Exhibit 10.1

 

FARMOUT AGREEMENT

 

This Farmout Agreement ("Agreement") is made and entered into this 28th day of
February, 2014, by and between Fort Peck Energy Company, LLC, a Delaware Limited
Liability Company whose address is 1515 Wynkoop Street, Suite 360, Denver,
Colorado 80202 U.S.A. ("FPEC") and Samson Oil and Gas USA Montana, Inc., a
Colorado corporation whose address is 1331 17th Street, Suite 710, Denver, CO
80202 U.S.A. ("Samson") (Samson and FPEC are each a "Farmor" and collectively
are the "Farmors"), and Momentus Energy LLC, a Delaware Limited Liability
Company whose address is 1221 Avenue of the Americas, New York, NY 10020
("Momentus" or "Farmee"). FPEC, Samson and Momentus are each a "Party" and
collectively are the "Parties".

 

RECITALS

 

WHEREAS, the Farmors own, collectively, an undivided one hundred percent (100%)
leasehold interest in the oil and gas leases and lands described in Exhibit 1
(the "Farmout Lands") and depicted on the map attached as Exhibit 2, excluding
there out those two (2) sections of lands as identified in crossed-hatch and
more specifically described below as the Workover Lands; and

 

WHEREAS, FPEC owns a net thirty three and one third percent (33.30%) leasehold
interest, and Samson owns a net sixty six and two thirds percent (66.70%)
leasehold interest in the Farmout Lands; and

 

WHEREAS, Farmors agree that Momentus may earn an undivided fifty percent (50%)
working interest in Farmors leasehold interest in the Farmout Lands by procuring
approximately twenty (20) square miles of three dimensional seismic data which
will be located on the Farmout Lands as depicted on map in Exhibit 3 (the
"Seismic Data Lands"), and drilling a well horizontally within the Bakken
Formation to a minimum lateral length of four thousand and nine hundred feet
(4,900'), such well to be drilled within the boundaries of the Seismic Data
Lands (the "Test Well"), subject to the terms and conditions set forth below;
and

 

WHEREAS, Samson holds: (i) a one hundred percent (100%) working interest in the
horizontally drilled Australia II 12 KA 6 Well (the “Australia II Well”) and the
related spacing unit which is all of Section 29, T28N, R55E (the “Australia
Workover Lands”) and; (ii) a 99.978565% working interest in the Gretel II 12 KA
3 Well (the “Gretel II Well”) (collectively, the Australia II Well and the
Gretel II Well are referred to as the “Existing Wells”) and the related spacing
unit which is all of Section 26, T28N, R53E, (the “Gretel Workover Lands”)
(collectively, the Australia Workover Lands and the Gretel Workover Lands are
referred to as the “Workover Lands”) both in Roosevelt County, Montana (the oil
and gas leases and lands covered by the Workover Lands are described in Exhibit
4A (attached) and the Workover Lands are shown in crossed-hatch areas on the map
attached as Exhibit 4B); and

 

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WHEREAS, Samson agrees that Momentus shall have the right to earn an undivided
fifty percent (50%) working interest in the Australia Workover Lands and
Australia II Well if Momentus conducts workover operations on the Australia II
Well, subject to the terms and conditions set forth below; and

 

WHEREAS Samson agrees that Momentus shall have the right to earn an undivided
fifty percent (50%) working interest in the Gretel Workover Lands and Gretel II
Well, if Momentus conducts workover operations on the Gretel II Well, subject to
the terms and conditions set forth below;

 

NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Parties agree as follows:

 

AGREEMENT

 

1. Three Dimensional Seismic Data Acquisition:

 

(a) On or before February 28, 2014, Momentus will provide a written proposal to
Farmors, describing the program to acquire approximately twenty (20) contiguous
square miles of three dimensional seismic data on the Seismic Data Lands with a
projected cost of approximately $ 1,200,000.00 U.S. Dollars ("3D Seismic Data
Program"). The 3D Seismic Data Program will include the acquisition and
processing parameters. Momentus may proceed with the acquisition of the 3D
Seismic Data Program upon the approval of the 3D Seismic Data Program by
Farmors, which approval shall not be unreasonably denied or delayed. If Momentus
does not provide a seismic program reasonably acceptable to Farmors, then the
rights of Momentus under this Agreement shall terminate and Momentus shall not
incur any liability to the Farmors.

 

(b) Within thirty (30) days of approval of the 3D Seismic Data Program by
Farmors (subject to approval from the BIA or other related governmental
agencies, permits being obtained, seismic contractors availability and weather
delays/conditions), Momentus shall commence or cause to be commenced the 3D
Seismic Program (“Seismic Date”) . Momentus will arrange for the simultaneous
transmission to Farmors of all field data and processed data as such data are
received from the seismic vendor. Upon completion of the 3D Seismic Data Program
Momentus will provide each of Farmors, at no cost or expense, one (1) licensed
copy of data which shall include both field and processed data provided that the
Farmors agree to be bound by the terms of such license. Momentus shall hold one
hundred percent (100%) of all trading rights pertaining to the data from the 3D
Seismic Program and will be entitled to receive one hundred percent (100%) of
all rights and benefits related to the marketing and sales(s) of the data to
third parties.

