Document:

Exhibit 10.1

Exhibit 10.1

“CONTERRA” JOINT VENTURE DEVELOPMENT AGREEMENT

(A Tax Partnership)

This Agreement (“Agreement”) is made and entered into effective as of October 1, 2009
(Effective Date) by and between PATARA OIL & GAS LLC (“Patara, Venture Manager or Operator”), a
Delaware limited liability company, whose address is Three Allen Center, 333 Clay, Suite 3960,
Houston, Texas 77002 and CONTERRA COMPANY, (“Conterra or Non-Operator”) a Delaware corporation,
whose address is 3700 Buffalo Speedway, Suite 960, Houston, Texas 77098, and shall sometimes be
referred to in this Agreement, singularly as “Party” or collectively as “Parties” or as “Venture
Manager, Operator” and “Non Operator”, as applicable.

RECITALS

The Parties desire to enter into this Agreement for the purposes of acquiring, prospecting
owning, operating, producing, selling, and otherwise commercially developing oil, gas and mineral
properties (the “Venture Properties”), as hereinafter defined. In order to conduct those
activities, the Parties desire to establish this Joint Venture for that purpose and to set forth
the terms, provisions, and conditions of their relationship.

Patara enters into this Agreement as the owner of all of the leasehold, rights to explore,
develop and operate the Venture Properties, as hereinafter defined, and desires that Conterra join
in the development of the Venture Properties and to contribute certain risk capital towards the
exploitation and enhancement of potential reserves upon the Venture Properties.

Conterra enters into this Agreement with the understanding that there are benefits to be
obtained from the contribution of risk capital relating to the cost of drilling and completion of
any well(s) located upon the Venture Properties and the corresponding reward from such risk capital
from the revenues that may be obtained from the production from wells drilled and completed upon
the Venture Properties.

In consideration of the covenants and agreements contained in this Agreement, other valuable
consideration, and the benefits to be derived by each Party, the Parties agree as follows:

ARTICLE I

GENERAL PROVISIONS

1.01 Formation of Joint Venture. The Parties hereby form and establish a Joint
Venture (the “Venture”) under the terms and provisions of this Agreement, and the rights and
liabilities of the Parties shall be as set forth in this Agreement.

1.02 Name of Venture. The name of the Venture shall be “CONTERRA — NO. 1,” or such
other name as the Parties from time to time may designate. Venture Manager shall cause to be
filed, on behalf of the Venture, such assumed or fictitious name certificate or certificates as may
from time to time be required by law.

1.03 Business of the Venture. The business of the Venture is to acquire, prospect,
own, develop, operate, sell, and otherwise commercially develop oil, gas and mineral properties.
In furtherance of its business, the Venture shall have and may exercise all the powers provided
under the terms of this Agreement, and shall do any and all things relating or incidental to its
business, as fully as natural persons might or could do under the laws of the State of Texas. The
Venture shall engage in no other business.

1.04 Place of Business of the Venture. The principal place of business of the Venture
shall be located at the offices of Patara , Three Allen Center, 333 Clay Street, Suite 3960,
Houston, Texas 77002. The Parties may, at any time and from time to time, change the location of
the Venture’s principal place of business, on written notice of the change, and may establish such
additional place or places of business of the Venture as the Parties may determine from to time.

 

 

 

1.05 Venture Manager. The Venture Manager and physical operator of the Venture
Properties shall be Patara (“Venture Manager”).

1.06 Venture Operating Agreement. All Venture operations conducted hereunder shall be
pursuant to the terms and provisions of the Venture Operating Agreement, attached hereto as Exhibit
“B”.

1.07 Duration of the Venture. The Venture shall commence on the Effective Date of
this Agreement, and shall continue until it or its properties are transferred or consolidated into
another business entity owned by the Parties or terminated in accordance with the provisions of
this Agreement.

1.08 Title to Venture Properties. Except as otherwise provided in this Agreement, all
property owned by the Venture, whether real or personal, tangible or intangible, shall be deemed to
be beneficially and contractually owned by the Venture as an entity, and no Party, individually,
shall have any ownership interest in the property, unless conveyed or transferred to the Party by
the Venture.

1.09 Filing of Certificates. Venture Manager shall file and publish all certificates,
notices, statements or other instruments required by law for the formation and operation of this
Joint Venture, in all jurisdictions where the Venture may elect to do business.

ARTICLE II

VENTURE PROPERTIES

2.01 Venture Leases Held By Production (HBP) Units. Patara represents, without
warranty of title, either express, implied or statutory, that it owns or controls those certain oil
and gas leases (the “Venture Leases”) described in Exhibit “A” in the attached Joint Operating
Agreement, all located in the Fairplay Area of Panola County, Texas covering approximately 3,425.00
net mineral acres of land, more or less, with leasehold rights covering all depths from the surface
down to the base of the Cotton Valley Sand series. As of the effective date of this Agreement,
Patara represents that all of the Venture Leases are being Held by Production under existing
producing wells and are all situated within the following established production Units (or
proration lease) as recorded in the Official Public Records of Panola County, Texas:

	 	 	 
	Unit Name	 	Producing Unit Wells
	 
	 	 
	Dobbins Gas Unit

	 	Dobbins Nos. 1 and 2
	Weir Estate Gas Unit

	 	Weir Estate No. 1
	C. Brooks Gas Unit

	 	C. Brooks Nos. 1, 2, 3, 4, 6, 7 and 9
	Taylor Gas Unit

	 	Taylor Nos. 1, 2, 4 and 5
	Raley Gas Unit

	 	Raley No. 1
	J. H. Browning Gas Unit

	 	J. H. Browning Nos. 1, 2 and 3
	Z. Austin Lease (lease basis)

	 	Z. Austin Nos. 1, 2, 3 and 4

 

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2.02 Venture Wells. The initial venture wells will include the drilling, completion,
equipping and production from an initial identified Fifteen (15) wells ( the “Venture Wells”) and
are intended to target prospective locations to produce reserves from the Cotton Valley Sand series
and Travis Peak and Pettit formations, which may underlie the Venture Leases, all of which are
embraced within the above-described production units.

	 	a.	 	Selection of Venture Wells. Each Venture Well
will be evaluated individually on its own geologic merits and will be
drilled at mutually agreeable locations. Prior to making any capital
contributions for the purpose of drilling a Venture Well and depositing
funds into the Banking Account of the Venture, the Parties shall have
received, reviewed and approved the following materials:

	 	(i)	 	Drilling Prognosis for the specific
Venture Well;

	 
	 	(ii)	 	AFE for the specific Venture Well;

	 
	 	(iii)	 	Assignment of leasehold interest;

	 
	 	(iv)	 	Such evidence of drillsite title as any Party may request;

	 
	 	(v)	 	Evidence that all mortgage encumbrances
have been removed.

	 	b.	 	Approval to Drill a Venture Well. Pursuant to
Section 2.02 (a), upon acceptance and approval to commence operations
of any Venture Well, Venture Manager shall send to Conterra a cash call
for the approved amounts set forth for in the Venture Well AFE and the
prospect fee of $100,000.00 as set forth in Section 5.02. Conterra
shall remit fifty (50%) percent of the amount of the cash call within
five (5) days after receipt, and, the remaining fifty (50%) percent
within five (5) days from the receipt of a second cash call. At the
option of Operator, no drilling operations shall be required until and
upon receipt of the cash call funds into the Venture capital account.
All capital contributions will be deposited in a segregated account in
the name of the Venture.

