIGNEE
AS A CONVENIENCE ONLY, AND ANY RELIANCE ON OR USE OF THE SAME HAS BEEN AND SHALL
BE AT ASSIGNEE’S SOLE RISK.  ASSIGNEE ACKNOWLEDGES THAT THIS EXPRESS DISCLAIMER
AND WAIVER SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS TRANSACTION
AND THE CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THIS DISCLAIMER AND WAIVER
HAS BEEN BROUGHT TO THE ATTENTION OF ASSIGNEE AND EXPLAINED IN DETAIL AND THAT
ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS DISCLAIMER AND WAIVER.

ASSIGNEE HEREBY ACKNOWLEDGES THAT ASSIGNEE HAS PHYSICALLY INSPECTED, OR HAS
WAIVED THE RIGHT TO INSPECT, THE LEASES CONVEYED HEREBY FOR ALL PURPOSES, AND
HAS SATISFIED ITSELF AS TO THE PHYSICAL AND ENVIRONMENTAL CONDITION THEREOF,
BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE MATERIAL FIBERS, AND
NATURALLY OCCURING RADIOACTIVE MATERIALS; IS NOT RELYING FOR ANY PURPOSE ON ANY
PRIOR DESCRIPTION OF SUCH LEASES, WHETHER WRITTEN OR VERBAL, WHICH MAY HAVE BEEN
DELIVERED TO ASSIGNEE BY ASSIGNOR; AND ACCEPTS ASSIGNMENT OF THE LEASES "AS IS,
WHERE IS, AND WITH ALL FAULTS".

THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY LAW TO BE APPLICABLE, THE
FOREGOING DISCLAIMERS ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSE OF ANY LAW,
RULE OR ORDER.

The provisions of this Assignment and of the Agreement shall be covenants
running with the lands covered by the Leases and shall be binding upon and shall
inure to the benefit of Assignor and Assignee and their respective successors
and assigns.

IN WITNESS WHEREOF, this Assignment is executed as to each executing party as of
the date of the notarization for such party, and effective as of the Effective
Date.

[Signature Pages follow]
 
 
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ASSIGNOR              
BEREXCO LLC
              By:             Adam E. Beren, President                
By: 
        Name:          Title:                   ASSIGNEE               PACIFIC
ENERGY DEVELOPMENT MSL LLC                 By:           Frank Ingriselli,
President      

STATE OF KANSAS                                           §
                                                                                
§
COUNTY OF SEDGWICK                                   §

This instrument was acknowledged to me on the _____________________ day
of _____________________ , 2013, by Adam E. Beren, as President of BEREXCO LLC.
 
 
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My commission expires:           
Notary Public
 

 
STATE OF_____________________ §
      §
COUNTY OF____________________§
 
This instrument was acknowledged to me on the _____________________ day
of_____________________, 2013, by_____________________,
as_____________________of_____________________.

My commission expires:           
Notary Public
 

 
STATE OF ___________________§
                                                                 §
COUNTY OF__________________§

 
This instrument was acknowledged to me on the_____________________ day
of_____________________ , 2013, by Frank Ingriselli, as President of Pacific
Energy Development MSL  LLC.

My commission expires:           
Notary Public
 

 
 
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EXHIBIT “A”

To be completed prior to execution of the Assignment
 
 
 
 
 
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EXHIBIT "D"
 
CENTRAL CRUDE CORPORATION
Crude Oil Purchase Contract
 
CONTRACT NO. ____________

This contract by and between Pacific Energy Development MSL LLC (“Pacific”),
with an address of 4125 Blackhawk Plaza Circle, Ste. 201A, Danville, CA 94506
and Central Crude Corporation (“CCC”), covering the sale and delivery by Pacific
and the purchase and receipt by CCC of the hereinafter specified lease crude oil
is entered into in accordance with the following terms and conditions:

1.
TERM:   
The Primary Term shall be a period of one month from ____________________. The
Term shall be automatically extended for a Secondary Term month to month
thereafter unless notice of non-renewal is given by either party hereto upon not
less than thirty (30) days advance written notice to the other party.

 
2. 
QUALTY AND CRUDE TYPE:
Kansas Common Crude Oil, Oklahoma Sweet Crude Oil and/or Oklahoma Sour Crude
Oil.

 
3.  
QUANTITY:
An amount equal to actual lease receipts from lease(s) indicated on Exhibit A
attached hereto and made a part hereof. (approximately ____ barrels per
day).  Exhibit A will be updated to reflect the addition or deletion of
leases(s), as may be agreed in writing by and between Pacific and CCC from time
to time.

 
4.  
DELIVERY:
Shall be made at the well tankage into facilities designated by CCC.

 
5.  
PRICE:
For the crude oil sold and delivered hereunder CCC agrees to pay a price per
barrel which shall be calculated as follows:
 
The arithmetic average of the daily settlement price for the “Light Sweet Crude
Oil” prompt month contract reported by the New York Mercantile Exchange
(“NYMEX”) from the first day of the delivery month through the last day of the
delivery month, excluding weekends and U.S. holidays, less $_____ per barrel.

[the deduction amount above to be  determined for each lease on Exhibit A,
dependent on crude type and lease location].

 
6.  
PAYMENT:  
Payment shall be made by either check or direct deposit on or about the
twentieth (25th) day of the month following the month of delivery.
 
[Pacific to furnish banking authorizations if it elects direct deposit]

 
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7. 
REJECTED TRUCK LOAD FEE:
CCC may assess Pacific a fee in an amount of $150.00 per any rejected truck
load, which amount shall be deducted from the payment due by CCC to Seller.

 
8.  
LETTER(S) OF
CREDIT COST:
In the event Pacific requires any Letters of Credit in connection with this
contract, any cost incurred by CCC in therewith shall be promptly reimbursed by
Pacific to CCC.

 
ConocoPhillips’s General Provisions dated January 01, 1993 attached hereto as
Exhibit B are incorporated herein and made a part hereof; provided, however, it
is understood and agreed that this Crude Oil Purchase Contract is for the sale
of lease crude by Pacific to CCC, that there is no associated obligation of CCC
to resell or exchange a similar quantity of crude back to Pacific, and that the
terms in the ConocoPhillips General Provisions pertaining to such obligations
are not applicable.  To the extent of any conflict between the provisions herein
and the General Provisions, the provisions herein shall govern.

If Division Orders have been issued to Pacific by CCC and executed by Pacific
covering the wells on Exhibit “A”, the Division Orders are incorporated herein
and made a part hereof.  The provisions of this Agreement, including but not
limited to those relating to term, rights of termination, price and otherwise,
shall be applicable and govern, notwithstanding any provision in the Division
Orders to the contrary.

All invoices and notices given pursuant to this contract shall be in writing,
faxed or emailed and shall be deemed delivered when received by the other party
at the address specified below:

Notices and all other correspondence to CCC shall be mailed, faxed or emailed as
follows:

Central Crude Corporation
2020 N. Bramblewood St.
Wichita, KS 67206
Phone:  316-265-8558
Fax:  316-265-8690
Email:  cwilson@berexco.com
 
Notices and all other correspondence to Pacific shall be mailed, faxed or
emailed as follows:

Pacific Energy Development MSL LLC
4125 Blackhawk Plaza Circle, Ste. 201A
Danville, CA 94506
Phone:  855-805-0805
Fax:  925-403-0703
Email: cmoore@pacificenergydevelopment.com
            mpeterson@pacificenergydevelopment.com
 
[Signature Page follows]
 
 
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Accepted and agreed this _____ day of     Accepted and agreed this _____ day of
  _____________________,_____.     _____________________,_____.            
BUYER       SELLER             Central Crude Corporation     Pacific Energy
Development MSL LLC             By:        By:     
Name:    Charles B. Wilson
    Name:    
Title:      Vice President 
    Title:    

 
 
 
 
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EXHIBIT “E”
 
BEREXCO LLC
 
March 8, 2012
     
Prospective Purchaser:
     
Will Sparker
 
Manager Business Development
 
STXRA LLC
 

 
Dear _______________ :
 
This Agreement is entered into by and between BEREXCO LLC (hereinafter referred
to as “BEREXCO”) and the Prospective Purchaser shown above (hereinafter referred
to us “RECIPIENT”), in contemplation of the investigation, evaluation,
negotiation and/or execution of a possible agreement between BEREXCO and
RECIPIENT concerning the sale and purchase of oil and gas interests covering and
the exploration and development thereof, on lands generally depicted on Exhibit
“A” (limited to acreage that Berexco has interests) attached hereto and made a
part hereof and to be more fully described upon execution of this Agreement (the
“Confidential Area”). It is agreed as follows:
 
 
1.
RECIPIENT has been or will be furnished by BEREXCO, certain land, legal,
economic, geological and/or geophysical information and data in oral, electronic
and/or written form (“Confidential Information”) related to oil and gas
interests located in the Confidential Area. Such Confidential Information has or
will be furnished to RECIPIENT in strict confidence for the solo and only
purpose of assisting RECIPIENT in evaluation of the said interests. The
Confidential Information shall not include information, data, knowledge, and
know-how, that (a) is known or in RECIPIENT’S possession, or to any of its
Representatives (hereinafter defined), without obligation of confidentiality
prior to disclosure to RECIPIENT; (b) is in the public domain, or hereafter
enters the public domain through no fault of the Recipient or any of its
Representatives prior to disclosure to RECIPIENT; or (c) is independently
developed by the Recipient without access or reference to BEREXCO’s Confidential
Information: however it shall include all analyses, interpretations,
compilations, studies and evaluations of such information, data, knowledge, and
know-how generated or prepared by or on behalf of BEREXCO or RECIPIENT and
resulting from the use of such information. All such Confidential Information
and data, and any analysis, compilations, studies or other documents or records
prepared by RECIPIENT or any of its Representatives, which contain or otherwise
reflect or are generated from such information or data, are hereinafter referred
to as the “Evaluation Material”. RECIPIENT hereby agrees and acknowledges that
(a) the Evaluation Material is of a proprietary and confidential nature and that
damage could result to BEREXCO if information or data contained therein or
derived therefrom is disclosed to any third party; (b) such Confidential
Information is made available to RECIPIENT subject to, and in consideration of,
RECIPIENT’S agreement that RECIPIENT will maintain the confidentiality of it and
the Evaluation Material; (c) RECIPIENT will use the Evaluation Material solely
for the review and evaluation contemplated hereby and for no other purpose; and
(d) RECIPIENT will not disclose the Evaluation Material, in whole or in part, to
any third party other than RECIPIENT’S directors. officers, employees, agents,
affiliates, consultants, members or partners (“Representatives”).and/or partners
unless expressly authorized by BEREXCO in writing to do so.

 
 
2.
In the event the Recipient or its Representatives is required by any legislative
or administrative body (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process) to disclose any Confidential Information, the Recipient shall provide
BEREXCO prompt notice of such requirement in order to afford BEREXCO an
opportunity to seek an appropriate protective order. If BEREXCO is unable to
obtain, or does not seek, a protective order, and Recipient is, in the opinion
of its counsel, compelled to disclose such Confidential Information, such
disclosure shall not be deemed to be a violation of this Agreement. Nothing in
this Agreement shall be construed to authorize Recipient to use, in any manner,
or to disclose, Confidential Information, except as permitted by this Agreement,
and pursuant to any applicable protective order.

 
 
3.
Without the prior written consent of BEREXCO, neither RECIPIENT nor RECIPIENT’S
Representatives will (a) confirm or deny the existence of the Evaluation
Material, or (b) confirm or deny the validity of any statements made by any
third party regarding the Evaluation Material.

 
 
4.
RECIPIENT will keep a record of the Evaluation Material and of the location of
such Evaluation Material. All Evaluation Material will be returned to BEREXCO or
destroyed within ten (10) days upon written request of BEREXCO.

 
 
5.
This Agreement shall terminate as to the Confidential Area one year from the
date of execution of this Agreement.

 
 
6.
This Agreement shall be binding upon the parties hereto and their agents,
successors and assigns, if any, and any parties or companies it represents and
shall be governed by the laws of the state or states in which the Confidential
Area is located. If any provision of this Agreement is void or is so declared,
such provision shall be severed from this Agreement, which shall otherwise
remain ill full force and effect.

 
If the foregoing correctly outlines our understanding, please so indicate by
signing in the space provided below.
 
Sincerely,
     
BEREXCO LLC
     
By:
     
Charles B. Spradlin Jr.
   
Vice President
       
RECIPIENT
     
By:
     
Will Sparker
   
Manager Business Development
 

 
 
 

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EXHIBIT “F”
 
SEISMIC DATA LICENSE AGREEMENT
 
Berexco LLC (hereinafter referred to as "Berexco") represents that it has
ownership rights and authority to make available certain seismic data (more
particularly described below) to Pacific Energy Development MSL LLC (hereinafter
referred to as “Pacific”) and that such seismic data are transferred subject to
the following conditions:
 
1.
Berexco agrees to provide to Pacific approximately 10.5 square miles of 3-D
seismic data owned by Berexco and covering the areas depicted on the plats
attached hereto, which plats are incorporated by reference.  This license to use
the geophysical data on a non-exclusive basis can be terminated by mutual
agreement of the parties after forty-nine (49) years from the date of this
agreement or in accordance with paragraph 8 hereinbelow.