 

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(c) In the event the 3D Seismic Data Program is not commenced on or before the
Seismic Date, or the data received from the 3D Seismic Data Program is not
processed and interpreted by Momentus on or before six (6) months after the
Seismic Date, then the rights of Momentus under this Agreement shall terminate
and Momentus shall not be incur any liability to the Farmors.

 

(d) Momentus shall, within forty five (45) days following the receipt of a Pre-
stack Time Migrated (PSTM) data volume received from the 3D Seismic Data Program
(the date forty five (45) days following receipt of same being the "Option
Date"), provide a full presentation of its interpretation of the processed data
to the Farmors, including all interpretation project data volumes (which would
include, but not be limited to, digital horizon files, fault files, map files,
seismic synthetics, etc., as well as hard copies of same) and a power-point
presentation of the resulting interpretation. In the event Momentus fails to
make its presentation to Farmors by the Option Date, then the rights granted to
Momentus to earn an interest in the Farmout Lands from the Farmors as a result
of drilling the Test Well under this Agreement shall terminate and Momentus
shall not incur any liability to the Farmors.

 

2. Test Well:

 

(a) Subject to the results of the 3D Seismic Date Program and Momentus’
interpretation of such processed data, Momentus shall have the option to elect,
in its sole discretion, to drill a Test Well. Momentus shall drill the Test Well
pursuant to the terms of the Amended JOA (as hereinafter defined). Momentus
shall notify Farmors on or before the Option Date in writing of its election to
drill a Test Well. The notification shall include the location that the Test
Well will be drilled, which shall be on the Seismic Data Lands and will provide
that the well bore and bottom hole location shall be located entirely within the
Seismic Data Lands. Momentus shall thereafter prosecute the drilling of the Test
Well diligently, without unnecessary delay and in a workmanlike manner
horizontally to a minimum lateral length of four thousand and nine hundred feet
(4,900') within the Bakken Formation as defined as the stratigraphic equivalent
found at a measured depth of 9,418 to 9,440 feet TVD in the Australia II 12 KA 6
well located in the NW4NW4 of Section 29, T28N-R55E, in Roosevelt County,
Montana (the "Contract Depth''). The Test Well shall be designed in a manner to
allow evaluation of the Bakken Formation. Momentus shall use its commercially
reasonable efforts to commence or cause to be commenced the actual drilling of a
Test Well within ninety (90) days following the Option Date (the “Spud Date”),
subject to the availability of a drilling rig capable of drilling to the
Contract Depth, surface conditions of the access road and well pad location, and
the receipt of the following necessary regulatory approvals:

 

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(i) An Application for Drilling Permit approved by the BLM, the BIA, and the
MBOGC;

 

(ii) A surface use agreement with the surface owners for the access road and
well pad location; and

 

(iii) Any necessary Montana or Tribal road access permits for the movement or
hauling of equipment exceeding the normal load rating for the access roads to
the well pad location.

 

If Momentus cannot commence drilling of the Test Well within ninety (90) days
following the Option Date as a result of a delay caused by any of the foregoing
or as a result of an event of Force Majeure, the Spud Date shall be extended for
a reasonable period thereafter for so long as it takes Momentus to resolve such
matters causing the delay.

 

(b) Momentus shall notify Farmors of the spudding of the Test Well. After
drilling has commenced and until the Test Well has been completed or plugged and
abandoned as a dry hole, Momentus shall furnish to Farmors daily reports as to
the progress of drilling the Test Well.

 

(c) Momentus shall bear 100% of Farmors' proportionate share of any costs,
expenses or risks of drilling, testing, completing, and equipping through the
production tanks, or, if determined pursuant to Section 2(e) that the well is
not capable of producing oil and gas in commercial quantities, the plugging and
abandoning the Test Well.

 

(d) Momentus agrees to promptly test any formation that either before or after
logging appears favorable for the production of oil and or gas in the opinion of
a reasonably prudent operator.

 

(e) If the Test Well proves to be capable of producing oil and or gas in
commercial quantities, in the sole discretion of Momentus, it shall be equipped
for production by Momentus through the crude oil tanks and natural gas metering
facilities provided by Momentus. If the Test Well proves to be incapable of
producing oil or gas in commercial quantities, in the sole discretion of
Momentus, then Momentus shall plug the same in accordance with the laws of
Montana, and shall reclaim the site in accordance with the Amended JOA.