	 	c.	 	Exclusion of Existing Producing Unit/ Lease
Wells. As described in Section 2.01 above, the existing producing
unit wells (“Excluded Wells”) are not intended to be a part of this
Agreement, and the related spacing acreage attributed thereto and
production therefrom are specifically excluded from this Agreement and
shall remain the exclusive property and under the exclusive control of
Patara.

	 	d.	 	Existing Facilities: In respect of the Excluded
Wells, Patara is currently operating the Fairplay Field infrastructure
of gathering lines, central facilities, central compression and related
equipment in order to deliver gas to a receipt sales point to third
parties. Patara does hereby dedicate to the Venture the concurrent
right to use such existing facilities to handle, move and process the
full gas well stream from any of the Venture Wells, subject to all
allocable costs associated with the incremental volume of gas well
stream from the Venture Well(s) handled and flowing through such
existing facilities.

	 	e.	 	Refund of Cash Call: Upon receipt of the first
cash call funds, Operator shall commence the drilling operations of the
selected Venture Well within ten (10) days. If drilling operations have
not been commenced within this time period, then Operator will return
100% of such cash funds to Conterra until a new cash call is made.

 

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ARTICLE III

INTEREST OF THE VENTURE PARTIES

3.01 Capital Expense and Revenue Interest of the Venture. The following table sets
forth the expense commitment to fund the Venture Banking Account and the corresponding revenue
sharing of the Venture. The acronyms BPO shall mean “before payout” and APO shall mean “after
payout” as further defined in Article VII.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Net (2)	 	 	Net Revenue	 
	 	 	Expense Interest (1)	 	 	Proceeds	 	 	Interest	 
	 	 	BPO	 	 	APO	 	 	BPO	 	 	APO	 
	Patara Oil & Gas LLC
	 	 	-0-	 	 	 	1.000	 	 	 	.075	 	 	 	.700	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Conterra Company
	 	 	1.000	 	 	 	-0-	 	 	 	.675	 	 	.050	(orri)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	1.000	 	 	 	1.000	 	 	 	.750	 	 	 	.750	 

Note:

	 	 	 
	(1)	 	Expenses include tangible and intangible drilling and completion costs,
development costs, prospect fee of $100,000.00 per well, and any other associated
costs, including but not limited to wellhead and gathering equipment necessary to
process and transport the oil and gas to market.

	 
	(2)	 	Net Proceeds shall mean operating revenues, less taxes, including, but not
limited to severance, ad valorem, property and state franchise taxes, leasehold
burdens, operating costs and allowable COPAS charges. The above Net Proceeds model is
for arithmetic exemplication purposes and is based upon using a 75% net revenue
interest in each of the Venture Wells, on a unitized basis, therefore:

	 
	 	 	BPO Calculation is:

	 	 	 
	Conterra:

	 	.90 x .75 = .675
	Patara:

	 	.10 x .75 = .075

	(3)	 	The actual Net Proceeds shall be based upon the actual net revenue interest, on
a unitized basis, for each of the production units and Venture Wells drilled thereon as
set forth in Exhibit “A-3” in the Venture Operating Agreement.

3.02
Banking Account. All revenue from Venture Wells shall be paid into, and all
operating costs with respect to Venture Wells, shall be received into and disbursed from a separate
and segregated Banking Account in the name of the Venture. Funds in the Banking Account will not be
comingled with funds of any Party.

3.03 Net Proceeds Sharing During Payout Period. Until Payout period, as defined in
Section 7.01, the Parties will share the Net Proceeds from production from the Venture Wells:

	 	 	 	 	 	 	 
	Conterra

	 	 	90	%	 	 
	Patara

	 	 	10	%	 	 

ARTICLE IV

ASSIGNMENT OF VENTURE WELLS AND LEASES

4.01 Assignment of Leasehold Interest Upon Selection. As provided in Section 2.02,
upon approval to drill and funding of the Venture Banking Account for each selected Venture Well as
provided in Section 2.02, Patara shall to execute and deliver to Conterra an assignment of 100%
leasehold interest, with special warranty of title, in the applicable Venture Leases within the
particular production unit attributable to each Venture Well. Such Assignment will be delivered
unencumbered by any mortgage and other burdens not approved by Conterra and will include the legal
description of forty (40) acres of land, in the form of a square, centered on the Venture Well and
such acreage shall be allocated to each Venture Well. The assignment will be delivered to Conterra
at the net revenue interest as set forth for each production unit in the Venture Operating
Agreement, and substantially in the form of Exhibit “C-1”.

 

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ARTICLE V

CONTRIBUTIONS

5.01 Capital Contributions.

	 	a.	 	Conterra shall make 100% of all of the contributions of capital
towards the drilling, completion and equipping for all of the Venture Wells.
Such contributions will be made pursuant to cash calls under the approved AFE
for each Venture well as set forth in Section 2.02(a) and will be made into the
separate and segregated Venture Banking Account.

	 	b.	 	No interest shall accrue on any contribution to the capital of
the Venture, and other than as described in Section 2.02(e), no Party shall
have the right to withdraw or be repaid any capital contribution unless Venture
Manager fails to drill, complete or equip a Venture Well, in which case such
contribution of capital by Conterra shall be promptly returned to Conterra.

	 	c.	 	The Venture Manager shall use the contribution of capital
pursuant to Section 5.01(a) solely for the drilling, completion and equipping
of Venture Wells and for no other purpose.

5.02 Bonus Payment for each Venture Well. Upon selection and approval of the drilling
of a particular Venture Well as provided in 2.02(a), Conterra shall then pay to Patara the sum of
$100,000.00 for each such approved Venture Well five (5) days prior to spudding such well. This
bonus payment is intended to be treated as a Venture prospect fee and shall be included in the
calculation of Payout for each and all of the Venture Well(s); provided, however, such bonus
payment shall not be treated as part of the capital account of the Venture, instead, it shall be
treated as the sole property of Patara.

5.03 Additional Contributions. The Parties, on unanimous agreement, may make
additional capital contributions to the Venture, which contributions shall be shared equally (50%/
50%) for costs, expenses or charges with respect to the ownership, operation, development,
maintenance and management of Venture Property for, but not limited to, interest expense,
professional fees, commissions, wages and related costs, to the extent such costs, expenses, or
charges exceed the capital and income, if any, derived from the Venture.

5.04 Contribution of Time and Materials.

	 	a.	 	Each Party shall contribute so much of time as may be
reasonably required to conduct the operations of the Venture for the purposes
set out in the Agreement.

	 	b.	 	It is contemplated that each Party shall, in connection with
time contributed to the Venture, make use of personally owned equipment,
vehicles, and other materials (“equipment”) for Venture purposes. This
equipment shall not be deemed a contribution by the Party to the Venture of the
equipment, and shall remain the property of the Party utilizing the equipment.
In the event it is necessary, in connection with the use of equipment, to
conduct maintenance resulting from the equipment being utilized by the Venture,
those costs shall be costs of the Venture, but shall not give the Venture
rights of ownership in the equipment.

