EX-10.11 12 endeavor8k080307ex10-11.txt EXHIBIT 10.11 - SEISMIC OPTION AGREEMENT BETWEEN ENDEAVOR CANADA AND PANTERRA RESOURCE CORP. ================================================================================ Exhibit 10.11 August 1, 2007 PANTERRA RESOURCE CORP. ENDEAVOR ENERGY CORP. 260, 603 - 7th Avenue S.W. 1110, 521 - 3 Avenue SW Calgary, AB Calgary, AB T2P 2T5 T2P 3T3 Attention: Fred Rumak Attention: Keith Miles STEALTH VENTURES LTD. RANCHMANS RESOURCES LTD. 705, 777 - 5 Avenue SW 850, 808 - 4 Avenue SW Calgary, AB Calgary, AB T2P 3R5 T2P 3E8 Attention: Rob Bell Attention: Mike Logan RE: SEISMIC OPTION LETTER OF INTENT SOUTH SASKATCHEWAN Further to our recent conversation, Endeavor Energy Corp. and Ranchmans Resources Ltd. (hereinafter collectively referred to as "Optionee") are prepared to enter into a Seismic Option with PanTerra Resource Corp. and Stealth Ventures Ltd. (hereinafter referred to as "Optioner"); the following sets out the terms and conditions: 1. Definitions ----------- Each capitalized term used in this Head Agreement will have the meaning given to it in the Farmout & Royalty Procedure, and, in addition: (a) "Contract Depth" means sufficient depth to Option any formation below the top of the Viking that may be prospective following the shooting of the program described in Clause 3. (b) "Option Lands" means the lands described in Schedule "B". 1 2. Schedules --------- The following Schedules are attached hereto and made part of this Agreement: (a) Schedule "A", which is the Farmout & Royalty Procedure elections; (b) Schedule "B", which is the Options Lands; (c) Schedule "C", which is the Operating Procedure; (d) Schedule "D", which specifies the types of drilling information required to be supplied by the Optionee to the Optioner pursuant to the Farmout & Royalty Procedure. 3. Seismic Option -------------- The Optionee shall shoot a minimum of a $500,000.00 seismic program ("Seismic Program") with the tail spreads not exceeding one mile of the Option Lands prior to December 15, 2007. Prior to January 15, 2008 Optionee shall elect to either: (a) Commit to shoot a $500,000.00 seismic program ("Second Seismic Program") on or within one mile of the Option Lands within 60 days of its election to shoot or prior to April 30, 2008; or (b) Commit to drill an Option Well at a location of its choice on the Option Lands. The Option Well shall be spudded within 60 days of its election to drill and drilled to Contract Depth and completed, capped or abandoned; or (c) Terminate the Option. (d) The Optionee must drill a well within 1 year of the first earning well or terminate the option. Should Optionee elect option (a) of this Letter of Intent, on or prior to July 31, 2008 Optionee shall elect to: (a) Commit to drill an Option Well at a location of its choice on the Option Lands. The Option Well shall be spudded within 90 days of its election to drill and drilled to Contract Depth and competed, capped or abandoned; or (b) Terminate the Option. 4. Option Well Earning ------------------- Subject to compliance with Article 3.00 of the Farmout & Royalty Procedure, Optionee will earn 100% of the Optionor's Working Interest, subject to the Overriding Royalty, in the lands earned from the applicable Permit ("Option Well Earning Block"), use calculations pursuant to the earning provisions under the Saskatchewan Government PNG License Regulations. Optionor shall have the right to participate with the Optionee, in the drilling of any Option Well on the Option Lands for 20% working 2 interest. In the event Optionor participates in the Option Well, the Overriding Royalty shall be calculated on the Optionee's 80% working interest in such Option Well Earning Block. Optionee shall earn Viking rights on all option lands after drilling its first earning well. Prior to earning by Optionee, if Optionor discovers Viking gas, Optionor shall retain the drilling spacing unit, plus one additional section of its choice. 5. Additional Seismic Programs and Option Wells -------------------------------------------- If the Optionee has drilled the Option Well to Contract Depth and is not otherwise in default, the Optionee will have continuing options to shoot additional seismic programs to continue the option to drill as per Clause 3.(a) or drill additional Option Wells on the remaining Option Lands to earn an interest in the unearned Option Lands. The Optionee may elect, by notice to the Optionor within 90 days of the drilling rig release date of the previous Option Well, to either shoot a $500,000.00 seismic program ("Additional Seismic Program") or drill a further Option Well ("Additional Option Well"). If the Optionee so elects, the Optionee must spud such Additional Option Well within 90 days of that election. The terms and conditions with respect to the Option Well shall apply mutatis mutandis to the Additional Option Wells. Optionor shall be provided a show and tell and a copy of interpreted data in the event of participation by Optionor. 