Gas Well Oil Agreement



 Exhibit 10.1 
 GAS WELL OPERATING AGREEMENT 
 THIS OPERATING AGREEMENT made this 2nd day of January 2002, by and between
Wilon Resources, Inc., 931 Ashland Terrace, Chattanooga, Tennessee 37415, hereinafter referred to as Wilon and R & D Drilling & Completion, Inc., P.O. Box 242, Salyersville, Kentucky 41465, hereinafter referred to as R & D.

 WHEREAS, R & D is an independent oil and gas management, development and production company, and currently operates and manages oil
and gas wells in Kentucky and West Virginia, and 
 WHEREAS, Wilon has gas wells located in Butler District, Wayne County, West Virginia and
desires R & D as an independent contractor to act on its behalf as the operator of said gas wells, and 
 WHEREAS, this agreement is
entered into to effectuate the agreements and covenants contained herein. 
 NOW THEREFORE, in consideration of the promises and mutual
covenants contained herein, the parties do hereby agree as follows: 
 1. OPERATING AREA 
 The Operating Area is designated as the Butler District, Wayne County, West Virginia and shall include the wells, the surface and subsurface equipment
associated with the gas wells, the gas gathering system, the gas pipelines from the wells to the master sales meters and the well access roads, hereinafter simply as the “wells”. A list of said wells is attached hereto as Exhibit A and
made a part of this agreement. Wells may be added to this Operating Agreement in writing by Wilon and accepted by R & D. 
 2. OPERATOR 
 Wilon appoints R & D as Operator of the wells. R & D shall manage and conduct all well operations as required or permitted pursuant to the terms
and conditions of this agreement. R & D shall have no liability to Wilon for losses sustained or liabilities incurred in the operation of the wells, except such as may result from gross negligence or willful misconduct by R & D. 

3. TERM OF OPERATING AGREEMENT 
 (1) This agreement shall
become effective as of the day and year first written above, when executed by the parties hereto, and except as provided for in 3(2) hereof, shall continue and remain in full force and effect during the productive life of the wells. 
 (2) This agreement shall terminate between the parties hereto, upon the earliest of (a) the plugging or abandonment of the wells, (b) the
resignation of R & D as operator, which may be effected with just cause, upon ninety (90) days prior written notice to Wilon, or (c) the removal of R & D as operator, which may be effected with just cause, upon thirty
(30) days prior written notice to R & D, from Wilon. 
  

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 (3) Upon resignation or removal of R & D as operator, as provided herein, R & D shall provide the
successor operator, upon written request by such operator, all well records, books and property pertaining to the wells. 
 4. WELL INTERESTS 
 Wilon hereby represents and warrants to R & D that it is the legal owners of the wells. 
 5. WELL OPERATIONS 
 The term “well operations” shall generally mean any labor or service,
including third party services, required to maintain the wells, the surface and subsurface equipment associated with the wells, gas gathering system, gas pipelines, well access roads and right of ways, and to maintain the quality of gas as the
standard requires by the gas purchasing entities, and all other services that would be required following the end of the month. 
 6. CHARGES FOR WELL
OPERATION 
 (1) R & D shall be paid, except as specifically provided for in 6(2) hereof, the invoice price for all supplies, equipment,
insurance, labor and services, including third party services, that R & D supplies, purchases or contracts for, pertaining to or for the benefit of the wells. 
 (2) R & D shall be paid a monthly operating fee of $250.00 per well, for each month a well has any production. The monthly operating fee paid R & D shall include the cost of (a) a well tender and a four
(4) wheel drive vehicle, (b) the routine maintenance and adjustments to the wellheads, gas gathering system, pipelines and meters, and the services for maintaining well records. 
 (3) The monthly operating fee paid R & D, as provided for in 6(2) hereof, shall not include the costs of (a) supplies used in the maintenance of
the wells, gas pipelines and meters, (b) the equipment, labor or third party services to repair or service the wells, gas gathering system, pipelines, meters and well access roads, (c) any special fees or reports required by State or
Federal agencies, including well bonds, and (d) the costs associated with title opinions or gas purchase contracts. 
 7. PAYMENTS AND APPROVALS

 (1) R & D shall in good faith conduct all well operations in a prudent and workmanlike manner using technically sound, customary and
generally accepted oil and gas field practices and techniques currently prevailing within the geographical area of the wells. 
 (2) R &
D shall not start any project or incur any extraordinary costs to the wells reasonably estimated to result in an expenditure of more than $1,000.00, without first sending written notice and then receiving written approval from Wilon, unless such
project or costs are necessary in the sole opinion of R & D to protect person, persons, or property in the event of a sudden emergency. 
 (3) R & D shall send written notice to Wilon of any project pertaining to the wells estimated to result in an expenditure of more than $1,000.00, as provided for in 7(3) hereof. Such notice shall specify (a) the well or wells,
(b) the purpose of the project, (c) the equipment, labor and third party services required for the project, and (d) the estimated cost of the project. Such notice shall require Wilon to advance payment of the estimated cost of the
project. 
  

