SEISMIC EXPLORATION AND OPTION TO LEASE AGREEMENT(Long Form)
BETWEEN
_________________________ _________________________
"GRANTORS"
AND
_________________________ "GRANTEE"
TABLE OF CONTENTS
ARTICLE
DEFINITIONS
1.1 Specific Terms
1.2 Other Terms
1.3 Other Definitional Provisions
2. PRELIMINARY EXPLORATION OPERATIONS
2.1 Preliminary Exploration Operations
2.2 Surface Protection and Restoration
2.3 Permit and Damage Payment
2.4 Ownership and Disclosure of Generated Information
2.5 Information in Grantors' Possession or Control
3. LEASING AND DRILLING
3.1 Exclusive Right to Explore and Lease
3.2 Leasing Option
3.3 Drilling Obligations of Grantee
4. REPRESENTATIONS AND WARRANTIES
5. TERM
6. NOTICES
7. MISCELLANEOUS
7.1 Entire Agreement
7.2 Counterparts
7.3 Terminology
7.4 Governing Law
7.5 Representations
7.6 Further Assurances
7.7 Survival of Representations, Warranties, Covenants and Agreements
7.8 Severability
7.9 Parties Bound by Agreement
7.10 Waivers
7.11 Remedies
7.12 No Third-Party Benefit
7.13 Amendment and Modification
7.14 Obligations of Grantors
7.15 Force Majeure
7.16 Memorandum of Agreement
7.17 Indemnification of Grantors
EXHIBIT A-1: Plat of Lands
EXHIBIT A-2: Description of LandsEXHIBIT B: Oil and Gas Lease
EXHIBIT C: Form of Memorandum of Agreement
EXHIBIT D: List of Agreements Affecting the Lands
SEISMIC EXPLORATION AND OPTION TO LEASE AGREEMENT
THIS SEISMIC EXPLORATION AND OPTION TO LEASE AGREEMENT (the
"Agreement") is entered into between ____ and ____ (collectively referred to as the "Grantors,"
or individually as a "Grantor"), and ____ a ____ corporation (the "Grantee"). Grantor and
Grantee may be referred to collectively as the "Parties" or individually as a "Party."
Grantors own the mineral interest in and control the executive rights to the mineral estate
in and under the Lands, defined below.
Grantee desires to enter into this Agreement to enable it, in accordance with t he terms
and conditions of this Agreement, to identify, delineate, generate, configure, and lease oil and
gas prospects within the Lands.
In consideration of the mutual agreements and covenants contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which are
acknowledged by Grantors, the Parties stipulate and agree as follows.
ARTICLE 1
DEFINITIONS
1.1 Specific Terms. As used in this Agreement the following terms shall have the meanings
indicated. All Exhibits referred to in this Agreement are attached to it and are deemed to be
incorporated into this Agreement for all purposes.
"Affiliate" means any Person which controls, is controlled by, or is under common
control with any Party. For purposes of the immediately preceding sentence, the terms
"controls," "controlled by," and "under common control with" mean the ownership (directly or
indirectly) of more than fifty percent (50%) of the voting interest of the relevant Person."Best Efforts" means diligent conduct directed to achieve a particular purpose; provide d
that it shall not require any Party to perform or fail to perform any act which might have an
adverse effect (directly or indirectly) on the finances or operations of such Party.
"Effective Date" means 7:00 A.M. __.S.T. on (Date) .
"Existing Leases" shall mean any and all oil, gas and other leases that are in effect on the
Effective Date.
"Expiration Date" shall have the meaning set forth in Article 5.
"Force Majeure" shall have the meaning set forth in Section 7.19.
"Generated Information" means the field tapes, field notes, final stack and migrated
sections directly generated from the actual Preliminary Exploration Operations. The Generated
Information shall not include any other information, including, without limitation, maps and
similar derivatives. Further, nothing in this Agreement shall obligate Grantee to generat e, create,
or process any information obtained or to generate or create any derivative information.