 

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ARTICLE VI

DISTRIBUTIONS

6.01 Distributable Cash. The term “distributable cash” as used in this Agreement,
with respect to any period, shall mean all Net Proceeds of the Venture in that period,

6.02 Distribution of Distributable Cash. Distributable cash for each month, if any,
shall be distributed, within fifteen (15) days after the end of such month, among the Parties in
the same proportion as set forth in Section 3.01.

ARTICLE VII

PAYOUT OF CAPITAL CONTRIBUTIONS

7.01 Payout Defined: The term “Payout” shall be defined as the month following the
month when the aggregate of all capital contributions made to the Banking Account by Conterra,
compounded annually at an internal rate of return of fifteen (15%) percent equal the sum all cash
distributions received by Conterra.

7.02 Occurrence of Payout: Upon the occurrence of Payout, the Venture Manager shall
send written notice to Conterra advising that Payout has occurred with a complete accounting of the
Venture Banking Account. Conterra shall have sixty (60) days in order to accept such accounting and
acknowledge that Payout has occurred, or may request an audit of the books and financial records of
Venture Manager.

	 	a.	 	After Payout Reversion. Upon the occurrence of Payout,
the expense interest and the net proceeds interest shall, ipso facto, revert to
the after Payout (“APO”) division of interest as set forth
in Section 3.01.

	 	b.	 	Relinquishment of Leasehold Ownership in Venture
Leases. Upon the occurrence of Payout, the leasehold interest previously
assigned pursuant to Section 4.01 in the Venture leases shall be automatically
converted to the after Payout interest of One Hundred (100%) percent working
interest to Patara and Five (5%) Percent of 8/8ths Overriding Royalty Interest
to Conterra.

	 	c.	 	Reassignment of Leasehold/Retained Five (5) Percent
Overriding Royalty Interest. Upon the occurrence of Payout, Conterra shall
execute and deliver to Patara a reassignment of One Hundred (100%) percent of
the leasehold title and retaining a Five (5%) Percent of 8/8ths Overriding
Royalty Interest in production from the Venture Leases. Such reassignment will
substantially be in the form of Exhibit “C-2”.

ARTICLE VIII

MANAGEMENT

8.01 Management of the Venture. Subject to the reservations of control in the Venture
specified in this paragraph, the Parties designate Patara as the Venture Manager of this Venture.
In the event of bankruptcy of Patara, the inability of Patara to perform the functions of Venture
Manager, breach of this Agreement by Patara or withdrawal of Patara as the Venture Manager,
Conterra shall immediately become and is hereby appointed as Venture Manager.

 

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8.02 Management and Control.

	 	a.	 	The Venture Manager shall have the right, in good faith, except
as otherwise specified in this Agreement, to take and do any and all reasonable
action required with regard to the affairs of the Venture, in
connection with its day to day operations, management, and control of
Venture Property, which is routine and normal.

	 	b.	 	The Venture Manager shall have the duty, power, and authority
to take such action, from time to time, as may be deemed necessary, appropriate
and prudent in connection with the management and conduct of the business and
affairs of the Venture, including, but not limited to, the following:

	 	(i)	 	protect and preserve the title and interest of
the Venture in Venture Property and other assets which may be owned by
the Venture.

	 	(ii)	 	Render for taxation and pay all ad valorem
taxes and assessments, if any and other charges imposed against the
property owned by the Venture.

	 	(iii)	 	Negotiate and supervise the performance of
contracts covering the Venture Property, and otherwise enforce the
obligations of parties with whom the Venture enters into contracts or
other arrangements.

	 	(iv)	 	Keep all books of accounts and records of the
Venture, including GAAP accounting, tax and Payout records.

	 	(v)	 	pay or cause to be paid all debts or other
obligations of the Venture.

	 	(vi)	 	maintain all funds of the Venture in a
segregated Venture Banking Account in a depository approved by the
Parties.

	 	(vii)	 	make monthly distributions, as provided for in
this Agreement, to the Parties in accordance with the provisions of
this Agreement.

	 	(viii)	 	perform all other normal business functions and otherwise operate and
manage the business and affairs of the Venture in accordance with, and
as limited by, this Agreement.

	 	(ix)	 	to employ agents, employees, managers,
accountants, attorneys, consultants, or other persons, necessary or
appropriate to carry out the business of the Venture, whether or not
any person employed is affiliated or related to a Party, and to pay
fees, expenses, salaries, wages, and other compensation to those
persons as the Venture Manager shall determine.

	 	(x)	 	pay, extend, renew, modify, adjust, submit to
arbitration, prosecute, defend, or compromise, on the terms as may be
determined and on the evidence as may be deemed sufficient, any
obligation, suit, liability, cause of action or claim, including taxes,
either in favor of or against the Venture of $25,000.00 or less,
subject to the limitation of imposing joint and several liability on
the Parties.

8.03 Specific Limited Power. Notwithstanding any other provision of this Agreement,
no one Party shall have the power, without the written consent of all Parties, to sell, lease or
assign the Venture Property or to enter into or otherwise become liable for or with respect to, any
arrangement which would result in the liquidation of the Venture or the sale of all its assets.

8.04 Right of Public to Rely on Authority of Parties. No person shall be required to
determine a Party’s authority to enter into any undertaking on behalf of the Venture or to see to
the application or distribution of revenues or proceeds paid to a Party on behalf of the Venture.

 

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8.05 Services of the Parties. During the existence of the Venture, the Parties shall
devote such time and effort to Venture business as may be necessary to promote the interest of the
Venture to the mutual benefit of the Parties. It is specifically understood and agreed that no
Party shall be required to devote full time to Venture business, and each Party may, at any time
and from time to time, engage in and possess interests in other business ventures of any and every
type of description, and no Party shall, by virtue of this Agreement, have any right, title or
interest in or to such independent ventures or to be income or profits derived from them.

8.06 Compensation and Reimbursement. The Parties shall have no right to receive
compensation for performing duties as Parties to this Venture, under this Agreement, except as may
be allowed by paragraph 5.04, and agreed to by the Parties; provided that this provision shall not
affect the Venture Manager’s right to expend capital contributions made by the Parties to the
Venture, or a Party’s right to receive its share of distributions of Venture funds, as provided for
in this Agreement, or the right to be repaid on any loans made by a Party to the Venture.

8.07 Insurance. The Venture Manager shall maintain, with insurers or underwriters of
good repute, in the name of the Venture for the benefit of each Party naming each Party as an
additional insured, such insurance relating to the operations of the Venture, as are customary for
businesses of a like nature to that of the Venture, to maintain insurance against risks, pursuant
to terms that are customary for a business and to pay all premiums and other sums payable to
maintain that insurance. Additionally, the exact limits of insurance coverage shall as set forth in
Exhibit “D” to the Venture Operating Agreement. Conterra has the right to opt out of the Venture’s
Manager’s insurance and maintain its own insurance at any time, providing that Conterra’s insurance
meets the limits of Exhibit “D” to the Venture Operting Agreement.

ARTICLE IX

TAX PROVISIONS

9.01 Tax Partnership. All of the Parties’ operations conducted pursuant to this
Agreement in the Venture area shall be subject to the terms and conditions of the Tax
Partnership Agreement attached hereto as Exhibit “A”.