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 (4) R & D shall not plug or abandon a well without first receiving the written approval from Wilon
unless such plugging or abandonment of a well or wells is required by a written order from a State or Federal agency. 
 (5) R & D shall
have the right to employ its own equipment in the operation of the wells, but in no event shall R & D charges for its equipment or services exceed the prevailing rates in the area for similar equipment or services; and its services shall be
performed pursuant the same terms and conditions as customary in the area. 
 8. ACCOUNTING AND STATEMENTS 
 (1) R & D shall maintain accurate records of all operating, production and business affairs pertaining to the wells. The records shall include the gas
production from the wells and other business records that would be customary in the day-to-day operation of the wells. 
 (2) R & D shall
have the right and be entitled to receive advance payment from Wilon for such expenditures as set forth in 7(2) hereof within fifteen (15) days after receipt of R & D ‘s written notice, as provided for herein. R & D shall not be
required to commence a project until such payment is made. 
 9. LIENS AND SECURITY INTEREST 
 Wilon hereby grants R & D, as operator, a first lien and security interest in said wells for any unpaid charges, fees or expenditures due R & D,
which remain unpaid for a period of sixty (60) days. 
 10. ACCESS TO INFORMATION AND WELLS 
 (1) Wilon, its agents or representatives, including attorneys, by appointment, shall have the right during normal business hours, to review or audit the
records pertaining to the wells. 
 (2) Wilon, its agents or representatives, including attorneys, at their sole risk, liability and expense,
shall have the right to enter the property and inspect the wells. 
 11. NOTICES 
 (1) All notices required pursuant to this agreement shall be writing and either personally delivered or transmitted by mail, registered or certified,
return receipt requested, postage prepaid to the parties hereto. 
 (2) All notices shall be effective upon personal delivery or upon being
deposited in the United State mail. 
 (3) Each party shall have the right, from time to time, during the term of this agreement, to change
their address for notices by giving the other party written notice of such change. 
 (4) All notices, as provided herein, may also be
delivered by facsimile transmission, provided there is sufficient evidence of actual receipt of such transmission by the receiving party. 
 12. RELATIONSHIP
OF THE PARTIES 
 (1) It is not the intention of the parties hereto to create, nor shall this agreement be construed or considered as
creating, any type of partnership or association between the parties for any purpose or reason whatsoever, including rendering either party liable as partners. 
  

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 (2) It is agreed and clearly understood that R & D shall be deemed to be an independent contractor
and shall perform its duties and obligations as the operator of the wells, as set forth within this agreement. 
 14. FORCE MAJEURE 
 If R & D or Wilon is rendered unable, wholly or in part, by force majeure to carry out their obligations pursuant to this agreement, other than the
obligation to make money payments, they shall give written notice to the other party hereto of the force majeure with full particulars; thereupon, the obligations of either party, as the case may be, shall be suspended during, but not longer than
the continuance of the force majeure. Either party shall use all reasonable diligence to remove the force majeure as quickly as possible to the extent the force majeure is within the reasonable control of either party. The term “force
majeure” shall mean any act of God, strike, lockout, or other industrial disturbance, act of public enemy, war, public riot, lightning, fire, storm, flood, explosion, government restraint, unavailability of equipment, adverse weather conditions
or any other cause, whether of the kind specifically enumerated herein or otherwise, which directly precludes performance hereunder and is not reasonably within the control of either party. 
 15. GOVERNING LAW 
 This agreement shall be governed by, and
construed in accordance with the laws of the State of West Virginia and by no other state. 
 16. CAPTIONS 
 The articles, sections, titles of captions contained in this agreement are inserted only as a matter of convenience and reference, and in no way define,
limit, extend or describe the scope of this agreement, or the intent of any provision hereof. 
 17. SEVERABILITY 
 If any provision of this agreement, or the application thereof to any person, entity or circumstances, shall be invalid or unenforceable to any extent,
the remainder of this agreement, and the application of such provision to other persons, entities or circumstances, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 
 18. COUNTERPARTS 
 This agreement may be executed in any
number of counterparts and all such counterparts shall, for all purposes, constitute one agreement, binding upon the parties hereto. 
 19. BINDING AGREEMENT

 This agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 20. ENTIRE AGREEMENT 
 This agreement contains
the entire agreement between the parties hereto, pertaining to R & D ‘s operation of the wells and supersedes all prior and contemporaneous oral and written representations, agreements, arrangements and 

  

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undertakings whatsoever between the parties hereto. No variations, modifications or changes to this agreement shall be binding upon the parties hereto,
unless set forth in a document duly executed by the parties. 
 IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written. 
  

			
	R & D Drilling & Completion, Inc.
		
	By:	 	  

		 	Its President
	
	Wilon Resources, Inc.
		
	By:	 	  

		 	Its President


  

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