Document:

ex10-1.htm

EXHIBIT 10.1

 

 

March 21, 2012

John P. Barton, Chairman

Rockdale Resources, Inc.

11044 Research Blvd.

Suite A-200

Austin, Texas 78759

RE:           Letter of Agreement for Farmout of Milam County “Airport Lease”

Dear John,

As we have discussed, this letter outlines the agreement between Rockdale Resources, Inc., (“Rockdale”) and Kingman Operating Company, Inc., (“Kingman”) whereby (a) Kingman will farmout its leasehold rights in 200 acres under that certain Paid Up Oil and Gas Lease described below, (b) Rockdale will have an exclusive option to farmout an additional 300 acres of Kingman’s leasehold rights under that Paid Up Oil and Gas Lease, (c) Kingman will serve as the operator for the wells drilled on the aforementioned 200-acres and 300-acres and will drill all such wells on a turn-key basis, (d) Rockdale will assign to Kingman a 10% working interest in each such well after “Payout” (defined herein), (e) Rockdale will convey to Kingman 1.6 million shares of Rockdale’s capital stock, (f) Rockdale will pay the expense of office space for Kingman in Austin, Texas for a period of time, and (g) Rockdale and Michael Smith will enter into an employment agreement whereby Mr. Smith will serve as CEO of Rockdale.

The Lease

Kingman has acquired the rights in that certain paid up oil and gas lease dated June 20, 2011 by and between Noack Farms, LLC, as lessor, and Ardent 1, LLC, as lessee, covering 623.29 acres, more or less, out of the James Reese League, A-303, in Milam County, Texas (the “Lands”), which is recorded at Volume 1150, Page 01, of the Deed Records of Milam County, Texas, by virtue of an assignment from Ardent 1, LLC, to Kingman dated January 11, 2012 which is recorded at Volume 1165, Page 688, of the Deed Records of Milam County, Texas (the “Lease”).  A copy of the Lease is attached to this letter agreement as Exhibit A.

Farmout of 200-acre Tract

Upon execution of this letter agreement, Rockdale will pay Kingman the sum of US$475,000.00; thereupon Kingman will execute and file the Assignment of Paid Up Oil and Gas Lease attached hereto as Exhibit B-1 thereby assigning to Rockdale all of Kingman’s rights under the Lease to the 200-acre tract of the Lands described in Exhibit B-1, subject to an overriding royalty reserved by Ardent 1, LLC (on its own behalf and on behalf of other overriding royalty interest holders including the landowners) equal to 25% of 8/8 of the oil, gas and all other hydrocarbons in, under and that may be produced, saved and marketed from said 200-acre tract.  Simultaneously, and as a condition of Kingman’s executing and filing Exhibit B-1, Rockdale will execute the single owner turnkey drilling and operating agreement attached hereto as Exhibit C whereby Kingman shall serve as operator for such 200-acre tract (the parties agreeing that Kingman shall have the exclusive right to serve as operator of any wells drilled on such 200-acre tract).  Kingman will drill any and all wells on the 200-acre tract on a turnkey basis at $275,000.00 per well and will operate such wells at a monthly management fee of $1,000.00 per well per month.

 

  

  

  

 

John P. Barton

Rockdale Resources, Inc.

March 21, 2012

Page 2

Option to Farmout 300-acret Tract

If no later than November 1, 2012, Rockdale pays Kingman the sum of US$1,275,000.00, Kingman will execute and file the Assignment of Paid Up Oil and Gas Lease attached hereto as Exhibit B-2 thereby assigning to Rockdale all of Kingman’s rights under the Lease to the 300-acre tract of the Lands described in Exhibit B-2, subject to an overriding royalty reserved by Ardent 1, LLC (on its own behalf and on behalf of other overriding royalty interest holders including the landowners) equal to 25% of 8/8 of the oil, gas and all other hydrocarbons in, under and that may be produced, saved and marketed from said 300-acre tract. As a condition of Kingman’s executing and filing Exhibit B-2, Kingman shall serve as operator for such 300-acre tract pursuant to the single owner turnkey drilling and operating agreement attached hereto as Exhibit C (the parties agreeing that Kingman shall have the exclusive right to serve as operator of any wells drilled on such 300-acre tract).  Kingman will drill any and all wells on the 300-acre tract on a turnkey basis at $275,000.00 per well and will operate such wells at a monthly management fee of $1,000.00 per well per month.