"Lands" means those lands depicted on "Exhibit A-1" and described in "Exhibit A-2,"
whether or not those lands are subject to any oil, gas, and mineral leases, other lease s, mortgages,
or other agreements affecting the lands.
"Memorandum of Agreement" means the Memorandum of Agreement, in a form
substantially similar to the form attached as Exhibit D, to be filed in the appropriate county
records to evidence the existence of this Agreement and any Oil and Gas Lease exe cuted and
delivered pursuant to this Agreement.
"Oil and Gas Lease" means each and every oil and gas lease executed and delivered
pursuant to this Agreement, each of which shall be in a form substantially similar to "Exhibit B."
"Operations Notice" shall have the meaning set forth in Section 2.3.
"Permit and Damage Payment" shall mean the money paid and to be paid by Grantee t o
Grantors, which payment shall represent the full and complete consideration to be paid by
Grantee (i) for the right to conduct Preliminary Exploration Operations on and under the Lands,
as well as (ii) in settlement of all damages, losses, expenses, liabilities, penalties, charges, or
other costs arising from or related to the Preliminary Exploration Operations incurred by the
surface owners, mineral owners, Grantors, their Affiliates or Third Parties. It is understood and
agreed that the Permit and Damage Payment is an all inclusive payment with re spect to the
Preliminary Exploration Operations, and includes, without limitation, claims by the surfac e
owners, mineral owners, Grantors, their Affiliates or Third Parties with respect to damages,
consideration, or other matters related to or arising from the Preliminary Exploration Ope rations.
However, the Permit and Damage Payment shall not cover extraordinary damages such as those
related to a catastrophe or the gross negligence or willful misconduct of Grantee.
"Person" means any individual or entity, including, without limitation, any corporation,
partnership, joint venture, limited liability company, joint stock company, trust, associat ion,
unincorporated organization or governmental authority (including any agency or political
subdivision).
"Preliminary Exploration Operations" means all techniques, procedures, processes, or
other activities or analyses generally available in and accepted by the indust ry at the time and
conducted by or on behalf of Grantee to assist in the identification, delineation, genera tion, and
configuration of Prospects, including, without limitation, geological operations and geophysical
surveys by seismograph, including 2-D Seismic and 3-D Seismic (whether using dynamite or
vibroseis), core tests, gravity, magnetic, and geochemical methods.
"Prospect" means each of the oil and gas prospects on and under the Lands identified,
delineated, generated, and configured in accordance with the terms and conditions of this
Agreement by Grantee and leased to Grantee by Grantors; provided that no single prospect shal l
include more than ____ acres without the consent of Grantors.
"Third Parties" shall mean (i) with respect to Grantors, any Person other than Grantors,
and (ii) with respect to Grantee, any Person other than Grantee, and its Affiliates, invest ors,
industry partners and lenders.
"2-D Seismic" shall mean those seismic methods known in the industry as 2-D seismic.
"3-D Seismic" shall mean those seismic methods known in the industry as 3-D seismic.
1.2 Other Terms. Other terms may be defined elsewhere in the text of this Agreement a nd
shall have the meaning indicated throughout this Agreement.
1.3 Other Definitional Provisions.
(a) The words in this, under this, or pursuant to this Agreement, and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole and not t o any
particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when used in
the plural, and vice-versa.
ARTICLE 2
PRELIMINARY EXPLORATION OPERATIONS
2.1 Preliminary Exploration Operations. Grantors grant to Grantee the sole, exclusive, and
irrevocable right to conduct Preliminary Exploration Operations on, under, and in the Lands
during the term of this Agreement, including any appropriate or necessary related rights of
ingress and egress. In conducting all operations under this Agreement, Grantee shall use it s sole
discretion to determine the type, nature, timing, and extent of all Preliminary E xploration
Operations. Prior to conducting any operations on the Lands, Grantee shall provide Grantors a
notice of Grantee's entry, and prior to conducting any 2-D Seismic or 3-D Seismic on the La nds,
Grantee shall provide to Grantors an Operations Notice.