 
2.
The 3-D seismic data to be provided by Berexco shall include the Load Sheet;
Design, Acquisition Parameters, and Bid Sheets; available sonic log data within
the volumes; and Processed 3-D Seismic Volumes in SGY Format.

 
3. 
Pacific agrees that said data, and copies thereof, shall be for its own internal
use only, and that such data shall not be sold, traded or otherwise made
available to other parties except under the following conditions:

 
a.
Data may be made available to a consultant for the purpose of performing an
interpretation for Pacific, only if a consultant agrees in writing that the
analysis and interpretation made therefrom, will not be divulged to any third
party and all data will be returned to Pacific, and

 
b.
Pacific, shall have the right to reveal said data and any interpretation(s)
therefrom, but not provide copies or transfer the data thereof, to any third
party or parties with which Pacific proposes to conduct good faith negotiations
at arm’s length with respect to the development of minerals in, on or under any
region which is geologically related to the area on which the data was taken.

 
c.
In no case shall third parties other than consultants who have complied with
sub-paragraph a. above be allowed to have the data in their possession outside
of Pacific’s office or divulge any analysis made therefrom to any other party.

 
4.
Berexco makes no warranty or representations whatsoever with respect to data
delivered hereunder; Pacific acknowledges it is accepting the data “as is” and
any action which Pacific may take based on the data received or interpretations
therefrom shall be at its sole and only risk and responsibility, and Pacific
shall have no claim against Berexco as a result thereof.

 
5.
Berexco retains title and full ownership rights to said data including, but not
limited to, the exclusive right to license, trade, or reproduce the same.

 
6.
In the event that any government unit should levy a sales or use tax or tax of
similar nature related to the licensing or transfer of the data covered under
this agreement, Pacific shall reimburse Berexco the amount of such levies or
taxes.

 
7.
Without the written consent of Berexco, this Seismic Data License Agreement
("SDLA") and the data subject hereto may not be assigned or transferred by
Licensee, in whole or in part, except in the event of a "Permitted Transfer", as
such term is defined in that certain Agreement for Purchase of Term Assignment
dated February 22, 2013, by and between Berexco (et al.) and Pacific
("AFPOTRA").  However, Berexco, having been given sufficient advance notice of
such a proposed assignment or transfer (other than a Permitted Transfer), will
permit such proposed assignment or transfer upon such terms as may be agreed
upon by Berexco and the proposed assignee or transferee, including the payment
of a fee which shall be based upon Berexco's then current license fee as of the
date of the proposed transfer or assignment.

 
 
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8.
This SDLA is delivered pursuant, and is made expressly subject, to the terms and
conditions of the AFPOTA, which agreement is on file at the offices of Berexco
LLC at 2020 N. Bramblewood, Wichita, Kansas, 67206.  Berexco and Pacific intend
that the terms of the AFPOTA remain separate and distinct from, and not merge
into, the terms of this SDLA.  To the extent of any conflict between the terms
and conditions of this SDLA and the AFPOTA, the terms and conditions of the
AFPOTA shall govern and prevail.  Any breach of this SDLA shall be deemed to be,
and treated as, a breach of the AFPOTA.

 
9.  
Signature below of Pacific’s authorized representative will indicate agreement
of the terms and conditions stated above.

Berexco LLC           Pacific Energy Development MSL LLC             By: /s/
Adam E. Beren     By:   /s/ Frank C. Ingriselli      Adam E. Beren, President  
    Frank C. Ingriselli, President  

 
 
 
 
 
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EXHIBIT “G“

WELL OPERATIONAL AND DATA REQUIREMENTS

In the drilling of any well under the Agreement to which this Exhibit is
attached, Buyer shall comply with the following:

1.  
Unless otherwise consented to by Seller in writing, Buyer shall run at a minimum
a standard open hole suite of logs in the vertical section of the hole below
surface casing on (a) the first two (2)  horizontal wells drilled by Buyer in
any governmental section under the Agreement; (b) all SWD Wells, and (c) all
Pilot or Vertical Wells drilled without a horizontal component.  Provided,
however, in the event of lost circulation or other abnormal hole conditions
which make the running of such logs impractical, Buyer shall make its best
efforts as a prudent operator to run the log suite, but in such event shall not
be unconditionally obligated to do so.  Logs shall include dual induction
(shallow and deep), neutron/density porosity, SP, and GR and micro log.  Buyer
may run additional logging tools at its discretion. Drilling time through the
vertical section of the hole will be kept and available on the derrick floor.

2.  
Unless otherwise consented to by Seller in writing, an attended mud logging unit
with gas detector will be employed from 100’ above the Heebner Shale formation
to total vertical depth while drilling all wells in which Buyer is required to
run logs under paragraph 1 above.  Washed ten-foot rock cuttings samples in
cloth sacks will be available at the rig during drilling operations covering the
depths the mud logging unit is on location.

3.  
Buyer shall furnish Seller two (2) copies of each of the following, if obtained:

a.  
permit forms,

b.  
completion reports,

c.  
any other form filed with government agencies,

d.  
well plans including directional plans,

e.  
all logs run in the well (including any cased hole logs),

f.  
core descriptions and analysis,

g.  
drill stem test data including gas and fluid analyses,

h.  
water analysis,

i.  
directional surveys,

j.  
dip meter calculations, if run (the original dip meter log will be available
upon request),

k.  
geologic reports,

l.  
mud logs,

m.  
daily gas analyzer report ,

n.  
other testing reports.

 

 
Buyer shall also furnish daily drilling and completion reports, the latter of
which shall show well test information (showing daily oil, gas and water
production) for at least ninety (90) days after initial completion of the well
before reaching final report status.

 
4.  
At the time of spudding, Buyer shall notify Seller by email to the email
addresses below.

5.  
Buyer shall cause adequate and competent cement to be placed across all
potentially oil and/or gas productive horizons in all wells drilled, including
disposal wells; provided, however, in the event of lost circulation, depletion,
or other cementing irregularities, Buyer shall make its reasonable efforts to
cause such placement of cement, but in such event shall not be unconditionally
obligated to do so.  The shallowest potentially productive horizon shall be the
top of the Lansing formation.   Buyer shall comply with all state Underground
Injection Control cementing and completion requirements for its disposal wells.

6.  
Buyer shall furnish a monthly oil, gas and water production and a monthly water
disposal report for each production and disposal well drilled and completed.

 

EMAIL DAILY DRILLING & COMPLETION REPORTS TO THE FOLLOWING PARTIES: BEREXCO LLC 
  BEREXCO LLC   Attn:    Linda McCune   Attn:    Dana Wreath  
Email:  wellreports@berexco.com     Email:  dwreath@berexco.com  

 
PARTIES TO BE NOTIFIED IN ADVANCE OF LOGGING OR ABANDONMENT OF WELL:
  NAME: Dana Wreath   BUSINESS       PHONE:  316-337-8331   or alternate  
CELL:      316-215-1220         NAME: Evan Mayhew   PHONE:  316-337-8312      
316-721-1916       CELL:      316-215-1245

 
 
 

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EXHIBIT “H”
 
INSURANCE PROVISIONS

Buyer shall, as a minimum, carry insurance to cover its operations pursuant to
the terms of this Agreement, as follows:

(A) 
Workman's Compensation Insurance in compliance with the Workman's Compensation
Laws of the state applicable, and Employer’s Liability Insurance with a limit of
not less than $1,000,000 each accident;

(B) 
Commercial General Liability Insurance with limits not less than $1,000,000 per
occurrence and $2,000,000 General Aggregate;

 
(C) 
Commercial Automobile Insurance with coverage for all owned, hired and non-owned
vehicles with limits of not less than $1,000,000 per occurrence (combined single
limit).

(D) 
Sudden and Accidental Pollution Insurance with limits not less than $5,000,000
per incident and $5,000,000 aggregate;

(E) 
Umbrella and Excess Liability Insurance providing additional limits of no less
than $10,000,000.00 per occurrence and $10,000,000 aggregate for all of the
insurance coverage as it may be applicable to subparagraphs (A), (B), (C) and
(D).

Buyer shall cause the insurance company or companies with which such insurance
is carried to include Seller as a Primary, Non-Contributory Additional Insured
and provide a waiver of subrogation in favor of Seller on the foregoing
policies, and to issue certificates of insurance representing such insurance to
extend the coverage thereof to Seller.
 
 
 
 

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EXHIBIT “I”

EXTENSION OF PARTIAL TERM ASSIGNMENT OF OIL AND GAS LEASES

WHEREAS, by Partial Term Assignment of Oil and Gas Leases ("Assignment") dated
effective _________, 201__ ("Effective Date"), recorded in Book ____ at Page
____ of the records of ______________ County, ____________, Berexco LLC et al.,
as Assignor, did transfer, assign and convey unto Pacific Energy Development
MSL  LLC, as Assignee, certain rights and interests in and to the Oil and Gas
Lease(s) which is(are) described on Exhibit “A attached hereto and hereby made a
part hereof; and

WHEREAS, the Assignment was valid until December 29, 2014; and

WHEREAS, both Assignor and Assignee wish to extend the term of the Assignment
for a period of one (1) year from the expiration thereof to the extent the
Assignment covers the Oil and Gas Lease(s) described on Exhibit "A" hereto;

NOW THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars
($10.00) in hand paid, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Assignor does hereby extend
the term of the Assignment, INSOFAR AND ONLY INSOFAR as (i) the Assignment
covers the Oil and Gas Lease(s) described on Exhibit "A" attached hereto, and
(ii) said Oil and Gas Lease(s) cover the lands described on said Exhibit "A",
for a period of one (1) year to December 29, 2015; subject, however, in all
other respects to the provisions and conditions of said lease(s) as modified, if
any modification thereof may have been heretofore executed.

 All other provisions of the Assignment shall remain as originally written.

This Extension of Partial Term Assignment of Oil and Gas Leases is delivered
pursuant, and is made expressly subject, to the terms and conditions of that
certain Agreement for Purchase of Term Assignment dated February 22, 2013, by
and between Berexco LLC, et al., and Pacific Energy Development MSLLLC, which
agreement is on file in the office of Berexco LLC at 2020 N. Bramblewood,
Wichita, KS 67206 (the “Agreement”).  Assignor and Assignee intend that the
terms of the Agreement remain separate and distinct from, and not merge into,
the terms of this Extension of Partial Term Assignment of Oil and Gas
Leases.  To the extent of any conflict between the terms and conditions of this
Extension of Partial Term Assignment of Oil and Gas Leases and the Agreement,
the terms of the Agreement shall govern and prevail.

IN WITNESS WHEREOF, this instrument is executed as to each executing party as of
the date of the notarization for such party.

  BEREXCO LLC          
 
By:
        Adam E. Beren, President                     By:       Name:      
Title:                       PACIFIC ENERGY DEVELOPMENT MSL LLC             By:
      Name:       Title:    

 
 
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STATE OF KANSAS                                           §
                                                                                 §
COUNTY OF SEDGWICK                                   §
 
This instrument was acknowledged to me on the_______________day
of_______________, 2012, by Adam E. Beren, as President of BEREXCO LLC.
 

My commission expires:           Notary Public  

 
STATE OF ___________________§
                                                                 §
COUNTY OF__________________§
 
This instrument was acknowledged to me on the___________________day
of ___________________2012, by___________________, as___________________of____.

My commission expires:           Notary Public  

 
STATE OF ___________________§
                                                                 §
COUNTY OF__________________§
 
This instrument was acknowledged to me on the___________________day
of___________________, 2012, by___________________, as___________________of
Pacific Energy Development MSL LLC.

My commission expires:           Notary Public  

 
 
 
 
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EXHIBIT "J"
 
SECONDARY TERM ASSIGNMENT OF OIL AND GAS LEASES
 
STATE OF___________________ §
 
COUNTY OF__________________§
 
 
This Secondary Term Assignment of Oil and Gas Leases (the “Assignment”) is made
and entered into as of the_______ day of ______________, ____ (the "Effective
Date") by and between Berexco LLC, _________________________
 

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hereinafter collectively referred to as “Assignor”, whether one or more, and
Pacific Energy Development MSLLLC, hereinafter referred to as “Assignee”.
 
W I T N E S S E T H:
 
This Assignment is delivered pursuant, and is made expressly subject, to the
terms and conditions of that certain Agreement for Purchase of Term Assignment
dated February 22, 2013, by and between Berexco LLC, et al., and Pacific Energy
Development MSL LLC, which agreement is on file in the office of Berexco LLC at
2020 N. Bramblewood, Wichita, KS 67206 (the “Agreement”).  Assignor and Assignee
intend that the terms of the Agreement remain separate and distinct from, and
not merge into, the terms of this Assignment.  To the extent of any conflict
between the terms and conditions of this Assignment and the Agreement, the terms
of the Agreement shall govern and prevail.
 