Kingman’s 10% Working Interest

It is further agreed, that when “Payout” occurs on the 200-acre and 300-acre tracts, respectively, Rockdale shall reassign to Kingman an undivided 10% working interest therein. “Payout” means that point in time when Rockdale has recovered from the net proceeds of the production attributed to the respective leasehold estate a sum equal to the cost attributed thereto for the drilling, testing, completing and equipping of a test well and a like proportionate interest in the cost of operating said test well during the payout period (it being the parties’ intent to comply with the restrictive definition of “complete payout” under Revenue Ruling, 1971-1 C.B. 160, Rev. Rul. 71-207 (1971)).

Conveyance of Rockdale Capital Stock

Within five (5) days of the effective date of this letter agreement, Rockdale and Kingman will execute the Subscription Agreement attached hereto as Exhibit D whereby Rockdale conveys to Kingman _____% of the Capital Stock (defined below) of Rockdale Resources, Inc., currently authorized to be issued, which amount equates to 1,600,000 shares as of the effective date of this letter agreement.  “Capital Stock” means any preferred stock, common stock or other stock or similar securities or any security convertible or exchangeable into or for preferred stock, common stock or other stock or similar securities issued by Rockdale Resources, Inc.

 

  

  

  

 

John P. Barton

Rockdale Resources, Inc.

March 21, 2012

Page 3

Austin Office Space

Upon execution of this letter agreement, Rockdale will secure and maintain (or already will have secured and maintained), at Rockdale’s cost and expense, for a period of three (3) (subject to extension by the parties’ written agreement), mutually agreeable office space for Kingman’s use in Austin, Texas, consisting of at least six (6) executive offices, a reception area, and a kitchenette.

Michael Smith Executive Agreement

No later than March 31, 2012, Rockdale and Michael Smith will enter into the executive employment and compensation agreement attached hereto as Exhibit E, whereby Mr. Smith will serve as President and Chief Executive Officer of Rockdale commencing April 1, 2012. Rockdale will pay Mr. Smith the sum of US$10,000.00 per month and reimburse him for expenses (including attorneys’ fees) incurred by him in such role, and Mr. Smith will devote such of his time to this position as is necessary and in the best interests of Rockdale but in no event less than 70% of normal business hours.  Rockdale understands that Mr. Smith will continue to serve as President of Kingman during this time, therefore Rockdale will make such disclosures of this dual executive role and interest (including any appearance of or potential for a conflict of interest) as reasonably prudent or required by law and indemnify Mr. Smith and reimburse him for any damages and costs he suffers from any failure by Rockdale to make those disclosures.

Miscellaneous

To the extent additional instruments or documents are needed to effect the parties’ agreement herein, each party agrees to work in good faith with the other and execute such other instruments or documents needed to effect their agreement herein.

Except as provided in, and then only for the purposes of, the operating agreement attached as Exhibit C, the parties do not intend that this letter agreement create a partnership or joint venture between then; rather, for the purposes of this letter agreement, the parties remain independent contractors.

The parties agree that this letter agreement shall be governed by and construed under the laws of the State of Texas, without regard to its conflict of laws principles, and that the courts located in Travis County, Texas shall preside over any dispute under this letter agreement.

No provision of this letter agreement may be assigned by a party without the other party’s prior written consent (and any attempt to do so shall be void as against the non-consenting party).

 

  

  

  

 

John P. Barton

Rockdale Resources, Inc.

March 21, 2012

Page 4

 

This letter agreement may be executed in multiple counterparts (including facsimile copies) and any copy bearing the signatures of both parties shall be deemed an original as long as it bears the original signature of at least one of the parties.

This letter agreement contains the parties’ sole and exclusive agreement concerning its subject matter, with each Exhibit hereto containing the parties’ sole and exclusive agreement concerning the subject matter stated therein.

If this letter agreement accurately sets forth the terms of our agreement, please sign below and return a fully-signed copy to me; this offer will expire and be void if not signed by 5:00 p.m., CDT, on March 31, 2012.  Upon your signature below, the effective date of this letter agreement will be March 21, 2012.

Yours truly,                                                                                                                              AGREED:

Kingman Operating Company, Inc.                                                                                      Rockdale Resources, Inc.