 

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3. Substitute Well:

 

If during the drilling of the Test Well Momentus encounters impenetrable
substances or other conditions making further drilling impracticable, Momentus
may elect to discontinue drilling the Test Well before Contract Depth is
reached. Momentus shall have the right but not the obligation to drill a
substitute well ("Substitute Well") at a location selected by Momentus within
the Seismic Data Lands, provided the actual drilling of the Substitute Well is
commenced not later than one hundred and twenty (120) days after the abandonment
of the original Test Well. If the Substitute Well is drilled, tested, and
completed or if found not to be capable of commercial production pursuant to
Section 2(e), plugged and abandoned in accordance with all of the requirements
specified for the original Test Well, the Substitute Well shall be considered as
the original Test Well for all purposes of this Agreement. Each reference herein
to the Test Well shall include a reference to a Substitute Well. All of the
costs of drilling, testing, completing, and equipping or, if found not to be
capable of commercial production pursuant to Section 2(e), plugging and
abandoning in accordance with all of the requirements specified for the original
Test Well for the Substitute Well shall be borne by Momentus and Momentus shall
not incur any liability to the Farmors.

 

4. Failure to Drill the Test Well:

 

If Momentus does not commence, or cause to be commenced, the drilling of the
Test Well by the Spud Date (subject to any extension to the Spud Date in the
event of a delay provided for in Section 2(a) above) or the Substitute Well if
applicable, then Momentus will lose any rights to earn a fifty percent (50%)
working interest in the Farmout Lands exclusive of the Workover Lands and this
Agreement shall terminate and Momentus shall not incur any liability to the
Farmors.

 

5. Earning Provision – Assignment Of Interest In Farmout Lands:

 

Within fifteen (15) days after Momentus has reached Contract Depth in the Test
Well consistent with the provisions of this Agreement, Momentus shall earn an
undivided fifty percent (50%) working interest in and to the Farmout Lands,
subject to its working interest share of all existing burdens listed in Exhibit
7 attached hereto. Upon earning Samson and FPEC shall execute and deliver all
such assignments and documents as may be reasonably required to effect the
assignment of the earned interest in the Test Well and the Farmout Lands, free
and clear of all burdens other than those burdens set forth in Exhibit 7.

 

The assignment and the date of earning shall be effective as of 7:00 A.M on the
first day of the month following date Contract Depth was reached in the Test
Well (“Test Well Earning Date”). Following the effective date of earning, the
interest in the Test Well's leasehold operating rights, material and equipment
and the production from the Test Well, shall be owned by the Parties as set
forth on Exhibit A of the Amended JOA and the Test Well shall be operated as a
well drilled for the joint account under the terms and provisions of the Amended
JOA.

 

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6. Scope of Assignment:

 

Any assignment of interest made under this Agreement shall be subject to all of
the provisions of this Agreement and shall be in forms attached as Exhibits 6-A,
6-B, and 6-C. Any assignment shall be made with warranty of title against claims
arising by, through or under, but not otherwise. The Parties shall execute BIA,
BLM or county forms of assignment, as applicable, to convey the subject
interests to Momentus.

 

7. Joint Operations for the Test Well following Earning:

 

If and when Momentus earns an interest in the Farmout Lands in accordance with
this Agreement, the Farmors shall become responsible for their working interest
ownership share of costs and expenses as to the after earning percentages as
described in Exhibit 7 . The Amended JOA shall govern all operations on
jointly-owned Farmout Lands, but in the event of any conflict between the
Amended JOA and this Agreement, this Agreement shall be the governing Agreement.

 

8. Operatorship:

 

Provided that Momentus successfully earns its interest in the Farmout Lands in
accordance with Section 5, the Parties to the Amended JOA shall appoint Momentus
to be the operator on the Farmout Lands pursuant to the terms of the Amended JOA
and Samson shall, in accordance with its obligations under the Amended JOA, do
all things necessary to infer operatorship (including delivery of all books and
records pertaining to joint operations) on Momentus as of the Test Well Earning
Date in Section 5 hereto.

 

9. Well Information:

 

Momentus shall provide Farmors with the geological information (in paper and
electronic form) as provided for in the Amended JOA for the Test Well and any
other well that may be drilled in accordance with this Agreement.

 

10. Workover of Existing Wells on Workover Lands:

 

(a) Upon written certification from Momentus that it has signed an agreement
with a geophysical data acquisition company to acquire the 3D Seismic Data
Program, Samson shall provide Momentus access to review the well files and
related data and information (the “Well Data”) pertaining to the Existing
Well(s). Momentus shall review the Well Data at Samson's office during normal
business hours or at a location that is mutually agreed upon between Samson and
Momentus.

 

 

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(b) Within forty five (45) days following Momentus' review of the Well Data, but
no later than June 1, 2014, Momentus may provide to Samson a detailed written
workover program for either one or both of the Existing Wells (the “Workover
Program”), which will be subject to Samson’s approval in its entirety which
shall not be reasonably denied or delayed. The Workover Program will describe
the proposed operations to be performed, the costs associated with the workover
operation and the date on which the work will be commenced. The Workover Program
for one or both of the Existing Wells shall include construction of a 75 KVA
three phase power supply to the respective Existing Well/s. Said power supply
construction to at least one of the Existing Wells would need to begin within
one hundred and twenty (120) days following the first day of production of oil
and gas. If Momentus does not submit to Samson the Workover Program by June 1,
2014 and/or does not complete the Workover Program, including the above
mentioned construction of the power supply to the respective Existing Well/s,
Momentus’ right to conduct the Workover Program and Momentus’ right to earn a
working interest as set forth below in either or both of the Existing Wells and
associated Workover Lands shall terminate and Momentus shall not incur any
liability to Samson.