9.02 Responsibility for Taxes. Each Party shall be responsible for reporting and
discharging its own tax measured by the income of the Party and the satisfaction of such Party’s
share of all contract obligations under this Agreement and the Tax Partnership Agreement. Each
Party shall protect, defend, and indemnify the other Party from and against any and all losses,
costs, and liabilities arising from the indemnifying Party’s failure or refusal to report and
discharge such taxes or satisfy such obligations.

ARTICLE X

BOOKS, RECORDS AND BANK ACCOUNTS

10.01 Books and Records. The Venture Manager shall keep the books of account and
other records with respect to the operations of the Venture as will sufficiently explain the
transactions and financial position of the Venture, to enable financial statements to be prepared,
and shall cause the books and other records to be kept in such manner as will enable them to be
audited annually as of June 30. The books and other records shall be maintained at the principal
place of business of the Venture, or at such other place as the Venture Manager shall determine,
and the Parties, and their authorized representatives, shall at all times have access to those
books.

10.02 Accounting Basis and Fiscal Year. The Venture books of account shall be kept on
an accrual accounting basis for Federal Income Tax purposes, and shall reflect all Venture
transactions, shall be appropriate and adequate for the Venture’s business and for the carrying out
of all the provisions of this Agreement, and shall be closed and balanced at the end of the fiscal
year. The fiscal year of the Venture shall end June 30th of each year.

 

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10.03 Reports. The Venture Manager shall cause to be delivered to each Party, within
forty (40) days after the end of each June 30, a report containing the following:

	 	a.	 	A balance sheet as of the end of the Venture’s June 30 fiscal
year end, and statements of income;

	 	b.	 	A general description of the activity of the Venture during the
period covered by the report;

	 	c.	 	A report of any material transaction between the Venture and
any Party, including fees and compensation paid by the Venture and any
materials or equipment supplied and services performed by a Party, or any
affiliate or employee of a Party, for fees or compensation; and

	 	d.	 	A report and all other information indicating the running
balance of Payout of the capital contributions Account compounded annually at
an internal rate of return of fifteen percent (15%).

10.04 Bank Accounts. The Venture Manager shall be responsible for causing one
separate and segregated Banking Account to be maintained which shall be insured by the Federal
Deposit Insurance Corporation, which accounts shall be used for the payments of expenditures
incurred by the Venture in connection with its business, and in which shall be deposited all cash
receipts of the Venture. All amounts shall be and remain the property of the Venture, and shall be
received, held, and disbursed by the Venture Manager for the purposes specified in this Agreement.
There shall not be deposited in any of the accounts any funds other than funds belonging to the
Venture, and no other funds shall in any way be commingled with the funds of the Venture. Neither
Party may pledge or mortgage its interest in the Banking Account except a pledge to the other
party.

10.05 Tax Returns. The Venture Manager, as may be required, shall cause Income Tax
Returns for the Venture to be prepared and timely filed with the appropriate authorities.

ARTICLE XI

OWNERSHIP OF VENTURE PROPERTY, LIMITATION ON LIABILITY

11.01 Ownership and Partition. Except as otherwise provided in this Agreement the
assets of the Venture of every kind and character, real and personal, now owned of later acquired,
shall be owned by the Venture as an entity, that ownership being subject to the other terms and
provisions of this Agreement. The Parties’ interests in the Venture shall be owned by the Venture
as personal property.

11.02 Relationship of the Parties. The relationship between and among the Parties
shall be limited to the carrying on of the purpose of the Venture in accordance with the terms of
this Agreement. This relationship shall be construed and deemed to be a Joint Venture, and not a
general partnership. Subject to Section 9.01 hereof, nothing in this Agreement shall be construed
to create a general partnership between or among the Parties or to authorize a Party to act as
general agent for another Party.

11.03 Limitation on Liability and Undertakings. As provided in this Agreement, no
Party, or the Venture, shall be responsible or liable for any indebtedness or obligation of any
Party, incurred either before or after the Effective Date of this Agreement, except those
responsibilities, liabilities, debts, or obligations undertaken or incurred in good faith in
carrying out the purpose of the Venture in accordance with the terms of this Agreement, or later
undertaken or incurred on behalf of the Venture, under or pursuant to the terms of this Agreement,
or assumed by the Venture. Each Party indemnifies and agrees to hold each other Party harmless
from all those obligations and indebtedness. No Party, acting alone, shall have any authority for,
or to undertake or to assume any obligations, debt, duty, or responsibility on behalf of any other
Party, or the Venture, except as otherwise provided in this Agreement.

 

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ARTICLE XII

GAS MARKETING AND RIGHT TO HEDGE

12.01 Gas Marketing. Notwithstanding the provisions of Article VI (G) of the Venture
Operating Agreement and in avoidance of creating a gas imbalance, the Parties agree to use their
best efforts to jointly market all volumes from each and all Venture Wells delivered into the same
purchaser of such gas.

12.02 Right to Hedge Separate Volumes. The Venture Manager, shall have the right to
execute hedging agreements for gas volumes produced from the Venture Wells by giving each Party
notice of any proposed hedge at least two (2 days prior to the proposed entry of the hedge order.
All payments to or from such hedging activities shall be made to or from the Venture Banking
Account, and with respect to Conterra, any payments to or from Conterra shall be included in the
calculation of Payout.

ARTICLE XIII

ADDITIONAL JOINT VENTURE(S)

13.01 Option to Create Additional Joint Venture(s). Conterra shall have the exclusive
option to elect to create up to two (2) Additional Joint Ventures, each of which will include the
drilling of fifteen (15) Venture Wells or a total of thirty (30) additional Venture Wells on the
Venture Properties. Each such Additional Venture shall be separate from this Venture but formed
using agreements substantially the same as this Agreement and its Exhibits. At the sole discretion
of Conterra, this option may be exercised at any time during the term of the Joint Venture by
giving written notice to Patara advising of such election.

ARTICLE XIV

CONTERRA SOLE OPTION TO TERMINATE

14.01 Unilateral Termination of this Agreement. Notwithstanding any of the provisions
of this Agreement, Conterra shall have the right to terminate its funding obligations pursuant to
Section 5.01(a) of this Agreement, in its sole discretion, after completing its obligation to fund
the first five (5) wells and again, after the first ten (10) wells Conterra may discontinue funding
immediately in the event of a Material Adverse Change, which is defined as (i) if there any change
in the Internal Revenue Code limiting or restricting the ability of Conterra to utilize 100% of the
deductions for Intangible Drilling Costs, or (ii) if the closing price of natural gas quoted for
NYMEX Henry Hub is below $3.00/MMBTU for a period of twenty (20) consecutive business days.

ARTICLE XV

ASSIGNABILITY OF INTEREST

15.01 Assignment of a Party’s Interest.

	 	a.	 	Except as provided herein, no Party may sell, transfer, assign,
pledge, or otherwise dispose of all or any part of its interest in this
Venture, the Venture leases or the Venture Wells (whether voluntary,
involuntary, or by operation of law) without the prior written consent of the
other Party, which consent shall not be unreasonably withheld.

	 	b.	 	No information concerning Venture Properties shall be disclosed
to any proposed assignee of an interest in the Venture, unless the proposed
assignor of the interest shall obtain, prior to any assignment or transfer,
written acknowledgment by a prospective assignee in a form satisfactory to all
Parties, that the assignee will be bound by the terms of this Agreement. In
the case of any proposed assignment, the written acknowledgment from a proposed
assignee shall contain provisions for
nondisclosure, of information relating to the accounts, activities and
properties of the Venture, in the event the prospective assignee shall elect
not to purchase or acquire an interest.