Assignor, in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand
paid, and other good and valuable consideration, and of the other agreements of
Assignee herein contained, the receipt and sufficiency of which are hereby
acknowledged, does hereby transfer, assign and convey unto Assignee, subject to
the exceptions, reservations, conditions and other provisions hereinafter set
out, all of Assignor’s right, title and interest in and to the leasehold and
contractual working interest rights in and to the Oil and Gas Lease(s) described
on Exhibit “A attached hereto, such lease(s) being hereinafter sometimes
referred to as “the Leases”, and in the "Contracts" as such term is defined in
the Agreement , INSOFAR AND ONLY INSOFAR as the Leases and Contracts cover the
Mississippi formation underlying lands described in Exhibit “A” (that portion of
the Leases assigned hereunder being sometimes hereinafter referred to as the
"Property").  The Mississippi formation is defined as the stratigraphic
equivalent of all depths between 4,982 feet and 5,391 feet, inclusive, as shown
on the Log-Tech Dual Compensated Porosity log dated February 22, 2007 for the
Peppard #3-20 well (API #15-033-21490-0000) located near the center of the
Southeast Quarter of the Southeast Quarter of the Northwest Quarter of the
Northeast Quarter of Section 20, Township 31 South, Range 17 West
(SE/4SE/4NW/4NE/4 Sec. 20-31s-17w), Comanche County, Kansas.
 
Subject to the terms and conditions of the Leases and the Agreement, and to the
further provisions hereof, this Assignment shall be for a term commencing on the
Effective Date and continuing for so long thereafter as oil, gas, other liquid
or gaseous hydrocarbons, and/or other minerals, or any of them or any
combination thereof (hereinafter referred to as "Hydrocarbons") are produced in
commercial quantities from the Mississippi formation in the __________ well
located _______________________ (the "Producing Well;"). Subject to the terms
and conditions of the Leases and the Agreement, upon cessation of production of
Hydrocarbons from the Mississippi formation in commercial quantities from such
Producing Well, this Assignment shall not terminate if: (a) Assignee has
previously drilled an additional well on the Property or on a production unit
approved by Assignor which includes any portion of the Property (an "Additional
Well) which Additional Well is then producing Hydrocarbons in commercial
quantities from the Mississippi formation, or (b) within the time periods
provided in the Agreement, (i) Assignee commences and continuously prosecutes
reworking operations on the Producing Well and re-establishes production of
Hydrocarbons from the Mississippi formation in commercial quantities from such
Producing Well or (ii) Assignee commences and continuously prosecutes drilling
and completion operations for a new well on the Property or on a production unit
approved by Assignor which includes any portion of the Property(a "New Well")
and establishes production of Hydrocarbons from the Mississippi formation in
commercial quantities from such New Well; provided, however, unless this
Assignment remains in effect under the provisions of (b)(i) above, this
Assignment shall terminate as to any acreage for which Assignee would not have
earned a Secondary Term Assignment under the Agreement by completion of any such
Additional Well or New Well, and, subject to the terms of the Leases and the
Agreement, shall remain in effect as to such acreage applicable to any such
Additional Well or New Well for so long as Hydrocarbons are produced in
commercial quantities from such Additional Well or New Well.
 
Assignor hereby reserves unto Assignor and excepts from this Assignment:
 
I)              Any and all rights not expressly conveyed to Assignee in this
Assignment, including, without limitation, all existing wells, equipment,
facilities, and other personal property on or related to the Leases; all of
Assignor's right, title and interest in and to all depths outside the
Mississippi Formation; the right to drill and complete new wells on the Leases
for the production of hydrocarbons from formations other than the Mississippi
Formation; and all right, title and interest of Assignor within the Mississippi
Formation necessary to allow Assignor to re-enter, workover, complete,
re-complete, fracture treat, and produce hydrocarbons from the Mississippi
Formation in any well which has been drilled on the Leases (or on lands unitized
therewith) prior to the execution of this Agreement (provided, however, Assignor
shall not convert an existing vertical well into a horizontal well targeting
production from the Mississippi Formation).
 
 
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II)            An overriding royalty interest in and to all hydrocarbons
produced from the Property equal to the positive difference, if any, obtained by
subtracting leasehold burdens existing as of the Effective Date from: (i)
twenty-two and one-half percent (22.5%) before Payout (as such term is
hereinafter defined); (ii) twenty-five percent (25%) upon and after Payout,
proportionately reduced to the extent Assignor's working interest in the Lease
assigned is less than 100%. To the extent leasehold burdens existing as of the
Effective Date exceed these respective percentages, Assignor reserves no
overriding royalty interest. It is the intention of Assignor to deliver to
Assignee a leasehold net revenue interest in each Lease equal to the lesser of
seventy-seven and one-half percent (77.5%) or Assignor's actual net revenue
interest in and to the Leases before Payout; and a leasehold net revenue
interest equal to the lesser of seventy-five percent (75%) or Assignor’s actual
net revenue interest in and to the Leases after Payout. The term "Payout" as
used herein shall mean “Payout” as defined in the Agreement.
 
III)           The continuing preferential right and option, from time to time
and at any time, but not the obligation, to purchase all or any part of the
hydrocarbons produced and saved by Assignee from any well drilled by Assignee on
the Leases, upon the terms and conditions described in the Agreement.
 
THIS ASSIGNMENT IS MADE WITHOUT ANY WARRANTY OF TITLE, EXPRESS, IMPLIED,
STATUTORY, OR AT COMMON LAW; EXCEPT THAT ASSIGNOR SHALL WARRANT AND DEFEND TITLE
FROM AND AGAINST ANY PARTY CLAIMING BY, THROUGH OR UNDER ASSIGNOR, BUT NOT
OTHERWISE.  ANY OTHER COVENANTS, WARRANTIES AND REPRESENTATIONS, WHETHER OF
TITLE OR OTHERWISE, ARE HEREBY EXPRESSLY DISCLAIMED BY ASSIGNOR, AND ASSIGNEE
ACCEPTS THIS ASSIGNMENT WITH FULL KNOWLEDGE OF SAME.  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, ASSIGNOR SPECIFICALLY MAKES NO REPRESENTATION,
COVENANT, OR WARRANTY, EXPRESS, IMPLIED, STATUTORY, OR AT COMMON LAW, AS TO THE
VALIDITY OF ANY OF THE LEASES, CONTRACTS OR AGREEMENTS COVERED HEREBY, OR AS TO
THE ACCURACY OF ANY DATA, INFORMATION OR MATERIALS DELIVERED TO ASSIGNEE BY
WHATSOEVER MEANS WITH RESPECT TO THE LEASES CONVEYED HEREBY, OR CONCERNING THE
QUALITY OR QUANTITY OF HYDROCARBON PRODUCTION OR RESERVES, IF ANY, ATTRIBUTABLE
TO THE LEASES CONVEYED, OR THE ABILITY OF THE PROPERTY TO PRODUCE HYDROCARBONS,
OR THE PRICES AT WHICH ASSIGNEE WILL BE ENTITLED TO RECEIVE PAYMENT FOR ANY SUCH
HYDROCARBONS, OR OTHERWISE. ANY AND ALL SUCH DATA, INFORMATION AND OTHER
MATERIALS FURNISHED BY ASSIGNOR AND ITS REPRESENTATIVES WAS PROVIDED TO ASSIGNEE
AS A CONVENIENCE ONLY, AND ANY RELIANCE ON OR USE OF THE SAME HAS BEEN AND SHALL
BE AT ASSIGNEE’S SOLE RISK.  ASSIGNEE ACKNOWLEDGES THAT THIS EXPRESS DISCLAIMER
AND WAIVER SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS TRANSACTION
AND THE CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THIS DISCLAIMER AND WAIVER
HAS BEEN BROUGHT TO THE ATTENTION OF ASSIGNEE AND EXPLAINED IN DETAIL AND THAT
ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS DISCLAIMER AND WAIVER.
 
ASSIGNEE HEREBY ACKNOWLEDGES THAT ASSIGNEE HAS PHYSICALLY INSPECTED, OR HAS
WAIVED THE RIGHT TO INSPECT, THE LEASES CONVEYED HEREBY FOR ALL PURPOSES, AND
HAS SATISFIED ITSELF AS TO THE PHYSICAL AND ENVIRONMENTAL CONDITION THEREOF,
BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE MATERIAL FIBERS, AND
NATURALLY OCCURING RADIOACTIVE MATERIALS; IS NOT RELYING FOR ANY PURPOSE ON ANY
PRIOR DESCRIPTION OF SUCH LEASES, WHETHER WRITTEN OR VERBAL, WHICH MAY HAVE BEEN
DELIVERED TO ASSIGNEE BY ASSIGNOR; AND ACCEPTS ASSIGNMENT OF THE PROPERTY "AS
IS, WHERE IS, AND WITH ALL FAULTS".
 
THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY LAW TO BE APPLICABLE, THE
FOREGOING DISCLAIMERS ARE "CONSPICUOUS" DISCLAIMERS FOR THE PURPOSE OF ANY LAW,
RULE OR ORDER.
 
The provisions of this Assignment and of the Agreement shall be covenants
running with the lands covered by the Property and shall be binding upon and
shall inure to the benefit of Assignor and Assignee and their respective
successors and assigns, it being understood, however, that the Agreement to
which this Assignment is subject contains, among other terms, certain rights of
termination and restrictions on the transfer of the Property.
 
IN WITNESS WHEREOF, this Assignment is executed as to each executing party as of
the date of the notarization for such party, and effective as of the Effective
Date.
 
[Signature Pages follow]
 
 
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ASSIGNOR
          BEREXCO LLC             By:          Adam E. Beren, President        
    By:         Name:        Title:                 ASSIGNEE            
PACIFIC ENERGY DEVELOPMENT MSL LLC
            By:          Frank Ingriselli, President    

 
 
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STATE OF KANSAS                          §
§
COUNTY OF SEDGWICK                  §
 
This instrument was acknowledged to me on the ____________________ day
of____________________  , 2013, by Adam E. Beren, as President of BEREXCO LLC.
 

My commission expires:                Notary Public  

 
STATE OF___________________§
§
COUNTY OF_________________ §

 
This instrument was acknowledged to me on the__________________day
of__________________, 2013, by__________________, as__________________
of__________________.
 

My commission expires:                Notary Public  

 
STATE OF___________________§
§
COUNTY OF_________________ §

This instrument was acknowledged to me on the__________________day
of __________________ , 2013, by Frank Ingriselli, as President of Pacific
Energy Development MSL LLC.
 

My commission expires:                Notary Public  

 
 
4

--------------------------------------------------------------------------------

 
 
EXHIBIT “A”
 
 
 
To be completed prior to execution of the Assignment
 
 
 
 
5

--------------------------------------------------------------------------------

 
 
 
EXHIBIT "K"
 
INTERNAL PARTNERS:

ADAM INVESTMENTS INC.
BAYBERRY OIL & GAS LLC, formerly A-Z Oil, L.P., formerly Arthur Zankel
BERENCO RESOURCES INC.
BERENERGY CORPORATION
BERESCO PROPERTIES INC.
FRITS-OIL, L.P., formerly Frits Marcus
G-OIL, L.P., formerly David Gottesman
JW-OIL, L.P., formerly John Wallace
MANUEL CORPORATION, formerly Berexco Inc.
MATZLIACH L.P., formerly Sheldon K. Beren
OKMAR OIL COMPANY
ROBEREN PROPERTIES INC.
ROBERT M. BEREN, L.P., formerly Robert M. Beren
SHEFTAL CORPORATION
 
 
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT “L”

SUITS, ACTIONS, PROCEEDINGS
 
NONE
 
 
 
 

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EXHIBIT “M”
 
GAS PURCHASE CONTRACTS
 
Gas Purchase Agreement dated November 1, 2005 by and Between ONEOK MIDSTREAM GAS
SUPPLY, LLC and BEREN CORPORATION.

Gas Purchase Agreement dated May 6, 1996 by and between REDWING GAS SYSTEMS INC.
and BEREXCO INC.

Gas Purchase Agreement dated April 1, 2005 by and between BLUESTEM GAS
MARKETING, LLC) and BEREN CORPORATION.

Gas Purchase Agreement dated September 1, 2003 by and between ONEOK MIDSTREAM
GAS SUPPLY, LLC and BEREXCO INC.

Gas Purchase Agreement dated December 1, 2005 by and between ONEOK MIDSTREAM GAS
SUPPLY, LLC and BEREXCO INC.

Gas Purchase Contract dated January 1, 2004 by and between ROBEREN PROPERTIES,
REDWING GAS SYSTEMS INC. and KANSAS GAS SERVICE.

Residue Gas Purchase Contract dated January 22, 2004 by and between ROBEREN
PROPERTIES INC. and KANSAS GAS SERVICE.

Casinghead Gas Contract dated August 3, 1979 by and between OKMAR OIL COMPANY,
ET AL and CITIES SERVICE COMPANY.

Casinghead Gas Contract dated March 4, 1981 by and between BEREXCO INC. ET AL
and CITIES SERVICE COMPANY.

Casinghead Gas Contract dated August 21, 1980 by and between OKMAR OIL COMPANY,
ET AL and CITIES SERVICE COMPANY.

Gas Purchase Agreement dated May 1, 1986 by and between BEREN CORPORATION and
REDWING GAS SYSTEMS INC.
 