2.2 Surface Protection and Restoration. In conducting any Preliminary Exploration
Operations on, under, and in the Lands, Grantee will use its Best Efforts to schedule and loc ate
its operations so as to reasonably accommodate Grantors' surface operations, including planting,
harvesting, or ranching operations, and to close all gates, repair damage caused to ca ttle guards
and other structures, gap fences, and generally reinstate the functionality of any of those
structures. Where necessary, at Grantors' request, Grantee shall cut up to a 2-blade sende ro
along its seismic lines across any brush or pasture. To the extent reasonably possible, Grantee
shall not enter the Lands through a gate, cut fences, or injure or cut any tree that has more than a
____ inch (____") diameter trunk without the prior written permission of Grantors, which
consent may not be withheld unreasonably. Grantee agrees that Preliminary Exploration
Operations shall not be conducted within ____ feet (____') of any buildings on the Lands without
Grantors' prior consent. Grantee agrees to keep all shot holes and vibrate points a sufficient
distance away from presently existing water wells to avoid damage to those wells, and in no
event shall any shot holes and vibrate points be closer than ____ feet (____') from any presently
existing water well. Grantee agrees to promptly plug all shot holes with standard good and
sufficient plugs set below the shallower of ____ (____') or plow depth, to be filled with dirt on
top of the plugs. Grantee shall rake and pile all debris and to dispose of it as reasona bly
requested by the surface owners. Grantee shall restore the surface of the Lands, as nearly as
reasonably practicable, to the condition which existed immediately prior to Grantee 's operations
(normal wear and tear excepted).
2.3 Permit and Damage Payment. Each time prior to commencing 2-D Seismic or 3-D
Seismic on the Lands, Grantee shall furnish Grantors a description ("Operations Notice") of each
operation stating whether the operation to be conducted is 2-D Seismic or 3-D Seismic, vibroseis
or dynamite, and a scaled plat depicting the planned location of the operations. The Permit and
Damage Payment shall be (i) $____ per mile for 2-D Seismic, and (ii) $____ per square mile for
3-D Seismic. Grantee shall pay Grantors the Permit and Damage Payment within ____ (____)
days after completion of the Preliminary Exploration Operations. Grantors shall promptly pay
the Permit and Damage Payment, as appropriate, to the owner(s) of the surface on which the
Preliminary Exploration Operations are being conducted, the owners of the mineral estat e under
which the Preliminary Exploration Operations are being conducted, and any other appropriate
designees as determined by Grantors.
2.4 Ownership and Disclosure of Generated Information. Grantee shall own an undivided
____ percent (____%) interest and Grantors, collectively, shall own an undivided ____ percent
(____%) interest in the Generated Information. Grantee shall provide one (1) copy (free of
charge) of the Generated Information to Grantors. Grantee shall retain possession and control of
the original copies of the Generated Information and shall provide additional copies to any
Grantor upon written request accompanied by a prepayment of all costs necessary or appropriate
to make such copies. Upon at least ____ (____) days written notice, any Grantor (including a
representative) may have reasonable access to examine and review the Generated Inform ation at
Grantee's principal place of business or any other convenient place designated by Grantee.
For so long as this Agreement is in effect, Grantors acknowledge that the Generated Informati on
and all derivatives (including, without limitation, maps and other analyses), is secret , proprietary,
and confidential information, and Grantors agree not to disclose that information to any Third
Party or to otherwise misappropriate the information without the prior written consent of
Grantee, which consent may be granted or withheld in Grantee's sole discretion.
2.5 Information in Grantors' Possession or Control. Upon at least ____ (____) days written
notice, each Grantor agrees to provide to Grantee (at Grantee's sole cost and expense) al l
information of the nature generally described as follows which relates to the Lands which a
Grantor may have access to or in its possession or control: oil and gas leases, maps, plat s,
geological and geophysical information, seismic field tapes and notes, and land records.