 

10

 

ARTICLE XVI

DISSOLUTION AND ASSIGNMENT

16.01 Events of Dissolution and Sale of Venture Interest.

	 	a.	 	The Venture shall be dissolved based upon the following:

	 	(i)	 	on the sale of all Parties’ interest in the
Venture;

	 	(ii)	 	on the occurrence of any event specified by the
laws of the State of Texas;

	 	(iii)	 	on the withdrawal, death, or disability of the
Venture Manager, with no successor appointed pursuant to paragraph
5.01, or on the filing by a Party of a voluntary petition in
bankruptcy, upon an adjudication of a Party as bankrupt or insolvent,
or on the filing by a Party of a petition under any chapter of the U.S.
Bankruptcy Code, or any other present or future applicable federal,
state, or other statute or law regarding bankruptcy, insolvency, or
other relief for debtors, or a Party seeking, consenting to, or
acquiescing in, the appointment of a trustee, receiver, conservator or
liquidator of the Party, or of all, or any substantial portion of, the
Party’s property or interest in the Venture; or,

	 	(iv)	 	on reaching Payout and the conversion of all of
Conterra’s interest to an Overriding Royalty Interest pursuant to
Section 7.02

	 
	 	(v)	 	on the unanimous consent of the Parties.

	 	b.	 	Dissolution of the Venture shall be effective on the date on
which the event occurs giving rise to the dissolution, but the Venture shall
not terminate until the assets of the Venture shall have been distributed as
provided for in this Agreement. Notwithstanding the dissolution of the
Venture, prior to the termination of the Venture, the business of the Venture
and the affairs of the Parties, as a Venture, shall continue to be governed by
this Agreement. Upon dissolution, the Venture Manager shall liquidate the
assets of the Venture, and apply and distribute the proceeds as contemplated by
this Agreement.

16.02 Distributions on Liquidation

	 	a.	 	After payment of liabilities owing to creditors, the Venture
Manager, or the liquidator, if any, shall set up such reserves as are deemed
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Venture. This reserve may be paid over by the Venture
Manager or the liquidator to a bank, to be held in escrow for the purposes of
paying any such contingent or unforeseen liability or obligation, and, at the
expiration of the period the Venture Manager or liquidator may deem advisable,
the reserves shall be distributed to the Parties or their assigns in the manner
set forth in paragraph 17.02 (b) below.

	 	b.	 	After paying all liabilities and providing for reserves, as
provided for above, Venture Manager or the liquidator shall cause the remaining
net assets of the Venture to be distributed:

	 	(i)	 	first, to any Party in respect of loans by
them, to the Venture; and,

	 
	 	(ii)	 	then, to the Parties in the order of priority provided by law.

 

11

 

Each Party shall receive its share of the assets in cash or in kind, and the proportion of a
share received in cash may vary from Party to Party, all as the Venture Manager or liquidator may
decide. If the distributions are insufficient to return to any Party the full amount of the
Party’s capital contribution, it shall have no recourse against any other Party. No Party with a
negative capital account at the time of dissolution of the Venture shall be required to restore to
the Venture the amount of the negative balance in the capital account. In the event that any part
of the net assets consist of notes or accounts receivable or other non-cash assets, the Venture
Manager of the liquidator shall take whatever steps deemed appropriate to convert the assets into
cash or into any other form which will facilitate the distribution of the assets. If any assets
shall be distributed in kind, the assets shall be distributed on the basis of their fair market
value. If the Parties, upon dissolution, are unable to agree on the fair market value of the
assets to be distributed, then appraisals and determination of that fair market value shall be made
by third party appraisers.

16.03 Assignment of Venture Interest. Any purchaser, transferee, or assignee of an
interest of a Party in the Venture, who has the right to become a Party to this Agreement, shall:

	 	a.	 	elect to become a Party to this Agreement by delivery of a
written notice of that election to the Venture Manager;

	 	b.	 	execute and acknowledge other instruments as the Venture
Manager may deem necessary or advisable to effect the admission of the
purchaser, transferee, or assignee as a Party, including, without limitation,
the written acceptance and adoption by the Party of the provisions of this
Agreement and the assumption by the Party of the obligations of the Party from
whom the interest is acquired; and

	 	c.	 	pay, or cause to be paid, a transfer fee to the Venture which
is sufficient to cover all reasonable expenses connected with the sale,
transfer, or assignment for the admission of the Party as a Party to this
Agreement.

16.04 New Party to Venture. A new Party to this Agreement shall, on compliance with
the provisions set out above, succeed to all rights and obligations, as provided for in this
Agreement as if that Party had been an original Party to this Agreement. Neither the Venture
Manager nor a selling Party shall be required to determine the tax consequences to a Party, or the
Party’s assignee, arising from the assignment of a Venture interest. The Venture shall continue
with the same basis and capital amount for the new Party as was attributable to the former owner,
who assigned or transferred a Venture interest.

ARTICLE XVII

DEFAULT

17.01 Default by a Party.

	 	a.	 	The following events shall be deemed to be events of default of
the terms of this Agreement by a Party:

	 	(i)	 	failure of a Party to make, when due, any
contribution or advance required to be made under the terms of this
Agreement and the failure to cure or remedy the failure within three
(3) days after receipt of written notice of such failure from the
Venture Manager;

	 	(ii)	 	failure to carry out any duties, covenants, or
conditions of this Agreement or the violation of any of the other
provisions of this Agreement and failure to remedy or cure the
violation within ten (10) days after receipt of written notice of the
violation from another Party to the Venture;

 

12

 

	 	(iii)	 	making an assignment for the benefit of
creditors or the filing of a petition under any section or chapter of
the U.S. Bankruptcy Code as amended, or under any similar law or
statute of the United States or any state;

	 	(iv)	 	adjudication of a Party as a bankrupt or
insolvent in proceedings filed against the Party under any section or
chapter or the U.S. Bankruptcy Code, as amended, or under similar law
or statute of the United States or any state, without further
possibility of appeal or review; and

	 	(v)	 	the appointment of a receiver for all, or
substantially all, of the assets of a Party, and the failure to have
the receiver discharged within thirty (30) days after appointment.

	 	b.	 	Upon the occurrence of any event of default by a Party, the
other Parties shall have the right, at their election, which election shall be
made at any time within one (1) year from the date of the default, on giving
the defaulting Party ten (10) days’ written notice of the election (and
providing the default is continuing on the date the notice is given), to pay
the defaulting Party the fair market value of that Party’s interest in the
Venture, based on the capital contributions made by the Party, taking into
consideration any outstanding indebtedness, liabilities, liens, and obligations
relating to the Party, for the purchase and redemption of the Party’s interest
in the Venture. Pursuit of a remedy provided above shall not preclude the
pursuit of any other remedy provided for in this Agreement, or any other
remedies provided in law, nor shall pursuit of any remedy provided for in this
Agreement constitute a forfeiture or waiver of any amount due by a defaulting
Party, or of any damages accruing by reason of the violation of any of the
terms, provisions, or covenants contained in this Agreement. A defaulting
Party shall be responsible for the payment of all attorneys’ fees reasonably
incurred by the Venture in connection with a default, and interest on all
amounts by which the defaulting Party is indebted to the Venture, at the
highest rate allowed by law.

