Attached files
EXHIBIT 10.9
Chesapeake Energy
January 11, 2011
Mr. Edward Holloway
Synergy Resources Corporation
20203 Highway 60
Platteville, CO. 80651
Re: Assignment of Oil and Gas Leases
Weld and Morgan Counties, Colorado and Laramie County, Wyoming
Dear Mr. Holloway:
This letter ("Agreement") shall memorialize the agreement between Synergy
Resources Corporation (hereinafter referred to as ("Synergy"), as Assignor, and
Chesapeake Exploration, L.L.C. ("Chesapeake"), as Assignee. Subject to the terms
and conditions ,contained herein, Synergy agrees to sell and Chesapeake agrees
to buy all of Synergy' right, title and interest in and to those certain oil and
gas leases covering lands n Weld and Morgan Counties, Colorado and Laramie
County, Wyoming, more particularly described on Exhibit "A" attached hereto and
made a part hereof (hereinafter collectively referred to as the "Leases"), which
Leases cover approximately 2,570.17543 net mineral acres of land, more or less,
such lands more particularly described in the Leases (hereinafter referred to as
the "Subject Lands").
This letter agreement shall evidence the mutual agreement between Synergy and
Chesapeake whereby Synergy shall sell, assign and convey to Chesapeake the
Leases, subject to the terms, provisions and conditions hereinafter contained:
1. Subject to a review of Synergy's title and Chesapeake's satisfaction
that Synergy owns Marketable Title, as defined below, in and to the
Leases, Chesapeake agrees to purchase all of Synergy's right, title
and interest in and to the Leases. Upon Closing, Chesapeake shall pay
Synergy $5,654,438.59 (hereinafter referred to as the "Purchase Price"
and which sum is calculated by multiplying $2,200.00 times the net
mineral acres covered by the interest in the Leases to be sold), such
Purchase Price to be adjusted for title defects for all acres
delivered with Marketable Title.
2. Chesapeake agrees, contemporaneous with the execution of this
agreement, to wire transfer to Synergy the total sum of $565,438.59 as
earnest money (hereinafter referred to as the ("Earnest Money") to be
applied to the Purchase Price. The Earnest Money shall be refundable
in the event that Synergy violates the terms of this Agreement or in
the event Chesapeake or Synergy fails to close this transaction. If,
at Closing the Earnest Money exceeds the Purchase Price, the
difference shall be refunded to Chesapeake. The wire transfer shall be
made as follows:
Wells Fargo Bank N.A.
5801 W. 11th. Street, Suite 202
Greeley, CO 80634
ABA 121000248
Credit Account: 1226619979
Credit Account Name: Synergy Resources Corporation
20202 Highway 60
Platteville, CO 89651
EIN: 20-2835920
3. Synergy represents to Chesapeake the following:
(a) The Assignment covers all of Synergy's interest in and to the
Leases (which Synergy warrants, by through or under Synergy, but
not otherwise, to be a 100% interest of the net acres as
identified on Exhibit A).
(b) There are no third party consents or approvals necessary to be
obtained prior to Synergy executing this Agreement. Except for
necessary consents or approvals contained in the Leases, there
are no third party consents or approvals necessary to be obtained
prior to Synergy's closing of the transaction contemplated
herein.
(c) The Leases are not subject to any claims, liens, investigations,
or litigation concerning Synergy's title thereto or concerning
any environmental matter known or should have known with a
reasonable investigation by Synergy.
(d) There are no contracts, conveyances, assignments, agreements or
encumbrances pertaining to the Leases known or should have known
with a reasonable investigation by Synergy that would materially
and adversely affect full rights of ownership or operation of the
leasehold estate to be assigned by Synergy.
(e) It is the intent of Synergy to convey to Chesapeake all of
Synergy's right, title, and interest in and to the Leases as to
all depths covered thereby.
4. Upon execution of this Agreement the following shall occur:
(a) Chesapeake will begin a due diligence and title review of the
Leases and the Subject Lands covered by the Leases.
(b) Synergy shall make available and give complete access to
Chesapeake all records relating to the Leases and the Subject
Lands covered thereby in its possession or control including but
not limited to proof of payment and ownership of the Leases,
contracts, agreements, mineral files, well files, lease and title
runsheets and data, regulatory work, and title opinions. All of
such information will be deemed confidential and subject to item
(d) below.
(c) Only for so long as this Agreement remains in effect, Synergy
shall not contract to sell and/or assign to any third party or
otherwise burden the Leases and/or lands covered by the Leases or
any interest other than those existing of record as of the date
of this Agreement.
(d) Both parties shall maintain the confidentiality of the existence
of this Agreement, the terms of the transaction contemplated
hereby and shall disclose it only to those employees,
representatives and attorneys who need to know such information
in order to directly assist in consummating the transaction.