6. Abandonment ----------- The parties hereby acknowledge and agree that Article 7.00 of the Farmout and Royalty Procedure which is entitled Abandonment of Wells has been amended to allow the Optionor to take over an Option well. Should Optionor elect to take over an Option Well, Optionee shall assign the Option Well along with the applicable surface rights. All responsibilities, obligations and liabilities associated with the Option Well after Optionor takes over the well shall lie with the Optionor. 7. Reasonable Extension -------------------- In the event the Optionee has committed to drill the Option Well as outlined in Clause 3 hereof and either or both governmental restrictions and ground conditions make the drill site inaccessible and precludes the Optionee from spudding the Option Well on or before the date provided in Clause 3, Optionor shall grant Optionee the extension or extensions required to Spud the Option Well until such time as either or both governmental restrictions and ground conditions permit Optionee to access the Option Well drill site together with such reasonable additional time as may be necessary to permit Optionee to organize and effect the Spudding thereof. 8. Restriction On Additional Drilling During Earning Phase ------------------------------------------------------- No Party may propose the drilling of an additional well on the Option Lands earned as a result of the drilling of an Earning Well until such time as the Optionee has earned an interest in all of the Option Lands or the Optionee's right to earn that interest has terminated. This clause shall not restrict Optionor from drilling shallow wells. 3 9. Operating Procedure ------------------- Endeavor Energy Corp. will be the initial Operator under the Operating Procedure. 10. Rentals ------- Rentals shall be charged on a 50/50 basis, 1 year from the date of this agreement on all lands held under the agreement. 11. Land Sale --------- Any lands purchased by Optionor shall be included in this agreement. Thereafter, any party acquiring lands within two miles of any lands hereunder, such party shall notify the remaining party of the acquisition, and shall offer that party the respective deep or shallow rights for 20% of the consideration expenditures. In the event the foregoing terms and conditions herein are acceptable, please indicate your concurrence by signing and returning the counterpart execution page of this Agreement to the attention of the undersigned. This offer is open for acceptance until 4:30 p.m. Wednesday, August 1, 2007 and Optionee will thereupon prepare final agreement incorporating, inter alia, the terms set out herein. Yours truly, ENDEAVOR ENERGY CORP. Keith Miles jm/attachments Agreed to this 1st day of August, 2007. /s/ Fred Rumak ----------------------------------------------- PANTERRA RESOURCES CORP. Agreed to this 1st day of August, 2007. /s/ Keith Miles ----------------------------------------------- ENDEAVOR ENERGY CORP. 4 Agreed to this 1st day of August, 2007. /s/ Rob bell ----------------------------------------------- STEALTH VENTURES LTD. Agreed to this 1st day of August, 2007. /s/ Mike Logan ----------------------------------------------- RANCHMANS RESOURCES LTD. This is a counterpart execution page attached to and forming a part of a Seismic Option Letter of Intent dated August 1, 2007 among Endeavor Energy Corp., Ranchmans Resources Ltd., Stealth Ventures Ltd., and PanTerra Resource Corp. - South Saskatchewan 5 SHEDULE "A" Schedule "A" attached to and forming a part of a Seismic Option Letter of Intent dated August 1, 2007 among Endeavor Energy Corp., Ranchmans Resources Ltd., Stealth Ventures Ltd., and PanTerra Resources Corp. - South Saskatchewan Farmout & Royalty Procedure Elections and Amendments 1. Effective Date (Sub clause 1.01 (f)) - August 1, 2008 2. Payout (Sub clause 1.01 (t), if Article 6.00 applies) - Alternate A - _____, Alternate B ______, Alternate B options, if applicable - _____m3 Equivalent Production and _____ years. 3. Incorporation of Clauses From 1990 CAPL Operating Procedure (Clause 1.02) (i) Insurance (311) Alternate A - _______, Alternate B - ____X_____ , (ii) Address for Notices (Clause 2202) - The Parties' addresses for service are: PanTerra Resource Corp. 260, 603 - 7 Avenue SW Calgary, AB T2P 2T5 Attention: Land Manager Stealth Ventures Ltd. 705, 777 - 5 Avenue SW Calgary, AB T2P 3R5 Attention: Land Manager Endeavor Energy Corp. 1110, 521 - 3 Avenue SW Calgary, AB T2P 3T3 Attention: Land Manager Ranchmans Resources Ltd. 850, 808 - 4 Avenue SW Calgary, AB T2P 3E8 Attention: Land Manager 4. Article 4.00 (Option Well(s)) will __X__/will not _____ apply. - 5. Article 5.00 (Overriding Royalty) will ___X__/will not _____ apply. - 6. Quantification Of Overriding Royalty (Sub clause 5.01A, if applicable) (i) Crude oil (a) - Alternate - __2__ - If Alternate 1 applies, _____% - If Alternate 2 applies, __1/23.8365_, min. __5__%, max.__10__% 6 (ii) Other (b) - Alternate - ___1___, - If Alternate 1 applies, __10__% - If Alternate 2 applies, ______%, in (i) and _____% in (ii). 7. Permitted Deductions (Sub clause 5.04B, if applicable) - Alternate (s) 1 only _____, 2 only _____, 1 and 2 __X__, Neither 1 nor 2 _____. If Alternate 2 applies, deductions not greater than ____50___% of the Market Price. 