exv10w20



 







Exhibit 10.20




JOINT EXPLORATION AND DEVELOPMENT AGREEMENT




     THIS AGREEMENT is entered into and made effective this the 12th day of February, 1997, by and
between RIATA ENERGY, INC., a Texas Corporation, 5912 Amarillo Blvd. W., Amarillo, Texas 79106,
hereinafter referred to as “RIATA” and MANTI RESOURCES, INC., a Texas Corporation, P.O. Box 2907,
Corpus Christi, Texas 78403, hereinafter refereed to as “MANTI”.



WITNESSETH:




     WHEREAS, RIATA and MANTI each are presently engaged in the business of exploring for oil, gas
and other hydrocarbons within the State of Texas, and



     WHEREAS, RIATA is the owner of certain lands located in Pecos County, Texas, which lands are
deemed by RIATA and MANTI to be prospective for finding oil, gas and other hydrocarbons, and



     WHEREAS, RIATA is the owner of certain proprietary data and/or are in possession of and have a
license to use certain other data, all of which covers lands which are subject to this Agreement as
well as lands adjacent thereto, and



     WHEREAS, both RIATA and MANTI find it in their mutual interests to enter into an agreement for
the purpose of establishing an area of mutual interest and then jointly exploring for oil, gas and
other hydrocarbons on the lands covered by this Agreement;



     NOW THEREFORE, for and in consideration of the premises and mutual covenants herein contained,
both RIATA and MANTI do hereby covenant and agree as follows:



ARTICLE
1

DEFINITIONS




     As used in this Agreement, the following words and terms shall have the meanings hereinafter
ascribed to them:



     1.1 “Agreement” shall refer to this agreement.



     1.2 “RIATA Lands” shall mean any and all leasehold and/or mineral interest within the Area of
Mutual Interest, presently owned or subsequently acquired by RIATA. The presently owned RIATA Fee
Lands are shaded red on the attached Exhibit “A”. The presently owned RIATA Mineral Classified
Lands are shaded green on the attached Exhibit “A”.



 









 





     1.3 “Area of Mutual Interest” (AMI) shall mean all of the lands, oil and has interests and oil
and leases intended to be developed and operated for oil and gas purposes under this Agreement and
shall be comprised of the area outlined in red on Exhibit “A” attached hereto and made a part
hereof for all purposes.



     1.4 “oil and gas” shall mean oil, gas, casinghead gas, gas condensate and all other liquid or
gaseous hydrocarbons and other marketable substances produced therewith, unless an intent to limit
the inclusiveness of this term is specifically stated.



     1.5 “oil and gas interests” shall mean unleased fee and mineral interests, including mineral
classified acreage in tracts of lands lying within the Area of Mutual Interest which are owned by
either of the parties to this Agreement.



     1.6 “oil and gas leases”, “lease” and “leasehold” shall mean the oil and gas leases covering
tracts of land lying within the Area of Mutual Interest which are owned either of the parties to
this Agreement.



     1.7 “Prospect Area” shall mean a specified geographical area which has been mutually agreed to
by the Parties which is thought to be prospective for finding oil and/or gas or other hydrocarbons.
A party’s interpretation shall be substantiated by available ell logs, seismic and geological data
deemed to be sufficient to logically and reasonable support such an idea.



     1.8 “Initial Test Well” shall mean the initial test well drilled on a proration unit within an
approved Prospect Area.



     1.9 “Jointly Owned Leases or Oil and Gas Interests” shall be those leases and Oil and Gas
Interests within the AMI acquired from third parties subsequent to the date hereof in which both
RIATA and MANTI acquire an interest pursuant to Article 7 hereof.



     1.10 “AFE” shall mean an Authorization for Expenditure prepared by a party to this Agreement
to; (a) acquire geological data, to acquire and/or reprocess geophysical data; or (b) acquire
Leasehold inclusive of brokerage and/or title curative costs; or (c) drill any well under the terms
of this Agreement.



     1.11 “Party” shall mean either RIATA or MANTI. “Parties” shall mean RIATA and MANTI
collectively.



     1.12 “Fina Agreement” shall mean that certain Agreement dated June 1, 1995 by and between
RIATA and Fina Oil and Chemical Company.



 









 





     1.13 “Nuevo Agreement” shall mean that certain Agreement dated November 15, 1995 by and
between RIATA and Nuevo Energy Company.