 
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT “N”
 
Well Name
Well
Number
Spot Call
SEC
TWP
RNG
County
State
UWI (API #)
FARLEY
3-29
NE SW
29
34S
14W
BARBER
KS
15007103780000
FARLEY
1-32
NW NW
32
34S
14W
BARBER
KS
15007103800000
FARLEY
6-32
NW SE SE
32
34S
14W
BARBER
KS
15007227490000
FARLEY
7-32
NE NE SW
32
34S
14W
BARBER
KS
15007228320000
PIERSON
1
SW SE
10
35S
13W
BARBER
KS
15007205220000
KENNEDY
1-16
NE NW
16
31S
17W
COMANCHE
KS
15033206190000
KENNEDY
1-17
N2 NE
17
31S
17W
COMANCHE
KS
15033204870000
PEPPERD
1-20
NE SW
20
31S
17W
COMANCHE
KS
15033200610000
PEPPARD
3-20
SE NW NE
20
31S
17W
COMANCHE
KS
15033214900000
DOOLIN
1
NW NE NE
16
31S
9W
HARPER
KS
15077101800000
DRAKE
1
SE SE
11
31S
9W
HARPER
KS
15077206250000
DRAKE-RYAN
1
NE SW SW
11
31S
9W
HARPER
KS
15077008650000
DUNCAN-MILLER
1
NE SE
11
31S
9W
HARPER
KS
15077207270000
VIRGINIA
1
NW NE NW
11
31S
9W
HARPER
KS
15077203110000
WINGATE
1
NW NW NE
11
31S
9W
HARPER
KS
15077205610000
JOHNSON
1-34
NW NW
34
30S
18W
KIOWA
KS
15097207950000
MORTON
1-35
SE NW
35
30S
18W
KIOWA
KS
15097301650000
MORTON
2-35
SE SE
35
30S
18W
KIOWA
KS
15097204830000
ROBBINS
1-34A SWD
SE SE
34
30S
18W
KIOWA
KS
15097301640001
ROBBINS
1-34
SE SE
34
30S
18W
KIOWA
KS
15097190020000
ROBBINS
2-34
NW SE
34
30S
18W
KIOWA
KS
15097208220000
SMITH
1-34T
NW SE SW
34
30S
18W
KIOWA
KS
15097215590000
SMITH
2-34
NW NW SW
34
30S
18W
KIOWA
KS
15097209650000
                 

 
 
 
 

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EXHIBIT "O"

AFFIDAVIT OF NON-FOREIGN STATUS
 
Section 1445 of the Internal Revenue Code (the “Code”) provides that a
transferee of a United States real property interest must withhold tax if the
transferor is a foreign person. To inform Pacific Energy Development MSL LLC, as
transferee (“Transferee”), that withholding of tax is not required upon the
disposition of a United States real property interest by the undersigned, as
transferor (“Transferor”), the undersigned hereby certifies the following on
behalf of Transferor:

 
1.
Transferor is a(n) _______________________________.  As such, it is not a
foreign corporation, foreign partnership, foreign trust, foreign estate or other
foreign person as those terms are defined under Section 1445(f)(3) of the Code
and Section 1.1445-2(b)(2)(i) of the Treasury Regulations;

 
2.
Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)
of the Treasury Regulations;

 
3.
Transferor’s U.S. employer identification number is
, and;

 
4.
Transferor’s office address is:

__________________________________________
__________________________________________
__________________________________________

Transferor understands that this certification may be disclosed to the Internal
Revenue Service by Transferee and that any false statement contained herein
could be punished by fine, imprisonment or both.

Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of
Transferor.
 

TRANSFEROR:                 By:            Name:         Title:          

 
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS ___ DAY OF ________________, 2013.
 

        (Personalized Seal)   Notary Public  

 
 
 
 
 

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EXHIBIT "P"
 
NOTE: This form contract is a suggested guide only and use of this form or any
variation thereof shall be at the sole discretion and risk of the user parties.
Users of the form contract or any portion or variation thereof are encouraged to
seek the advice of counsel to ensure that their contract reflects the complete
agreement of the parties and applicable law. The International Association of
Drilling Contractors disclaims any liability whatsoever for loss or damages
which may result from use of the form contract or portions or variations
thereof. Computer generated form, reproduced under license from IADC.
 

 
Revised April, 2003
   
INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS
 
DRILLING BID PROPOSAL
 
AND
 
DAYWORK DRILLING CONTRACT - U.S.
 

 
TO:
__________________________________________________

 
 
__________________________________________________

 
Please submit bid on this drilling contract form for performing the work
outlined below, upon the terms and for the consideration set forth, with the
understanding that if the bid is accepted by ___________________________ this
instrument will constitute a Contract between us. Your bid should be mailed or
delivered not later than _________ P.M. on ___________________, 20____, to the
following address: _____________________________
_____________________________________________________________________________________________
 
THIS CONTRACT CONTAINS PROVISIONS RELATING TO INDEMNITY,
 
RELEASE OF LIABILITY, AND ALLOCATION OF RISK-
 
SEE PARAGRAPHS 4.9, 6.3(c), 10,12, AND 14
 
This Contract is made and entered into on the date hereinafter set forth by and
between the parties herein designated as “Operator” and “Contractor.”
 
OPERATOR:
Pacific Energy Development MSL LLC
Address:
4125 Blackhawk Plaza Circle, Suite 201-A
 
Danville, CA 94506
CONTRACTOR:
BEREDCO LLC
Address:
2020 No Bramblewood
 
WICHITA, KS 67206

 
IN CONSIDERATION of the mutual promises, conditions and agreements herein
contained and the specifications and special provisions set forth in Exhibit ‘A’
and Exhibit “B” attached hereto and made a part hereof (the “Contract”),
Operator engages Contractor as an independent contractor to drill the
hereinafter designated well or wells in search of oil or gas on a Daywork Basis.
 
For purposes hereof, the term “Daywork” or ‘Daywork Basis’ means Contractor
shall furnish equipment, labor, and perform services as herein provided, for a
specified sum per day under the direction, supervision and control of Operator
(inclusive of any employee, agent, consultant or subcontractor engaged by
Operator to direct drilling operations). When operating on a Daywork Basis,
Contractor shall be fully paid at the applicable rates of payment and assumes
only the obligations and liabilities stated herein. Except for such obligations
and liabilities specifically assumed by Contractor, Operator shall be solely
responsible and assumes liability for all consequences of operations by both
parties while on a Daywork Basis, including results and all other risks or
liabilities incurred in or incident to such operations.
 
 
 
 

--------------------------------------------------------------------------------

 
 
1.
LOCATION OF WELL:

 
Well Name and Number The first 5 Horizontal Wells and/or an equivalent thereof &
the first 5 SWD wells as more fully described in Section 14-D of the Agreement
for Purchase of Term Assignment between Pacific Energy Development MSL LLC and
Berexco LLC.
 
Parish/
County:
See Exhibit C
state:
KS & OK
Field
Name:
 

Well location and land description:
 

See Exhibit C
         

 
1.1 Additional Well Locations or Areas:
___________________________________________________
 
_____________________________________________________________________________________________
 
Locations described above are for well and Contract identification only and
Contractor assumes no liability whatsoever for a proper survey or location stake
on Operator’s lease.
 
2.
COMMENCEMENT DATE:

 
Contractor agrees to use reasonable efforts to commence operations for the
drilling of the well by the
 
15th day of March 2013.
 
or
Operator agrees to give Contractor at least sixty (60) days advance written
notice of the spudding of each well hereunder, and Contractor agrees, within ten
(10) days from receipt of such notice, to either commit to drill such well or
consent to Operator’s drilling such well with a third-party contractor without
penalty under the provisions of sub-paragraph 6.4(a) hereof; provided, however
any such consent by Contractor shall not reduce the total number of wells to be
drilled by Operator utilizing Contractor hereunder.

 
3.
DEPTH:

 
3.1 Well Depth: The well(s) shall be drilled to a vertical depth of
approximately 4500 feet, or to the __________________________ formation,
whichever is deeper, but the Contractor shall not be required hereunder to drill
said well(s) below a measured maximum depth of 11.000 feet, unless Contractor
and Operator mutually agree to drill to a greater depth.
 
4.
DAYWORK RATES:

 
Contractor shall be paid at the following rates for the work performed
hereunder.
 
4.1 Mobilization: Operator shall pay Contractor a mobilization fee of $ Actual
cost  or a mobilization day rate of $ ______________ per day. This sum shall be
due and payable in full at the time the rig is rigged up or positioned at the
well site ready to spud. Mobilization shall include:
 
Transportation of drilling equipment and tubulars and rigging up.
_________________________________
 
_____________________________________________________________________________________________
 
4.2 Demobilization: Operator shall pay Contractor a demobilization fee of $
19,500 or a demobilization day rate during tear down of $ _______________ per
day, provided however that no demobilization fee shall be payable if the
Contract is terminated due to the total loss or destruction of the rig.
Demobilization shall include: Demob will only be charged if rig must move back
to Oklahoma more than 100 miles before all wells have been drilled.
 
4.3 Moving Rate: During the time the rig is in transit to or from a drill site,
or between drill sites, commencing on _________________. Operator shall pay
Contractor a sum of $ ____________ per twenty-four (24) hour day.
 
 
 

--------------------------------------------------------------------------------

 
 
4.4 Operating Day Rate: For work performed per twenty-four (24) hour day with 4
man crew the operating day rate shall be:
 
Depth Intervals
             
From
   
To
 
Without Drill Pipe
 
With Drill Pipe
           
$
13.500 RIGS 4, 6, 8
 per day
$
13.500 RIGS 4, 6, 8
 per day
         
$
12.500 RIGS 1, 2
 per day
$
12.500 RIGS 1, 2
 per day
         
$
 
 per day
$
 
 per day

 
Using Operator’s drill pipe $ ______________ per day.
 
The rate will begin when the drilling unit is rigged up at the drilling
location, or positioned over the location during marine work, and ready to
commence operations; and will cease when the rig is ready to be moved off the
location.
 
If under the above column “With Drill Pipe” no rates are specified, the rate per
twenty-four hour day when drill pipe is in use shall be the applicable rate
specified in the column “Without Drill Pipe” plus compensation for any drill
pipe actually used at the rates specified below, computed on the basis of the
maximum drill pipe in use at any time during each twenty-four hour day.
 
DRILL PIPE RATE PER 24-HOUR DAY
 
Straight Hole
   
Size
   
Grade
 
Directional or Uncontrollable Deviated Hole
   
Size
   
Grade
 
$
 per ft.
           
$
 
 per ft.
           
$
 per ft.
           
$
 
 per ft.
           
$
 per ft.
           
$
 
 per ft.
           

 
Directional or uncontrolled deviated hole will be deemed to exist when deviation
exceeds __________ degrees or when the change of angle exceeds __________
degrees per one hundred feet.
 
Drill pipe shall be considered in use not only when in actual use but also while
it is being picked up or laid down. When drill pipe is standing in the derrick,
it shall not be considered in use, provided, however, that if Contractor
furnishes special strings of drill pipe, drill collars, and handling tools as
provided for in Exhibit “A”, the same shall be considered in use at all times
when on location or until released by Operator. In no event shall fractions of
an hour be considered in computing the amount of time drill pipe is in use but
such time shall be computed to the nearest hour, with thirty minutes or more
being considered a full hour and less than thirty minutes not to be counted.
 
4.5 Repair Time: In the event it is necessary to shut down Contractor’s rig for
repairs, excluding routine rig servicing. Contractor shall be allowed
compensation at the applicable rate for such shut down time up to a maximum of 4
hours for any one rig repair job, but not to exceed 24 hours of such
compensation for any calendar month. Thereafter, Contractor shall be compensated
at a rate of $ -0- per twenty-four (24) hour day. Routine rig servicing shall
include, but not be limited to, cutting and slipping drilling line, changing
pump or swivel expendables, testing BOP equipment, lubricating rig, and ________
_______________________________________.
 
4.6 Standby Time Rate: $ 12,500 (1, 2); $ 13.500(4, 6, 8) per twenty-four(24)
day. Standby time shall be defined to include time when the rig is shut down
although in readiness to begin or resume operations but Contractor is waiting on
orders of Operator or on materials, services or other items to be furnished by
Operator.
 
4.7 Drilling Fluid Rates: When drilling fluids of a type and characteristic that
increases Contractor’s cost of performance hereunder, including, but not limited
to, oil-based mud or potassium chloride, are in use, Operator shall pay
Contractor in addition to the operating rate specified above:
 
 
(a)
$ 20.00 per man per day for Contractor’s rig-site personnel.

 
 
(b)
$ ________ per day additional operating rate; and

 
 
(c)
Cost of all labor, material and services plus ______ hours operating rate to
clean rig and related equipment.

 
4.8 Force Majeure Rate: $ 9.000 per twenty-four (24) hour day for any continuous
period that normal operations are suspended or cannot be carried on due to
conditions of Force Majeure as defined in Paragraph 17 hereof. It is, however,
understood that subject to Subparagraph 6.3 below, Operator can release the rig
in accordance with Operator’s right to direct stoppage of the work, effective
when conditions will permit the rig to be moved from the location.
 
