Joint Exploration And Development Agreement

Exhibit 10.20 JOINT EXPLORATION AND DEVELOPMENT AGREEMENT THIS AGREEMENT is entered into and made effective this the 12th day of February, 1997, by and between RIATA ENERGY, INC. , a Texas Corporation, 5912 Amarillo Blvd. W., Amarillo, Texas 79106, hereinafter referred to as " RIATA" and MANTI RESOURCES, INC. , a Texas Corporation, P.O. Box 2907, Corpus Christi, Texas 78403, hereinafter refereed to as " MANTI" . WITNESSETH: WHEREAS, RIATA and MANTI each are presently engaged in the business of exploring for oil, gas and other hydrocarbons within the State of Texas, and WHEREAS, RIATA is the owner of certain lands located in Pecos County, Texas, which lands are deemed by RIATA and MANTI to be prospective for finding oil, gas and other hydrocarbons, and WHEREAS, RIATA is the owner of certain proprietary data and/or are in possession of and have a license to use certain other data, all of which covers lands which are subject to this Agreement as well as lands adjacent thereto, and WHEREAS, both RIATA and MANTI find it in their mutual interests to enter into an agreement for the purpose of establishing an area of mutual interest and then jointly exploring for oil, gas and other hydrocarbons on the lands covered by this Agreement; NOW THEREFORE, for and in consideration of the premises and mutual covenants herein contained, both RIATA and MANTI do hereby covenant and agree as follows: ARTICLE 1 DEFINITIONS As used in this Agreement, the following words and terms shall have the meanings hereinafter ascribed to them: 1.1 " Agreement" shall refer to this agreement. 1.2 " RIATA Lands" shall mean any and all leasehold and/or mineral interest within the Area of Mutual Interest, presently owned or subsequently acquired by RIATA. The presently owned RIATA Fee Lands are shaded red on the attached Exhibit " A" . The presently owned RIATA Mineral Classified Lands are shaded green on the attached Exhibit " A" .


1.3 " Area of Mutual Interest" (AMI) shall mean all of the lands, oil and has interests and oil and leases intended to be developed and operated for oil and gas purposes under this Agreement and shall be comprised of the area outlined in red on Exhibit " A" attached hereto and made a part hereof for all purposes. 1.4 " oil and gas" shall mean oil, gas, casinghead gas, gas condensate and all other liquid or gaseous hydrocarbons and other marketable substances produced therewith, unless an intent to limit the inclusiveness of this term is specifically stated. 1.5 " oil and gas interests" shall mean unleased fee and mineral interests, including mineral classified acreage in tracts of lands lying within the Area of Mutual Interest which are owned by either of the parties to this Agreement. 1.6 " oil and gas leases" , " lease" and " leasehold" shall mean the oil and gas leases covering tracts of land lying within the Area of Mutual Interest which are owned either of the parties to this Agreement. 1.7 " Prospect Area" shall mean a specified geographical area which has been mutually agreed to by the Parties which is thought to be prospective for finding oil and/or gas or other hydrocarbons. A party' s interpretation shall be substantiated by available ell logs, seismic and geological data deemed to be sufficient to logically and reasonable support such an idea. 1.8 " Initial Test Well" shall mean the initial test well drilled on a proration unit within an approved Prospect Area. 1.9 " Jointly Owned Leases or Oil and Gas Interests" shall be those leases and Oil and Gas Interests within the AMI acquired from third parties subsequent to the date hereof in which both RIATA and MANTI acquire an interest pursuant to Article 7 hereof. 1.10 " AFE" shall mean an Authorization for Expenditure prepared by a party to this Agreement to; (a) acquire geological data, to acquire and/or reprocess geophysical data; or (b) acquire Leasehold inclusive of brokerage and/or title curative costs; or (c) drill any well under the terms of this Agreement. 1.11 " Party" shall mean either RIATA or MANTI. " Parties" shall mean RIATA and MANTI collectively. 1.12 " Fina Agreement" shall mean that certain Agreement dated June 1, 1995 by and between RIATA and Fina Oil and Chemical Company.


1.13 " Nuevo Agreement" shall mean that certain Agreement dated November 15, 1995 by and between RIATA and Nuevo Energy Company. 1.14 " Longfellow - West Ranch Prospect Area" shall mean those lands lying within the blue outline on Exhibit " A" attached hereto. ARTICLE 2 2.1 Area of Mutual Interest (AMI). RIATA and MANTI hereby agree to establish an Area of Mutual Interest (AMI) effective the date hereof with respect to any interest currently owned or subsequently acquired jointly either by RIATA or MANTI, together with all other lands, oil and gas interests and oil and gas leases lying within the red outline on Exhibit " A" , for the purposes of jointly exploring for oil, gas and other hydrocarbons on the lands covered by this Agreement. RIATA and MANTI shall contribute a like amount of acreage or interest, currently owned or subsequently acquired, to the AMI to effectuate a 50/50 ownership in the AMI area. In the event either party contributes a lesser amount of leasehold acreage and/or interest than the other party, said party shall be required to purchase an oil, gas and mineral lease or acquire an interest within the AMI area to effectuate a like leasehold and/or interest amount contributed to the AMI area. Any additional acreage acquired subsequent to the execution of this Agreement, shall be in accordance with Article 7. ARTICLE 3 THE LANDS COMMITTED TO THIS AGREEMENT 3.1 Existing Land, Oil and Gas Interests and Oil and Gas Leases Committed to This Agreement. RIATA represents that it is the leasehold owner and/or has rights to explore on approximately 210,000 net acres, subject to the Fina Agreement and the Nuevo Agreement covering a portion of those lands known as the " Longfellow Ranch ' A'" more particularly identified in yellow on Exhibit " A" and the " West Ranch" in more particularly identified in purple on Exhibit " A" and located in Pecos County, Texas. 3.2 Additional Lands, Oil and Gas Interests and Oil and Gas Leases Committed to This Agreement. Subject to the Fina Agreement and the Nuevo, this Agreement shall also cover and affect the remaining acreage owned by RIATA lying within the red outline on Exhibit " A" (outside of the Longfellow Ranch " A" Area and West Ranch Area together with all other lands,