ARTICLE 3
LEASING AND DRILLING
3.1 Exclusive Right to Explore and Lease. As of the Effective Date and until the t ermination
of this Agreement, Grantee shall have the sole, exclusive, absolute, and irrevocable right to lease
oil and gas interests in and under the Lands, and Grantors shall not grant, let, or lease (including
any renewals, extensions, amendments or modifications of Existing Leases) to any Person (othe r
than Grantee) the right to investigate, explore, prospect, or drill for or produce oil and/or gas or
conduct exploration, geologic operations and geophysical surveys on the Lands (except in
accordance with the terms and conditions of Existing Leases) without Grantee's prior writ ten
consent, which consent may be granted or withheld by Grantee in its sole discretion.
3.2 Leasing Option. Grantee shall have the right to cause Grantors to execute and delive r Oil
and Gas Leases to Grantee covering up to ____ (____) Prospects during the term of this
Agreement. After the timely identification, delineation, generation, and configuration of each
Prospect, Grantee shall send an Oil and Gas Lease to Grantors. Grantors shall execute and
deliver to Grantee, and Grantors shall use their good faith Best Efforts to cause other int erested
Persons, as applicable, to execute and deliver to Grantee an Oil and Gas Lease with respect to the
Prospects. Each Oil and Gas Lease executed by Grantors and Grantee shall have an adde ndum
attached to it describing the lands comprising the Prospect. Grantee shall prepare and de liver to
Grantors and Grantors shall execute and Grantee shall file of record in each appropriate count y a
Memorandum of Agreement evidencing the existence of this Agreement and the Oil and Ga s
Lease. Grantee will provide Grantors copies of all recorded Memorandums of Agreement and
Oil and Gas Leases.
3.3 Drilling Obligations of Grantee. In the absence of a condition or event of force majeure,
conditions or events caused by Grantors (including, their agents and representatives and
Affiliates), or termination of this Agreement prior to the Expiration Date, in accordance with the
terms and conditions of this Agreement and each Oil and Gas Lease (as applicable), Gra ntee
agrees to generate at least ____ (____) Prospects, execute Oil and Gas Leases on those
Prospects, and drill or cause to be drilled during the term of the Oil and Gas Leases ____ (____)
obligatory wells (each on a different Prospect and on a different Oil and Gas Lease), ea ch to a
depth of a least ____ thousand (____) vertical feet from the surface of the ground. However, if
geological, mechanical, or other conditions make it unreasonable to proceed, Grantee sha ll not be
obligated to continue operations with respect to a well, but may have a period of ti me to arrange
for and commence the drilling of a substitute well in accordance with the terms of the applicable
Oil and Gas Lease, and the substitute well shall satisfy Grantee's drilling obligati on pertaining to
that well. If Grantee does not timely drill the ____ (____) obligatory wells (including any
related substitute wells) required by this Section, Grantee shall pay Grantors a sum of m oney
equal to the product of (x) ____ dollars ($____), times (y) the positive difference, if any,
between (i) ____ (____), and (ii) the number of Prospects on which Grantee has drilled at least
one obligatory well (including any related substitute wells). This payment shall be Grant or's sole
and exclusive remedy with respect to Grantees obligations to (i) identify, delinea te, generate, and
configure Prospects, (ii) lease Prospects, and (iii) conduct Preliminary Exploration Operations on
Prospects. In no event shall Grantee, be obligated to drill or cause to be drilled more than ____
(____) wells.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Grantors represent and warrant that: (i) each Oil and Gas Lease executed pursuant to thi s
Agreement will include a covenant warranting title to the mineral interest by, through, and under
Grantors and not otherwise; (ii) they own and control the executive rights to all the mi neral
interest in and under the Lands; (iii) except as expressly set forth on Exhibit D, none of t he
Lands are subject to any lease, mortgage or other agreement affecting the Lands; (i v) Grantors
will not renew, extend, amend, or modify any Existing Lease, other lease, mortgage or other
agreement affecting the Lands; and, (v) the execution of this Agreement and the Oil and Gas
leases will not violate or contravene any other agreement.