 

(c) Upon Samson's approval of the Workover Program, Samson shall designate
Momentus as the designated operator of either or both of the Existing Wells, as
applicable pursuant to the Workover Program, with the Bureau of Land Management
("BLM"), the State of Montana ("Montana"), the Montana Board of Oil and Gas
Conservation ("MBOGC"), the Bureau of Indian Affairs ("BIA"), and the Fort Peck
Tribes Departments of Minerals, and Natural Resources.

 

(d) The Workover Lands are subject to a Joint Operating Agreement between
Farmors (the "JOA"), attached as Exhibit 5. Upon approval of the Workover
Program, Momentus, Samson and FPEC will amend the JOA to add Momentus as a party
to the JOA and to name Momentus as operator of either or both of the Existing
Wells , pursuant to the Workover Program, as applicable (the "Amended JOA''). In
the event that one of the Existing Wells is completed for production of oil or
gas, then upon completion of such well, (i) all costs (including but not limited
to all equipping and operating costs) incurred after conclusion of the portion
of the Workover Program applicable to such well and (ii) the revenue received
from such well will be shared by Momentus fifty percent (50%) and Samson fifty
percent (50%), pursuant to the terms of the Amended JOA. If an Existing Well is
abandoned or otherwise determined to be incapable of production in commercial
quantities at the time Momentus completes the Workover Program as determined in
the sole discretion of Momentus then all costs of the plugging and of the
abandonment operations of such well shall be borne one hundred percent (100%) by
Momentus. All plugging and abandonment operations shall be conducted in
accordance with the terms of the Amended JOA, including the right of a Party to
take over the Existing Well proposed to be plugged and abandoned pursuant to
Section VI(E) of the Amended JOA. If, pursuant to the Amended JOA, a Party
decides to take over the Existing Well proposed to be plugged and abandoned than
Momentus shall have no further obligation or liability associated with plugging
and abandoning such Existing Well and shall transfer operatorship to the Party
taking over such Existing Well.

 

 

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(e) The Amended JOA shall also be amended as to Exhibit C thereof (“Accounting
Procedure Joint Operations”), Article III Overhead, paragraph 1. Drilling and
Producing Operations, subsection A. Technical Services, subparagraph (ii.) to
amend the selection from “Alternative 1-All Overhead” to now read “Alternative
3-Drilling Direct”.

 

(f) Within sixty (60) days following the date the Workover Program is approved
by Samson (but subject to rig availability, surface conditions, regulatory
requirements, and the results of Momentus’ seismic review, in its sole
discretion Momentus, as the designated operator of either or both of the
Existing Wells, as applicable pursuant to the Workover Program, shall entirely
at its own cost, risk and expense, commence and conduct the operations in the
same manner as proposed in the approved Workover Program. If the Workover
Program includes workover of both Existing Wells, then Momentus' operation of
the second Existing Well shall commence within ninety (90) days following the
conclusion of the portion of the Workover Program relating to the Existing Well
first subject to such Workover Program.

 

(g) Within fifteen (15) days after Momentus has concluded the portion of the
Workover Program applicable to an Existing Well in a manner consistent with the
provisions of this Agreement (“Workover Earning Date”) Momentus shall earn an
undivided fifty percent (50%) working interest in such Existing Well and an
undivided fifty percent (50%) of Samson's leasehold interest in the Workover
Lands applicable to such Existing Well, subject to its working interest share of
all existing burdens listed in Exhibit 7 attached hereto. Upon earning Samson
shall execute and deliver all such assignments and documents as may be
reasonably required to effect the assignment of the earned interest in such
Existing Well and the applicable Workover Lands, free and clear of all burdens
other than those burdens set forth in Exhibit 7.

 

11. Plugging And Abandonment:

 

Upon abandonment of the either one or both of the Existing Wells or of the Test
Well pursuant to this Agreement, Momentus agrees to plugging operations to be
conducted in accordance with the Amended JOA and the rules and regulations
established by the State of Montana and other governmental agencies.

 

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12. Well Access:

 

Farmors shall have access to the rig floor (and the location of any operation
pursuant to this Agreement), at its own cost, risk, expense, and Samson shall be
entitled to all information free of cost to the workover operation, equipping,
operating and production data, as it relates to the Existing Well(s) and Farmors
shall be entitled to all information of the drilling, testing, surveying,
completing, equipping, operating and production data of the Test Well.

 

13. Prerequisite Corporate Qualifications:

 

Momentus, on or before April 30th, 2014, shall file all the necessary and
requisite paperwork to be qualified to hold oil and gas leases on Indian lands
and conduct business operations contemplated by this Agreement. The actions
taken by Momentus shall include, but are not limited to, the following:

 

(a) Form a business entity under the laws of a State within the United States of
America for its operating activities in Montana and the United States;

 

(b) Register Momentus to do business in Montana;

 

(c) File corporate paperwork as necessary for Momentus to do business on an
Indian reservation, including but not limited to a performance bond, an
irrevocable letter of credit, or other form of surety with the BIA;

 

(d) File corporate paperwork as necessary for Momentus to do business on an
Indian reservation with the BLM; and

 

(e) File corporate paperwork as necessary for Momentus to do business on the
Fort Peck Indian Reservation with the necessary Tribal Departments as follows:

 

(i)Minerals Department;

 

(ii)Natural Resources Department; and

 

(iii)Tribal Employment Rights Office.