oil and gas interests and oil and gas leases lying within the area outlined in red on the attached Exhibit " A" , including but not limited to, the unleased portion of the entirety of other owners not under oil and gas lease(s) or contractually committed to an unrelated third party by the terms of another agreement on the date of this Agreement. It is hereby mutually agreed that RIATA is granting MANTI, subject to the terms of this Agreement, a first right of refusal to acquire an oil and gas interest and/or oil, gas and mineral lease(s), including mineral classified acreage, covering the balance of RIATA Lands, in order to effectuate a 50/50 working interest ownership within the entire AMI area. It is hereby mutually agreed that the granting of an oil, gas and mineral lease on mineral classified acreage shall be subject to the terms and provisions of the General Land Office of the State of Texas. Nothing herein shall constitute a violation of the laws, rules, statutes and regulations of the General Land Office of the State of Texas, and in the event that it does, this clause is void. 3.3 Lands, Oil and Gas Interests and Oil and Gas Leases Initially Excluded from this Agreement. This Agreement does not cover lands, oil and gas interests or oil and gas leases which, on the effective date herein are leased or contractually committed an unrelated party by the terms of another agreement. The lands, leases, interests and/or agreements which are excluded, are shaded in blue on Exhibit " A" attached hereto and made a part hereof for all purposes. In the event any lands, leases, interests, and/or agreements are inadvertently omitted from Exhibit " A" , such interest shall be automatically excluded from this Agreement, provided that such interest was leased or contractually committed to an unrelated third party by the terms of another agreement on the effective date of this Agreement. 3.4 Disclaimer Regarding RIATA and MANTI Interest. It is not the intent of either RIATA or MANTI, pursuant to this Agreement, to convey to either party a mineral interest in any lands committed hereto. The Agreement contemplates the conveyance by RIATA of oil and gas leasehold interest to MANTI. ARTICLE 4 TERM OF THE AGREEMENT 4.1 Primary Term. The term of the Agreement shall be for a period of three (3) years from the effective date of the Agreement.


ARTICLE 5 INTEREST OF THE PARTIES 5.1 Interests in the Agreement. RIATA and MANTI shall each own a fifty percent (50%) interest in the Agreement and the rights to explore derived therefrom, subject to the terms, conditions, reservations, and restrictions set forth herein. Each party is entitled to participate for such interest in the acquisition of any data or leases, in any agreements covering the designation of a Prospect Area proposed pursuant to this Agreement or a well to be drilled thereon. ARTICLE 6 DESIGNATION OF PROSPECT AREA(S) AND DRILLING OF WELLS 6.1 Designation of the Initial Prospect Area. RIATA and MANTI hereby mutually agree to designate those lands lying within the blue outline on Exhibit " A" , being hereinafter referred to as the " Longfellow Ranch ' A' and West Ranch" Prospect Area, as the Initial Prospect Area for the purpose of exploring for oil and/or gas or other hydrocarbons. 6.2 Drilling of Initial Test Well(s) in the Longfellow Ranch " A" and West Ranch Prospect Area. RIATA and MANTI hereby mutually agree to drill six (6) obligatory Initial Test Wells, as hereinafter defined in accordance with mutually acceptable drilling procedures and the AFE' s setting forth the drilling and completion costs for such wells, attached hereto as Exhibit " C" and made a part hereof. The timing, location, objective depth and formation of such wells shall be as follows: PRIORITY SECTION BLOCK ABSTRACT SURVEY DEPTH/FORMATION No. 1 32 138 5216 T & St. L. 6,000' /Caballos No. 2 4 600 5565 J.H. Sims 6,000' /Caballos No. 3 24 2 8833 T.C.R.R. 6,000' /Caballos No. 4 4 182 6073 T.C.R.R. 8,000' /Wolfcamp No. 5 85 R-3 2944 G.C. S.F. 4,500' /Caballos No. 6 The next obligatory well on the West Ranch Prospect Area.
Exact location and depth yet to be determined. It is hereby mutually agreed to that in the event additional geological and/or engineering information becomes available and merits the drilling (or reentry) of test wells other than the obligatory Initial Test Well set forth above, such test well(s) shall be substituted in place thereof


and shall be deemed to have replaced the pending obligatory Test Well(s) to ...