UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
AMENDMENT NO. 1
PETROHUNTER ENERGY CORPORATION
(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE
(Title of Class of Securities)
71649T 10 4
(CUSIP Number)
DAVID E. BRODY
1875 LAWRENCE STREET, SUITE 1400, DENVER, CO 80202
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
MAY 1, 2007
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), ss.ss.240.13d-1(f) or
ss.ss.240.13d-1(g), check the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.ss.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person=s
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP NO. 71649T 10 4 PAGE 2 OF 7
SCHEDULE 13D
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1 NAME OF REPORTING PERSONS MAB RESOURCES LLC
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (Entities Only)
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE, USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES 123,200,000
BENEFICIALLY
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
123,200,000
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
123,200,000
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.2%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
--------------------------------------------------------------------------------
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 OF 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
CUSIP NO. 71649T 10 4 PAGE 3 OF 7
SCHEDULE 13D
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1 NAME OF REPORTING PERSONS BIOFIBRE TECHNOLOGY INTERNATIONAL
INC.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (Entities Only)
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND, USA
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 2,000,000
BENEFICIALLY
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
2,000,000
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------- ----------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,000,000
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
--------------------------------------------------------------------------------
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 3 OF 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
CUSIP NO. 71649T 10 4 PAGE 4 OF 7
SCHEDULE 13D
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1 NAME OF REPORTING PERSONS MARC A. BRUNER
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (Entities Only)
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(See Instructions) (b) [ ]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
OO
--------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
--------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 125,200,000
BENEFICIALLY
OWNED BY -------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH -------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
125,200,000
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
125,200,000
--------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.9%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 4 OF 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
CUSIP NO. 71649T 10 4 PAGE 5 OF 7
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "STATEMENT") relates to the Common Shares,
$0.001 par value ("COMMON SHARES"), of PetroHunter Energy Corporation, a
Maryland corporation (the "ISSUER"). The address of the principal executive
office of the Issuer is 1875 Lawrence Street, Suite 1400, Denver Colorado 80202.
ITEM 2. IDENTITY AND BACKGROUND.
MAB RESOURCES LLC:
(a) Name: MAB Resources LLC
(b) Present principal occupations: N/A
(c) Address of principal office: 1875 Lawrence Street, Suite 1400, Denver,
Colorado 80202
(d) Conviction in a criminal proceeding: no
(e) Violations of federal or state securities laws: no
(f) Citizenship: Delaware, USA
BIOFIBRE TECHNOLOGY INTERNATIONAL INC.:
(a) Name: BioFibre Technology International Inc. (formerly MABio Materials
Corporation)
(b) Present principal occupations: N/A
(c) Address of principal office: 1875 Lawrence Street, Suite 1400, Denver,
Colorado 80202
(d) Conviction in a criminal proceeding: no
(e) Violations of federal or state securities laws: no
(f) Citizenship: Maryland, USA
MARC A. BRUNER:
(a) Name: Marc A. Bruner
(b) Present principal occupations: President, Chief Executive Officer and
Chairman of the Board of Falcon Oil & Gas Ltd.; sole director and executive
officer of BioFibre Technology International Inc., member of MAB Resources
LLC
(c) Address of principal office: 1875 Lawrence Street, Suite 1400, Denver,
Colorado 80202
(d) Conviction in a criminal proceeding: no
(e) Violations of federal or state securities laws: no
(f) Citizenship: USA
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
MAB Resources and BioFibre Technology International initially had shares in GSL
Energy Corporation, which were acquired with working capital and personal funds.
Effective May 12, 2006, GSL Energy Corporation
CUSIP NO. 71649T 10 4 PAGE 6 OF 7
merged with and into a subsidiary of the Issuer. As a result, MAB Resources and
BioFibre Technology International Inc. acquired 68,000,000 Common Shares and
2,000,000 Common Shares, respectively. In May 1, 2007, the Issuer issued
50,000,000 Common Shares to MAB Resources in consideration for the transfer of
MAB Resources' working interest in certain oil and gas properties, a revised
overriding royalty interest in such properties and MAB Resources' agreement to
forego monthly capital cost advances.
ITEM 4. PURPOSE OF TRANSACTION.