	 	c.	 	Each Party agrees that in the event a Party shall default, as
provided for above, the defaulting Party shall execute and deliver conveyances,
agreements, notes, instruments, or other documents which may be necessary to
confirm and render fully effective the transfer of the defaulting Party’s
interest. Any relinquishment and transfer shall not relieve the defaulting
Party from any liability under this Agreement which may have accrued prior to
the date of the relinquishment or transfer. In the event appropriate
instruments, as reasonably required, are not delivered after fifteen (15) days
written notice to the defaulting Party, the non-defaulting Party may, as the
defaulting Party’s irrevocable agent and attorney-in-fact, execute the legal
instruments as may be required, necessary, or advisable to convey, transfer, or
assign the defaulting Party’s interest, and the Parties agree that the
non-defaulting Party shall not have any individual liability for any action
taken in connection with that action.

ARTICLE XVIII

MISCELLANEOUS

18.01 Notices. Any and all notices, elections, or demands permitted or required to be
made under this Agreement, shall be in writing, signed by the Party giving the notice, election, or
demand and shall be delivered personally, or sent by registered or certified mail, return receipt
requested, to the other Party, at its address on the first page of this Agreement, or such other
address as may be supplied by written notice given in conformity with the terms of this Section.
The date of personal delivery or the date of mailing, as the case may be, shall be the date of
receipt of the notice.

 

13

 

18.02 Successors and Assigns. Subject to the restrictions on transfers set forth
above, this Agreement, and each and every one of its provisions, shall be binding on and inure to
the benefit of the Parties, and their respective successors, successors in title, heirs and
assigns, and each and every successor in interest to any Party, whether the successor acquires the
interest by way of gift, purchase, devise, or any other method, shall hold the interest subject to
all the terms and provisions of this Agreement. Any assignment of an interest by a Party shall be
specifically delivered subject to the terms and provisions of this Agreement.

18.03 Liabilities. The obligation and liabilities of each Party, as among themselves,
with respect to any and all liabilities in connection with conducting the business of the Venture,
shall be several and not joint or collective.

18.04 Amendments. Amendments may be made to this Agreement from time to time by
unanimous consent of the Parties, which consent shall be evidenced by a written amendment attached
to this Agreement as executed by all Parties.

18.05 No Waiver. The failure of any Party to insist on strict performance of a
covenant or of any obligation of this Agreement, irrespective of the length of time for which the
failure continues, shall not be a waiver of a Party’s subsequent right to demand strict compliance.
No consent or waiver, expressed or implied, to or of any breach or default in the performance of
any obligation of this Agreement, shall constitute a consent or waiver to or of any other breach or
default in performance of the same or any other obligation of this Agreement.

18.06 Entire Agreement. This Agreement, together with Exhibits attached hereto,
constitutes the full and complete Agreement of the Parties with respect to the subject matter of
this Agreement.

18.07 Captions. Title or captions of articles, sections, and paragraphs contained in
this Agreement are inserted only as a matter of convenience and for reference, and in no way are
intended to define, limit, extend or describe the scope of this Agreement or the intent of any of
its provisions.

18.08 Counterparts. This Agreement may be executed in a number of counterparts, all
of which taken together shall, for all purposes, constitute one Agreement, binding on the Parties,
notwithstanding that all Parties may not have signed the same counterpart.

18.09 Applicable Law. This Agreement shall be deemed to have been entered into and
shall be construed and enforced according to the laws of the State of Texas, as applied to
contracts made and to be performed entirely within that state, unless otherwise provided.

18.10 Gender. When this Agreement requires, all words in any gender shall be deemed
to include the masculine, feminine, and neuter gender, all singular words shall include the plural,
and all plural words shall include the singular.

18.11 Prior Agreements Superseded. This Agreement supersedes any prior understanding
or written or oral agreements between the Parties respecting the subject matter of this Agreement.

18.12 Legal Construction. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect,
the invalidity, illegality, or unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable
provision had not been contained in this Agreement.

18.13 Priority of Conterra Joint Development Agreement. In the event of conflict
with the provivions of this Agreement and the Venture Operating Agreement, then the provisions of
this Agreement shall prevail.

 

14

 

IN WITNESS WHEROF, this Agreement is executed by each Party as of the date of acknowledgment
of their signature, but shall be deemed effective as of October 1, 2009 the Effective Date.

	 	 	 	 	 
	 	PATARA OIL & GAS LLC

 	 
	 	By:  	/s/ Lane M. Kincannon
 	 
	 	 	Lane M. Kincannon 	 
	 	 	Vice-President, Land 	 
	 
	 	CONTERRA COMPANY

 	 
	 	By:  	/s/ Kenneth R. Peak
 	 
	 	 	Kenneth R. Peak 	 
	 	 	Chief Executive Officer 	 

	 	 	 	 	 
	THE STATE OF TEXAS

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF HARRIS

	 	 	)	 

BEFORE ME, the undersigned authority, on this day personally appeared Lane M. Kincannon, known
to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me
that he is the Vice-President, Land & Business Development of Patara Oil & Gas LLC, a Delaware
limited liability company, and that he executed the same for the purpose and consideration therein
expressed on behalf such company.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, on October
 _____, 2009.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Notary Public	 	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	My Commission Expires:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

15

 

	 	 	 	 	 
	THE STATE OF TEXAS

	 	 	)	 
	 

	 	 	)	 
	COUNTY OF HARRIS

	 	 	)	 

BEFORE ME, the undersigned authority, on this day personally appeared Kenneth R. Peak, known
to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me
that he is the Chief Executive Officer of Conterra Company, a Delaware corporation, and that he
executed the same for the purpose and consideration therein expressed on behalf such corporation.

GIVEN UNDER MY HAND AND SEAL OF OFFICE, on October
 _____, 2009.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Notary Public	 	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	My Commission Expires:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

 

16Exhibit 10.2

Exhibit 10.2

AMENDMENT NO. 1

This AMENDMENT NO. 1 (the “Amendment”) dated October 23, 2009 (the “Effective
Date”) is among Contango Oil & Gas Company, a Delaware corporation (“Contango”),
Contango Energy Company, a Delaware corporation (“CEC”), and Contango Operators, Inc., a
Delaware corporation and successor by merger to Contango Resources Company (“COI”, together
with Contango and CEC, collectively, the “Borrowers” and individually, a
“Borrower”), the Lenders (as defined below), and Guaranty Bank, as administrative agent (in
such capacity, the “Administrative Agent”) and as issuing lender (in such capacity, the
“Issuing Lender”) for such Lenders.

RECITALS

A. The Borrowers are party to that certain Amended and Restated Credit Agreement dated as of
March 31, 2009, among the Borrowers, the lenders party thereto from time to time (the
“Lenders”), the Issuing Lender and the Administrative Agent (as the same may be amended,
modified or supplemented from time to time, the “Credit Agreement”).