ARTICLE 5TERM
The term of this Agreement shall commence on the Effective Date and shall re main in effect
through the Expiration Date. "Expiration Date" shall be the earlier of (i) the dat e on which ____
(____) Oil and Gas Leases covering ____(____) Prospects have been executed by Grantors and
delivered to Grantee, or (ii) (Date) .
ARTICLE 6
NOTICES
All notices, requests, demands and other communications required or permitted to be given
under this Agreement shall be deemed to have been duly given if in writing and hand de livered
or sent via first class mail, postage prepaid, registered, or certified mail, a nd if sent to the address
indicated below or if received by facsimile transmission at the fax numbers indicated below:
If to Grantee:
If to Grantors:
Either Grantors or Grantee may change addresses or telephone numbers by giving the other Party
written notice of the change stating a new address or fax number. Commencing on the ____
(____) day after the notice is given, the newly designated address or fax number shall be the
Party's address or fax number for the purposes of this Article.
ARTICLE 7
MISCELLANEOUS
7.1 Entire Agreement. This Agreement constitutes the entire agreement between the Parties
and supersedes all prior or contemporaneous proposals or agreements, whether oral or written,
all previous negotiations and all other communications or understandings between the Parties
with respect to the subject matter of this Agreement.
7.2 Counterparts. This Agreement may be executed in multiple counterparts, each of whic h,
when executed, shall be deemed an original, and all of which shall constitute but one and the
same instrument.
7.3 Terminology. All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the singular sha ll include
the plural, and vice versa. Articles, sections and other titles or headings are for convenie nce
only, and do not limit or amplify the provisions of the Agreement itself. All references to
articles, sections, or subdivisions shall refer to the corresponding article, section, or subdi vision
of this Agreement unless specific reference is made to the articles, sections, or subdi visions of
another document or instrument.
7.4 Governing Law. This Agreement has been made and shall be performed in the State of
____ and shall be deemed to be a contract under, and shall be construed, interpreted and
governed by and according to, the laws of the State of ____ without regard to any conflict of la w
principle which, if applied, might require or permit the application of the law of another
jurisdiction.
7.5 Representations. Each person who signs this Agreement represents that he has the legal
right to execute and perform this Agreement on his or her own behalf or on behalf of the Pe rson
for which he or she is signing.
7.6 Further Assurances. Subject to the terms and conditions set forth in this Agreement,
without in any way limiting any other provision in this Agreement, each of the Parties agrees to
use all reasonable efforts to take, or to cause to be taken, all actions, and t o do, or to cause to be
done, all things reasonably necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by Sections 2.1., 2.4., 3.1. and
3.2. and Article IV of this Agreement. In case, at any time after the execution of t his Agreement,
any further action is necessary or desirable to carry out the purposes of the above-referenced
Sections and Article, the proper Parties (including officers or directors) shall take or cause to be
taken all such necessary action. Under no circumstances shall Grantors be obligated to expend
any money to comply with the provisions of this paragraph.
7.7 Survival of Representations, Warranties, Covenants, and Agreements. Without in any
way limiting the survival of any representation, warranty, covenant, and agreement in this
Agreement, the representations, warranties, covenants, and agreements given by the Parties and
included in the Sections and Article referred to in the immediately preceding Sec tion shall
survive this Agreement without regard to any action taken pursuant to this Agreement, inc luding,
without limitation, the execution of any documents affecting an interest in real property or any
investigation made by the Party asserting the breach thereof.
7.8 Severability. Any term or provision of this Agreement that is invalid or unenforceable in
jurisdiction in which the Lands are located shall be ineffective to the extent of the invalidity or
unenforceability, without rendering invalid or unenforceable the remaining terms and provisions
of this Agreement or affecting the validity or enforceability of any terms and provisions of thi s
Agreement. If any provision of this Agreement is so broad as to be unenforceable, each
provision shall be interpreted to be only so broad as is enforceable.
7.9 Parties Bound by Agreement. This Agreement shall be binding on and inure to the
benefit of the Parties and their respective heirs, successors, assigns and personal representatives.
