Exhibit 10.14


 


	
  TO:

  	
  RAILROAD
  COMMISSION OF TEXAS

  	
  Bond # B005246

  	
   

  
	
   

  	
  Attention:
  Oil & Gas Division

  	
   

  	
   

  
	
   

  	
  Permitting/Production,
  P-5 Financial Assurance Section

  	
   

  	
   

  
	
   

  	
  P.O. Box
  12967

  	
  BLANKET PERFORMANCE BOND

  	
  P-5PB(2)

  
	
   

  	
  Austin,
  TX 78711-2967

  	
   

  	
  rev. 6/2002

  



 


THE
STATE OF TEXAS, COUNTY OF Harris


 


WHEREAS,
persons performing oil and gas operations within the jurisdiction of the
Railroad Commission of Texas are required to execute and file with the
Commission a bond covering those operations, pursuant to §91.103 and §91.104 of
the Texas Natural Resources Code;


 


WHEREAS,
the Principal named below is the operator of certain Commission-regulated
operations including but not limited to (1) operations listed on the
Commission’s P-5 Organization Report records, and/or (2) wells listed on
the Commission’s Oil and Gas Proration Schedules, and any additional wells that
may be obtained prior to the expiration of this bond and carried on the Oil and
Gas Proration Schedules;


 


WHEREAS,
the Commission’s P-5 Organization Report records and the Oil and Gas Proration
Schedules pertaining to the Principal are incorporated herein by reference as
if fully set forth at length;


 


WHEREAS,
the Principal desires to perform oil and gas operations and activities within
the jurisdiction of the Commission, and which operations and activities must be
carried on in full conformance with all state laws and Commission rules,
including those laws and Commission rules, orders, and permits requiring
operators to plug and abandon all wells and control, abate, and clean up
pollution associated with an operator’s oil and gas operations and activities;


 


WHEREAS,
Principal acknowledges and agrees that, due to amendments to the Texas Natural
Resources Code, amendments to Commission Rules, and/or changes to the Principal’s
Commission-regulated operations, including without limitation the acquisition
of additional wells, it may be required during the effective term of this bond
to provide additional financial security beyond the face amount of this bond
before its P-5 Organization Report will be accepted and approved.


 


	
  I. Organization
  Name, exactly as shown on P-5 Organization Report.

  	
   

  	
  2. P-5 Number, if
  assigned.

  	
   

  	
  3. Total # of operator’s
  wells.

  
	
  Resaca Operating Company

  	
   

  	
  703238

  	
   

  	
  490

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.
  Other Commission-regulated operations. See bond instruction sheet, Paragraph
  F.

  [ Check appropriate
  operations; example: operating a pipeline = I ]

  	
   

  	
  5.
  Other operations not included in (A)-(L).

  	
   

  	
  6.
  Effective Date of P-5 Renewal for which bond is being submitted. (Leave blank
  if this is the initial bond filing.)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)         (B)         (C)         (D)         (E)         (F)         

  	
   

  	
   

  	
   

  	
   

  
	
  (G)         (H)         (I)          (J)          (K)         (L)         

  	
   

  	
   

  	
   

  	
   

  



 


We,
Resaca Operating Company (person’s name) as Principal, and U.S. Specialty
Insurance Company as Surety, duly authorized and qualified to do business in
the State of Texas, are held and firmly bound unto the State of Texas in the
sum of Two Hundred Fifty Thousand and No/100 
Dollars ($ 250,000.000) payable at Austin, Travis County, Texas, and for
the payment of which, well and truly to be made, we bind ourselves, our heirs,
executors, administrators, successors and assigns, jointly and severally,
firmly by these presents.


 


This
bond is conditioned that if the Principal will plug and abandon all wells and
control, abate, and clean up pollution associated with its oil and gas
operations and activities in accordance with state law and all permits, rules and
orders of the Commission, and is in full compliance with the following
requirements, then the Principal and Surety are relieved of their obligation to
pay the bond amount to the State:


 


1.          Inactive wells shall be maintained in compliance with
Commission Statewide Rule 14 (a) by plugging the wells, (b) by
restoring the wells to beneficial use, or (c) so as to prevent the
pollution of any ground or surface water in the state or any uncontrolled
escape of formation fluids from the strata in which they were originally
located.


 


2.          All active wells shall be maintained so as to prevent
the pollution of any ground or surface water in the state or any uncontrolled
escape of formation fluids from the strata in which they were originally
located.


 


3.          All oil and gas operations and activities shall be
carried out so as to prevent pollution of any ground or surface water in the
state.


 


In
the event of a failure of Principal to comply with the conditions and
obligations of this bond, the Surety shall promptly remedy such noncompliance,
in accordance with the laws of the state and permits, rules, and orders of the
Commission, within 60 days of notice of non-compliance.


 


1.               If any well or other oil and gas operation or
activity subject to this bond is likely to pollute or is polluting any ground
or surface water or allowing uncontrolled escape of formation fluids from the
strata in which they were originally located, the Surety shall expend funds up
to the face amount of the bond to control, abate and clean up pollution and to
prevent further escape of formation fluids.