 

14. Assignment of Project Development Agreement:

 

The Farmors, on or before fifteen (15) days prior to the Spud Date, shall
initiate the process for approval of the assignment of fifty (50%) percent of
their interests in the Project Development Agreement between the Assiniboine and
Sioux Tribes of the Fort Peck Reservation (the "Tribes") and FPEC dated December
12, 2011 (the "PDA") pursuant to this Agreement, subject to the performance of
Momentus under Sections 1 through 6 of this Agreement. The assignment will
require a resolution from the Fort Peck Tribal Executive Board ("TEB") as the
duly elected body representing the Tribes. The assignment of the PDA will be
limited to the assignment of interests to Momentus in the event the Test Well or
subsequent wells are drilled on Farmout Lands which include in an approved
spacing unit in that portion of the bed of the Missouri River owned by the
Tribes.

 

 

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15. Liens:

 

Momentus will not allow any liens to attach to the Workover Lands or Farmout
Lands during the Workover Program or during the drilling operations of the Test
Well. Momentus shall promptly satisfy all obligations for which a lien could
attach to the Workover Lands or the Farmout Lands by operation of law so that
such liens are never perfected or enforced due to default by Momentus, its
successors, or assigns. It is agreed that the perfection or filing of such lien
against the Workover Lands or the Farmout Lands shall be considered a material
breach of this Agreement unless Momentus shall, within sixty (60) days from the
date of such perfection or filing, either:

 

(i)cause such lien to be released; or

 

(ii)if Momentus claims that such lien does not result from a bona fide
indebtedness, furnish security satisfactory to Farmors that Momentus will cause
such lien to be released.

 

16. Representations and Warranties of the Parties:

 

Each Party severally and not jointly makes the following representations and
warranties as of the date hereof:

 

(a) Status. It is duly organized, validly existing and in good standing under
the laws of its organization, and is licensed to do business in the State of
Montana.

 

(b) Power. It has all requisite power and authority to carry on its business as
presently conducted. The execution and delivery of this Agreement does not, and
the fulfillment of and compliance with the terms and conditions hereof will not
violate, or be in conflict with, any material provision of its governing
documents, any material provision of any agreement or instrument to which it is
a party or by which it is bound, or any judgment, decree, order, statute, rule
or regulation applicable to it.

 

(c) Authorization and Enforceability. This Agreement constitutes its legal,
valid and binding obligation, enforceable in accordance with its terms, subject,
however, to the effects of bankruptcy, insolvency, reorganization, moratorium
and other laws for the protection of creditors, as well as to general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.

 

 

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(d) Finder’s Fees. It has not incurred any obligation or liability, contingent
or otherwise, for brokers' or finders' fees in respect of this Agreement for
which the other Parties shall have any obligation or liability.

 

17. Representations And Warranties Of Farmors:

 

Farmors, each as an individual company owns a leasehold and certain working
interest in the Farmout Lands and in the Workover Lands, make the following
representations and warranties individually as of the date hereof:

 

(a) No Liens. Other than as set forth in Exhibit 7, the Farmout Lands and
Workover Lands are free and clear of all liens and encumbrances arising by,
through or under Farmors, but not otherwise.

 

(b) No Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to the knowledge of Farmors,
threatened against Farmors.

 

(c) Litigation. There is no action, suit, proceeding, claim or investigation
pending or, to the knowledge of Farmors, threatened (i) against Farmors with
respect to the Farmout Lands and Workover Lands or (ii) that impedes or is
likely to impede Farmors' ability to consummate the transaction contemplated by
this Agreement.

 

(d) Judgments. There are no unsatisfied judgments or injunctions issued by a
court or federal, state, municipal, tribal or other governmental entity
outstanding against Farmors, nor are Farmors in violation or default under any
order, writ, injunction, or decree of any court or federal, state, municipal or
other governmental entity.

 

(e) No Unrecorded Interests. Farmors have not granted any interest in any of the
Farmout Lands or Workover Lands that is not of record in Roosevelt or Richland
Counties, Montana, as of the date hereof, and to the knowledge of Farmors, no
third party has granted, or is entitled to, any interest in any lease that is
subject to this Agreement, as of the date hereof.

 

(f) Rights of First Refusal or Preferential Rights to Purchase. None of the
Farmout Lands or Workover Lands are subject to any rights of first refusal or
other preferential or pre-emptive rights of purchase whereby any person
(including the other Farmor) would have the right to acquire any of the Farmout
Lands as a consequence of Momentus conducting the work and earning an interest
in any of the Farmout Lands or Workover Lands or the Existing Wells in
accordance herewith, except as shown on Schedule I.