8. Article 6.00 (Conversion Of Overriding Royalty) - will ______/will not __X__ apply. If Article 6.00 applies, conversion to _____% of Working Interest in Sub clause 6.04A. 9. Article 8.00 (Area of Mutual Interest) - will _____/will not __X__ apply. 10. Well Information To Royalty Owners (Sub clause 9.03 (b)) amended to read as follows: "The additional information described in the well information requirement Schedule and this Article. However, if that Royalty Well is being drilled to obtain information to evaluate any petroleum and natural gas rights that have been offered for sale at a Crown land sale within three and a half (3.5) kilometers of the well and the provisions of Article 8.00 are not then in effect, the obligation to deliver that additional information will be suspended until seven (7) days following the applicable Crown land sale." 11. Reimbursement Of Land Maintenance Costs (Clause 11.02) - will _____/will not __X__apply. If applies, reimbursement of $ ________. 7 SCHEDULE "C" ------------ ATTACHED TO AND FORMING A PART OF A SEISMIC OPTION AGREEMENT DATED AUGUST 1, 2007 AMONG ENDEAVOR ENERGY CORP., RANCHMANS RESOURCES LTD., STEALTH VENTURES LTD., AND PANTERRA RESOURCES CORP. - SOUTH SASKATCHEWAN 1990 CAPL OPERATING PROCEDURE ----------------------------- CLAUSES PAGE ELECTIONS ---------------------------------------------- -------------------------------- 311 9 Insurance ___ A xxx B ---------------------------------------------- --------------------------------- 604 15 Marketing Fee xxx A --------------------------------------------- ---------------------------------- 903 19 Casing Point xxx A ___ B ---------------------------------------------- --------------------------------- Penalty for Independent Operations 1007 23 (iv) 300% development well 500% exploratory well ---------------------------------------------- --------------------------------- 1010 25 Title Preserving Well (iv) 365 days ---------------------------------------------- --------------------------------- 2401 37 Disposition of Interests xxx A ___ B ---------------------------------------------- --------------------------------- Recognition Upon Assignment 2404 38 Replaced with 1993 CAPL ----------------------- Assignment Procedure ---------------------------------------------- --------------------------------- 8 RATES AND ELECTIONS TO THE 1996 PETROLEUM ACCOUNTANTS SOCIETY OF CANADA (PASC) ACCOUNTING PROCEDURE 101. Rates and Elections ------------------- The following clauses of the Accounting Procedure are modified to include the indicated election, alternate, option or value: 105. Operating Fund: __10__ % 110. Approvals: Clause _____; from __two__ ; seventy-five percent (_75_%) 112. Expenditure Limitations: (a) excess of _twenty-five thousand_ dollars ($ 25,000) (c) excess of _twenty-five thousand_ dollars ($ 25,000) 202. Employee Benefits: (b) exceed twenty-five percent (_25_%) 213. Camp and Housing: (b) shall __x__ / shall not ______ 216. Warehouse Handling: _2.5_% Warehouse 221. Allocation Options: 204. _100% of direct costs_______ 207 (c). _100% of direct costs_______ 212. _100% of direct costs_______ 213 (a). _100% of direct costs_______ 214. _100% of direct costs_______ 302. Overhead Rates: (a) ________ percent (______%) OR (1) __five___ percent (_5_%); fifty thousand dollars ($50,000.00) (2) __three__ percent (_3_%); one hundred thousand dollars ($100,000.00) (3) __one___ percent (_1_%); (b) ________ percent (______%) OR (1) __three__ percent (_3_%); fifty thousand dollars ($50,000.00) (2) __two __ percent (_2_%); one hundred thousand dollars ($100,000.00) (3) __one___ percent (_1_%); (c) ________ percent (______%) OR (1) __five __ percent (_5_%); fifty thousand dollars ($50,000.00) (2) __three_ percent (_3_%); one hundred thousand dollars ($100,000.00) (3) __one__ percent (_1_%); (d) ________ percent (______%) 9 OR (1) __five __ percent (_5_%); fifty thousand dollars ($50,000.00) (2) __three_ percent (_3_%); one hundred thousand dollars ($100,000.00) (3) __one__ percent (_1_%); (e) ________ percent (______%) OR (1) __ten __ percent (_10_%); and (2) __two hundred and fifty dollars ($250.00) (3) ______ percent (___%); Shall ___x___ / shall not ______ 406. Dispositions: fifty thousand dollars ($50,000.00) 102. Modifications to the PASC Accounting Procedure The Accounting Procedure is modified as follows: The clauses contained in the Accounting Procedure are amended as follows: ------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------- ------------------------------------------------------------------- 103. Warranty as to Modifications Except as otherwise provided for in Clause 101 and 102 hereof, the Accounting Procedure published by the Petroleum Accountants Society of Canada, 1996 (copyright) is hereby incorporated in its entirely in the Agreement and the Parties so warrant that said Accounting Procedure has been amended only to the extent set forth herein. 10 --------------------------------------------------------------------------------