By: /s/ Michael D. Smith                                                                                                        By: /s/ John P. Barton                                                                                                                                  

[authorized signature]                                                                                                        [authorized signature]

Name:                 Michael D. Smith                                                                                         Name:                    John P. Barton                                                                                            

[printed name]                                                                                                                        [printed name]

Its:                        President                                                                                                     Its:                    Chairman of the Board of Directors                                                                                  

                                 [title]                                                                                                                                                      [title]

 

Art/Rockdale Kingman-Rockdale Letter Agree Final 4-12-12

 

  

  

  

EXHIBIT A

THE LEASE

 

 

 

  

  

  

EXHIBIT B-1

ASSIGNMENT OF 200-ACRE TRACT

 

 

 

 

 

 

 

  

  

  

 

EXHIBIT B-2

ASSIGNMENT OF 300-ACRE TRACT

 

 

 

  

  

  

 

EXHIBIT C

SINGLE OWNER TURNKEY DRILLING & OPERATING AGREEMENTex10-2.htm

EXHIBIT 10.2

 

 

NOTICE OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

ASSIGNMENT OF PAID-UP OIL AND GAS LEASE

STATE OF TEXAS                                          §

COUNTY OF MILAM                                     §

WHEREAS, heretofore, on the 20th day of June, 2011, a certain paid up oil and gas lease was made and entered into by and between NOACK FARMS, LLC, as lessor (“Lessor”), and ARDENT 1, LLC, as lessee, covering:

623.29 acres, more or less, out of the James Reese League, A-303, in Milam County, Texas[;] [b]eing the same lands described in a[n] Assignment/Deed dated May 4, 2011 between Stacy Ann Smith Wood to Noack Farms, LLC, recorded in Volume 1148, page 634 of the Official Records of Milam County, Texas[;] [s]aid lands also described in a Special Warranty Deed dated November 29, 2008 recorded in Volume 1091, page 87 of the Official Records of Milam County, Texas[,]

(the “Lands”), which said lease is recorded in Volume 1150, Pages 01-06, of the Deed Records of Milam County, Texas (the “Lease”); and

WHEREAS, by virtue of an assignment dated January 11, 2012 between ARDENT 1, LLC, and KINGMAN OPERATING COMPANY, INC. (“Kingman”), recorded at Volume 1165, Page 688, of the Deed Records of Milam County, Texas, the Lease is now owned and held by Kingman, subject to an overriding royalty reserved by ARDENT 1, LLC (on its own behalf and on behalf of Lessor) equal to 25% of 8/8 of the oil, gas and all other hydrocarbons in, under and that may be produced, saved and marketed from the Lands;

NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, that Kingman, for and in consideration of the sum of Ten and No/100’s ($10.00) Dollars and other good and valuable consideration enumerated in that certain letter agreement between Kingman and Rockdale Resources, Inc., dated March 21, 2012, the receipt and sufficiency of which is hereby acknowledged, and, subject to the terms, conditions, covenants, obligations and reservations hereinafter set out, has granted, sold, transferred, conveyed, assigned and delivered, and by these presents does grant, sell, transfer, convey, assign and deliver unto the said ROCKDALE RESOURCES, INC. (“Rockdale”) the Lease above mentioned, together with all leasehold and other rights, titles and interests that Kingman has by virtue of said Lease, and all rights, titles and interests purported to be created by said Lease, insofar as said Lease covers:

a total of 200 Acres, being comprised of two (2) Tracts, of which Tract A is comprised of 124.134 Acres and Tract B is comprised of 75.866 Acres, which are more fully described as all that certain tract or parcel of land situated in Milam County, Texas, being a part of the James Reese Survey, Abstract No. 303, and a part of the James A. Prewitt Survey, Abstract No. 288, being a part of the residue of a called 220 Acre tract (Tract 1), a part of the residue of a called 104 Acre tract (Tract 2), a part of the residue of a called 153 Acre tract (Tract 3), a part of the residue of a called 200 Acre tract (Tract 4) and a part of the residue of a called 100 Acre tract (Tract 5) conveyed from Stacy Ann Smith Wood, Independent Executor Under the Last Will and Testament of Thelma Noack Smith, Deceased, to Stacy Ann Smith Wood by Deed dated July 18, 2007, recorded in Volume 1081, Page 007, of the Official Records of Milam County, Texas and being more particularly described by metes and bounds as follows, to wit:

TRACT A- 124.134 Acres

BEGINNING at a set 5/8" iron rod on the east Right-of-Way line of U.S. Highway 77, at the southwest corner of Tract 26 of the South Oaks Subdivision recorded in Cabinet A, Slide 99A of the Plat Records of Milam County, for the common northwest corner of the said residue of Tract 2 and of this tract;

 

