ex101.htm


    
      

      

    

    

      FARMOUT
AGREEMENT

      


      


      THIS AGREEMENT is made as of
the 15th day of December, 2009.

      


      


      BETWEEN:

      


      STONE CANYON RESOURCES, INC.,
a body corporate registered in the State of Colorado, USA, and having an office
at the City of Calgary, in the Province of Alberta, Canada

      (hereinafter
called “Farmor”)

       

      OF
THE FIRST PART

      


       -
and -

      


      DYNAMIC HYDROCARBONS LTD., a
body corporate registered in the State of Nevada, USA, and having an office at
the City of Austin, in the State of Texas, USA

      (hereinafter
called “Farmee”)

       

      OF
THE SECOND PART

      


      


      WHEREAS Farmor is a party in
interest to the Petroleum and Natural Gas Lease Agreement described in Schedule
“A” (such agreement or agreements, including all amendments, if any, thereto
referred to as the “Agreements”);

      


      NOW THEREFORE THIS AGREEMENT
WITNESSETH that in consideration of the terms and conditions hereinafter
contained, the Farmor shall grant to Farmee the provisions as described in this
Agreement:

      


      
        	
                1.  

              	
                DEFINITIONS

              


      

      


      Each
capitalized term used in this Agreement will have the meaning given to it in the
Farmout & Royalty Procedure, and in addition:

      


      
        	
                 
      

              	
                (a)

              	
                “Lands”
      means all petroleum and natural gas mineral rights from the Top of the
      Colorado to the Base of the Pekisko as further described and verified in
      Schedule “A”;

              


      

      
        	
                 
      

              	
                (b)

              	
                “Effective
      Date” shall mean December 31, 2009;

              


      

      
        	
                 
      

              	
                (c)

              	
                “Farmout
      Lands” means Farmor’s working interest in all Petroleum and Natural Gas
      Rights in the lands as described in Schedule “A” attached
      hereto;

              


      

      
        	
                (d)  

              	
                     
      “Operating Procedure” shall mean the 1990 CAPL Operating Procedure and the
      1988 PASC Accounting Procedure with the summary of rates, elections,
      insertions and amendments as attached hereto as Schedule
    “B”;

              


      


      
        
           


        

        
          1

          
            

          

        

        
           


        

      

      


      
        	
                2.

              	
                SCHEDULES

              


      

      


      The
following schedules are attached hereto and incorporated into this
Agreement:

      


      
        	
                (a)  

              	
                Schedule
      “A”, which sets forth and describes Farmout Lands, the Rights and the
      Title Documents, along with related Encumbrances and Pre / Post Farmout
      Working Interests.

              


      

      
        	
                (b)  

              	
                Schedule
      “B” which sets forth the Operating Procedure and the Accounting
      Procedure.

              


      

      


      
        	
                3.

              	
                FINANCIAL
      CONSIDERATION

              


      

      


      On or
before December 31, 2009, Farmee shall provide Farmor with a payment of five
thousand United States dollars ($5,000.00) as the condition to proceed with the
execution of this Farmout Agreement.  Upon receipt of the said
Financial Consideration, Farmor shall within ten (10) business days expedite the
full execution of this Farmout Agreement.  Should Farmor fail to
expedite this Agreement within the said agreed to number of days, Farmee shall
have the right to terminate further said process and Farmor shall immediately
reimburse Farmee for all funds paid or forwarded.

      


      
        	
                4.  

              	
                FARMEE
      COMMITTMENT

              


      

      


      Farmee,
on or prior to December 31, 2010, shall commence the initiation of a geological
study to evaluate the hydrocarbon potential of all formations within the Farmout
Lands.

      


      
        	
                5.  

              	
                INTEREST
      EARNED

              


      

      


      Pursuant
to Clauses 3 and 4, Farmor shall hold in trust for Farmee, and Farmee shall have
the right to earn a four and a three-quarter percent (4.75%) Working Interest in
the Farmout Lands, upon Farmee providing to Farmor the said geological
study.

      


      
        	
                6.  