 

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(g) Areas of Mutual Interest. None of the Farmout Lands or Workover Lands are
subject to an agreement which provides for an area of mutual interest, except as
shown on Schedule II.

 

(h) Notice of Default. Farmors have not received written notice of any default
or purported default under any of the title and operating documents pertaining
to the Farmout Lands or the Workover Lands that remains outstanding in any
material respect or that has not been remedied in all material respects and to
the knowledge of the Farmors, there has been no act or omission by the Farmors
that reasonably could constitute a breach of or a default under any such title
and operating document that has not been remedied in all material respects or
which, if un-remedied, could reasonably be expected to have a material adverse
effect on the value of the Farmout Lands or Workover Lands.

 

(i) Applicable Laws. Farmors have not received written notice of any breach or
purported breach of any applicable law pertaining to the Farmout Lands or
Workover Lands or the ownership or operation, if any, thereof (excluding any
applicable law relating to the environment) that remains outstanding in any
material respect or that has not been remedied in all material respects and, to
the knowledge of the Farmors, there has been no act or omission by either of the
Farmors that reasonably could constitute a breach of any such applicable law
that has not been remedied in all material respects or which, if un-remedied,
could reasonably be expected to have a material adverse effect on the value of
the Farmout Lands or Workover Lands.

 

(j) Lease Payments. to the extent pertaining to the Farmout Lands or Workover
Lands: (i) all lessor royalties and all lease rentals; (ii) all ad valorem and
property taxes; and (iii) all production, severance and similar taxes, charges
and assessments based upon or measured by the ownership or production (if any)
of petroleum substances or any of them or the receipt of proceeds from the sale
thereof, that became due and payable to third parties on or prior to the date of
this Agreement or on the date that Momentus earns an interest in any of the
Farmout Lands or Workover Lands have been fully paid, except, in each case, for
amounts that are being disputed in good faith.

 

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(k) Environmental Notices. Farmor has not received written notice of any orders
or directives from any government authority: (i) that are specific to the
Farmout Lands or Workover Lands or any portion thereof, related to environmental
liabilities which require any work, repairs, construction or capital
expenditures with respect to the Farmout Lands or Workover Lands which have not
been complied with in all material respects; and with respect to the breach of
any applicable law relating to the environment that are specifically applicable
to the Farmout Lands or Workover Lands or any portion thereof which remain
outstanding in any material respect.

 

(l) Permits. The Farmors possesses all material permits necessary for the
operation of the Farmout Lands or Workover Lands.

 

(m) AFEs. there are no authorities for expenditure or other financial
commitments pertaining to the Farmout Lands or Workover Lands.

 

(n) Wells. All wells (including the Existing Wells) located on the Farmout Lands
or Workover Lands have been drilled, completed, constructed, installed,
maintained and operated and, if applicable, abandoned in all material respects
in accordance with good oil and gas field practices and the material
requirements of applicable law.

 

(o) Operations. All operations conducted on the Farmout Lands or Workover Lands
have been conducted in all material respects in accordance with good oil and gas
field practices and the material requirements of applicable law.

 

(p) No Midstream Agreement. There are no production sales contracts,
transportation agreements or processing agreements which pertain to production
from the Farmout Lands or the Workover Lands.

 

18. Repetition of Representations and Warranties

 

All representations and warranties given under Sections 16 and 17 above shall be
deemed repeated and valid, true and correct as of the effective date of
assignment of each of the earned interests, as such dates are determined
pursuant to Section 5 (Earning Provision – Assignment Of Interest In the Farmout
Lands) and Section 10 (f) (Earning Provision – Assignment Of Interest the
Workover Lands) and each Party agrees to inform the other Party of any material
changes to the facts in the representations and warranties prior to the Test
Well Earning Date and to the Workover Earning Date.

 

13

 

 

19. Insurance:

 

As to all operations under this Agreement, Momentus shall carry for the benefit
and protection of the Parties insurance described in Exhibit D of the Amended
JOA.

 

20. Title:

 

Farmors shall provide Momentus with the right to review all title opinions,
abstracts of title and other title information in Farmors possession with
respect to the Farmout Lands or Workover Lands, at the FPEC and Samson offices
provided, however, furnishing such items shall not be construed as a warranty or
representation by FPEC and Samson of title or ownership. Momentus shall provide
Farmors with a copy of all curative work and title information resulting from
any additional title examinations conducted by Momentus.

