Business
Cedar Strat Agreement Amended and Piceance Update
Cedar Strat Agreement Amended and Piceance Update.
About this update from Xxl Energy Corp.
[{"type":"text","content":"\n\n\n\n\n(TSXV Symbol: EXX)\n\nMONTREAL, March 31 /CNW Telbec/ - On June 9, 2005, the Company announced\nan agreement with Chamberlain Exploration Development and Research\nStratigraphic Corporation (\"Cedar Strat\") under which the Company initially\nacquired a 100% working interest in oil and gas leases covering approximately\n33,000 net mineral acres in the Nevada Oil and Gas Fairway. Under the\nagreement, Cedar Strat was obligated to continue assembling acreage within two\nareas of interest, with the goal of assembling an additional 120,000 net\nmineral acres for the Company's benefit.\nUnder the terms of the original agreement, the Company has to date paid\nUS$2,800,000 for acreage assembled by Cedar Strat under the agreement, and is\nobligated to make a final payment of US$800,000 by November 30, 2006. The\nCompany also agreed to drill four wells on the project: the first by May 31,\n2007, the second by May 31, 2008, the third by May 31, 2009 and the fourth by\nMay 31, 2011. The agreement provided further that the Company was obligated to\nmake default payments to Cedar Strat for failure to drill the commitment\nwells, in the sum of US$500,000 for failure to drill the first well,\nUS$300,000 for the second well, US$100,000 for the third well and US$150,000\nfor the fourth well. The agreement also provided that the Company would\nrelinquish and return to Cedar Strat all of its interests in sub-areas where\nit failed to drill commitment wells within the required time.\nThe Company and Cedar Strat have now entered into an amendment agreement\ndated March 30, 2006, (the \"Amendment Agreement\") amending certain of the\nterms of the original agreement. Under the Amendment Agreement, the date for\ncommencing each of the four commitment wells has been extended by 18 months.\nAlso, no default payments are payable by the Company, and no interests are\nrelinquished to Cedar Strat, in the event that commitment wells are not\ndrilled. The Amendment Agreement also provides for the Company and Cedar Strat\nto collectively employ their best efforts to sell to a third party any\ninterests upon which the Company elects not to drill any commitment well, with\nthe proceeds being distributed first to the Company as to 75% of its costs\nincurred with respect to the interests sold, and 50/50 thereafter.\nAs consideration for the amendment, the...