     1.14 “Longfellow — West Ranch Prospect Area” shall mean those lands lying within the blue
outline on Exhibit “A” attached hereto.



ARTICLE 2




     2.1 Area of Mutual Interest (AMI). RIATA and MANTI hereby agree to establish an Area
of Mutual Interest (AMI) effective the date hereof with respect to any interest currently owned or
subsequently acquired jointly either by RIATA or MANTI, together with all other lands, oil and gas
interests and oil and gas leases lying within the red outline on Exhibit “A”, for the purposes of
jointly exploring for oil, gas and other hydrocarbons on the lands covered by this Agreement.
RIATA and MANTI shall contribute a like amount of acreage or interest, currently owned or
subsequently acquired, to the AMI to effectuate a 50/50 ownership in the AMI area. In the event
either party contributes a lesser amount of leasehold acreage and/or interest than the other party,
said party shall be required to purchase an oil, gas and mineral lease or acquire an interest
within the AMI area to effectuate a like leasehold and/or interest amount contributed to the AMI
area. Any additional acreage acquired subsequent to the execution of this Agreement, shall be in
accordance with Article 7.



ARTICLE 3




THE LANDS COMMITTED TO THIS AGREEMENT




     3.1 Existing Land, Oil and Gas Interests and Oil and Gas Leases Committed to This
Agreement. RIATA represents that it is the leasehold owner and/or has rights to explore on
approximately 210,000 net acres, subject to the Fina Agreement and the Nuevo Agreement covering a
portion of those lands known as the “Longfellow Ranch ‘A’” more particularly identified in yellow
on Exhibit “A” and the “West Ranch” in more particularly identified in purple on Exhibit “A” and
located in Pecos County, Texas.



     3.2 Additional Lands, Oil and Gas Interests and Oil and Gas Leases Committed to This
Agreement. Subject to the Fina Agreement and the Nuevo, this Agreement shall also cover and
affect the remaining acreage owned by RIATA lying within the red outline on Exhibit “A” (outside of
the Longfellow Ranch “A” Area and West Ranch Area together with all other lands,



 









 







oil and gas interests and oil and gas leases lying within the area outlined in red on the
attached Exhibit “A”, including but not limited to, the unleased portion of the entirety of other
owners not under oil and gas lease(s) or contractually committed to an unrelated third party by the
terms of another agreement on the date of this Agreement. It is hereby mutually agreed that RIATA
is granting MANTI, subject to the terms of this Agreement, a first right of refusal to acquire an
oil and gas interest and/or oil, gas and mineral lease(s), including mineral classified acreage,
covering the balance of RIATA Lands, in order to effectuate a 50/50 working interest ownership
within the entire AMI area. It is hereby mutually agreed that the granting of an oil, gas and
mineral lease on mineral classified acreage shall be subject to the terms and provisions of the
General Land Office of the State of Texas. Nothing herein shall constitute a violation of the
laws, rules, statutes and regulations of the General Land Office of the State of Texas, and in the
event that it does, this clause is void.



     3.3 Lands, Oil and Gas Interests and Oil and Gas Leases Initially Excluded from this
Agreement. This Agreement does not cover lands, oil and gas interests or oil and gas leases
which, on the effective date herein are leased or contractually committed an unrelated party by the
terms of another agreement. The lands, leases, interests and/or agreements which are excluded, are
shaded in blue on Exhibit “A” attached hereto and made a part hereof for all purposes. In the
event any lands, leases, interests, and/or agreements are inadvertently omitted from Exhibit “A”,
such interest shall be automatically excluded from this Agreement, provided that such interest was
leased or contractually committed to an unrelated third party by the terms of another agreement on
the effective date of this Agreement.



     3.4 Disclaimer Regarding RIATA and MANTI Interest. It is not the intent of either
RIATA or MANTI, pursuant to this Agreement, to convey to either party a mineral interest in any
lands committed hereto. The Agreement contemplates the conveyance by RIATA of oil and gas
leasehold interest to MANTI.



ARTICLE 4




TERM OF THE AGREEMENT




     4.1 Primary Term. The term of the Agreement shall be for a period of three (3) years
from the effective date of the Agreement.



 









 





ARTICLE 5




INTEREST OF THE PARTIES




     5.1 Interests in the Agreement. RIATA and MANTI shall each own a fifty percent (50%)
interest in the Agreement and the rights to explore derived therefrom, subject to the terms,
conditions, reservations, and restrictions set forth herein. Each party is entitled to participate
for such interest in the acquisition of any data or leases, in any agreements covering the
designation of a Prospect Area proposed pursuant to this Agreement or a well to be drilled thereon.