5. "Marketable Title" shall constitute title to the Leases and mineral
estate underlying the Leases which is free of any existing defect,
lawsuit, claim, demand, mortgage, lien, or encumbrance that would
result in Chesapeake receiving less than the net revenue interest as
depicted in Exhibit A, and the full and complete enjoyment of the
leasehold.
The Leases will be delivered subject the royalties provided for in
the leases, together with any other royalty and overriding royalty
interests burdening the Leases as of the date of this Agreement. It
is Chesapeake's intent to acquire all or such portions of the Leases
to which Synergy owns Marketable Title. However until Closing,
Chesapeake shall have the right to decline to purchase any Leases
which Chesapeake determines in its good faith opinion are subject to
a title defect or defects rendering title less than Marketable. In
the event Chesapeake discovers a title defect or defects, it shall
give written notice thereof to Synergy stating the particulars of
such defect and at Chesapeake's option, the affected lands shall no
longer be subject to this Agreement ("Excluded leases"). Thereafter,
the parties shall endeavor to reach mutual agreement as to how to
cure the title defect(s) to Chesapeake's reasonable satisfaction and
if Synergy cures such to Chesapeake's reasonable satisfaction prior
to Closing, such Excluded Leases shall then be part of this
Agreement and assigned at Closing. If such Excluded eases is not
cured by Closing, an agreement shall be reached to cure the Excluded
Leases and such Excluded Leases will be the subject of a separate
purchase agreement at the purchase price provided for herein. In the
event that more than twenty percent (20%) of net mineral acres
recited in this Agreement is determined by Chesapeake to not have
Marketable Title, either party hereto shall have the right to
terminate this Agreement without liability or obligation to the
other party. Notwithstanding the foregoing, if less than twenty
percent (20%) is determined to not have Marketable Title both
parties shall be obligated to close on the balance of the Leases
determined to have Marketable title. Any matter that would otherwise
constitute a title defect for which Chesapeake has failed to deliver
notice prior to closing of the transaction contemplated herein will
be deemed irrevocably waived (other than failure to obtain consent
to assign any Leases).
6. Assignment of the Leases will be made on the form of assignment
attached hereto as Exhibit "B" ("Assignment").
7. From and after the effective date of this Agreement, Synergy will seek
to secure any consents and/or waivers from lessors under the Leases as
may be necessary to deliver the Assignment. In the event all of such
consents and/or waivers have not been obtained as of Closing (as
defined below), Chesapeake will tender that portion of the Purchase
Price attributable to the net mineral acres for which such consents or
waivers are pending to a mutually acceptable escrow agent under an
escrow agreement promulgated by such agent. Likewise, Synergy will
tender the Assignment of the affected Lease or Leases to such escrow
agent. The escrow agent will be instructed to hold the applicable
funds and Assignment until receipt of joint written instructions from
both Synergy and Chesapeake authorizing the release of same. In the
event the necessary consent and/or waivers have not been obtained
within sixty (60) days of closing, Chesapeake may terminate the escrow
agreement and this Agreement as to the affected lands. In the event of
such termination, the escrow agent will return the escrowed Assignment
to Chesapeake, and will deliver the escrowed funds to Chesapeake, and
neither party will have any further obligation to the other with
respect to such funds or the lease(s) covered by the escrowed
Assignment.
8. Closing ("Closing") shall occur at the earlier of March 31, 2011 or
within five business days after receipt by Chesapeake of written
confirmation from Chesapeake that its title due diligence is complete
and all representations of Synergy are true and correct as of the date
of Closing. At Closing, the following shall occur simultaneously:
(a) Synergy shall deliver the Leases (excluding any Excluded Leases)
to Chesapeake along with a fully executed and notarized
Assignment of the Leases.
(b) Chesapeake shall pay to Synergy by wire transfer in immediately
available funds the Purchase Price covered by the assigned Leases
adjusted for any Excluded Leases and less the Earnest Money.
(c) Chesapeake shall file the Assignment in the real property records
of Weld and Morgan County, Colorado and Laramie County, Wyoming.
9. Chesapeake and Synergy agree that a signed fax copy of this Agreement
shall be binding.
10. This Agreement constitutes the entire agreement between the parties
and supersedes any prior agreements or negotiations regarding the
subject matter herein, whether oral or written.
11. Chesapeake is not responsible nor shall incur any third party broker
or other fees associated with this transaction which may be incurred
by Synergy.
12. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
13. All terms and provisions of this instrument and attached assignment
shall inure to the benefit of and shall be binding on the successors,
heirs, executors, administrators, representatives and assigns of each
of the parties to this Agreement.
If the foregoing accurately reflects our agreement, please so indicate by
executing this Agreement in the space provided below and return a fully
executed copy by fax to the undersigned with the original to follow at your
earliest convenience.