 


2.               If any well or other oil and gas operation or
activity subject to this bond is not polluting any ground or surface water or
cilowing uncontrolled escape of formation fluids from the strata in which they
were originally located, but the Principal has failed to maintain current operator
status as reflected on the Commission’s P-5 Organization Report records, the
Surety shall:


 


(a)     Expend funds up to the face
amount of the bond to properly plug the well or close any other operation or
activity (Surety understands and agrees that plugging or closing operations
must be completed once commenced without the expenditure of State Funds,
including State Oil- Field Cleanup funds); or


 


(b)    Pay liquidated damages. It is
agreed by the parties that the actual damages which might be sustained by the
Railroad Commission of Texas by reason of the failure to comply are uncertain
and would be difficult of ascertainment, and it is further agreed that the sum
of $2.50 per foot multiplied by the total depth of each non-compliant well, up
to the face amount of the bond, would be reasonable and just compensation for
such failure to comply, and Surety hereby promises to pay and the Railroad
Commission of Texas agrees to accept, at its office in Austin, Travis County,
Texas such sum as liquidated damages, and not as a penalty, in the event of
such failure to comply.


 


(over)


 

















 


3.               Except as provided by Paragraph 2(b) above,
if the Commission has expended State Funds to plug any well, to close any other
operation or activity, to control, abate and clean up pollution or take any
other action to prevent further escape of formation fluids, the Surety shall
reimburse the Commission for the amounts of State Funds so expended up to the
face amount of the bond.


 


Sums demanded under this
bond shall be paid to the Railroad Commission at Austin, Texas, within thirty
days after receipt of written demand therefor, which demand shall be mailed by
registered or certified U.S. mail to the address shown below.


 


Conditions and
obligations under this bond are construed in accordance with state law and all
permits, rules, and orders of the Commission, including any amendments thereto
that may be made during the term of this bond, and Surety waives notice of any
amendments. The State of Texas shall have the right to sue on and otherwise
enforce the obligations of this bond without first resorting to or exhausting
its remedies against the properties and assets of the Principal.


 


This bond is effective
beginning 150 days after the Principal’s P-5 effective date stated in Box 6. If
the Principal is filing this bond for the first time, then the bond is
effective on the Principal’s P-5 effective date for the first year; thereafter,
it will be effective 150 days after the P-5 effective date.


 


The term of this bond
shall expire May 1, 2011 (date must be  150 days after one
of the Principal’s annual P-5 expiration dates) and is renewable. Written
notice of renewal shall be given by the Surety to the Commission on or before
the Principal’s last P-5 filing date prior to the expiration of this bond.
Obligations to pay part or all of the bond amount are deemed released upon the
expiration date of the bond unless the Commission has made a claim on the bond
or an enforcement action against any operations or activities subject to the
bond is pending. Principal and Surety may also be relieved of their obligations
to pay part or all of the bond amount by written agreement between the Railroad
Commission of Texas, Principal, and Surety.


 


If the bond amount is not
paid in accordance with the terms of this bond and if judgment for any part of
the bond amount is awarded through action of the Attorney General in
bankruptcy, probate, or any other court proceeding, then the State shall be
entitled to court costs and reasonable attorney’s fees awarded by the court.
Surety’s liability for such costs and fees shall not be limited by the amount
of this bond. It is agreed and understood that this bond is executed and
performable in Austin, Travis County, Texas, and venue for any cause of action
construing this bond is proper in Austin, Travis County, Texas.


 


A transfer, by any means,
of any well covered under this bond does not relieve the Surety of any
obligation under this bond until the operator acquiring the well has on file
with the Commission an approved form of financial security covering the well.
The transferred well remains covered by this bond and the Principal and Surety
remain responsible for compliance with all laws and Commission rules covering
the transferred well until the Commission determines that the well is covered
by proper financial security and the acquiring operator has assumed full
responsibility for the well in accordance with all state laws, including
§91.107, Texas Natural Resources Code and Commission rules.


 


IN TESTIMONY WHEREOF,
said PRINCIPAL has hereunto subscribed his or her name or has caused this
instrument to be signed by its duly authorized officers and its corporate seal
to be affixed this 20th day of October 2009.


 


IN TESTIMONY WHEREOF,
said SURETY has caused this instrument to be signed by its duly authorized
officers and its corporate seal to be affixed this 1st day of December 2009.


 


	
   

  	
  Resaca
  Operating Company

  
	
   

  	
   

  	
  PRINCIPAL

  
	
   

  	
   

  	
   

  
	
  (seal)

  	
  By

  	
  /s/ [Illegible], Vice President

  
	
   

  	
   

  	
  NAME & TITLE

  
	
   

  	
   

  
	
   

  	
  U.S.
  Speciality Insurance Company

  
	
   

  	
   

  	
  SURETY (ATTACH POWER OF ATTORNEY)

  
	
   

  	
   

  	
   

  
	
  (seal)

  	
  By

  	
  /s/
  Edwin H. Frank, III

  
	
   

  	
   

  	
  Edwin
  H. Frank, III, Attorney-in-Fact

  
	
   

  	
   