ARTICLE 6




DESIGNATION OF PROSPECT AREA(S) AND DRILLING OF WELLS




     6.1 Designation of the Initial Prospect Area. RIATA and MANTI hereby mutually agree
to designate those lands lying within the blue outline on Exhibit “A”, being hereinafter referred
to as the “Longfellow Ranch ‘A’ and West Ranch” Prospect Area, as the Initial Prospect Area for the
purpose of exploring for oil and/or gas or other hydrocarbons.



     6.2 Drilling of Initial Test Well(s) in the Longfellow Ranch “A” and West Ranch Prospect
Area. RIATA and MANTI hereby mutually agree to drill six (6) obligatory Initial Test Wells, as
hereinafter defined in accordance with mutually acceptable drilling procedures and the AFE’s
setting forth the drilling and completion costs for such wells, attached hereto as Exhibit “C” and
made a part hereof. The timing, location, objective depth and formation of such wells shall be as
follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRIORITY	 	SECTION	 	BLOCK	 	ABSTRACT	 	SURVEY	 	DEPTH/FORMATION
	No. 1

	 	 	32	 	 	 	138	 	 	 	5216	 	 	T & St. L.
	 	6,000’/Caballos
	No. 2

	 	 	4	 	 	 	600	 	 	 	5565	 	 	J.H. Sims
	 	6,000’/Caballos
	No. 3

	 	 	24	 	 	 	2	 	 	 	8833	 	 	T.C.R.R.
	 	6,000’/Caballos
	No. 4

	 	 	4	 	 	 	182	 	 	 	6073	 	 	T.C.R.R.
	 	8,000’/Wolfcamp
	No. 5

	 	 	85	 	 	 	R-3	 	 	 	2944	 	 	G.C. S.F.
	 	4,500’/Caballos
	No. 6	 	 	 	 	 	The next obligatory well on the West Ranch Prospect Area.

Exact location and depth yet to be determined.






     It is hereby mutually agreed to that in the event additional geological and/or engineering
information becomes available and merits the drilling (or reentry) of test wells other than the
obligatory Initial Test Well set forth above, such test well(s) shall be substituted in place
thereof



 









 







and shall be deemed to have replaced the pending obligatory Test Well(s) to be drilled upon
the written consent of both Parties.



     6.3 Acreage Ownership in the Longfellow Ranch “A” and West Ranch Prospect Areas.
MANTI agrees to contribute an amount of acreage sufficient to effectuate a 50/50 ownership in the
Longfellow Ranch “A” and West Ranch Prospect Areas. In this regard, MANTI will take an oil, gas and
mineral lease from RIATA wherein RIATA will convey an interest equal to 50% of RIATA’s leasehold
interest to MANTI on the lands described on Exhibit “C” attached hereto and made a part hereof for
all purposes.



     The net revenue interest conveyed will be the same as the net revenue interest of the leases
when acquired by RIATA.



     6.4 Designation of additional Prospect Area(s). At any time after completion of the
six obligatory Initial Test Wells as contemplated in Article 6.2, either RIATA or MANTI shall have
the right to propose that certain specific geographical; areas be designated as additional Prospect
Areas for the purpose of drilling Initial Test Well(s) for any undrilled proration units within
such an approved Prospect Area. The proposing party shall make a technical presentation of the
interpretive data used to develop the prospect. The parties shall mutually agree on: (a) the
location of the proposed Initial Test Well(s); (b) the proration unit to be established for said
well(s); and (c) the Prospect Area which shall encompass all lands within a mutually acceptable
geographical area.



     6.5 Election by a Non-Proposing Party. Any party desiring to drill the Initial Test
Well on a proration unit, within an approved Prospect Area, shall give the other party written
notice of the proposed operation, specifying the work to be performed, the location, the proposed
depth, objective formation(s) accompanied by an AFE estimating the cost to drill and complete such
well. Upon receipt of the AFE the non-proposing party shall have twenty (20) days in which to make
an election in writing regarding its participation in the proposed well. Should the receiving
party fail to make its election within the required time period it will be deemed to have elected
not to participate in the Initial Test Well and such non-participating interest shall be subject to
the terms and provisions as provided in Article 6.9 herein.