Very truly yours,
/s/ Steve McMillen
Steve McMillen
Attachment
By /s/ Henry J. Hood
----------------------------------------
Henry J. Hood, Senior Vice President -
Land & Legal and General Counsel
Chesapeake Operating, Inc., General Partner
Agreed to and effective this 13th day of January, 2011.
Synergy Resources Corporation:
By /s/ Edward Holloway
-----------------------------------------
Edward Holloway, CEO & President
EXHIBIT "A"
Attached to and made a part of that certain Assignment of Oil and Gas
Leases from Synergy Resources Corporation, as Assignor, to Chesapeake
Exploration, L.L.C., as Assignee, dated the 10th day of January, 2011, covering
lands located described below.
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Lease County. Gross Net Annual Purchase
Lessor Lessee Date State Entry Description Acres Acres Term Rental NRI Info
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State of Colorado Synergy 11/20/08 Weld, CO 9819.8 All of Section 640.00 640.00 5 Yr 960 87.50%
State Board of Resources Corp 36-8N-65W
Land Commissioners
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State of Colorado Synergy 11/20/08 Weld,C0 9820.8 W/2 of Section 320.00 320.00 5 Yr 480 87.50%
State Board of Resources Corp 36-8N-67W
Land Commissioners
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US Dept of Synergy 02/12/09 Morgan, C0073441 SE/4 NW/4 120.00 120.00 10 Yr 180 87.50%
Interior, Bureau Resources Corp CO (40.0 nma)
of Land Management of Section
1-4N-60W;
SW/4 NW/4
(40.0 nma)of
Section 2-
4N-60W & SE/4
NE/4 (40.0 nma)
of Section
3-4N-60W
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US Dept of Synergy 02/12/09 Weld, CO COC73442 N/2 SE/4 of 80.00 80.00 10 Yr 120 87.50%
Interior, Bureau Resources Corp Section
of Land Management 4-6N-62W
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US Dept of Synergy 02/12/09 Weld, CO COC73444 SE/4 of Section 160.00 160.00 10 Yr 240 87.50%
Interior, Bureau Resources Corp 2-7N-67W
of Land Management
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US Dept of Synergy 02/12/09 Weld, CO C0073443 NW/4 NE/4 & 120.00 120.00 10 Yr 180 87.50%
Interior, Bureau Resources Corp N/2 NW/4
of Land Management of Section
28-7N-63W
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Longs Peak Dairy, Synergy 02/16/10 Weld, CO 3677222 NE/4; N/2 520.00 378.00 3 Yr n/a 82.00% 2 year
LLC Resources Corp SE/4; N/2 option @
SW/4; SE/4 $50/acre,
SW/4; NW/4 81% NRI
of Section
18-8N-65W
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Longs Peak Dairy, Synergy 02/16/10 Weld, CO 3677223 NE/4 of Section 160.00 40.00 3 Yr n/a 82.00% 2 year
LLC Resources Corp 20-8N-65W option @
$50/acre,
81% NRI
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Nancy Morris Synergy 02/10/10 Weld, CO 3679379 W/2 & SE/4 of 478.00 119.50 3 Yr n/a 83.33% 2 year
Resources Corp Section option @
34-9N-65W $100/acre
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Marlene D. Harding Synergy 02/25/10 Weld, CO 3679380 W/2 & SE/4 of 478.00 119.50 3 Yr n/a 83.33% 2 year
Resources Corp Section option @
34-9N-65W $100/acre
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Susan Marie Synergy 03/29/10 Weld, CO 3689440 NW/4 NW/4; 240.00 80.00 3 Yr n/a 83.00% 2 year
Wheeler Trust Resources Corp S/2 NE/4; option @
dated February 25, SE/4 NW/4; $300/acre
2010 N/2 SE/4
of Section
28-8N-67W
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Sally C. Hays Synergy 03/29/10 Weld, CO 689441 NW/4 NW/4; 240.00 80.00 83.00% 2 year
Resources Corp S/2 NE/4; option @
SE/4 NW/4; $300/acre
N/2 SE/4
of Section
28-8N-67W
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DSK Ranch,, LLC Synergy 06/25/10 Laramie, Bk 2172 Pg N/2 NW/4 of 55.48 55.48 3 Yr n/a 82.00% 2 year
Resources Corp WY Section option @
26-14N-64W $175/acre
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Jeanne W. Ragsdale Synergy 07/23/10 Weld, CO 3712608 All that part 77.00 24.06 3 Yr n/a 82.00% 2 year
Resources Corp of SW/4 option @
lying South of $250/acre
Larimer and
Weld
Irrigation
Co Ditch
of Section
2-7N-65W
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Janet K. Slater Synergy 07/23/10 Weld, CO 3712607 All that part 77.00 24.06 3 Yr n/a 85.00% 2 year
Resources Corp of SW/4 option @
lying South of $250/acre
Larimer and
Weld
Irrigation
Co Ditch
of Section
2-7N-65W
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Richard A. Whitney Synergy 10/11/10 Weld, CO All that part 77.00 4.81 3 Yr n/a 85.00% 2 year
Resources Corp of SW/4 option @
lying South of $250/acre
Larimer and
Weld
Irrigation
Co Ditch
of Section
2-7N-65W
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Linda J. McGarr Synergy 08/04/10 Weld, CO 3712610 All that part 77.00 4.81 3 Yr n/a 85.00% 2 year