 
 
 

--------------------------------------------------------------------------------

 
 
4.9 Reimbursable Costs: Operator shall reimburse Contractor for the costs of
material, equipment, work or services which are to be furnished by Operator as
provided for herein but which for convenience are actually furnished by
Contractor at Operator’s request, plus 10 percent for such cost of handling.
When, at Operator’s request and with Contractor’s agreement, the Contractor
furnishes or subcontracts for certain items or services which Operator is
required herein to provide, for purposes of the indemnity and release provisions
of this Contract, said items or services shall be deemed to be Operator
furnished items or services. Any subcontractors so hired shall be deemed to be
Operator’s contractor, and Operator shall not be relieved of any of its
liabilities in connection therewith.
 
4.10 Revision in Rates: The rates and/or payments herein set forth due to
Contractor from Operator shall be revised to reflect the change in costs if the
costs of any of the items hereinafter listed shall vary by more than
 
5 percent from the costs thereof on the date of this Contract or by the same
percent after the date of any revision pursuant to this Subparagraph:
 
 
(a)
Labor costs, including all benefits, of Contractor’s personnel;

 
 
(b)
Contractor’s cost of insurance premiums;

 
 
(c)
Contractor’s cost of fuel, including all taxes and fees; the cost per gallon/MCF
being $ Supplied by Operator;

 
 
(d)
Contractor’s cost of catering, when applicable;

 
 
(e)
If Operator requires Contractor to increase or decrease the number of
Contractor’s personnel;

 
 
(f)
Contractor’s cost of spare parts and supplies with the understanding that such
spare parts and supplies constitute _______________ percent of the operating
rate and that the parties shall use the U.S. Bureau of Labor Statistics Oil
Field and Gas Field Drilling Machinery Producer Price Index (Series ID
WPU119102) to determine to what extent a price variance has occurred in said
spare parts and supplies;

 
 
(g)
If there is any change in legislation or regulations in the area in which
Contractor is working or other unforeseen, unusual event that alters
Contractor’s financial burden.

 
 
(h)
Market price increases

 
5.
TIME OF PAYMENT

 
Payment is due by Operator to Contractor as follows:
 
5.1 Payment for mobilization, drilling and other work performed at applicable
rates, and all other applicable charges shall be due, upon presentation of
invoice therefor, upon completion of mobilization, demobilization, rig release
or at the end of the month in which such work was performed or other charges are
incurred, whichever shall first occur. All invoices may be mailed to Operator at
the address hereinabove shown, unless Operator does hereby designate that such
invoices shall be mailed as follows: _______________. Prepayment is required as
outlined in paragraph 14-D of the Agreement for Purchase of Term Assignment
between Pacific Energy Development MSL LLC and Berexco LLC.
 
5.2 Disputed Invoices and Late Payment: Operator shall pay all invoices within
15 days after receipt except that if Operator disputes an invoice or any part
thereof, Operator shall, within fifteen days after receipt of the invoice,
notify Contractor of the item disputed, specifying the reason therefore, and
payment of the disputed item may be withheld until settlement of the dispute,
but timely payment shall be made of any undisputed portion. Any sums (including
amounts ultimately paid with respect to a disputed invoice) not paid within the
above specified days shall bear interest at the rate of 1½percent or the maximum
legal rate, whichever is less, per month from the due date until paid. If
Operator does not pay undisputed items within the above stated time, Contractor
may suspend operations or terminate this Contract as specified under
Subparagraph 6.3.
 
 
 
 

--------------------------------------------------------------------------------

 
 
6.
TERM:

 
6.1 Duration of Contract: This Contract shall remain in full force and effect
until drilling operations are completed on the well or wells specified in
Paragraph 1 above, or for a term of __________, commencing on the date specified
in Paragraph 2 above.
 
6.2 Extension of Term: Operator may extend the term of this Contract for
__________ well(s) or for a period of ___________________________ by giving
notice to Contractor at least __________ days prior to completion of the well
then being drilled or by
_____________________________________________________________________________ .
 
6.3 Early Termination:
 
(a) By Either Party: Upon giving of written notice, either party may terminate
this Contract when total loss or destruction of the rig, or a major breakdown
with indefinite repair time necessitate stopping operations hereunder.
 
(b) By Operator: Notwithstanding the provisions of Paragraph 3 with respect to
the depth to be drilled, Operator shall have the right to direct the stoppage of
the work to be performed by Contractor hereunder at any time prior to reaching
the specified depth, and even though Contractor has made no default hereunder.
In such event. Operator shall reimburse Contractor as set forth in Subparagraph
6.4 hereof.
 
(c) By Contractor: Notwithstanding the provisions of Paragraph 3 with respect to
the depth to be drilled, in the event Operator shall become insolvent, or be
adjudicated a bankrupt, or file, by way of petition or answer, a debtor’s
petition or other pleading seeking adjustment of Operator’s debts, under any
bankruptcy or debtor’s relief laws now or hereafter prevailing, or if any such
be filed against Operator, or in case a receiver be appointed of Operator or
Operator’s property, or any part thereof, or Operator’s affairs be placed in the
hands of a Creditor’s Committee, or, following three business days prior written
notice to Operator if Operator does not pay Contractor within the time specified
in Subparagraph 5.2 all undisputed items due and owing, Contractor may, at its
option, (1) elect to terminate further performance of any work under this
Contract and Contractor’s right to compensation shall be as set forth in
Subparagraph 6.4 hereof, or (2) suspend operations until payment is made by
Operator in which event the standby time rate contained in Subparagraph 4.6
shall apply until payment is made by Operator and operations are resumed. In
addition to Contractor’s rights to suspend operations or terminate performance
under this Paragraph, Operator hereby expressly agrees to protect, defend and
indemnify Contractor from and against any claims, demands and causes of action,
including all costs of defense, in favor of Operator, Operator’s co-venturers,
co-lessees and joint owners, or any other parties arising out of any drilling
commitments or obligations contained in any lease, farmout agreement or other
agreement, which may be affected by such suspension of operations or termination
of performance hereunder.
 
6.4 Early Termination Compensation:
 
(a) Prior to Commencement: See #27 In the event Operator terminates this
Contract prior to commencement of operations hereunder. Operator shall pay
Contractor as liquidated damages and not as a penalty a sum equal to the standby
time rate (Subparagraph 4.6) for a period of ______ days or a lump sum of
$___________.
 
(b) Prior to Spudding: If such termination occurs after commencement of
operations but prior to the spudding of the well. Operator shall pay to
Contractor the sum of the following: (1) all expenses reasonably and necessarily
incurred and to be incurred by Contractor by reason of the Contract and by
reason of the premature termination of the work, including the expense of
drilling or other crew members and supervision directly assigned to the rig; (2)
ten percent (10%) of the amount of such reimbursable expenses; and (3) a sum
calculated at the standby time rate for all time from the date upon which
Contractor commencer commences any operations hereunder down to such date
subsequent of the date of termination as will afford Contractor reasonable time
to dismantle its rig and equipment provided, however, if this Contract is for a
term of more than one well or for a period of time. Operator shall pay
Contractor, in addition to the above, the Force Majeure Rate, less any
unnecessary labor, from that date subsequent to termination upon which
Contractor completes dismantling its rig and equipment until the end of the term
or  ______________________________
 
(c) Subsequent to spudding: If such termination occurs after the spudding of the
well, Operator shall pay Contractor (1) the amount for all applicable rates and
all other charges and reimbursements due to Contractor, but in no event shall
such sum, exclusive of reimbursements due, be less than would have been earned
for 30 days at the applicable rate “Without Drill Pipe” and the actual amount
due for drill pipe used in accordance with the above rates; or (2) at the
election of Contractor and in lieu of the foregoing. Operator shall pay
Contractor for all expenses reasonably and necessarily incurred and to be
incurred by reason to this Contract and by reason of such premature termination
plus a lump sum of $_________ provided, however, of this Contract is for a term
of more than one well or for a period of time. Operator shall pay Contractor, in
addition to the above, the Force Majeure Rate less any unnecessary labor from
the date of termination until the end of the term or
_______________________________________________________________.
 
 
 
 

--------------------------------------------------------------------------------

 
 
7.
CASING PROGRAM

 
Operator shall have the right to designate the points at which casing will be
set and the manner of setting, cementing and testing. Operator may modify the
casing program, however, any such modification which materially increases
Contractor’s hazards or costs can only be made by mutual consent of Operator and
Contractor and upon agreement as to the additional compensation to be paid
Contractor as a result thereof.
8.
DRILLING METHODS AND PRACTICES:

 
8.1 Contractor shall maintain well control equipment in good condition at all
times and shall use all reasonable means to prevent and control fires and
blowouts and to protect the hole.
 
8.2 Subject to the terms hereof, and at Operator’s cost at all times during the
drilling of the well, Operator shall have the right to control the mud program,
and the drilling fluid must be of a type and have characteristics and be
maintained by Contractor in accordance with the specifications shown in Exhibit
“A”.
 
8.3 Each party hereto agrees to comply with all laws, rules, and regulations of
any federal, state or local governmental authority which are now or may become
applicable to that party’s operations covered by or arising out of the
performance of this Contract. When required by law, the terms of Exhibit “B”
shall apply to this Contract. In the event any provision of this Contract is
inconsistent with or contrary to any applicable federal, state or local law,
rule or regulation, said provision shall be deemed to be modified to the extent
required to comply with said law, rule or regulation, and as so modified said
provision and this Contract shall continue in full force and effect
 
8.4 Contractor shall keep and furnish to Operator an accurate record of the work
performed and formations drilled on the IADC-API Daily Drilling Report Form or
other form acceptable to Operator. A legible copy of said form shall be
furnished by Contractor to Operator.
 
8.5 If requested by Operator, Contractor shall furnish Operator with a copy of
delivery tickets covering any material or supplies provided by Operator and
received by Contractor.
 
9.
INGRESS, EGRESS, AND LOCATION:

 
Operator hereby assigns to Contractor all necessary rights of ingress and egress
with respect to the tract on which the well is to be located for the performance
by Contractor of all work contemplated by this Contract Should Contractor be
denied free access to the location for any reason not reasonably within
Contractor’s control, any time lost by Contractor as a result of such denial
shall be paid for at the standby time rate. Operator agrees at all times to
maintain the road and location in such a condition that will allow free access
and movement to and from the drilling site in an ordinarily equipped highway
type vehicle. If Contractor is required to use bulldozers, tractors, four-wheel
drive vehicles, or any other specialized transportation equipment for the
movement of necessary personnel, machinery, or equipment over access roads or on
the drilling location, Operator shall furnish the same at its expense and
without cost to Contractor. The actual cost of repairs to any transportation
equipment furnished by Contractor or its personnel damaged as a result of
improperly maintained access roads or location will be charged to Operator.
Operator shall reimburse Contractor for all amounts reasonably expended by
Contractor for repairs and/or reinforcement of roads, bridges and related or
similar facilities (public and private) required as a direct result of a rig
move pursuant to performance hereunder. Operator shall be responsible for any
costs associated with leveling the rig because of location settling.
 
10.
SOUND LOCATION:

 
Operator shall prepare a sound location adequate in size and capable of properly
supporting the drilling rig, and shall be responsible for a casing and cementing
program adequate to prevent soil and subsoil wash out. It is recognized that
Operator has superior knowledge of the location and access routes to the
location, and must advise Contractor of any subsurface conditions, or
obstructions (including, but not limited to mines, caverns, sink holes, streams,
pipelines, power lines and communication lines) which Contractor might encounter
while en route to the location or during operations hereunder. In the event
subsurface conditions cause a entering or shifting of the location surface, or
if seabed conditions prove unsatisfactory to properly support the rig during
marine operations hereunder, and loss or damage to the rig or its associated
equipment results therefrom, Operator shall, without regard to other provisions
of this Contract, including Subparagraph 14.1 hereof, reimburse Contractor for
all such loss or damage including removal of debris and payment of Force Majeure
Rate during repair and/or demobilization if applicable.
11.
EQUIPMENT CAPACITY

 
Operations shall not be attempted under any conditions which exceed 85% of the
capacity of the equipment specified to be used hereunder or where canal or water
depths are in excess of N/A feet. Without prejudice to the provisions of
Paragraph 14 hereunder, Contractor shall have the right to make the final
decision as to when an operation or attempted operation would exceed the
capacity of specified equipment.
 
 
 
 

--------------------------------------------------------------------------------

 
 
12.
TERMINATION OF LOCATION LIABILITY:

 
When Contractor has concluded operations at the well location, Operator shall
thereafter be liable for damage to property, personal injury or death of any
person which occurs as a result of conditions of the location and Contractor
shall be relieved of such liability; provided, however, if Contractor shall
subsequently reenter upon the location for any reason, including removal of the
rig, any term of the Contract relating to such reentry activity shall become
applicable during such period.
 