              	
                OPERATIONS

              


      

      


      
        	
                (a)  

              	
                All
      operations of Farmee carried out with respect to the Test Well and the
      Farmout Lands pursuant to this Agreement shall be conducted in accordance
      with the terms and conditions and rates of the Operating
      Procedure.

              


      

      
        	
                 
      

              	
                (b)  
      

              	
                All
      operations of Farmee carried out with respect to the Farmout Lands
      pursuant to this Agreement shall be conducted in such manner as to avoid
      any surface disturbance to the environment and to the surface land
      owners.

              


      

      


      
        	
                7.  

              	
                LIMITATION
      ACT

              


      

      


      The
two-year period for seeking a remedial order under Section 3(1)(a) of the
Limitations Act, R.S.A. 2000 c. L-12, as amended, for any claim (as defined in
that Act) arising in connection with this agreement is extended
to:


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      


      
        	
                (a)  

              	
                for
      claims disclosed by an audit, two years after the time this agreement
      permitted that audit to be performed;
or

              


      

      
        	
                (b)  

              	
                for
      all other claims, four years.

              


      

      


      
        	
                8.  

              	
                NOTICE FOR
      SERVICE

              


      

      


      Stone
Canyon Resources, Inc.

      Attention:
Land Department

      1530 –
9th
Avenue SE

      Calgary,
Alberta  T2G 0T7

      Canada

      


      Dynamic
Hydrocarbons Ltd.

      Attention:
Ronald Petrucci, President

      7001
Winterberry Drive

      Austin,
Texas  78750

      USA

      


      
        	
                9.  

              	
                TRANSFERS

              


      

      


      Upon the
Interest Earned by Farmee, Farmor will proceed to transfer and assign all
interest in the Farmout Lands to Farmee.  Farmor shall be responsible
for drafting and delivering all necessary assignment documents to Farmee on a
timely basis and Farmee shall accept and execute any documents necessary to
affect the Transfers.

      


      
        	
                10.  

              	
                MISCELLANEOUS

              


      

      


      
        	
                (a)  

              	
                Each
      of the parties represents and warrants that it now has or is entitled to
      have full right, full power and absolute authority to enter into this
      Agreement.

              


      

      
        	
                (b)  

              	
                In
      the event of any conflict or inconsistency between the provisions of this
      Agreement and those of any Schedule attached hereto, the provisions of
      this Agreement shall prevail.  In the event of any conflict or
      inconsistency between the provisions of this Agreement and the Title
      Documents, the provisions of the Title Document shall
    prevail.

              


      

      
        	
                (c)  

              	
                This
      Agreement shall all purposes be construed and interpreted according to the
      courts and the laws of Alberta.

              


      

      
        	
                (d)  

              	
                Each
      of the Parties represents and warrants that it now has or is entitled to
      have full right, full power and absolute authority to enter into this
      Agreement.

              


      

      
        	
                (e)  

              	
                The
      Parties shall from time to time and at all times do all such further acts
      and execute and deliver all such further deeds and documents as shall be
      reasonably required in order to perform fully and carry out the terms of
      this Agreement.

              


      

      
        	
                (f)  

              	
                This
      Agreement supersedes all other agreements, documents, letters and
      understandings, whether written or oral, among the parties in respect of
      the Farmout Lands.

              


      


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

      IN WITNESS WHEREOF the parties
hereto have executed and delivered this Agreement as of the day and year first
above written.

      


      


      STONE
CANYON RESOURCES, INC.

      


      Signature:

      Title:

      


      


      DYNAMIC
HYDROCARBONS LTD.

      


       

      Signature:

      Title:

      


      


      


      This is
an execution page to a Farmout Agreement dated December 15, 2009 between Stone
Canyon Resources, Inc. and Dynamic Hydrocarbons Ltd.

      



      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      SCHEDULE
“A”

      


      


      Attached
to and forming part of a Farmout Agreement, dated December 15, 2009, between
Stone Canyon Resources, Inc., as Farmor, and Dynamic Hydrocarbons Ltd., as
Farmee.