     Accompanying the AFE, the proposing party must define the areal extent of the prospect to be
tested as defined by well control and available geological and geophysical data.



 









 





     If the part receiving the proposal elects to participate in the drilling of the Initial Test
Well on a proration unit, within an Approved Prospect Area, the parties will enter into the form
Operating Agreement attached hereto as Exhibit “B” and made a part hereof. The contract area for
the Operating Agreement shall be the Prospect Area, as agreed to by both parties.



     6.6 Participation Costs of Initial Test Well. It is agreed between the parties hereto
that the entire cost, risk and expense of drilling the Initial Test Well, on each proration unit
within an Approved Prospect Area, to contract depth and of all operations conducted with respect
thereto, including all tests, logs, and cores necessary to obtain sufficient information to allow
the parties to this agreement to make a decision upon reaching contract depth as to whether or not
production casing should be run and an attempt made to complete the well as productive of oil
and/or gas, which point is hereinafter sometimes referred to as “casing point” and all costs and
expenses associated with completing (subject to the casing point election in the Operating
Agreement) the Initial Test Well as a well capable of producing oil and/or gas shall be borne as
follows:



	 	 	 	 	 
	RIATA:
	 	 	50.0	%
	MANTI:
	 	 	50.0	%






“Completion” shall mean, as to a gas well, the point in time when production casing has been set,
perforations completed, appropriate wellbore assemblies installed, and a well-head installed, and
as to an oil well, the point in time when production casing has been set, perforations completed,
appropriate wellbore assemblies installed and appropriate well control equipment placed at the
surface of the wellbore.



     6.7 Participation Costs in Subsequent Operations. It is agreed between the parties
hereto that all costs and expenses after completion of the Initial Test Well, on each proration
unit within an approved Prospect Area, subject to the terms contained in this Agreement, shall be
borne as set out below:



	 	 	 	 	 
	RIATA:
	 	 	50.0	%
	MANTI:
	 	 	50.0	%






     6.8 Operating Agreement(s). RIATA and MANTI shall execute contemporaneously with this
Agreement, the Operating Agreement attached hereto as Exhibit “A”, which Operating Agreement shall
govern all operations on the six obligatory Initial Test Wells. The balance of the AMI area shall
be governed by a similar Operating Agreement executed on a Prospect Area



 









 







by Prospect Area basis, amended only to provide for the description of the contract area,
location of the proposed test well, depth/objective, commencement date and any other information
relative thereto. All subsequent operations shall be controlled by the governing Operating
Agreement.



     6.8 (a). Designation of Operator. RIATA shall be designated as Operator, subject to
the Fina Agreement and the Nuevo Agreement, of any Prospect Area on the Lands within the AMI,
subject to MANTI’s approval of an AFE and procedures. In the event that RIATA is non-consent to
the operation proposed, then MANTI shall be designated as Operator.



     6.8 (b). Commencement of Drilling Operations. The Operator of the Initial Test Well
on a proration unit within the approved Prospect Area must commence actual drilling operations on
the proposed well within 120 days of receipt of the non-proposing parties election concerning
participation in the well. In the event actual drilling operations are not commenced within said
120 day period, the proposed well shall be deemed to be withdrawn.



     6.8 (c). Use or RIATA’s Subsidiary Service Companies. RIATA is hereby be granted a
first right of refusal to provide any and all services for the drilling, completion, re-entry,
re-completion and workover of any well drilled within the AMI. RIATA will provide these services
on an arms-length basis and at a rate commensurate with those of other contractors providing the
same services in the same geographic area as the AMI.



     6.8 (d). Damages, Right of Ways, and Easements on the Surface Estate of RIATA. MANTI
recognizes that RIATA is the owner of the surface estate of a portion of the lands covered by the
AMI. MANTI and RIATA agree that all damages paid for wells drilled, re-entered, re-completed or
worked over on any well drilled on the Lands within the AMI will be paid on the same basis as is
common to other surface estates within the same geographic areas as those Lands within the AMI.



     6.9 Relinquishment of Interest for Non-Participation. In the event the non-proposing
party elects not to participate in the drilling of an Initial Test Well on a proration unit within
an approved Prospect Area, the non-proposing party shall be deemed to have relinquished to the
proposing party, providing that drilling operations are commenced in accordance with Article 6.8
(b), all of its right, title and interest in and to the proration unit established for the proposed
Initial Test Well, from the surface of the earth down to 100’ below total depth drilled. Such



 









 







relinquished interest shall exclude any currently producing interval(s) in an existing
wellbore owned by the non-participating party.