13.
INSURANCE

 
During the life of this Contract, Contractor shall at Contractor’s expense
maintain, with an insurance company or companies authorized to do business in
the state where the work is to be performed or through a self-insurance program,
insurance coverages of the kind and in the amount set forth in Exhibit “A”,
insuring the liabilities specifically assumed by Contractor in Paragraph 14 of
this Contract. Contractor shall procure from the company or companies writing
said insurance a certificate or certificates that said insurance is in full
force and effect and that the same shall not be canceled or materially changed
without ten (10) days prior written notice to Operator. For liabilities assumed
hereunder by Contractor, its insurance shall be endorsed to provide that the
underwriters waive their right of subrogation against Operator. Operator will,
as well, cause its insurer to waive subrogation against Contractor for liability
it assumes and shall maintain, at Operator’s expense, or shall self insure,
insurance coverage as set forth in Exhibit “A” of the same kind and in the same
amount as is required of Contractor, insuring the liabilities specifically
assumed by Operator in Paragraph 14 of this Contract. Operator shall procure
from the company or companies writing said insurance a certificate or
certificates that said insurance is in full force and effect and that the same
shall not be canceled or materially changed without ten (10) days prior written
notice to Contractor. Operator and Contractor shall cause their respective
underwriters to name the other additionally insured but only to the extend of
the indemnification obligations assumed herein.
 
14.
RESPONSIBILlTY FOR LOSS OR DAMAGE, INDEMNITY, RELEASE OF LIABILlTY AND
ALLOCATlON OF RISK:

 
14.1 Contractor’s Surface Equipment: Contractor shall assume liability at all
times for damage to or destruction of Contractor’s surface equipment, regardless
of when or how such damage or destruction occurs, and Contractor shall release
Operator of any liability for any such loss, except loss or damage under the
provisions of Paragraph 10 or Subparagraph 14.3.
 
14.2 Contractor’s In-Hole Equipment: Operator shall assume liability at all
times for damage to or destruction of Contractor’s in-hole equipment, including,
but not limited to, drill pipe, drill collars, and tool joints, and Operator
shall reimburse Contractor for the value of any such loss or damage; the value
to be determined by agreement between Contractor and Operator as current repair
costs or 100 percent of current like kind new replacement cost of such equipment
delivered to the well site.
 
14.3 Contractor’s Equipment - Environmental Loss or Damage: Notwithstanding the
provisions of Subparagraph 14.1 above, Operator shall assume liability at all
times for damage to or destruction of Contractor’s equipment resulting from the
presence of H2S1 CO2 or other corrosive elements that enter the drilling fluids
from subsurface formations or the use of corrosive, destructive or abrasive
additives in the drilling fluids.
 
14.4 Operator’s Equipment: Operator shall assume liability at all times for
damage to or destruction of Operator’s or its co-venturers’, co-lessees’ or
joint owners’ equipment, including, but not limited to, casing, tubing, well
head equipment, and platform if applicable, regardless of when or how such
damage or destruction occurs, and Operator shall release Contractor of any
liability for any such loss or damage.
14.5 The Hole: In the event the hole should be lost or damaged, Operator shall
be solely responsible for such damage to or loss of the hole, including the
casing therein. Operator shall release Contractor and its suppliers, contractors
and subcontractors of any tier of any liability for damage to or loss of the
hole, and shall protect, defend and indemnify Contractor and its suppliers,
contractors and subcontractors of any tier from and against any and all claims,
liability, and expense relating to such damage to or loss of the hole.
 
14.6 Underground Damage: Operator shall release Contractor and its suppliers,
contractors and subcontractors of any tier of any liability for, and shall
protect, defend and indemnify Contractor and its suppliers, contractors and
subcontractors of any tier from and against any and all claims, liability, and
expense resulting from operations under this Contract on account of injury to,
destruction of, or loss or impairment of any property right in or to oil, gas,
or other mineral substance or water, if at the time of the act or omission
causing such injury, destruction, loss, or impairment, said substance had not
been reduced to physical possession above the surface of the earth, and for any
loss or damage to any formation, strata, or reservoir beneath the surface of the
earth.
 
14.7 Inspection of Materials Furnished by Operator: Contractor agrees to
visually inspect all materials furnished by Operator before using same and to
notify Operator of any apparent defects therein. Contractor shall not be liable
for any loss or damage resulting from the use of materials furnished by
Operator, and Operator shall release Contractor from, and shall protect, defend
and indemnify Contractor from and against, any such liability.
 
14.8 Contractor’s Indemnification of Operator: Contractor shall release Operator
of any liability for, and shall protect, defend and indemnify Operator from and
against all claims, demands, and causes of action of every kind and character,
without limit and without regard to the cause or causes thereof or the
negligence of any party or parties, arising in connection herewith in favor of
Contractor’s employees or Contractor’s subcontractors of any tier (inclusive of
any agent or consultant engaged by Contractor) or their employees, or
Contractor’s invitees, on account of bodily injury, death or damage to property.
Contractor’s indemnity under this Paragraph shall be without regard to and
without any right to contribution from any insurance maintained by Operator
pursuant to Paragraph 13. If it is judicially determined that the monetary
limits of insurance required hereunder or of the indemnities voluntarily assumed
under Subparagraph 14.8 (which Contractor and Operator hereby agree will be
supported either by available liability insurance, under which the insurer has
no right of subrogation against the indemnities, or voluntarily self-insured, in
part or whole) exceed the maximum limits permitted under applicable law, it is
agreed that said insurance requirements or indemnities shall automatically be
amended to conform to the maximum monetary limits permitted under such law.
 
 
 

--------------------------------------------------------------------------------

 
 
14.9 Operator’s Indemnification of Contractor: Operator shall release Contractor
of any liability for, and shall protect, defend and indemnify Contractor from
and against all claims, demands, and causes of action of every kind and
character, without limit and without regard to the cause or causes thereof or
the negligence of any party or parties, arising in connection herewith in favor
of Operator’s employees or Operator’s contractors of any tier (inclusive of any
agent, consultant or subcontractor engaged by Operator) or their employees, or
Operator’s invitees, other than those parties identified in Subparagraph 14.8 on
account of bodily injury, death or damage to property. Operator’s indemnify
under this Paragraph shall be without regard to and without any right to
contribution from any insurance maintained by Contractor pursuant to Paragraph
13. If it is judicially determined that the monetary limits of insurance
required hereunder or of the indemnities voluntarily assumed under Subparagraph
14.9 (which Contractor and Operator hereby agree will be supported either by
available liability insurance, under which the insurer has no right of
subrogation against the indemnities, or voluntarily self-insured, in part or
whole) exceed the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnities shall automatically be amended
to conform to the maximum monetary limits permitted under such law.
 
14.10 Liability for Wild Well: Operator shall be liable for the cost of
regaining control of any wild well, as well as for cost of removal of any debris
and cost of property remediation and restoration, and Operator shall release,
protect, defend and indemnify Contractor and its suppliers, contractors and
subcontractors of any tier from and against any liability for such cost.
 
14.11 Pollution or Contamination: Notwithstanding anything to the contrary
contained herein, except the provisions of Paragraphs 10 and 12, it is
understood and agreed by and between Contractor and Operator that the
responsibility for pollution or contamination shall be as follows:
 
(a)
Contractor shall assume all responsibility for, including control and removal
of, and shall protect, defend and indemnify Operator from and against all
claims, demands and causes of action of every kind and character arising from
pollution or contamination, which originates above the surface of the land or
water from spills of fuels, lubricants, motor oils, pipe dope, paints, solvents,
ballast bilge and garbage, except unavoidable pollution from reserve pits,
wholly in Contractor’s possession and control and directly associated with
Contractor’s equipment and facilities.

 
 
(b)
Operator shall assume all responsibility for, including control and removal of,
and shall protect, defend and indemnify Contractor and its suppliers,
contractors and subcontractors of any tier from and against all claims, demands,
and causes of action of every kind and character arising directly or indirectly
from all other pollution or contamination which may occur during the conduct of
operations hereunder, including, but not limited to, that which may result from
fire, blowout, cratering, seepage or any other uncontrolled flow of oil, gas,
water or other substance, as well as the use or disposition of all drilling
fluids, including, but not limited to, oil emulsion, oil base or chemically
treated drilling fluids, contaminated cuttings or cavings, lost circulation and
fish recovery materials and fluids. Operator shall release Contractor and its
suppliers, contractors and subcontractors of any tier of any liability for the
foregoing.

 
 
(c)
In the event a third party commits an act or omission which results in pollution
or contamination for which either Contractor or Operator, for whom such party is
performing work, is held to be legally liable, the responsibility therefore
shall be considered, as between Contractor and Operator, to be the same as if
the party for whom the work was performed had performed the same and all of the
obligations respecting protection, defense, indemnity and limitation of
responsibility and liability, as set forth in (a) and (b) above, shall be
specifically applied.

 
14.12 Consequential Damages: Subject to and without affecting the provisions of
this Contract regarding the payment rights and obligations of the parties or the
risk of loss, release and indemnity rights and obligations of the parties, each
party shall at all times be responsible for and hold harmless and indemnify the
other party from and against its own special, indirect or consequential damages,
and the parties agree that special, indirect or consequential damages shall be
deemed to include, without limitation, the following: loss of profit or revenue;
costs and expenses resulting from business interruptions; loss of or delay in
production; loss of or damage to the leasehold; loss of or delay in drilling or
operating rights; cost of or loss of use of property, equipment, materials and
services, including without limitation those provided by contractors or
subcontractors of every tier or by third parties. Operator shall at all times be
responsible for and hold harmless and indemnify Contractor and its suppliers,
contractors and subcontractors of any tier from and against all claims, demands
and causes of action of every kind and character in connection with such
special, indirect or consequential damages suffered by Operator’s co-owners,
co-venturers, co-lessees, farmors, farmees, partners and joint owners.
 
14.13 Indemnity Obligation: Except as otherwise expressly limited in this
Contract, it is the Intent of parties hereto that all releases, indemnity
obligations and/or liabilities assumed by such parties under terms of this
Contract, including, without limitation, Subparagraphs 4.9 and 6.3(c),
Paragraphs 10 and 12, and Subparagraphs 14.1 through 14.12 hereof, be without
limit and without regard to the cause or causes thereof, including, but not
limited to, pre-existing conditions, defect or ruin of premises or equipment,
strict liability, regulatory or statutory liability, products liability, breach
of representation or warranty (express or implied), breach of duty (whether
statutory, contractual or otherwise) any theory of fort, breach of contract,
fault, the negligence of any degree or character (regardless of whether such
negligence is sole, joint or concurrent, active, passive or gross) of any party
or parties, including the party seeking the benefit of the release, indemnity or
assumption of liability, or any other theory of legal liability. The
indemnities, and releases and assumptions of liability extended by the parties
hereto under the provisions of Subparagraphs 4.9 and 6.3 and Paragraphs 10,12
and 14 shall inure to the benefit of such parties, their co-venturers,
co-lessees, joint owners, their parent, holding and affiliated companies and the
officers, directors, stockholders, partners, managers, representatives,
employees, consultants, agents, servants and Insurers of each. Except as
otherwise provided herein, such indemnification and assumptions of liability
shall not be deemed to create any rights to indemnification in any person or
entity not a party to this Contract, either as a third party beneficiary or by
reason of any agreement of indemnity between one of the parties hereto and
another person or entity not a party to this Contract.
 
 
 

--------------------------------------------------------------------------------

 
 
15.
AUDIT

 
If any payment provided for hereunder is made on the basis of Contractor’s
costs, Operator shall have the right to audit Contractor’s books and records
relating to such costs. Contractor agrees to maintain such books and records for
a period of two (2) years from the date such costs were incurred and to make
such books and records readily available to Operator at any reasonable time or
times within the period.
 
16.
NO WAIVER EXCEPT IN WRITING

 
It is fully understood and agreed that none of the requirements of this Contract
shall be considered as waived by either party unless the same is done in
writing, and then only by the persons executing this Contract, or other duty
authorized agent or representative of the party.
 
17.
FORCE MAJEURE

 
Except as provided in this Paragraph 17 and without prejudice to the risk of
loss, release and indemnity obligations under this Contract, each party to this
Contract shall be excused from complying with the terms of this Contract, except
for the payment of monies when due, if and for so long as such compliance is
hindered or prevented by a Force Majeure Event. As used in this Contract,
‘“Force Majeure Event” includes: acts of God, action of the elements, wars
(declared or undeclared). Insurrection, revolution, rebellions or civil strife,
piracy, civil war or hostile action, terrorist acts, riots, strikes, differences
with workmen, acts of public enemies, federal or state laws, rules, regulations
dispositions or orders of any governmental authorities having jurisdiction in
the premises or of any other group, organization or informal association
(whether or not formally recognized as a government), inability to procure
material, equipment, fuel or necessary labor in the open market, acute and
unusual labor or material, equipment or fuel shortages, or any other causes
(except financial) beyond the control of either party. Neither Operator nor
Contractor shall be required against its will to adjust any labor or similar
disputes except in accordance with applicable law. In the event that either
party hereto is rendered unable, wholly or in part, by any of these causes to
carry out its obligation under this Contract, it is agreed that such party shall
give notice and details of Force Majeure in writing to the other party as
promptly as possible after its occurrence. In such cases, the obligations of the
party giving the notice shall be suspended during the continuance of any
inability so caused except that Operator shall be obligated to pay to Contractor
the Force Majeure Rate provided for in Subparagraph 4.8 above.
 
18.
GOVERNING LAW:

 
This Contract shall be construed, governed, interpreted, enforced and litigated,
and the relations between the parties determined in accordance with the laws of
Kansas.
 