 

21. Indemnity:

 

SUBJECT TO SECTION 21(B) BELOW, THE PARTIES SHALL INDEMNIFY, HOLD HARMLESS AND
DEFEND EACH PARTY INDIVIDUALLY AND EACH PARTY'S AFFILIATES, AND THEIR RESPECTIVE
SHAREHOLDERS, OFFICERS, DIRECTORS, MEMBERS, PARTNERS, INVESTORS, EMPLOYEES,
AGENTS, REPRESENTATIVES, SUCCESSORS OR ASSIGNS (COLLECTIVELY, THE "INDEMNIFIED
PARTIES") FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LAWSUITS, DAMAGES,
AWARDS, PENALTIES, SETTLEMENTS, LOSSES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, COURT COSTS, EXPERT WITNESS EXPENSES AND
REASONABLE ATTORNEYS' FEES) (COLLECTIVELY, "CLAIMS") ARISING FROM AN INDIVIDUAL
PARTY'S PERFORMANCE UNDER THIS AGREEMENT OR AN INDIVIDUAL PARTY'S ACTS OR
OMISSIONS (OR THE ACTS OR OMISSIONS OF AN INDIVIDUAL PARTY'S CONTRACTORS OR
THEIR SUBCONTRACTORS OF ANY TIER) ON THE LANDS SUBJECT TO THIS AGREEMENT FROM
AND AFTER THE EFFECTIVE DATE; PROVIDED, HOWEVER, A PARTY SHALL HAVE NO
OBLIGATION TO INDEMNIFY A SPECIFIC INDIVIDUAL PARTY FROM ANY CLAIM ARISING FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT SPECIFIC INDIVIDUAL PARTY. A
PARTY SHALL NOT BE LIABLE FOR, AND SHALL HAVE NO OBLIGATION TO INDEMNIFY ANOTHER
PARTY FOR, ANY CLAIMS FOR CONSEQUENTIAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES
(INCLUDING COMPENSATION FOR BUSINESS INTERRUPTION, LOSS OF PROFITS, LOSS OF
OPPORTUNITY, OPPORTUNITY COSTS, RESERVOIR OR FORMATION DAMAGE, THE INABILITY TO
PRODUCE PETROLEUM SUBSTANCES OR A DELAY IN THEIR PRODUCTION).

 

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22. Successors and Assigns

 

This Agreement is binding upon the Parties and their respective heirs,
successors and assigns, and shall be a covenant running with the Farmout Lands
and Workover Lands.

 

23. Force Majeure:

 

If Momentus is rendered unable, wholly or in part, by Force Majeure, to carry
out its obligations under this Agreement, the obligations of Momentus, so far as
they are affected by Force Majeure, shall be suspended from the inception and
during the continuance of the inability, and the cause of the Force Majeure, as
far as possible, shall be remedied with commercially reasonable diligence.
Momentus shall provide Farmors with written notice of the Force Majeure event,
with reasonably full detail of the Force Majeure within a reasonable time after
Momentus learns of the occurrence of the Force Majeure event. The settlement of
strikes, lockouts and other labor difficulty shall be entirely within the
discretion of Momentus and nothing in this Agreement shall require the
settlement of strikes, lockouts, or other labor difficulty. "Force Majeure"
means any cause or condition not within the reasonable control of Momentus and
which, by the exercise of reasonable diligence, Momentus is unable to prevent or
overcome, and without limiting the generality of the foregoing, such shall
include delays or inabilities to obtain requisite permits to conduct the
operations contemplated by this Agreement.

 

24. Notices:

 

All notices authorized or required by any provision of this Agreement shall be
given in writing and delivered in person, by certified or registered U.S. Mail,
overnight courier service, postage or charges prepaid, by facsimile or
electronic mail over the Internet ("Email") and shall be addressed to the Party
to whom the notice is given as follows (or to such other address as such Party
may notify in writing):

 

 

(a)If to FPEC:

 

Fort Peck Energy Company, LLC

1515 Wynkoop Street, Suite 360

Denver, CO 80202

Telephone:303-546-7951

Facsimile:303-448-8882

 

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(b)If to Samson:

 

Samson Oil and Gas USA Montana, Inc.

1331 17th Street, Suite 710

Denver, Colorado 80202

Attention:Land Department

Telephone:303-295-0344

Facsimile:303-295-1961

 

(c)If to Momentus:

 

Momentus Energy LLC c/o Dentons U.S. LLP

1221 Avenue of the Americas

New York, NY 10020

Attention:Julia Papastravidis

Telephone:212-768-6700

Facsimile:212-768-6800

 

and copy sent to:

Momentus Energy Corp.

Suite 370, 800 – 6th Avenue SW,

Calgary AB T2P 3G3

Attention:Land Department

Telephone:403-861-6329

 

25. Governing Law, Venue, and Waiver of Jury Trial:

 

(a) The domestic law, without regard to conflicts of laws principles, of the
state of Montana will govern all questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement.

 

(b) Each of the Parties submits to the exclusive jurisdiction of any state or
federal court sitting in the State of Montana, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that might be required
of any other Party with respect to any such action or proceeding. The Parties
agree that either or both of them may file a copy of this paragraph with any
court as written evidence of the knowing, voluntary and bargained agreement
between the Parties irrevocably to waive any objections to venue or to
convenience of forum.

 

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(c) Each Party acknowledges and agrees that any controversy that may arise under
this Agreement is likely to involve complicated and difficult issues, and
therefore it irrevocably and unconditionally waives any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out of
or relating to this Agreement. Each Party certifies and acknowledges that (i) no
representative, agent or attorney of any other Party has represented, expressly
or otherwise, that such other Party would not, in the event of litigation, seek
to enforce the foregoing waiver, (ii) it understands and has considered the
implications of such waiver, (iii) it makes such waiver voluntarily and (iv) it
has been induced to enter into this Agreement by, among other things, the mutual
waiver and certifications in this Section 25.