Resources Corp of SW/4 option @
lying South of $250/acre
Larimer and
Weld
Irrigation
Co Ditch
of Section
2-7N-65W
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Charles Rollin Synergy 07/29/10 Weld, CO 3712611 N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
option @
Powell Resources Corp 26-10N-59W $100/acre
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Charles Rollin Synergy 07/29/10 Weld, CO 3712609 W/2 E/2 of 160.00 8.89 3 Yr n/a 85.00% 2 year
Powell Resources Corp Section option @
8-7N-63W $100/acre
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Charles Rollin Synergy 07/29/10 Weld, CO 3712612 W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Powell Resources Corp 18-9N-67W option @
$100/acre
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Cherie Jeanne Synergy 12/28/10 Weld, CO W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Spence Resources Corp 18-9N-67W option @
$100/acre
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Charla Jeanne Synergy 12/28/10 Weld, CO N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
Spence Resources Corp 26-10N-59W option @
$100/acre
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Cherie Jeanne Synergy 12/28/10 Weld, CO W/2 E/2 of 160.00 8.89 3 Yr n/a 85.00% 2 year
Spence Resources Corp Section option @
8-7N-63W $100/acre
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Charles J. Wheeler Synergy 12/20/10 Weld, CO W/2 E/2 of 160.00 8.89 3 Yr n/a 85.00% 2 year
Resources Corp Section option @
8-7N-63W $100/acre
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Charles J. Wheeler Synergy 12/20/10 Weld, CO N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
option @
Resources Corp 26-10N-59W $100/acre
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Charles J. Wheeler Synergy 12/20/10 Weld, CO W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Resources Corp 18-9N-67W option @
$100/acre
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John W. Wheeler Synergy 12/20/10 Weld, CO W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Resources Corp 18-9N-67W option @
$100/acre
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John W. Wheeler Synergy 12/20/10 Weld, CO W/2 of Section 160.00 8.89 3 Yr n/a 85.00% 2 year
option @
Resources Corp 8-7N-63W $100/acre
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John W. Wheeler Synergy 12/20/10 Weld, CO N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
Resources Corp 26-10N-59W option @
$100/acre
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Great Northern Synergy 08/18/10 Weld, CO N/2 of Section 320.00 13.32 3 Yr n/a 85.00% 2 year
Properties, LLC Resources Corp 26-10N-59W option @
$100/acre
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Great Northern Synergy 08/18/10 Weld, CO W/2 of Section 320.00 26.64 3 Yr n/a 85.00% 2 year
Properties, LLC Resources Corp 18-9N-67W option @
$100/acre
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Great Northern Synergy 08/18/10 Weld, CO W/2 E/2 of 160.00 26.64 3 Yr n/a 85.00% 2 year
Properties, LLC Resources Corp Section option @
8-7N-63W $100/acre
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Sharon Lynn Synergy 01/07/10 Weld, CO W/2 E/2 of 160.00 8.89 3 Yr n/a 85.00% 2 year
Campbell Resources Corp Section option @
8-7N-63W $100/acre
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Sharon Lynn Synergy 01/07/10 Weld, CO W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Campbell Resources Corp 18-9N-67W option @
$100/acre
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Sharon Lynn Synergy 01/07/10 Weld, CO N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
Campbell Resources Corp 26-10N-59W option @
$100/acre
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Marylin Zelle Synergy Weld, CO W/2 E/2 of 160.00 8.89 3 Yr n/a 85.00% 2 year
Resources Corp Section option @
8-7N-63W $100/acre
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Marylin Zelle Synergy Weld, CO W/2 of Section 320.00 4.44 3 Yr n/a 85.00% 2 year
Resources Corp 18-9N-67W option @
$100/acre
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Marylin Zelle Synergy Weld, CO N/2 of Section 320.00 8.89 3 Yr n/a 85.00% 2 year
Resources Corp 26-10N-59W option @
$100/acre
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Total: 9,519.48 2,570.16
It is Assignors intent to convey to Assignee all of Assignor's right, title
and interest in and to the above described lands, regardless of the omission of
any particular lease or leases, error in description, incorrect or misspelled
names or incorrect recording references.
END OF EXHIBIT "A"