     All operations on the Prospect Area shall be conducted pursuant to the terms of a Joint
Operating Agreement in the for attached hereto as Exhibit “B” covering the Prospect Area. In the
event of a conflict between the terms of the Joint Operating Agreement and this Agreement, the
terms of this Agreement shall control.



ARTICLE 7




ACQUISITION OF ADDITIONAL OIL AND GAS LEASES AND INTERESTS




     7.1 Acquisition of Additional Oil and Gas Leases and Interests. In the event that
subsequent to the date hereof either party acquires any oil, gas and mineral leases or other
mineral interest or contract rights permitting it to explore for and produce oil and gas from a
third party, or any other right or benefit covering or affecting lands within the AMI, such Party
shall offer to the other Part as soon as possible, and in any event within twenty days of such
acquisition, the full particulars of and the right to participate in the acquisition of any such
rights to the extent of an interest equal to its interest within the Prospect Area at the time of
such acquisition. The non-acquiring party shall have twenty (20) days within which to elect to
participate unless circumstances require a lesser period of time in which case the non-acquiring
party shall have such time specified in the offer. The failure of the non-acquiring party to
respond within the applicable time period following the receipt of a notice and full particulars
shall be deemed an election not to participate. Any party electing to participate for its share of
any such acquisition shall be obligated to pay, as billed, its proportionate share of all costs of
the acquisition and reasonable expenses actually incurred by the acquiring Party, if necessary in
order to acquire such rights. All leases, mineral interests or other mineral rights acquired by
either Party within the AMI following the date hereof shall be acquired pursuant to this Article 7.
Leases or mineral interests or contractual rights to permit drilling or exploration for oil and gas
which are acquired by both RIATA and MANTI pursuant to this Article 7 shall be referred to as
“Jointly Owned Leases or Oil and Gas Interests”.



     7.2 Non-Participating Election. In the event a non-acquiring Party elects not to
participate in the acquisition of any lease(s), mineral interest or other right as contemplated by
Section 7.1, and the acquiring Party completes the acquisition thereof, the non-participating



 









 







Party shall be deemed to have relinquished all rights acquired by the participating Party and
such lease(s), mineral interest and other rights shall not be subject to this Agreement and for
purposes hereof shall be treated as if owned by a third party.



     7.3 Mineral Classified Lands. Certain Lands in the AMI are Mineral Classified under
the Relinquishment Act of the State of Texas. RIATA is the Agent for the State of Texas of those
lands. By statute, RIATA is prohibited from owning a working interest in any oil, gas and mineral
lease covering such lands wherein RIATA is Agent for the State of Texas.



     In the event that MANTI elects to lease lands within an approved Prospect Area wherein RIATA
is Agent for the State of Texas, the Parties hereto agree that RIATA will not own a working
interest in that oil, gas and mineral lease, but that all other rights, benefits and obligations
extended to RIATA by virtue of this Agreement will apply to those lands.



ARTICLE 8




ACQUISITION OF ADDITIONAL GEOPHYSICAL AND GEOLOGICAL DATA




     8.1 Acquisition of Additional Geophysical or Geological Data. When by geological,
geophysical or other means, except for drilling wells, either Party defines an area or areas which
it feels warrants further action by way of acquiring more geophysical, geological, geochemical
and/or magnetic data, it shall submit to the other Party an AFE covering the proposed operation.
This AFE will describe the area involved including a legal description and shall describe the work
to be done in reasonable detail. No more than two AFE’s for the acquisition of said geological or
geophysical data may be open and active in any one Prospect Area at any one time. The Parties agree
that they will take no action to acquire geophysical or geological data or leases or mineral
interest in the area in the absence of an AFE therefor.



     8.2 Election Period. Upon receipt of an AFE, the receiving Party shall have thirty
(30) days excluding holidays in which to make an election to participate in or reject that AFE.
Should the receiving Party fail to make an election within the required period of time, it will be
deemed to have rejected the AFE. The thirty (30) days response period hereinabove provided shall
not apply to AFE’s for acreage acquisition which are the result of information obtained in a “Group
Shoot” seismic program. Any information obtained in a “Group Shoot” seismic program will be held
confidential unless mutually agreed to, in writing, by the Parties. Where an AFE for the



 









 







acquisition of acreage results from such a program, the period to respond shall be 48 hours
from the receipt of the AFE, excluding holidays.