  

1

  

 

THENCE along the common line between the said residue of Tract 2 and the said residue of Tract 3 respectively and the said Tract 26 and Tracts 25, 24, 23 and 27 respectively of the said South Oaks Subdivision for the following courses and distances:

N 68°16'19" E-917.66 feet to a found 5/8" iron rod at the southeast corner of Tract 25, at the southwest corner of Tract 24, for an interior ell corner of this tract;

N 68°04'02" E-367.09 feet to a found 5/8" iron rod at the southeast corner of Tract 24, at the south corner of Tract 23, at the southwest corner of Tract 27, for an interior ell corner of this tract;

N 67°47'18" E-1338.62 feet to a found 5/8" iron rod on a west line of a called 283.162 Acre tract conveyed to James F. and Amy L. Eisterhold in Volume 1166, Page 302, at the southeast corner of Tract 27, at a northeast corner of the said residue of Tract 3, for the northeast corner of this tract;

THENCE S 03°48'58" W-1932.44 feet along the common line between the said 283.162 Acre tract and the said residue of Tract 3, the said residue of Tract 2 and the said residue of Tract 5 respectively to a set 5/8" iron rod for the southeast corner of this tract;

THENCE S 67°53'42" W-3595.12 feet crossing the said residue of Tract 5, the said residue of Tract 4 and the said residue of Tract 1 respectively to a set 5/8" iron rod on the common line between the said east Right-of-Way line of U.S. Highway 77 and the said residue of Tract 1, for the southwest corner of this tract;

THENCE N 24°05'00" E-2517.27 feet along the common line between the said east Right-of­Way line of U.S. Highway 77 and the said residue of Tract 1, the said residue of Tract 4 and the said residue of Tract 2 to the POINT OF BEGINNING containing within these metes and bounds 124.134 Acres of land.

Tract B: 75.866 Acres

BEGINNING at a set 5/8" iron rod on the West Right-of-Way line of F.M. Highway 908, at the southeast corner of a called 21 5094/5645 Acre tract conveyed to Douglas Key in Volume 315, Page 333, for the common northeast comer of the said residue of Tract 3 and of this tract;

THENCE along the common line between the said West Right-of-Way line of F.M. Highway 908 and the said residue of Tract 3 for the following courses and distances:

S 21°20'10" E-219.48 feet to a set 5/8" iron rod for an interior ell corner of this tract;

S 21°30'10" E-1523.30 feet to a set 5/8" iron rod for the southeast corner of this tract;

THENCE S 67°53'42" W-2311.85 feet crossing the said residue of Tract 3 and the said residue of Tract 5 respectively to a set 5/8" iron rod on the common line between a called 283.162 Acre tract conveyed to James F. and Amy L. Eisterhold in Volume 1166, Page 302 and the said residue of Tract 5, for the southwest comer of this tract;

THENCE N 03°48'58" E-1934.51 feet along the common line between the said 283.162 Acre tract and the said residue of Tract 5, the said residue of Tract 2 and the said residue of Tract 3 respectively to a found W' iron rod at the southwest comer of a called 54.534 Acre tract conveyed to the City of Rockdale in Volume 585, Page 433, at a northwest corner of the said residue of Tract 3, for the northwest corner of this tract;

THENCE N 67°47'14" E-1485.17 feet along the common line between the said residue of Tract 3 and the said 54.534 Acre tract and the said 21 5094/5645 Acre tract respectively to the POINT OF BEGINNING containing within these metes and bounds 79.089 Acres of land; as more fully described in the survey of Bradley L. Lipscomb RPLS attached hereto as Addendum A and incorporated herein by reference, (the “Leased Parcel”) on the terms set forth below, insofar only as the same covers and includes oil and gas, if any, which may lie in and under the Leased Parcel, and, provided, however, that unless Rockdale or its assigns actually commence (spud in) a test well thereon for oil within 120 days from and after the date hereof, and, after having so commenced said test well, prosecute the drilling of same with all due and reasonable diligence to such total depth at which oil in paying quantities, or flowing sulphur water, if any, is encountered, this assignment and all rights and obligations hereunder shall then ipso facto cease and terminate as to all parties.