MAB Resources and BioFibre Technology International have ongoing oil and natural
gas business relations with the Issuer and acquired these interests in the
Issuer as a result of the merger of GSL Energy Corporation being merged with and
into a subsidiary of the Issuer. Neither MAB Resources LLC nor BioFibre
Technology International Inc. presently has any plan and is not considering any
proposal that relates or would result in any of the actions enumerated in Item 4
of Schedule 13D. MAB Resources LLC and/or BioFibre Technology International Inc.
may form such a plan or proposal in the future.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As May 1, 2007, MAB Resources is the record owner of 118,000,000 Common
Shares of the Issuer. As of May 1, 2007, BioFibre Technology
International is the record owner of 2,000,000 Common Shares of the
Issuer. As of May 1, 2007, MAB Resources held options to acquire
5,200,000 Common Shares of the Issuer. As of May 1, 2007, MAB
Resources, BioFibre Technology International and Mr. Bruner as a group
had a beneficial interest in 125,200,000 Common Shares of the Issuer
(44.9%).
(b) As of May 1, 2007, MAB Resources had sole power to vote and dispose of
123,200,000 Common Shares. As of May 1, 2007, BioFibre Technology
International had sole power to vote and dispose of 2,000,000 Common
Shares.
(c) During the sixty-day period preceding the filing of this Schedule 13D,
there were no transactions in the Issuer's Common Shares other than the
acquisition of 50,000,000 Common Shares on May 1, 2007.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
Common Shares beneficially owned by Mr. Bruner.
(e) Mr. Bruner continues to be the beneficial owner of more than five
percent of the Issuer's outstanding Common Shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
MAB Resources and the Issuer have entered into a stock option agreement,
effective as of August 10, 2005, pursuant to which MAB Resources has the option
to acquire 13,000,000 Common Shares of the Issuer for an exercise price of $0.50
per share. 20% of the option was exercisable on each of August 10, 2005 and
2006, and 20% of the option becomes exercisable on each of August 10, 2007, 2008
and 2009.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION
99.1 Option Agreement, effective August 10, 2005, between MAB
Resources and the Issuer*
99.2 Acquisition and Consulting Agreement between MAB Resources LLC
and PetroHunter Energy Corporation Effective January 1, 2007
------------------
* Filed as an exhibit with the initial filing of this Schedule 13D.
CUSIP NO. 71649T 10 4 PAGE 7 OF 7
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
May 11, 2007 MAB RESOURCES LLC
By: /s/ MARC A. BRUNER
--------------------------------------------
Marc A. Bruner
BIOFIBRE TECHNOLOGY INTERNATIONAL INC.
By: /s/ MARC A. BRUNER
--------------------------------------------
Marc A. Bruner
/s/ MARC A. BRUNER
-----------------------------------------------
Marc A. Bruner
EXHIBIT 99.2
ACQUISITION AND CONSULTING AGREEMENT BETWEEN
MAB RESOURCES LLC AND PETROHUNTER ENERGY CORPORATION
EFFECTIVE JANUARY 1, 2007
ACQUISITION AND CONSULTING AGREEMENT
Between
MAB Resources LLC
and
PetroHunter Energy Corporation
Effective January 1, 2007
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TABLE OF CONTENTS
PAGE
1. Definitions................................................................1
1.1 Definitions..................................................1
2. Term and Effect of Prior Agreement.........................................2
2.1 Term.........................................................2
2.2 Prior Agreements.............................................2
3. Purchase and Sale..........................................................3
3.1 Assignment of Oil and Gas Properties.........................3
3.2 MAB Reservation of Overriding Royalty Interest...............3
3.3 PetroHunter Shares...........................................3
3.4 Subsidiary Shares............................................4
3.5 Promissory Note..............................................4
3.6 Consideration by MAB.........................................4
3.7 Independent Evaluation.......................................4
4. Accounting............................................................5
4.1 Ownership of Production......................................5
4.2 Accounting...................................................5
4.3 Proration of Taxes...........................................5
4.4 Letters-in-Lieu..............................................5
4.5 Prepaids.....................................................5
4.6 Audits.......................................................5
5. Consulting Services...................................................5
5.1 Services.....................................................5
5.2 Monthly Fee..................................................6
5.3 Limitations..................................................6
6. Closing Conditions.........................................................7
6.1 MAB's Closing Conditions.....................................7
