farmoutagreement.htm - Generated by SEC Publisher for SEC Filing









 



FARMOUT AGREEMENT


 


This Agreement dated the 12th day of March, 2013


 


 BETWEEN: 


 


Summit West Oil, LLC, a company incorporated under the laws of the State of Washington and having an office at 1048 West 11th. Avenue, Spokane, WA 99204 


 


(hereinafter referred to as “SW” or “Farmor”)


 


                                                                                                             OF THE FIRST PART


 


AND:


 


NORSTRA ENERGY INC., a Nevada company having an office at 2860 Exchange Blvd, Suite 400, Southlake, TX 76092


 


                        (hereinafter referred to as “Norstra” or the “Farmee” )


 


                                                                                                             OF THE SECOND PART


 


 


WHEREAS the Farmor is the beneficial owner of 100% working interests in and to the Lease Documents relating to the Farmout Lands, as more particularly described in the attached Schedule “A”.


 


NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained, the parties hereby covenant and agree as follows:


 


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)          “AFE” means the projected budget to drill and complete a horizontal well drilled into the Bakken Oil Formation on the Farmout Lands as attached in Schedule B.


 


(b)          "Exchange" means US Over The Counter Market (OTC);


 


(c)          "Farmee" means Norstra;


 


(d)          “Farmor" refers to SW;


 


(e)          “Farmout Lands" means those lands described as the South Sun River Prospect in the attached Schedule "A";


 


(f)           “Lease Documents” means the document or documents of title described in the attached Schedule “A”; 


 




 




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(g)         
“Payout”
means after recovery of all costs actually incurred by the Farmee to drill and
complete a Well;

 

(h)         
“Assignment” means the assignment from SW to Norstra for
all either the earned spacing unit of any well drilled OR after all obligations
under 3 (a)-(d) have been met means the assignment of all leases in Schedule A
from SW to Norstra.

 

 

2.           
Schedule 

 

           
The following schedule is attached hereto and form part of this
Agreement:

 

Schedule “A” which
describes the leases that represent the South Sun River Prospect.

 

 

 

3.           
Interest Earned

 

The Farmee shall have
the option to earn a 100% working interest by doing the following:

 

(a)         
Spending
an aggregate of $200,000 on exploration work as follows:

 

(i)           
Send
$60,000 no later than April 5, 2013 on acquiring seismic and other miscellaneous
exploration data on the Farmout Lands;

 

(ii)          
Spend an
additional $140,000 no later than April 30, 2013 for the initial working
program, re-interpret existing 2D seismic data and delineate potential drill
locations.

 

(b)         
Drill and
complete a horizontal well into the Bakken Oil Formation at an estimated cost of
$5,000,000 as set out in Schedule “B” by December 31, 2013;

 

(c)         
Drill and
complete a second horizontal well into the Bakken Oil Formation at an estimated
cost of $5,000,000 as set out in Schedule “B” by June 30,
2014;



(d)         
Drill and
complete a horizontal well into the Bakken Oil Formation at an estimated cost of
$5,000,000 as set out in Schedule “B” by December 31, 2014;



(e)         
Upon
completion of the steps set out in 3(a) through 3(d) above, the Farmee shall
have earned the above mentioned 100% working interest in the entire acreage
constituting the Farmout Lands.  In the event that the Farmee only
completed the first and/or the first and second well, but the Farmee elects not
to proceed with the second and/or third well, the Farmee will earn the above
mentioned working interests only on the spacing unit that they drilled the
well(s) on.

 

 


 



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4.           
Royalties and Carried Interest

 

The Farmee acknowledges
that the Farmout Lands are subject to royalty burdens totalling 20%.

 

5.           
Operations 

 

(a)         
The Farmee
shall have the right to choose the operator, subject to the approval of the
Farmor, which approval shall not be unreasonably withheld.  

 

(b)         
All
operations conducted pursuant to this Agreement will be in a lawful manner and
in accordance with good oilfield practice.

 

(c)         
All
operations conducted by the Farmee pursuant to this Agreement will be at the
Farmee’s individual sole cost, risk and expense.

 

6.           
Representations and Warranties

 

The Farmor hereby
represents and warrant to the Farmee as follows:

 

(a)        SW has been
duly incorporated and is a valid and subsisting body corporate under the laws of
its jurisdiction of incorporation;

 

(b)        The Farmor
have full right, power and authority to enter into and accept the terms of this
Agreement and to carry out the transactions contemplated therein;

 

(c)        The Farmor
is the beneficial owners of the undivided working interests in and to the Lease
Documents and the Farmout Lands as set forth in the attached Schedule “A” and
all leases are in good standing.  