19.
INFORMATION CONFIDENTIAL:

 
Upon written request by Operator, information obtained by Contractor in the
conduct of drilling operations on this well, including, but not limited to,
depth, formations penetrated, the results of coring, testing and surveying,
shall be considered confidential and shall not be divulged by Contractor or its
employees, to any person, firm, or corporation other than Operator’s designated
representatives.
 
20.
SUBCONTRACTS:

 
Either party may employ other contractors to perform any of the operations or
services to be provided or performed by it according to Exhibit “A”.
 
21.
ATTORNEY’S FEES

 
If this Contract is placed in the hands of an attorney for collection of any
sums due hereunder, or suit is brought on same, or sums due hereunder are
collected through bankruptcy or arbitration proceedings, then the prevailing
party shall be entitled to recover reasonable attorney’s fees and costs.
 
22.
CLAIMS AND LIENS:

 
Contractor agrees to pay all valid claims for labor, material, services, and
supplies to be furnished by Contractor hereunder, and agrees to allow no lien by
such third parties to be fixed upon the lease, the well, or other property of
the Operator or the land upon which said well is located.
 
23.
ASSIGNMENT:

 
Neither party may assign this Contract without the prior written consent of the
other, and prompt notice of any such intent to assign shall be given to the
other party. In the event of such assignment, the assigning party shall remain
liable to the other party as a guarantor of the performance by the assignee of
the terms of this Contract. If any assignment is made that materially alters
Contractor’s financial burden, Contractor’s compensation shall be adjusted to
give effect to any increase or decrease in Contractor’s operating costs.
 
24.
NOTICES AND PLACE OF PAYMENT:

 
Notices, reports, and other communications required or permitted by this
Contract to be given or sent by one party to the other shall be delivered by
hand, mailed, digitally transmitted or telecopied to the address hereinabove
shown. All sums payable hereunder to Contractor shall be payable at its address
hereinabove shown unless otherwise specified herein.
 
 
 

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25.
CONTINUING OBLIGATIONS:

 
Notwithstanding the termination of this Contract, the parties shall continue to
be bound by the provisions of this Contract that reasonably require some action
or forbearance after such termination.
 
26.
ENTIRE AGREEMENT:

 
This Contract constitutes the full understanding of the parties, and a complete
and exclusive statement of the terms of their agreement, and shall exclusively
control and govern all work performed hereunder. All representations, offers,
and undertakings of the parties made prior to the effective date hereof, whether
oral or in writing, are merged herein, and no other contracts, agreements or
work orders, executed prior to the execution of this Contract, shall in any way
modify, amend, alter or change any of the terms or conditions set out herein.
 
27.
SPECIAL PROVISIONS:

 
The wells listed in Section #1 above will be the first horizontal wells drilled
by Operator in Kansas or Oklahoma.
 
6.4 (a) PRIOR TO COMMENCEMENT OR SPUDDING: In the event Operator terminates this
contract for any reason (other than 6.3a) prior to spudding the 5th horizontal
well and/or an equivalent thereof and the first five SWD wells and Operator
drills the remaining wells with another contractor, Operator shall pay
Contractor as liquidated damages and not as a penalty a sum equal to (i) the
standby time rate for a period of 7 days per horizontal well and/or an
equivalent thereof not spudded, plus (ii) the standby rate for a period of 7
days per SWD well not spudded.
 
This contract is entered into pursuant to Paragraph 14.D of the Agreement for
Purchase of Term Assignment between Pacific Energy Development MSL LLC and
Berexco LLC. Any capitalized terms not defined herein shall have the meanings
defined in the Agreement for Purchase of Term Assignment.
 
Contractor will pay to inspect drill pipe prior to spudding of the first
horizontal well to establish premium drill pipe. Operator will pay to inspect
drill pipe at the end of each horizontal well and will pay to replace any
damaged or downgraded drill pipe.
28.
ACCEPTANCE OF CONTRACT:

 
The foregoing Contract, including the provisions relating to indemnity, release
of liability and allocation of risk of Subparagraphs 4.9 and 6.3(c), Paragraphs
10 and 12, and Subparagraphs 14.1 through 14.12, is acknowledged, agreed to and
accepted by Operator this _____ day of _____________, 2013.
 
OPERATOR: 
 
By: 
 
Title: 
 

 
The foregoing Contract, including the provisions relating to indemnity, release
of liability and allocation of risk of Subparagraphs 4.9, 6.3(c), Paragraphs 10
and 12, and Subparagraphs 14.1 through 14.12, is acknowledged, agreed to and
accepted by Contractor this 15th day of March, 2013, which is the effective date
of this Contract, subject to rig availability, and subject to all of its terms
and provisions, with the understanding that it will not be binding upon Operator
until Operator has noted its acceptance, and with the further understanding that
unless said Contract is thus executed by Operator within 15 days of the above
date Contractor shall be in no manner bound by its signature thereto.
 
CONTRACTOR: 
 
By: 
Adam E, Beren
Title: 
President

 
 
 
 

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EXHIBIT “A”
 
To Daywork Contract dated March 15, 2013
 
Operator Pacific Energy Development MSL LLC
Contractor BEREDCO LLC

 
Well Name and Number See Exhibit C
 
SPECIFICATIONS AND SPECIAL PROVISIONS
 
1.
CASING PROGRAM (See Paragraph 7)

 

   
Hole Size
 
Casing Size
 
Weight
 
Grade
 
Approximate Setting Depth
 
Wait on Cement Time
 
Conductor
   
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
Surface
   
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
Protection
   
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
     
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
Production
   
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
Liner
   
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs
     
 in.
 
 in.
 
 lbs/ft.
     
 ft.
 
 hrs

 
2.
MUD CONTROL PROGRAM (See Subparagraph 8.2)

 
Depth Interval (ft)
                         
From
 
To
 
Type Mud
PER OPERATOR
 
Weight
(Ibs./gal.)
 
Viscosity
(Secs)
 
Water Loss
(cc)
                                                                               
                                                         

 
Other mud
specifications:                                           ________________________________________________________________________
 
__________________________________________________________________________________________
 
__________________________________________________________________________________________
 
__________________________________________________________________________________________
 
3.
INSURANCE (See Paragraph 13)

 
3.1 Adequate Workers’ Compensation Insurance complying with State Laws
applicable or Employers’ Liability Insurance with limits of $ 500.000 covering
all of Contractor’s employees working under this Contract.
 
3.2 Commercial (or Comprehensive) General Liability Insurance, including
contractual obligations as respects this Contract and proper coverage for all
other obligations assumed in this Contract. The limit shall be
 
$ 1,000,000 combined single limit per occurrence for Bodily Injury and Property
Damage.
 
3.3 Automobile Public Liability Insurance with limits of $ 1,000,000 for the
death or injury of each person and $ 1,000,000 for each accident; and Automobile
Public Liability Property Damage Insurance with limits of
 
$ 1,000,000 for each accident.
 
3.4 In the event operations are over water, Contractor shall carry in addition
to the Statutory Workers’ Compensation Insurance, endorsements covering
liability under the Longshoremen’s & Harbor Workers’ Compensation Act and
Maritime liability including maintenance and cure with limits of $ N/A for each
death or injury to one person and $ N/A for any one accident.
 
3.5 Other insurance: N/A
_________________________________________________________________
 
___________________________________________________________________________________________
 
___________________________________________________________________________________________
 
 
 
 

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4.
EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY CONTRACTOR:

 
The machinery, equipment, tools, materials, supplies, instruments, services and
labor hereinafter listed, including any transportation required for such items,
shall be provided at the well location at the expense of Contractor unless
otherwise noted by this Contract.
 
4.1 Drilling Rig At contractors discretion, either 1,2 for any vertical or SWD
well and either 4,6 or 8 for any vertical or horizontal well.
 
Complete drilling rig, designated by Contractor as its Rig No. 1, 2, 4, 6 or 8
the major items of equipment being:
 
Drawworks: Make and Model See Exhibit D 
 
Engines: Make, Model, and H.P.
__________________________________________________________________
 
No. on
Rig  ____________________________________________________________________________
 
Pumps:  No. 1 Make, Size, and Power
______________________________________________________________
 
No. 2 Make, Size, and Power
______________________________________________________________
 
Mud Mixing Pump: Make, Size, and Power
__________________________________________________________
 
Boilers: Number, Make, H.P. and W.P
______________________________________________________________
 
Derrick or Mast: Make, Size, and Capacity
__________________________________________________________
 
_____________________________________________________________________________________________
 
Substructure: Size and Capacity
___________________________________________________________________
 
Rotary Drive: Type
_____________________________________________________________________________
 
Drill Pipe: Size _____________ in. _____________ ft.; Size: _____________ in.
_____________ ft.
 
Drill Collars: Number and Size
____________________________________________________________________
 
Blowout Preventers:
____________________________________________________________________________
 
Size
   
Series or Test Pr.
   
Make & Model
   
Number
                                                                               
         
B.O.P. Closing Unit:
                   
B.O.P. Accumulator:
                   

 
 
 
 

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4.2
Derrick timbers.

 
 
4.3
Normal strings of drill pipe and drill collars specified above.

 
 
4.4
Conventional drift indicator.

 
 
4.5
Circulating mud pits.

 
 
4.6
Necessary pipe racks and rigging up material.

 
 
4.7
Normal storage for mud and chemicals.

 
 
4.8
Shale Shaker.

 
 
4.9
_______________________________________________________________________________

 
 
4.10
_______________________________________________________________________________

 
 
4.11
_______________________________________________________________________________

 
 
4.12
_______________________________________________________________________________

 
 
4.13
_______________________________________________________________________________

 
 
4.14
_______________________________________________________________________________

 
 
4.15
_______________________________________________________________________________

 
 
4.16
_______________________________________________________________________________

 
 
4.17
_______________________________________________________________________________

 
 
 
 

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5.
EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY OPERATOR:

 
The machinery, equipment, tools, materials, supplies, instruments, services and
labor hereinafter listed, including any transportation required for such items,
shall be provided at the well location at the expense of Operator unless
otherwise noted by this Contract.
 
 
5.1
Furnish and maintain adequate roadway and/or canal to location, right-of-way,
including rights-of-way for fuel and water lines, river crossings, highway
crossings, gates and cattle guards.

 
 
5.2
Stake location, clear and grade location, and provide turnaround, including
surfacing when necessary.

 
 
5.3
Test tanks with pipe and fittings.

 
 
5.4
Mud storage tanks with pipe and fittings.

 
 
5.5
Separator with pipe and fittings.

 
 
5.6
Labor and materials to connect and disconnect mud tank, test tank, and mud gas
separator.

 
 
5.7
Labor to disconnect and clean test tanks and mud gas separator.

 
 
5.8
Drilling mud, chemicals, lost circulation materials and other additives.

 
 
5.9
Pipe and connections for oil circulating lines.

 
 
5.10
Labor to lay, bury and recover oil circulating lines.

 
 
5.11
Drilling bits, reamers, reamer cutters, stabilizers and special tools.

 
 
5.12
Contract fishing tool services and tool rental.

 
 
5.13
Wire line core bits or heads, core barrels and wire line core catchers if
required.

 
 
5.14
Conventional core bits, core catchers and core barrels.

 
 
5.15
Diamond core barrel with head.

 
 
5.16
Cement and cementing service.

 
 
5.17
Electrical wireline logging services.

 
 
5.18
Directional, caliper, or other special services.

 
 
5.19
Gun or jet perforating services.

 
 
5.20
Explosives and shooting devices.

 
 
5.21
Formation testing, hydraulic fracturing, acidizing and other related services.

 
 
5.22
Equipment for drill stem testing.

 
 
 
 

--------------------------------------------------------------------------------

 
 
 
5.23
Mud logging services.

 
 
5.24
Sidewall coring service.

 
 
5.25
Welding service for welding bottom joints of casing, guide shoe, float shoe,
float collar and in connection with installing of well head equipment if
required.

 
 
5.26
Casing, tubing, liners, screen, float collars, guide and float shoes and
associated equipment.

 
 
5.27
Casing scratchers and centralizers.

 
 
5.28
Well head connections and all equipment to be installed in or on well or on the
premises for use in connection with testing, completion and operation of well.

 
 
5.29
Special or added storage for mud and chemicals.

 
 
5.30
Casinghead, API series, to conform to that shown for the blowout preventers
specified in Subparagraph 4.1 above.

 
 
5.31
Blowout preventer testing packoff and testing services.

 
 
5.32
Replacement of BOP rubbers, elements and seals, if required, after initial test.

 
 
5.33
Casing Thread Protectors and Casing Lubricants.

 
 
5.34
H2S training and equipment as necessary or as required by law.

 
 
5.35
Site septic systems.

 
 
5.36
Fresh water system for trailers

 
 
5.37
_______________________________________________________________________________

 
 
5.38
_______________________________________________________________________________

 
 
5.39
_______________________________________________________________________________

 
 
5.40
_______________________________________________________________________________

 
 
5.41
_______________________________________________________________________________

 
 
5.42
_______________________________________________________________________________

 
 
5.43
_______________________________________________________________________________

 
 
5.44
_______________________________________________________________________________

 
 
5.45
_______________________________________________________________________________

 
 
5.46
_______________________________________________________________________________

 
 
5.47
_______________________________________________________________________________

 
 
5.48
_______________________________________________________________________________

 
 
5.49
_______________________________________________________________________________

 
 
5.50
_______________________________________________________________________________

 
 
 
 

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6.
EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY DESIGNATED PARTY:

 
The machinery, equipment, tools, materials, supplies, instruments, services, and
labor listed as the following numbered items, including any transportation
required for such items unless otherwise specified, shall be provided at the
well location and at the expense of the party hereto as designated by an X mark
in the appropriate column.
 