6.2 PetroHunter's Closing Conditions.............................7
7. Representations and Warranties........................................8
7.1 Each Party...................................................8
8. Conditions and Breach.................................................8
8.1 Conditions...................................................8
8.2 Breach.......................................................8
9. Indemnification.......................................................8
9.1 Indemnification of MAB.......................................8
10. Miscellaneous.........................................................9
10.1 Audit Rights.................................................9
10.2 Press Releases; Confidentiality..............................9
10.3 Construction of Agreement....................................9
10.4 Assignability................................................9
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10.5 Successors and Assigns.......................................9
10.6 Counterparts................................................10
10.7 Words and Gender............................................10
10.8 Partial Invalidity..........................................10
10.9 Incorporation by Reference..................................10
10.10 Notices 10
10.11 Governing Law...............................................10
10.12 Entire Agreement............................................11
10.13 No Third Party Beneficiaries................................11
10.14 No Recording................................................11
10.15 Necessary Documents.........................................11
SCHEDULES
1. Issuance of Additional Shares to MAB
2. Determination of Proved Reserves Thresholds
EXHIBITS
A Form of Assignment of Oil and Gas Leases (Non-Producing Properties)
B Form of Assignment and Bill of Sale (Producing Properties)
C Transfer of Sweetpea Shares
D Form of Assignment of Overriding Royalty Interest
E Lease Schedule
F Form of Promissory Note
ii
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ACQUISITION AND CONSULTING AGREEMENT
THIS ACQUISITION AND CONSULTING AGREEMENT (the "Agreement") is
effective January 1, 2007 (the "Effective Date") by and between MAB Resources
LLC, a Delaware limited liability company ("MAB"), and PetroHunter Energy
Corporation, a Maryland corporation ("PetroHunter"). MAB and PetroHunter may be
collectively referred to herein as the "Parties."
RECITALS
WHEREAS, MAB entered into various third-party agreements whereby it
acquired interests in certain oil and gas properties as set forth in Exhibit E
attached hereto and incorporated herein (the "Properties"), and assumed certain
obligations with respect thereto pursuant to the agreements (the "Underlying
Agreements");
WHEREAS, the Parties entered into that certain Management and
Development Agreement, as amended and restated, dated effective July 1, 2005
(the "Management Agreement") governing the terms of their relationship with
respect to the Properties and future acquisition of additional properties by MAB
for the benefit of PetroHunter;
WHEREAS, pursuant to various individual agreements (the
"MAB/PetroHunter Agreements") and pursuant to the Management Agreement, MAB
assigned to PetroHunter an undivided fifty-percent (50%) working interest in the
Properties (whether by way of a conveyance of leases or shares of stock) and
PetroHunter undertook certain obligations to MAB, and assumed MAB's obligations
with respect to the third parties to the Underlying Agreements, insofar as
PetroHunter's undivided interest therein;
WHEREAS, the Parties seek to materially revise their relationship, and
MAB desires to sell and fully relinquish its undivided fifty-percent (50%)
working interest in the Properties to PetroHunter, and PetroHunter desires to
acquire said interest in consideration for shares of PetroHunter and other
consideration to be paid to MAB;
NOW, THEREFORE, based on the above premises and in consideration of the
covenants and agreements contained herein, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, capitalized terms
shall have the meanings set forth herein.
"ACCOUNTING" shall have the meaning set forth in Section 4.2.
"ADDITIONAL SHARES" shall have the meaning set forth in Section 3.3.
"CLOSING DATE" shall mean a date mutually agreeable to the Parties
within one hundred thirty-five (135) days after the Effective Date.
"FUTURE PROPERTIES" shall have the meaning set forth in Section 5.1(b).
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"HYDROCARBONS" means any oil or gas in, under, and that may be produced
from lands covered by the Properties, including without limitation crude oil,
condensate, natural gas liquids, natural gas, and coalbed methane.
"MAB/PETROHUNTER AGREEMENTS" has the meaning set forth in the Preamble.
"MAB/PETROHUNTER ASSIGNMENT" shall have the meaning as set forth in
Section 3.1.
"MANAGEMENT AGREEMENT" shall mean that certain Management and
Development Agreement between MAB and PetroHunter, as amended and restated,
dated effective July 1, 2005.