  	
  NAME & TITLE

  
	
   

  	
   

  	
   

  
	
   

  	
  13403
  Northwest Freeway, Houston, Texas 77040

  
	
   

  	
   

  	
  SURETY’S FULL MAILING ADDRESS

  
	
   

  	
   

  	
   

  
	
   

  	
  13403
  Northwest Freeway, Houston, Texas 77040

  
	
   

  	
   

  	
  SURETY’S PHYSICAL ADDRESS

  



 


P-5PB(2) rev. 6/2002


 

















 


POWER OF
ATTORNEY


 


AMERICAN
CONTRACTORS INDEMNITY COMPANY UNITED STATES SURETY COMPANY U.S. SPECIALTY
INSURANCE COMPANY


 


KNOW ALL MEN BY THESE
PRESENTS: That American Contractors Indemnity Company, a California
corporation, United States Surety Company, a Maryland corporation and U.S.
Specialty Insurance Company, a Texas corporation (collectively, the “Companies”),
do by these presents make, constitute and appoint:


 


Edwin H.Frank, III or W. Russell Brown, Jr. of Houston, Texas


 


its true and lawful
Attorniey(s)-in-fact, each in their separate capacity if more than one is named
above, with full power and authority hereby conferred in its name, place and
stead, to execute, ackowledge and deliver any and all bonds,
recognizances, undertakings or other instruments or contracts of suretyship to
include riders, amendments, and consents of surety, providing the bond penalty
does not exceed
****************Three Million************************ Dollars
($**3,000,000.00**). This power of Attorney shall expire without further action
on March 18, 2011. This power of Attorney is granted under and by
authority of the following resolutions adopted by the Boards of Directors of
the Companies:


 


Be it Resolved, that the president, any
Vice-Presedentm, any Assistant Vice-President, any Secretary or any Assistant
Secretary shall be and is hereby vested with full power and authority to
appoint any one or more suitable persons as Attorney(s)-in Fact to represent
and act for and on behalf of the Company subject to the following provisions:


 


Attorney-in Fact may be given full power and authority for
and in the name of and on behalf of the Company, to executy, acknowledge and
deliver, any and all bonds, recognizances, contracts, agreements or indemnity
and other conditional or obligatory undertakings and any and all notices and
documents canceling or terminating the Company’s liability thereunder, and any
such instruments so excuted by any such Attorney-in Fact shall be binding upon
the Company as if signed by the President and sealed and effected by the
Corporate Secretary.


 


Be it Resolved, that the signature of any authorized
officer and seal of the Company heretofore or hereafter affixed to any power of
attorney or any certificate relating thereto by facsimile, and any power of
attorney or certificate bearing facsimile signature or facsimile seal shall be
valid and binding upon the Company with respect to any bond or undertaking to
which it si attached.


 


IN WITNESS WHEREOF, The
Companies have caused this instrument to be signed and their corporate seals to
be hereto affixed, this 1st day of December, 2009.


 


AMERICAN
CONTRACTORS INDEMNITY COMPANY UNITED STATES SURETY COMPANY U.S. SPECIALTY
INSURACE COMPANY


 


	
  Corporate Seals

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel P. Aguilar

  
	
  AMERICAN
  CONTRACTORS INDEMNITY CO.

  CALIFORNIA INCORPORATED SEPT 26, 1990

  UNITED STATES
  SURETY COMPANY SEAL

  U.S. SPECIALTY INSURANCE COMPANY

  	
   

  	
  Daniel P. Aguilar, Vice
  President

  



 


State of California


County of Los Angeles SS:


 


on December 1, 2009,
before me, Deborah Reese, a notary public, personally appeared Daniel P.
Aguilar, Vice President of American Contractors Indemnity Company, United
States Surety Company and U.S. Specialty Insurance Compay who proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the
instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing paragraph
is true and correct. WITNESS may hand and official seal.


 


	
  Signature

  	
  /s/ [ILLEGIBLE]

  	
   

  	
  (seal)

  	
  Deborah
  Reese Commission #
  1726211 Notary Public California Los Angeles County My Comm Expires Mar
  18, 2011

  



 


I, Jeannie J. Kim,
Assistant Secretary of American Contractors Indemnity Company, United States
Surety Company and U.S. Specialty Insurance Company, do hereby certify that the
above and foregoing is a true and correct copy of a Power of Attorney, executed
by said Companies, which is still in full force and effect; furthermore, the
resolutions of the Boards of Directors, set out in the Power of Attorney are in
full force and effect.


 


In Witness Whereof, I
have hereunto set my hand and affixed the seals of said Companies at Los
Angeles, California this 1st day of December, 2009.


 


Corporate Seals


 


	
  Bond No. B005246

  	
  AMERICAN CONTRACTORS INDEMNITY CO.

  	
  /s/
  Jeannie J. Kim

  
	
  Agencey No. #8353

  	
  CALIFORNIA INCORPORATED SEPT 26, 1990

  UNITED STATES
  SURETY COMPANY SEAL

  U.S. SPECIALTY INSURANCE COMPANY

  	
  Jeannie J. Kim, Assistant
  Secretary