7.10 Waivers. A waiver by any Party of a particular right, including, without limitation,
breach of any provision of this Agreement, shall not operate or be construed as a subsequent
waiver of that same right or a waiver of any other right.
7.11 Remedies. Unless otherwise expressly stated, the rights, obligations, and remedies
created by this Agreement are cumulative and in addition to any other rights, obli gations, or
remedies otherwise available at law or in equity. Nothing in this Agreement shall be considered
an election of remedies. Without being subject to the limitations required by comm on law, any
Party may enforce this Agreement by an injunction or specific performance.
7.12 No Third-Party Benefit. Nothing contained in this Agreement shall be construed to
confer any right, benefit, or interest upon any Person other than the Parties.
7.13 Amendment and Modification. All amendments, supplements and modifications to this
Agreement shall be in writing and signed by all of the Parties.
7.14 Obligations of Grantors. Grantee shall not be obligated to pursue any particular remedy
from any particular Grantor before seeking compensation or any other form of redress from any
Grantor.
7.15 Force Majeure. Conditions of force majeure shall limit the Parties obligation to perform
under this Agreement for the duration of such condition, and shall extend the term of this
Agreement by a period equal to the relevant force majeure period effected. "Force Maje ure"
shall mean any conditions or events which prevent a Party from performing its obligations under
this Agreement and that are not reasonably within the control of the Party claiming a suspension
of an obligation, and that by the exercise of due diligence, the Party shall not have been able to
avoid or overcome, including without limitation, acts of God, rules, laws, and regulations, wars
or warlike action (whether actual or impending) arrests and other restraints or government (ci vil
or military), blockages, insurrections, riots, epidemics, earthquakes, fires, sabotage or seizure by
any government or other public authority, and any other such causes, whether of the kind herein
enumerated or otherwise.
7.16 Memorandum of Agreement. Upon the execution of this Agreement, the Parties agree to
file in the appropriate county records a Memorandum of Agreement evidencing the existence of
this Agreement.
7.17 Indemnification of Grantors. Except as expressly provided for to the contrary, Grantee
agrees to indemnify and hold harmless Grantors, their heirs, representatives, successors and
assigns, from and against any and all claims, demands, causes of action, and damages to the
extent they arise out of, are incidental to, or result from Grantee's Preliminary Explora tion
Operations. Each assignee of all or any of Grantee's interest in and to this Agreement agrees to
indemnify and hold harmless Grantors in the same manner as is provided in the immediat ely
preceding sentence.
The Parties have executed this Agreement as of the Effective Date.
Grantors
Grantee
Exhibit A-1: Plat of Lands
Exhibit A-2: Description of Lands
Exhibit B: Oil and Gas Lease
Exhibit C: Form of Memorandum of Agreement
Exhibit D: List of Agreements Affecting and Lands
EXHIBIT A-1
PLAT OF LANDS
Attached to and made a part of the Seismic Exploration and Option to Lease Agre ement dated to
be effective ____, between ____, as Grantors and ____, as Grantee.
EXHIBIT A-2
DESCRIPTION OF LANDS
Attached to and made a part of the Seismic Exploration and Option to Lease Agre ement dated to
be effective ____, between ____, as Grantors, and ____, as Grantee.
EXHIBIT B
OIL AND GAS LEASE
Attached to and made a part of the Seismic Exploration and Option to Lease Agre ement dated to
be effective ____, between ____, as Grantors, and ____, as Grantee.
EXHIBIT C
FORM OF MEMORANDUM OF AGREEMENT
Attached to and made a part of the Seismic Exploration and Option to Lease Agre ement dated to
be effective ____, between ____, as Grantors, and ____, as Grantee.
EXHIBIT D
LIST OF AGREEMENTS AFFECTING THE LANDS
Attached to and made a part of the Seismic Exploration and Option to Lease Agre ement dated to
be effective ____, between ____, as Grantors, and ____, as Grantee.