 

(d)        There are no
claims, proceedings, actions, lawsuits, administrative proceedings or
governmental investigations in existence, or so far as the Farmor is aware,
contemplated or threatened against or with respect to the Farmors (or either of
them) or any of the Farmout Lands or Lease Documents and there is no particular
circumstance, matter or thing known to the Farmor which could reasonably be
anticipated to give rise to any such claim, proceeding, action, lawsuit,
proceeding or investment.

 

The Farmee hereby
represents and warrants to the Farmor as follows:

 

(a)        The Farmee
has been duly incorporated and is a valid and subsisting body corporate under
the laws of its jurisdiction of incorporation; and

 

(b)        The Farmee
has full right, power and authority to enter into and accept the terms of this
Agreement and to carry out the transactions contemplated therein.

 

7.           
Notices  

The addresses for
service of the Parties in the Agreement are as follows:

 


	
      Summit West Oil,
      LLC,
1048 West 11th. Avenue
Spokane, WA
      99204 

       

       

	
      NORSTRA ENERGY
      INC. 

      2860 Exchange
      Blvd, Suite 400,

      Southlake, TX
      76092





 



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8.           
Regulatory Approval

           
The obligations of the Farmee are subject to acceptance by the Exchange of any
and all filings required to be made with the Exchange in respect of this
Agreement and/or the subject matter thereof.  

 

9.           
Transfer of Interest

           
Upon the Farmee earning an interest in the Farmout Lands, the Farmor will
proceed to transfer and assign such interest in the Lease Documents and the
Farmout Lands to the Farmee..  The interest of the Farmee shall be recorded
in any division orders filed with respect to producing wells on the Farmout
Lands.

 

10.         
Termination 

 

  (a)      This Agreement and the
transactions contemplated hereby may be terminated:

 

(i)           
By mutual
agreement of the Parties; or

 

(ii)          
By either
Party, if, subject to Section 10(b) of this Agreement, there has been a material
breach of a covenant or agreement contained in this Agreement, on the part of
the other Party, or the failure of a condition, and such breach of a covenant or
agreement or failure of a condition has not been cured or waived.

 

(b)       If the Farmee has
committed a material breach of a covenant or agreement relating to drilling
obligations, payment on lands, or payment of rentals, the Farmee shall have 30
business days following receipt of notice from the Farmor to cure the breach
before this Agreement can be terminated.

 

11.         
General 

 

(a)         
The rights
and obligations of the parties hereunder will be binding and enure for the
benefit of and be enforceable by each of the parties hereto, and their
respective successors and permitted assigns.

 

(b)         
This
Agreement constitutes the entire Agreement between the parties hereto and no
variation of the terms hereof will be binding unless the same is contained in a
written document that is signed by all of the parties.

 

(c)         
This
Agreement shall be governed by and be construed in accordance with the laws of
the State of Nevada, USA.

 

(d)         
Time is of
the essence of this Agreement.

 


 



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(e)         
The
headings of the paragraphs of this Agreement are inserted for convenience only
and do not define, limit, enlarge or alter the meanings of any paragraph or
clause herein.

 

(f)          
The Farmee
and the Farmor acknowledge that they have been advised to obtain and have
obtained independent legal advice.

 

(g)         
This
Agreement may be executed in two or more counterparts and delivered by
electronic transmission, each of which will be deemed to be an original and all
of which will constitute one agreement, effective as of the reference date given
above and executed electronic copies will be deemed for all purposes under this
Agreement to be valid executed copies of this Agreement.  

 

(h)         
All the
monetary amounts shall be in the currency of the United States unless otherwise
stated.

 

 

IN WITNESS WHEREOF
each
of the parties has duly executed this Agreement to be effective as of the date
first above written.

 

SUMMIT WEST OIL,
LLC      
                                 


 

per: /s/ Authorized
Signatory

           
 

 

 

NORSTRA ENERGY
INC     

 

per:/s/ Glen
Landry

 


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SCHEDULE "A"

 

           
Attached to and forming part of a Farmout and Royalty Agreement dated the
12th day of March, 2013, between SUMMIT WEST OIL, LLC. and NORSTRA
ENERGY INC.