"NET PROCEEDS" shall have the meaning set forth in Section 4.1.
"PROMISSORY NOTE" shall mean the promissory note attached as Exhibit F
and described in Section 3.4.
"PROPERTIES" shall mean the properties described on Exhibit E, attached
hereto, and Future Properties, together with all substitute leases, licenses,
permits, production licenses, and all subsequently acquired or derivative rights
in such leases, licenses and permits.
"PROVED RESERVES" means the amount of PetroHunter's proved oil and gas
reserves attributable to the Properties, calculated pursuant to industry
standards, generally accepted accounting principles, and in accordance with Rule
4-10 of Regulation S-X, with conversion of any proved non-gas reserves to proved
gas reserves based upon British Thermal Unit equivalents.
"PROVED RESERVES THRESHOLDS" shall mean, and shall be determined and
calculated in accordance with, the provisions of Schedule 2.
"RESERVED ORRI" shall have the meaning set forth in Section 3.2.
"SERVICES" shall mean the services provided pursuant to Section 5.1.
"SWEETPEA" shall mean Sweetpea Petroleum Pty Ltd.
"SWEETPEA SHARES" shall have the meaning set forth in Section 3.1.
2. TERM AND EFFECT OF PRIOR AGREEMENT
2.1 TERM. This Agreement shall be effective from the Effective Date and
shall continue for a period of five (5) years thereafter (the "Term"). At the
end of the 5-year period, the Parties may renegotiate and extend all or any
portion of the Agreement in a mutually agreeable written agreement. Provided,
however, such termination at the end of five years shall have no effect on the
purchase and sale of the Properties, as described in Articles 3 and 4, below.
2.2 PRIOR AGREEMENTS. This Agreement replaces the Management Agreement
and all MAB/PetroHunter Agreements in their entirety, provided however, the
Parties shall perform any obligations which accrued under such agreements prior
to the Effective Date, including
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without limitation PetroHunter's obligation to pay any and all amounts which
accrued to MAB's benefit under the Management Agreement which remain unpaid.
3. PURCHASE AND SALE
3.1 ASSIGNMENT OF OIL AND GAS PROPERTIES. On or before the Closing
Date, MAB shall:
(a) assign and transfer to PetroHunter (or its designated
subsidiary or affiliate) in one or more assignments and, PetroHunter shall
accept and assume, all of MAB's working interest and other interests and
obligations in and related to the Properties, and
(b) sell and assign to PetroHunter (or its designated
subsidiary or affiliate) all of MAB's shares of Sweetpea Petroleum Pty Ltd. (the
"Sweetpea Shares").
(collectively, the "MAB Working Interest") with an effective date of said
assignments being January 1, 2007, in accordance with the terms herein and
substantially in the form of assignments attached as Exhibits A, B, and C
(collectively, the "MAB/PetroHunter Assignment"). PetroHunter shall fully assume
all of MAB's obligations to the third parties under the Underlying Agreements.
Revenues and expenses attributable to the Properties shall be allocated as of
the Effective Date, as further set forth in Article 4, below.
3.2 MAB RESERVATION OF OVERRIDING ROYALTY INTEREST. MAB hereby
relinquishes in its entirety the overriding royalty reserved by MAB under the
Management Agreement and under each of the MAB/PetroHunter Agreements.
PetroHunter shall assign to MAB the following overriding royalty. All of the
Properties, including Future Properties, shall be subject to MAB's overriding
royalty interest in the amount of five percent (5%) (proportionately reduced,
based on PetroHunter's net revenue interest in each lease, license or permit as
of the Effective Date) of the proceeds of all sales of Hydrocarbons on the
Properties or on lands pooled or unitized therewith (the "Reserved ORRI"). The
Reserved ORRI shall be calculated based on the wellhead value of the product,
and therefore shall be subject to paying or netting back to the wellhead (from
the downstream sales price, if product is not sold at the wellhead) MAB's
proportionate share of post-production costs, including gathering,
transportation, processing costs and/or fees. The Reserved ORRI shall be
conveyed to MAB in a form similar to the Assignment of Overriding Royalty,
attached as Exhibit D, and shall continue in effect as long as oil and gas is
produced from the Properties. Provided, however, the Reserved ORRI: (a) will not
apply to or burden any lease within the area known as the Piceance II properties
(as defined in the applicable Underlying Agreement) in any respect; and (b) will
be proportionately reduced or will not apply to the extent it causes PetroHunter
Operating Company's (or other affiliate or subsidiary of PetroHunter) net
revenue interest to be less than 75% (proportionately reduced) under any lease.