B. The Borrowers, the Lenders, the Administrative Agent and the Issuing Lender wish to,
subject to the terms and conditions of this Amendment, amend the Credit Agreement as provided
herein.

THEREFORE, the Borrowers, the Lenders, the Administrative Agent and the Issuing Lender hereby
agree as follows:

Section 1. Defined Terms. As used in this Amendment, each of the terms defined in the
opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.
Each term defined in the Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement, unless expressly provided to the contrary.

Section 2. Other Definitional Provisions. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this Amendment, unless
otherwise specified. All references to instruments, documents, contracts, and agreements are
references to such instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise specified. The words
“hereof”, “herein”, and “hereunder” and words of similar import when used in this Amendment shall
refer to this Amendment as a whole and not to any particular provision of this Amendment. The term
“including” means “including, without limitation,”. Paragraph headings have been inserted in this
Amendment as a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Amendment and shall not be used in the interpretation of any
provision of this Amendment.

 

 

 

Section 3. Amendments to Credit Agreement.

(a) Section 1.01
(Certain Defined Terms). Section 1.01 of the Credit Agreement is
hereby amended by adding the following new defined terms in alphabetical order:

“Conterra — No. 1” means Conterra — No. 1, a tax partnership for
purposes of federal income taxation, formed pursuant to that certain
“Conterra” Joint
Venture Development Agreement, dated as of October 1, 2009, between Patara
Oil & Gas LLC, a Delaware limited liability company, and Conterra Company.

“Conterra Assets” means, collectively, any assets owned by either
Conterra Entity; provided that the term “Conterra Assets” shall not
include any equity interests of any Conterra Entity.

“Conterra Company” means Conterra Company, a Delaware corporation.

“Conterra Entities” means, collectively, Conterra Company and
Conterra — No. 1, and each being referred to herein as a “Conterra
Entity”.

“Conterra Hedge Contracts” means, collectively, each of the Hedge
Contracts entered into by any Conterra Entity.

“Non-Conterra Hedge Contracts” means, collectively, each of the
Hedge Contracts entered into by any Borrower or any Subsidiary of a Borrower
other than any Conterra Entity.

(b) Section 6.01 (Liens, Etc.). Section 6.01 of the Credit Agreement is hereby
amended by (1) deleting “and” at the end of subsection (h), (2) replacing the period at the end of
subsection (i) with “; and”, and (3) adding the following new subsection (j) to the end thereof as
follows:

(j) Liens securing obligations under Conterra Hedge Contracts which are not
prohibited by the terms of Section 6.14; provided that such Liens
encumber only the Conterra Assets and not any of the other Properties of any
Borrower or any Subsidiary of a Borrower.

(c) Section 6.05 (Restricted Payments). Section 6.05 of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:

6.05 Restricted Payments. No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, make any Restricted Payments except that
if (a) no Default or Event of Default has occurred or will occur after
giving effect to the making of such Restricted Payment, (b) no Borrowing
Base deficiency of the type described in Section 2.05(b) shall exist before
or after giving effect to the making of such Restricted Payment, and (c) the
Borrowing Base shall, both before and after giving effect to such Restricted
Payment, be equal to or greater than five (5) times the aggregate
Commitments then in effect, then (i) the Subsidiaries may make Restricted
Payments to a Borrower, (ii) Conterra — No. 1 may make Restricted Payments
to Conterra Company, (iii) CEC may make Restricted Payments to Contango,
(iv) COI may make Restricted Payments to CEC, and (v) the Borrowers may make
Restricted Payments described in clause (a) of the definition thereof.

 

2

 

(d) Section 6.06 (Investments). Section 6.06(e) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

(e) Other Investments in an aggregate amount not to exceed $30,000,000.

(e) Section 6.14 (Limitation on Speculative Hedging). Section 6.14 of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

6.14 Limitation on Speculative Hedging. Other than the Hedge
Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts shall not
be modified without the prior written consent of the Administrative Agent),
no Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
(a) purchase, assume, or hold a speculative position in any commodities
market or futures market or enter into any Hydrocarbon Hedge Agreement,
Interest Hedge Agreement or similar hedge arrangement for speculative
purposes or (b) be party to or otherwise enter into any Hedge Contract which
(i) is entered into for reasons other than as a part of its normal business
operations as a risk management strategy and/or hedge against changes
resulting from market conditions related to such Borrower’s or such
Subsidiary’s operations; (ii) with respect to Non-Conterra Hedge Contracts,
covers notional volumes that would be in excess of (A) 80% of the production
volumes anticipated by the Administrative Agent to be produced by the
Borrowers during each of the Winter/Spring Months for periods that such
Hedge Contract is in effect, and (B) 35% of the production volumes
anticipated by the Administrative Agent to be produced by the Borrowers
during the Summer/Fall Months for periods that such Hedge Contract is in
effect; provided that notwithstanding anything in this subsection
(ii) to the contrary, the Borrowers may purchase commodity floors or puts on
up to 100% of the production volumes anticipated during the period such
hedge arrangement is in effect and attributable to Proven Reserves of the
Borrowers and their respective Subsidiaries that are categorized as
“proved, developed and producing”; and (iii) with respect to Conterra Hedge
Contracts, (A) covers notional volumes in excess of 100% of the anticipated
production volumes attributable to Proven Reserves of the Conterra Entities
which are categorized as “proved, developed and producing” during the period
such hedge arrangement is in effect, (B) allows the applicable counterparty
to have recourse to any Borrower or any Subsidiary of a Borrower (other than
the Conterra Entities) or their respective assets (other than the Conterra
Assets), or is otherwise guaranteed or supported by any Borrower or any
Subsidiary of a Borrower (other than the Conterra Entities), (C) is longer
than three (3) years in duration, or (D) is with a counterparty or has a
guarantor of the obligation of the counterparty who (unless such
counterparty is a Lender or one of its Affiliates) at the time the contract
is made does not have long-term obligations rated BBB+ or Baa1 or better,
respectively, by either Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc. (or such counterparty’s obligations are guaranteed by
such a Person). For purposes of the foregoing Section, the “Winter/Spring
Months” shall be December, January, February, March, April, May and June,
and the “Summer/Fall Months” shall be July, August, September, October and
November.

 

3

 

(f) Article VI (Negative Covenants). Article VI of the Credit Agreement is hereby
amended by adding the following new Section 6.17 to the end thereof as follows:

6.17 Conterra Entities. Notwithstanding anything to the contrary
contained herein, no Borrower shall, nor shall any Borrower permit any of
its Subsidiaries (other than the Conterra Entities) to (i) create, assume,
incur or suffer to exist any Lien on or in respect of any of its Property
for the benefit of any Conterra Entity, other than Liens securing the
Obligations, (ii) sell, assign, pledge, or otherwise transfer any of its
Properties to any Conterra Entity, except as permitted under Section 6.04
and on terms permitted by Section 6.07, or (iii) except as permitted under
Section 6.06(j), make or permit to exist any loans, advances, or capital
contributions to, or make any investment in, or purchase or commit to
purchase any stock or other securities or evidences of indebtedness of or
interests in, any Conterra Entity or in any of its Properties, including
without limitation the Conterra Assets.