     Once an AFE has either been accepted or rejected, the Operator shall undertake the completion
of the task contemplated by that AFE. At the election of the Operator, the completion of the task
may be delegated to the Non-Operator.



     Once the dollar limit stated in the AFE has been reached, and the work to be performed is
completed, said AFE shall be deemed to have been closed. If, however, additional work is still to
be performed, a new or supplemental AFE must be submitted before additional funds may be expended
on behalf of the Joint Account within the area. Also an AFE may be closed out at any time by the
mutual consent of the Parties.



     8.3 Non-Participating Election. In the event a non-proposing Party elects not to
participate in an AFE, the non-participating party shall be deemed to have relinquished all rights,
information and/or interest acquired pursuant to the work to be conducted under the proposed AFE.



ARTICLE 9




SCHEDULED MEETINGS AND ACCESS TO DATA




     9.1 Technical Meetings. RIATA and MANTI shall periodically meet to discus activities
within the AMI, to designate Areas of Interests, to designate Prospect Areas, additional work to be
conducted, AFE’s and to formulate plans and strategies of the next succeeding quarter as well as
conducting technical reviews of any leads or Prospects. Either party may call such a meeting and
shall provide a minimum of at least ten (10) days advance written notice, by facsimile, telegram or
overnight delivery to the other party of such meeting.



     9.2 Access to Well Data and other Seismic Data. During the term of this Agreement,
RIATA and MANTI shall have access in a reciprocal manner to all well data and seismic data,
including interpretive data, owned by or in possession of either RIATA or MANTI within the AMI.
Such access shall be subject to the terms of any existing license agreements covering such data.
All such data shall be made available at the respective company’s office during normal business
hours. RIATA and MANTI shall have the right to reprocess any seismic data owned or in the
possession of the other company within the AMI, provided that such reprocessing is



 









 







permitted under the governing license agreement covering such data. Copies of the respective
company’s licensing agreements shall be made to the other Party upon request.



ARTICLE 10




RELATIONSHIP OF THE PARTIES




     10.1 Internal Revenue Code Election; the Agreement. The rights, duties, obligations
and liabilities of the Parties hereunder shall be several, not joint or collective. It is not the
purpose or intention of this Agreement to create any mining partnership, commercial partnership or
other partnership relation and none shall be inferred from the Agreement to file and election to be
excluded from the application of certain United States tax laws. Each party agrees to elect to be
excluded from the application of Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue
Code of 1986, and all amendments thereto.



     10.2 Internal Revenue Code Election; Operating Agreements. Any operating agreement
entered into by RIATA and MANTI pursuant to this Agreement within the Contract Area shall provide
for an election to be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of
the Internal Revenue Code of 1986, and all amendments thereto.



ARTICLE 11




ASSIGNABILITY AND CONFIDENTIALITY




     11.1 Limited Assignability. The rights, benefits and obligations of the Agreement are
exclusive between RIATA and MANTI. RIATA reserves the right to approve the assignment by MANTI of
any interest in the Agreement to any other unrelated party, as said assignment pertains to the
Lands committed to this Agreement. RIATA shall not unreasonably deny any request to assign an
interest by MANTI to an unrelated party, assuming that the party is, in the sole opinion of the
Party being asked to approve, at least as financially capable as the assigning Party, or if the
assignment provides, to the approving Party’s satisfaction, that the assigning Party shall remain
as guarantor of it’s assignee.



     11.2 Confidentiality. RIATA and MANTI agree to hold confidential all data related to
the Agreement, including the terms of the Agreement itself, and not to divulge any facts hereof to
any unrelated party, except as may be required to satisfy any local, state or federal government
regulation, or for the business purpose of selling an interest in the Agreement or within the



 









 







Prospect Areas to an unrelated party by RIATA or MANTI. This confidentiality provision shall
extend to any operating agreement covering any Prospect Area and/or any well drilled thereon and
would not terminate until the expiration of the Agreement, or the expiration of the primary terms
of any lease granted or acquired within a Prospect Area pursuant hereto.



ARTICLE 12




NOTICE




     All notices hereunder shall be deemed to be properly given, if in writing, and sent by
postpaid registered or certified mail, by facsimile, or by courier delivery, addressed to the
respective Party at the addresses set forth below, or such other addresses as they shall
respectively hereafter designate in writing:



	 	 	 	 	 
	As to RIATA:	 	RIATA ENERGY, INC.
	 	 	5912 Amarillo Blvd. W.