 

  

2

  

 

It is understood that the drilling and completion of said well shall be at the sole cost, expense and risk of Rockdale hereunder, but the drilling and completion of the same is expressly made a condition of this assignment, and in the event Rockdale shall fail either to commence said well, or to drill and complete the same, as herein provided, this assignment shall be void and of no further force or effect, and Kingman shall have the right to peaceably retake possession of the hereinabove described Leased Parcel and the leasehold estate therein and thereunder, whereupon Rockdale shall have no further interest in said Lease, insofar as the same covers any part of the Leased Parcel above described, or in the production therefrom, and upon demand, shall reassign to Kingman herein, its successors and assigns, all of the rights, title, interest and property hereby conveyed.

This assignment is made subject to that certain letter agreement dated March 21, 2012, by and between Kingman and Rockdale, a copy of said letter agreement being available for inspection in Kingman’s principal office, which letter agreement provides, among other things, for a reversionary interest in the leasehold estate in Kingman.  When Payout occurs, as that term is hereinafter defined, Rockdale shall reassign to Kingman an undivided 10% working interest in the leasehold estate herein assigned by Kingman to Rockdale and a like proportionate interest in all wells and equipment located therein and thereon. “Payout” for the purpose of this assignment is defined as that point in time when Rockdale has recovered from the net proceeds of the production attributed to the leasehold estate assigned to Rockdale by Kingman a sum equal to the cost attributed to such leasehold estate in the drilling, testing, completing and equipping of the test well and a like proportionate interest in the cost of operating said test well during the payout period (it being the parties’ intent to comply with the restrictive definition of “complete payout” under Revenue Ruling, 1971-1 C.B. 160, Rev. Rul. 71-207 (1971)).

As a further and additional consideration for this assignment, Rockdale herein expressly binds and obligates itself, its successors and assigns, to operate the Leased Parcel in such a manner as to obtain the maximum production from each and every well for each and every accounting month; it being understood and agreed, however, that the amount of maximum production therefrom shall be governed by the rules and regulations of the Oil and Gas Division of the Railroad Commission of Texas. In this connection, it is further understood and agreed that Kingman herein, or its representative, shall at all times have access to the Leased Parcel herein assigned for the purpose of gauging the production therefrom.

It is understood and agreed that this assignment is in all things subject to all of the terms, conditions, covenants and obligations in said Lease contained, including, without limitation, an overriding royalty interest reserved unto ARDENT 1, LLC (on its own behalf and on behalf of Lessor) equal to 25% of 8/8 of the oil, gas and all other hydrocarbons in, under and that may be produced, saved and marketed from the Lease, insofar as the Lease covers the Lands; provided, however, that such overriding royalties shall be subject to being proportionately reduced in the event the Lease covers less than the entire mineral fee estate in the Land, and/or Lessor owns less than all of the working interest in and to the Lands; and Rockdale herein expressly binds itself, its successors or assigns, to in all things strictly comply with each and all such terms, conditions, covenants and obligations and expressly assumes the same.

This assignment is made with warranty of title by, through and under Kingman, but no further.  The express representations of Kingman contained in this agreement are exclusive and are in lieu of, and Kingman expressly disclaims and negates and Rockdale hereby waives, any representation or warranty, express or implied, with respect to: (i) title to the Leased Parcel, (ii) the quality, quantity or volume of the reserves, if any, of oil, gas or other hydrocarbons in or under the Leased Parcel, and (iii) the environmental condition of the Leased Parcel, both surface and subsurface.  Kingman does not make or provide, and Rockdale hereby waives, any warranty or representation, express or implied, as to the quality, merchantability or fitness for a particular purpose of the Leased Parcel or its conformity to models or samples of materials.  Except as provided herein, Kingman disclaims and negates, and Rockdale hereby waives, all other representations and warranties, express or implied or statutory.  There are no warranties that extend beyond the face of this assignment.  Rockdale acknowledges that this waiver is conspicuous.

 

  

3

  

 

Witness the execution hereof, this 22nd day of March, 2012.

By: Kingman Operating Company, Inc.

By: /s/ Michael D. Smith                                                                                          

Name:    Michael D. Smith                                                                                       

Its:          President                                                                                                    

SUBSCRIBED AND SWORN TO BEFORE ME this 22nd day of March 2012, by Michael D. Smith, personally known to me to be the person whose name is subscribed to the foregoing instrument, who on his oath acknowledged that he executed the same for the purposes and considerations and in the capacity and with the authority therein expressed, to which WITNESS MY HAND AND SEAL OF OFFICE.

 /s/ Jeremy R. Hallford                                                                                                 

[SEAL]                                                                                                NOTARY PUBLIC, STATE OF TEXAS

  

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00209-of-00352.parquet"}]]