     
To Be Provided By and At The Expense Of
 
Item
 
Operator
 
Contractor
6.1
Cellar and Runways
 
X
   
6.2
Ditches and sumps
 
X
   
6.3
Fuel (located at RIG)
 
X
   
6.4
Fuel Lines (length location)
 
X
   
6.5
Water at source, including required permits
 
X
   
6.6
Water well, including required permits
 
X
   
6.7
Water lines, including required permits
 
X
   
6.8
Water storage tanks 330 capacity
     
X
6.9
Potable water
     
X
6.10
Labor to operate water well or water pump
 
X
   
6.11
Maintenance of water well, if required
 
X
   
6.12
Water Pump
 
X
   
6.13
Fuel for water pump
 
X
   
6.14
Mats for engines and boilers, or motors and mud pumps
     
X
6.15
Transportation of Contractor’s property:
         
Move in
 
X
     
Move out on final well
     
X
6.16
Materials for “boxing in” rig and derrick
     
X
6.17
Special strings of drill pipe and drill collars as follows:
                 
N/A
         
N/A
         
N/A
6.18
Kelly joints, subs, elevators, tongs, slips and BOP rams for use with special
drill pipe
 
X
   
6.19
Drill pipe protectors for Kelly joint and each joint of drill pipe running
inside of Surface Casing as required, for use with normal strings of drill
pipe.............................
     
N/A
6.20
Drill pipe protectors for Kelly joint and drill pipe running inside of
Protection Casing
     
N/A
6.21
Rate of penetration recording device
     
X
6.22
Extra labor for running and cementing casing (Casing crews)
 
X
   
6.23
Casing tools
 
X
   
6.24
Power casing tongs
 
X
   
6.25
Laydown and pickup machine
 
X
   
6.26
Tubing tools
     
N/A
6.27
Power tubing tong
     
N/A
6.28
Crew Boats, Number __________
     
N/A
6.29
Service Barge
     
N/A
6.30
Service Tug Boat
     
N/A
6.31
Rat Hole
 
X
   
6.32
Mouse Hole
 
X
   
6.33
Reserve Pits
 
X
   
6.34
Upper Kelly Cock
     
N/A
6.35
Lower Kelly Valve
     
N/A
6.36
Drill Pipe Safety Valve
     
N/A
6.37
Inside Blowout Preventer
     
N/A
6.38
Drilling hole for or driving for conductor pipe
 
X
   
6.39
Charges, cost of bonds for public roads
 
X
   
6.40
Portable Toilet
 
X
   
6.41
Trash Receptacle
 
X
   
6.42
Linear Motion Shale Shaker
     
X
6.43
Shale Shaker Screens
 
X
   
6.44
Mud Cleaner
     
N/A
6.45
Mud/Gas Separator
 
X
   
6.46
Desander
     
X
6.47
Desilter
     
X
6.48
Degasser
 
X
   
6.49
Centrifuge
 
X
   
6.50
Rotating Head
 
X
   
6.51
Rotating Head Rubbers
 
X
   
6.52
Hydraulic Adjustable Choke
 
X
   
6.53
Pit Volume Totalizer
 
X
   
6.54
Communication, type CELL
     
X
6.55
Forklift, capacity _______________
 
X
   
6.56
Corrosion Inhibitor for protecting drill string
 
X
   
6.57
Dozer assistance, if needed
 
X
   
6.58
Drill collar inspection and repair
 
X
   
6.59
         
6.60
         

 
 
 
 

--------------------------------------------------------------------------------

 
 
7. OTHER PROVISIONS:
EXHIBIT “B”
 
(See Subparagraph 8.3)
 
The following clauses, when required by law, are incorporated in the Contract by
reference as if fully
 
set out:
 
 
(1)
The Equal Opportunity Clause prescribed in 41 CFR 60-1.4.

 
 
(2)
The Affirmative Action Clause prescribed in 41 CFR 60-250.4 regarding veterans
and veterans of the Vietnam era.

 
 
(3)
The Affirmative Action Clause for handicapped workers prescribed in 41 CFR
60-741.4.

 
 
(4)
The Certification of Compliance with Environmental Laws prescribed in 40 CFR
15.20.

 
 
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT “C”
 
This contract will cover the following five (5) horizontal wells and/or
equivalent thereof and the following 5 SWD wells:
 
Barber, Comanche, Harper and Kiowa Counties, Kansas or Woods County, Oklahoma.
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
EXHIBIT “D”
 
BEREDCO LLC
Rotary Drilling Contractor
 
RIG INVENTORY
 
RIG #1-9,000 FEET
 
DRAWWORKS:
Unit U-15
 
POWERED BY:
(2) 3408 Caterpillar Diesel Engines
 
MAST & SUBSTRUCTURE:
DSI 127’ 400,000# Mast w/10’ Substructure.
 
MUD PUMPS:
#1: 1000 Tri-Plex with Caterpillar 3412 engine
#2: Ideco 700 w/ Caterpillar D379 Engine
 
ROTARY EQUIPMENT:
Gardner Denver 17-1/2” X 44”
 
TRAVELING EQUIPMENT:
Blocks 200 ton - Swivel 225 ton
 
BOPS:
11” 3000# Shaffer Annular BOP
11” 3000# Cameron double ram
Valcon 4-Station Accumulator
 
WATER TANK:
500 Bbl
 
MUD SYSTEMS:
Mud pit 490 Bbl
Premix 100 Bbl
 
GENERATORS:
#1: 150 kW powered by 3406 Caterpillar Diesel Engines
#2: 150 kW powered by 3406 Caterpillar Diesel Engines
 
DRILL PIPE AND COLLARS:
As required.
 
RIG MEASUREMENTS:
Centers from conductor to mouse hole 4’6”, 7’8” ahead. Right 7’6”‘ to rat hole,
10’10” diagonal
Location 150’ East (V-Door), 150’ West, 120’ South, 60’ North
KB - 13 feet
 
Phone: 316-265-2856
2020 No Bramblewood
Wichita, KS 67206
08/29/2012
 
 
 
 

--------------------------------------------------------------------------------

 
 
BEREDCO LLC
Rotary Drilling Contractor
 
RIG INVENTORY
 
RIG #2 - 8,000 FEET
 
DRAWWORKS:
National Model 370
 
ENGINE:
D353 Caterpillar Engine
 
MAST & SUBSTRUCTURE:
Lee C. Moore 127’, 400,000# Mast, w/10’ H Substructure
 
MUD PUMPS:
#1: Gardner Denver Model FXN Duplex Mud Pump Powered By Caterpillar D353
#2: Gardner Denver Model FXN Duplex Mud Pump Powered By Caterpillar D353
 
ROTARY EQUIPMENT:
Ideco l7-l/2” x 44”
 
TRAVELING EQUIPMENT:
Block -160 ton Ideco, Swivel - Ideco 200 ton
 
BOPS:
11” 3000# Regan annular
Valcon 4-Station Accumulator
3000# Choke Manifold
 
WATER TANK:
295 Bbl
 
MUD SYSTEMS:
450 - Bbl.
80 Bbl Pre-Mix
 
GENERATORS:
150 KW Generator Powered By Cummins KTA Diesel Engine
150 KW Generator Powered By Caterpillar 3306 Diesel Engine
 
DRILL PIPE AND COLLARS:
As required.
 
RIG MEASUREMENTS:
Mouse hole 3’ ahead, Rat hole 6’ 9” ahead, 6’ 8” to the right, 9’ 5” in diagonal
Location 150’ East (V-Door), 140’ West, 50’ North, 120’ South
KB-13 feet
 
Phone: 316-265-2856
2020 No Bramblewood
Wichita, KS 67206
05/07/2012
 
 
 
 

--------------------------------------------------------------------------------

 
 
BEREDCO LLC
Rotary Drilling Contractor
 
RIG #4-11,000 FEET
 
INVENTORY
 
DRAWWORKS:
Ideco Model H525
 
ENGINES:
(2) Caterpillar Model 3408 Diesel Engines w/ Torque Converters.
 
MAST & SUBSTRUCTURE:
DSI 131’ 430,000# Mast, w/14’ Substructure.
 
MUD PUMPS:
#1: Brewster 1100 Tri-Plex with Caterpillar D398 engine
#2: Brewster 1100 Tri-Plex with Caterpillar D398 engine
 
ROTARY EQUIPMENT:
Ideco 17-1/2” x 44”
 
TRAVELING EQUIPMENT:
Block - 250 ton, Swivel - Oilwell PC225
 
BOPS:
11” 3000# Shaffer Annular BOP
11” 3000# Cameron double ram
Valcon 4-Station Accumulator
 
WATER TANK:
330 Bbl
 
MUD SYSTEMS:
680 Bbl with 150 Bbl pre-mix, Linear shaker, desander, desilter
 
GENERATORS:
2 - 325 kW Generator Powered By Series 60 Detroit engines
 
DRILL PIPE AND COLLARS:
As required.
 
RIG MEASURMENTS:
From center of Conductor 4’ 9” to Mouse hole, 7’ 8” ahead’
Right 9’ to Rat hole, 11’ 5” diagonal
Location: 50’ North, 150’ East (v-door side), 120’ South, 140’ West
KB -16 feet
 
Phone: 316-265-2856
2020 North Bramblewood
Wichita, Kansas 67206
08/29/2012
 
 
 
 

--------------------------------------------------------------------------------

 
BEREDCO LLC
Rotary Drilling Contractor
 
RIG INVENTORY
 
RIG #6 - 13,000 FEET
 
DRAWWORKS:
Unit Model SU 15
 
POWERED BY:
(2)- D353 Caterpillar Diesel Engines
 
MAST & SUBSTRUCTURE:
LCM 131 ft 450,000#, 16’ substructure
 
MUD PUMPS:
#1 H&H 1000 HP Triplex Powered by Caterpillar 3508 engine
#2 H&H 1000 HP Triplex Powered by Caterpillar 3508 engine
 
ROTARY EQUIPMENT:
Ideco 17 ½” table
 
TRAVELING EQUIPMENT:
250 ton Block, 200 ton swivel.
 
BOPS:
4 Station Accumulator
11” 3000# Cameron double ram
11” 3000#Hydrill Annular
 
WATER TANK:
500 bbl
 
MUD SYSTEMS:
500 bbl system, linear shaker, desander, desilter.
120 bbl Premix
 
GENERATORS:
2 - 325 kW Generator Powered By Series 60 Detroit engines
 
DRILL PIPE AND COLLARS:
As required.
 
RIG MEASURMENTS:
From center of Conductor 45” to center Mouse hole, 7’7” ahead’
Right 8’8” to Rat hole, 11’6” diagonal
Location: 150’ East (v-door side), 150’ West, 45’ North, 120’ South
KB -18 feet
 
Phone: 316-265-2856
2020 No Bramblewood
Wichita, KS 67206
03/02/2011
 
 
 
 

--------------------------------------------------------------------------------

 
 
BEREDCO LLC
Rotary Drilling Contractor
 
RIG INVENTORY
 
RIG #8 - 13,000 FEET
 
DRAWWORKS:
Unit Model SU-15
 
ENGINES:
(2) Series 60 Detroit Engines
 
MAST & SUBSTRUCTURE:
Tofco 131’, 550,000# w/ 12’ Substructure.
 
MUD PUMPS:
2 FM 1000 Triplex Pump Powered By a Caterpillar 3412
 
ROTARY EQUIPMENT:
Oilwell 20-1/2” x 44”
 
TRAVELING EQUIPMENT:
Blocks 250-Ton, Swivel 200-Ton
 
BOPS:
11” 3000# Cameron double ram
11” 3000# Shaffer Spherical
4-Station Accumulator
 
WATER TANK:
350 Bbl
 
MUD SYSTEMS:
600 Bbl Mud System, Linear shaker, Desander, Desilter 125 Bbl Premix Tank
 
GENERATORS:
2 - 325 kW Generator Powered By Series 60 Detroit engines
 
DRILL PIPE AND COLLARS:
As required
 
RIG MEASURMENTS:
From center of Conductor to center of Mouse hole 57”,
From center of hole to past mouse hole 80”,
Right 100” to Rat hole, Diagonal 126”
Location: 45’ North, 150’ East (v-door side), 120’ South, 150’ West
KB-14 feet
 
Phone: 316-265-2856
2020 No Bramblewood
Wichita, KS 67206
05/10/2011
 
 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE 7

 

Property   Defect Description Morton Unit  8/19/66 JOA requires maintenance of
uniform ownership Smith 1-34 GMC  5/2/66 JOA requires maintenance of uniform
ownership Doolin Missing conveyances