      


      
        	
                 
                        
                  LANDS:

                

              	
                 

              


      

      


      
        	
                Farmout Lands and Rights

              	
                Farmout Working Interest

              	
                Encumbrances

              
	 
      	 
      	 
      
	
                Twp
      44, Rge 4W5:

              	
                Before
      Earned Interest:

              	
                None

              
	
                East
      Half Section 19

              	
                -
      Farmor: 9.5%

              	 
      
	
                Top
      of the Colorado to Base of the Pekisko

              	 
      	 
      
	 
      	
                After Earned
      Interest:

              	 
      
	 
      	 
      - Farmor: 4.75%	 
      
	 
      	 
      - Farmee: 4.75%	 
      


      

      


      
        	
                 
                        
                  LEASE
      AGREEMENT:

                

              	
                 

              


      

       

      Province
of Alberta, Canada, Petroleum and Natural Gas Crown Lease number 0494090860,
dated September 29, 1994 and continued indefinitely on September 29,
1999.

       

      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      SCHEDULE
“B”

      


      


      Attached
to and forming part of a Farmout Agreement, dated December 15, 2009, between
Stone Canyon Resources, Inc., as Farmor, and Dynamic Hydrocarbons Ltd., as
Farmee.

      


      Summary
of the 1990 Joint Operating Agreement and the 1988 Accounting
Procedure:

      


      1990 CAPL OPERATING
PROCEDURE:

      


      
        	
                I.

              	
                Operator:

              	
                Harvest
      Operations Corp

              
	
                II.

              	
                Insurance
      (Clause 311):

              	
                Alternative
      A

              
	
                III.

              	
                Marketing
      Fee (Clause 604):

              	
                Alternative
      A

              
	
                IV.

              	
                Casing
      Point Election (clause 903):

              	
                Alternative
      A

              
	
                V.

              	
                Penalty
      for Independent Operations (Clause 1007):

                (a)
      (iv) Development Wells  300%

                (b)
      (iv) Exploration Wells  500%

              	 
      
	
                VI.

              	
                Title
      Preserving Well (Clause 1010 (a) (iv):

              	
                245
      Days

              
	
                VII

              	
                Disposition
      of Interests (Clause 2401):

              	
                Alternative
      A

              
	
                VIII

              	
                Recognition
      Upon Assignment (Clause 2404):

              	
                Alternative
      A

              


      

      


      1988 PASC ACCOUNTING
PROCEDURE:

      


      
        	
                I.

              	
                Operating
      Advances

              	
                10%
      Share

              
	
                II.

              	
                Approvals

              	
                2
      or more parties totaling 75%

              
	
                III.

              	
                Employee
      Benefits

              	
                22%

              
	
                IV.

              	
                Warehouse
      Handling

              	
                2.5%
      for tubular and New Price in excess of $5,000.00

              
	
                V.

              	
                Overhead
      Rates (Clause 302):

              	 
      
	 
      	
                (a)           Exploration
      Projects:

                (1)   5     
      % of first $50,000.00

                (2)   3     % of
      next $100,000.00

                (3)   1     
      % of cost exceeding sum of (1) and (2)

                 

              	 
      
	 
      	
                (b)           Development
      Projects:

                (1)   3     
      % of first $50,000.00

                (2)   2     % of
      next $100,000.00

                (3)   1     
      % of cost exceeding sum of (1) and (2)

                 

              	 
      
	 
      	
                (c)           Initial
      Construction Projects:

                (1)    5    
      % of first $50,000.00

                (2)    3    
      % of next $100,000.00

                (3)    1    
      % of cost exceeding sum of (1) and (2)

                 

              	 
      
	 
      	
                (f)           Operations
      and Maintenance:

                A
      flat rate of $250.00 per month, no adjustable rates.

                 

              	 
      
	
                VII.

              	
                Disposition

              	
                Greater
      than $25,000.00

              
	
                VIII.

              	
                Periodic
      Inventory

              	
                5
      year intervals

              


      


      
        
           


        

        
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