 

 

                                                                                  
Description of the Lease Documents and the Farmout Lands

 


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      SCHEDULE A: SCHEDULE OF LEASES
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
      Township
	
      Range
	
      Section
	
      Legal
	
      Gross Ac
	
      % Ownership
	
      Net Ac
	
      Lease Date
	
      Term

	
      20 N
	
      8 W
	
      2
	
      SW4SE4, S2SW4
	
      120.00
	
      100.00
	
      120.00
	
      6/5/2012
	
      10 years

	
      20 N
	
      8 W
	
      11
	
      W2, W2NE4, N2SE4
	
      480.00
	
      100.00
	
      480.00
	
      6/5/2012
	
      10 years

	
      20 N
	
      8 W
	
      14
	
      N2NW4, SW4NW4, SW4SW4
	
      160.00
	
      100.00
	
      160.00
	
      6/5/2012
	
      10 years

	
      20 N
	
      8 W
	
      34
	
      SE4SE4
	
      40.00
	
      100.00
	
      40.00
	
      6/5/2012
	
      10 years

	
      20 N
	
      8 W
	
      36
	
      NW4, S2
	
      480.00
	
      100.00
	
      480.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      12
	
      S2NE4, SE4
	
      200.00
	
      100.00
	
      200.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      13
	
      N2NE4, SW4NE4
	
      120.00
	
      100.00
	
      120.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      19
	
      E2NW4, NW4NE4, S2NE4, SE4, NE4SW4
	
      400.00
	
      100.00
	
      400.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      26
	
      N2NW4, SE4NW4, W2NE4, S2SW4
	
      280.00
	
      100.00
	
      280.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      27
	
      N2N2, S2S2
	
      320.00
	
      100.00
	
      320.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      31
	
      NE4, NE4SE4
	
      200.00
	
      100.00
	
      200.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      32
	
      NW4, N2SW4
	
      240.00
	
      100.00
	
      240.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      33
	
      NE4NE4, S2S2
	
      200.00
	
      100.00
	
      200.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      34
	
      N2N2
	
      160.00
	
      100.00
	
      160.00
	
      6/5/2012
	
      10 years

	
      20 N 
	
      7 W
	
      36
	
      NW4, S2
	
      480.00
	
      100.00
	
      480.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      2
	
      Lot 4, SW4NW4, N2SW4
	
      161.41
	
      100.00
	
      161.41
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      3
	
      Lots 1, 2, 3, 4, S2N2, S2
	
      645.72
	
      100.00
	
      645.72
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      5
	
      Lots 3, 4, S2NW4, S2
	
      483.63
	
      100.00
	
      483.63
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      8
	
      N2N2, NE4SW4
	
      200.00
	
      100.00
	
      200.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      10
	
      N2NW4
	
      80.00
	
      100.00
	
      80.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      14
	
      SW4SW4
	
      40.00
	
      100.00
	
      40.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      15
	
      NW4NW4, S2SE4, SE4SW4
	
      160.00
	
      100.00
	
      160.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      17
	
      NW4, NE4NE4, S2NE4, S2
	
      600.00
	
      100.00
	
      600.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      20
	
      NE4NW4, NW4NE4, S2NE4, N2SE4, NE4SW4
	
      280.00
	
      100.00
	
      280.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      21
	
      S2SW4
	
      80.00
	
      100.00
	
      80.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      22
	
      NE4NW4, NW4NE4, E2E2, SW4SE4, SE4SW4
	
      320.00
	
      100.00
	
      320.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      23
	
      W2W2
	
      160.00
	
      100.00
	
      160.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      28
	
      NW4NW4, S2NW4
	
      120.00
	
      100.00
	
      120.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      32
	
      NE4NW4, N2NE4, SE4NE4
	
      160.00
	
      100.00
	
      160.00
	
      6/5/2012
	
      10 years

	
      19 N
	
      7 W
	
      34
	
      N2N2, SE4, NE4SW4
	
      360.00
	
      100.00
	
      360.00
	
      6/5/2012
	
      10 years

	
      18N
	
      6 W
	
      16
	
      All
	
      640.00
	
      100.00
	
      640.00
	
      6/5/2012
	
      10 years

	
      18N
	
      6 W
	
      20
	
      SW4SW4
	
      40.00
	
      100.00
	
      40.00
	
      6/5/2012
	
      10 years

	
      18N
	
      6 W
	
      28
	
      E2NE4, SE4, E2SW4, Dearborn Riverbed and related
      acreage
	
      329.00
	
      100.00
	
      329.00
	
      6/5/2012
	
      10 years

	 	 	 	 	 	 	 	 	 
	
      17N
	
      6W
	
      28
	
      Lot 1, NE4NW4
	
      78.23
	
      100.00
	
      78.23
	
      6/5/2012
	
      10 years

	
      17N
	
      6W
	
      36
	
      All
	
      640.00
	
      100.00
	
      640.00
	
      6/5/2012
	
      10 years

	
      16N
	
      6W
	
      16
	
      All
	
      640.00
	
      100.00
	
      640.00
	
      6/5/2012
	
      10 years

	 	 	 	 	 	 	 	 	 
	 	 	 	
      TOTAL
	
      10097.99
	 	
      10097.99
	 	 




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