 

26. Entire Agreement:

 

This Agreement, together with all Exhibit(s), constitutes the entire Agreement
between the Parties as to the subject matter herein and supersedes all prior
negotiations or agreements pertaining to such. Any amendments to this Agreement
shall be made in writing.

 

27. Momentus Energy Corp.:

 

Momentus Energy Corp. (an Alberta company), Momentus Energy USA Corp (an Alberta
company), and Momentus Energy Inc. (a Delaware company), (the latter being the
sole member of Momentus, each an affiliate of Momentus, shall herein be known
individually and collectively as “Momentus Companies”. Momentus Companies shall
be jointly and severally liable with Momentus for any duties, obligations, or
liabilities of Momentus incurred pursuant to this Agreement as an affiliate of
Momentus Companies. Any reference to "Momentus" or "Farmee" in this Agreement
shall also refer to Momentus Companies to the extent Momentus Companies becomes
a party to or performs any obligation pursuant to this Agreement as an affiliate
of or parent of Momentus. Momentus Companies shall guarantee the performance of
Momentus, and any payment or obligation incurred by Momentus pursuant to this
Agreement. Farmors need not exhaust remedies against Momentus, but may proceed
directly against Momentus Companies to secure any payment or obligation incurred
by Momentus or Momentus Companies pursuant to this Agreement.

 

 

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28. Relationship of the Parties:

 

With respect to this Agreement, each Party shall not be considered the agent,
partner, employee or fiduciary of any other Party, nor shall this Agreement be
construed as creating a mining partnership, joint venture or other partnership
or association. Each Party shall be responsible only for its obligations as
provided in this Agreement and shall be liable only for its proportionate share
of the costs of performing its obligations under this Agreement. All of the
obligations and liabilities under this Agreement shall be several and not joint
or collective. The Parties elect not to be treated as a partnership under the
Internal Revenue Code of 1986 or under any Income Tax Laws of the state in which
the lands covered hereby are located, and specifically elect to be excluded from
all such provisions thereof.

 

29. Headings:

 

The heading of the several paragraphs and/or Sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction of
the terms and provisions hereof.

 

30. Time:

 

Time is of the essence of this Agreement.

 

31. Further Assurances:

 

The Parties agree to execute, acknowledge and deliver any additional
instruments, agreements or other documents and to do any other acts and things
which may be necessary to more fully and effectively accomplish the intent of
the Parties as set forth in this Agreement.

 

32. Memorandum of Agreement:

 

This Agreement shall not be placed of record; however, a Memorandum of
Agreement, in the form attached as Exhibit 8, shall be placed of record in
Roosevelt County, Montana.

 

33. Counterparts and Facsimile or Email Signatures:

 

This Agreement may be executed by the Parties in any number of counterparts,
each of which shall be deemed an original instrument, but all of which together
shall constitute but one and the same instrument. Facsimile or Email signatures
shown on imaged documents are considered binding.

 

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34. Exhibits:

 

The Exhibit(s) to this Agreement are hereby incorporated in this Agreement by
reference and constitute a part of this Agreement.

 

 

 

 

 

 

 

[this space intentionally left blank]

 

19

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement, as of the date
first set forth above.

 

FORT PECK ENERGY COMPANY, LLC                         By: Lynn D. Becker,
Manager   Date:           SAMSON OIL AND GAS USA MONTANA, INC.                  
      By: Terry Barr, President and CEO   Date:           MOMENTUS ENERGY LLC,
by its sole member MOMENTUS ENERGY INC.                         By: Peter Henry,
Director, Momentus Energy Inc.   Date:    

  

 

 

The undersigned acknowledge their joint and several liability with respect to
the duties, obligations or liabilities of Momentus in this Agreement, in
accordance with the terms and conditions thereof.

 

20

 

 

 

MOMENTUS ENERGY CORP.                   By: Paul Starnino, Director   Date:    
          MOMENTUS ENERGY USA CORP.                   By: Paul Starnino,
Director   Date:                       MOMENTUS ENERGY INC.                  
By: Peter Henry, Director   Date:    

 

 

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EXHIBITS

 

1.Farmout Lands – Descriptions of Leases and Lands

 

2.Farmout Lands – Map

 

3.Seismic Data Lands - Map

  

4.A. Workover Lands - Descriptions of Leases and Lands

 

B. Workover Lands - Map

  

5.Existing Joint Operating Agreement with Exhibits

 

  

6.A. Form of Federal Assignment

 

B. Form of County Assignment

 

C. Form of Project Development Agreement Assignment

 

7.Farmout Interests – Existing Burdens, Liens & WI Ownership

 

8.Memorandum of Farmout Agreement

 

  

SCHEDULES

 

I.Rights of First Refusal or Preferential Rights to Purchase.

 

II.Areas of Mutual Interest.

 

 

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