Amarillo, Texas 79106

Attention: Steven E. Looper
	 
	 	 	 	 
	 

	 	Phone No.
	 	(806) 352-2936
	 

	 	Fax No.
	 	(806) 352-3225
	 
	 	 	 	 
	As to MANTI:	 	MANTI RESOURCES, INC.

P.O. Box 2907

Corpus Christi, Texas 78403

Attention: Tim Boyle
	 
	 	 	 	 
	 

	 	Phone No.
	 	(512) 888-7708
	 

	 	Fax No.
	 	(512) 888-4418






ARTICLE 13




ENTIRETY OF AGREEMENT




     This Agreement represents the entire understanding and agreement between RIATA and MANTI
regarding the matters set forth herein and supersedes any and all prior discussions, proposals,
understandings, agreements or representations, if any, by either RIATA or MANTI to the other.



     This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns; provided, however, nothing herein contained shall be



 









 







construed as permitting an assignment contrary to the forgoing terms, conditions and
provisions of this Agreement.



ARTICLE 14




PREFERENTIAL RIGHT TO PURCHASE




     Should any Party desire to sell or assign all or any part of its interest under this
Agreement, it shall promptly give written notice to the other Party, with full information
concerning its 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 relative terms
of the offer. The other Party shall then have an optional prior right, for a period of fifteen
(15) days after receipt of the notice, to purchase on the same terms and conditions the interest
which the other Party proposed to sell. However, there shall be no preferential right to purchase
in those cases where any party wishes to mortgage its interests, or dispose of its interests by
merger, reorganization, consolidation, or sale of all of its assets to a subsidiary of a parent
company.



     IN WITNESS WHEREOF, this Agreement is executed on this the 12th day of February, 1997.



	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	RIATA ENERGY, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Malone Mitchell, 3rd, President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	MANTI RESOURCES, INC.	 	 
	ATTEST:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 






 










 









AMENDMENT TO

JOINT EXPLORATION AND DEVELOPMENT AGREEMENT




     Riata Energy, Inc., a Texas Corporation, 5912 Amarillo Blvd. West, Amarillo, Texas 79106
(“Riata”) and Manti resources, Inc., a Texas Corporation, P. O. Box 2907, Corpus Christi, Texas
78403 (“Manti”) entered into a Joint Exploration and Development Agreement on February 12, 1997
(“The Agreement”) which outlined the terms and conditions under which Riata and Manti would jointly
explore for oil and gas; and drill, develop and operate oil and gas wells on certain lands located
in Pecos County, Texas.



     WHEREAS, The Agreement provides for a primary term of three (3) years from the effective date
of The Agreement, and



     WHEREAS, Riata and Manti hereby desire to amend The Agreement and Joint Operating Agreement
attached thereto, and all of the rights, privileges, obligations thereto;



     NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained,
Riata and Manti do hereby amend The Agreement to provide for a primary term of ten (10) years from
the effective date of the Agreement.



     Nothing herein contained shall be construed as altering, amending or effecting The Agreement
or any of the terms and provisions thereof except as The Agreement is expressly amended hereby.



Executed to and Accepted this                      day of                                          1997.


	 	 	 
	RIATA ENERGY, INC.
	 	 
	 
	 	 
	 

	 	 
	Malone Mitchell, 3rd — President
	 	 






Executed to and Accepted this                      day of                                          1997.



	 	 	 
	MANTI RESOURCES, INC.
	 	 
	 
	 	 
	 

	 	 
	Lee Barberito — President
	 	 






 









 





THE STATE OF TEXAS

COUNTY OF                                         



This Instrument was acknowledged before me on this the                      day of                      1997, by Lee Barberito,
President of Manti Resources, Inc., a Texas Corporation, on behalf of said Corporation.




	 	 	 
	 

	 	 
	 

	 	Notary Public, Sate Of Texas






THE STATE OF TEXAS

COUNTY OF                     



This Instrument was acknowledged before me on this the                      day of                      1997, by Malone
Mitchell, 3rd President of Riata Energy, Inc., a Texas Corporation, on behalf of said
Corporation.




	 	 	 
	 

	 	 
	 

	 	Notary Public, Sate Of Texas