Section 4. Borrowers Representations and Warranties. The Borrowers represent and
warrant that: (a) the representations and warranties contained in the Credit Agreement, as amended
hereby, and the representations and warranties contained in the other Loan Documents, are true and
correct in all material respects on and as of the Effective Date as if made on as and as of such
date except to the extent that any such representation or warranty expressly relates solely to an
earlier date, in which case such representation or warranty is true and correct in all material
respects as of such earlier date; (b) no Default has occurred and is continuing; (c) the execution,
delivery and performance of this Amendment are within the corporate, limited liability company,
limited partnership or partnership power, as applicable, and authority of each Borrower and have
been duly authorized by appropriate corporate, limited liability company, limited partnership or
partnership, as applicable, and governing action and proceedings; (d) this Amendment constitutes
the legal, valid, and binding obligation of each Borrower enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity; (e) there are no
governmental or other third party consents, licenses and approvals required in connection with the
execution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens
under the Security Instruments are valid and subsisting and secure each Borrower’s obligations
under the Loan Documents.

 

4

 

Section 5. Conditions to Effectiveness. This Amendment shall become effective on the
Effective Date and enforceable against the parties hereto upon the occurrence of the following
conditions precedent:

(a) The Administrative Agent shall have received multiple original counterparts, as requested
by the Administrative Agent, of this Amendment duly and validly executed and delivered by duly
authorized officers of the Borrowers, the Administrative Agent, the Issuing Lender and the Required
Lenders.

(b) No Default shall have occurred and be continuing as of the Effective Date.

(c) The representations and warranties in this Amendment shall be true and correct.

(d) The Borrowers shall have paid all costs and expenses which have been invoiced and are
payable pursuant to Section 10.04 of the Credit Agreement.

Section 6. Acknowledgments and Agreements.

(b) Each Borrower acknowledges that on the date hereof all Obligations are payable without
defense, offset, counterclaim or recoupment.

(c) The Administrative Agent and the Lenders hereby expressly reserve all of their rights,
remedies, and claims under the Loan Documents. Nothing in this Amendment shall constitute a waiver
or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, (ii) any
of the agreements, terms or conditions contained in any of the Loan Documents, (iii) any rights or
remedies of the Administrative Agent or any Lender with respect to the Loan Documents or (iv) the
rights of the Administrative Agent or any Lender to collect the full amounts owing to them under
the Loan Documents.

(d) Each of the Borrowers, the Administrative Agent, the Issuing Lender and the Lenders does
hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledges and
agrees that the Credit Agreement, as amended hereby, is and remains in full force and effect, and
each Borrower acknowledges and agrees that its liabilities and obligations under the Credit
Agreement, as amended hereby, are not impaired in any respect by this Amendment.

(e) From and after the Effective Date, all references to the Credit Agreement and the Loan
Documents shall mean such Credit Agreement and such Loan Documents as amended by this Amendment.

(f) This Amendment is a Loan Document for the purposes of the provisions of the other Loan
Documents. Without limiting the foregoing, any breach of representations, warranties, and
covenants under this Amendment shall be a Default or Event of Default, as applicable, under the
Credit Agreement.

Section 7. Counterparts. This Amendment may be signed in any number of counterparts,
each of which shall be an original and all of which, taken together, constitute a single
instrument. This Amendment may be executed by facsimile signature and all such signatures shall be
effective as originals.

 

5

 

Section 8. Successors and Assigns. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns permitted pursuant to
the Credit Agreement.

Section 9. Invalidity. In the event that any one or more of the provisions contained
in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provision of this
Amendment.

Section 10. Governing Law. This Amendment shall be deemed to be a contract made under
and shall be governed by and construed in accordance with the laws of the State of Texas.

Section 11. RELEASE. EACH BORROWER ACKNOWLEDGES THAT ON THE DATE HEREOF ALL
OBLIGATIONS ARE PAYABLE WITHOUT DEFENSE, OFFSET, COUNTERCLAIM OR RECOUPMENT. IN ADDITION, EACH
BORROWER (FOR THEMSELVES AND THEIR RESPECTIVE SUBSIDIARIES, SUCCESSORS, AGENTS, ASSIGNS,
TRANSFEREES, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS, ATTORNEYS AND AGENTS) HEREBY RELEASES
ANY AND ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES IT MAY HAVE AGAINST THE ADMINISTRATIVE
AGENT, THE ISSUING LENDER, ANY OF THE LENDERS, LEGAL COUNSEL TO THE ADMINISTRATIVE AGENT, THE
ISSUING LENDER OR ANY OF THE LENDERS, CONSULTANTS HIRED BY ANY OF THE FOREGOING, OR ANY OF THEIR
RESPECTIVE AFFILIATES, SUBSIDIARIES, SHAREHOLDERS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, SUCCESSORS OR ASSIGNS OF ANY KIND OR NATURE ARISING OUT OF, RELATED TO, OR IN ANY
WAY CONNECTED WITH, THE CREDIT AGREEMENT OR THE LOAN DOCUMENTS, IN EACH CASE WHICH MAY HAVE ARISEN
ON OR BEFORE THE DATE OF THIS AMENDMENT. EACH OF THE BORROWERS (FOR THEMSELVES AND THEIR
RESPECTIVE SUBSIDIARIES) HEREBY ACKNOWLEDGES THAT IT HAS READ THIS AMENDMENT AND HAS CONFERRED WITH
ITS COUNSEL AND ADVISORS REGARDING ITS CONTENT, INCLUDING THIS SECTION 11, AND IS FREELY AND
VOLUNTARILY ENTERING INTO THIS AMENDMENT, AND HEREBY AGREES TO WAIVE ANY CLAIM THAT THE TERMS OF
THIS AMENDMENT (INCLUDING, WITHOUT LIMITATION, THE RELEASES CONTAINED HEREIN) ARE INVALID OR
OTHERWISE UNENFORCEABLE.

Section 12. Entire Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS
AMENDMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,
WRITTEN OR ORAL, WITH RESPECT THERETO.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

6

 

EXECUTED effective as of the date first above written.

	 	 	 	 	 
	BORROWERS:	 CONTANGO OIL & GAS COMPANY

 	 
	 	By:  	/s/ Kenneth R. Peak
 	 
	 	 	Name:  	Kenneth R. Peak 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 
	 	CONTANGO ENERGY COMPANY

 	 
	 	By:  	/s/ Kenneth R. Peak
 	 
	 	 	Name:  	Kenneth R. Peak 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 
	 	CONTANGO OPERATORS, INC.

 	 
	 	By:  	/s/ Kenneth R. Peak
 	 
	 	 	Name:  	Kenneth R. Peak 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 

Signature Page to Amendment No. 1

 

 

 

	 	 	 	 	 
	ADMINISTRATIVE AGENT/ 
ISSUING LENDER/SOLE LENDER:	
 GUARANTY BANK,

as Administrative Agent, Issuing Lender and sole Lender

 	 
	 	By:  	/s/ John A. Clark
 	 
	 	 	Name:  	John A. Clark 	 
	 	 	Title:  	Managing Director 	 

Signature Page to Amendment No. 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]