Further, in the event a lease is subject to an overriding royalty owned by a
third party, as of the Effective Date, and such overriding royalty subsequently
converts to a working interest after payout, thereby resulting in an increase in
PetroHunter's net revenue interest, MAB's Reserved ORRI shall nevertheless
remain at said proportionately reduced level that was determined as of the
Effective Date.
3.3 PETROHUNTER SHARES. In addition to being subject to the Reserved
ORRI, PetroHunter shall issue and deliver to MAB the following shares and shall
execute the Promissory Note described in Section 3.5, as further consideration
for MAB's assignment and relinquishment of the MAB Working Interest: Within
thirty days after Closing, PetroHunter shall issue to MAB fifty million
(50,000,000) shares of its common stock, valued as of the close of
3
247148
trading on December 29, 2006, which is $1.62 (US) per share. PetroHunter shall
also deliver up to fifty million (50,000,000) additional shares (the "Additional
Shares") in accordance with, and subject to, Schedule 1, attached hereto, and
pursuant to the determination and calculation of the Proved Reserves, as set
forth in Schedule 2, attached hereto. The Additional Shares shall be valued as
of the close of trading on the date on which each Proved Reserves Threshold set
forth in Schedule 1 is met. If PetroHunter does not achieve one trillion cubic
feet of Proved Reserves within five years from the Effective Date, MAB will
retain the number of Additional Shares which PetroHunter is obligated to issue
up to that time, and the balance of Additional Shares, if any, will not be
issued, and any right to earn or receive such remaining Additional Shares shall
be forfeited by MAB. MAB's voting rights to each portion or number of the
Additional Shares shall commence at the point in time when PetroHunter has
achieved the applicable Proved Reserves Threshold, in accordance with Schedules
1 and 2, and not before such point in time.
3.4 SUBSIDIARY SHARES. As further consideration for MAB's assignment of
the MAB Working Interest, PetroHunter shall: (a) cause PetroHunter Energy NT
("PH/NT") to issue to MAB 25 million shares of PH/NT; and (b) cause any
subsidiary which it forms in the future to issue to MAB 7% of the total combined
number of shares which such subsidiary issues to PetroHunter and MAB at the time
of the formation of such subsidiary; provided, however, said 7% shall be
proportionately reduced to the extent that the value of the assets of said
subsidiary (as mutually determined by MAB and PetroHunter) is based on
properties which are not owned by PetroHunter or its subsidiaries as of January
1, 2007. For example, if PetroHunter forms a subsidiary during the year 2008,
and transfers properties into said subsidiary which were owned by PetroHunter
(or a subsidiary) as of January 1, 2007, and also transfers properties into the
new subsidiary which were acquired by PetroHunter (or a subsidiary) after
January 1, 2007, and the relative value of the new properties and the
pre-Effective Date properties is 50/50, MAB will receive shares in said new
subsidiary comprising 3.5% of the total number of shares issued by the new sub
(at the time of its formation) to PetroHunter and MAB combined.
3.5 PROMISSORY NOTE. At Closing, as further consideration for MAB's
assignment of the MAB Working Interest, PetroHunter shall execute the Promissory
Note substantially in the form of Exhibit F, in the principal amount of $13.5
million, payable in arrears in monthly installments of $225,000, commencing on
the first day after Closing (retroactive to the Effective Date), accruing
interest at LIBOR (to be adjusted quarterly), and which shall be unsecured and
subordinated to any other indebtedness in existence as of the date of this
Agreement or which is incurred by PetroHunter or any affiliate or subsidiary in
the future.
3.6 CONSIDERATION BY MAB. In addition to the conveyance of the MAB
Working Interests, as further consideration for the Reserved ORRI, the Monthly
Payment, the issuance of PetroHunter shares, and the assumption of MAB's
obligations under the Underlying Agreements by PetroHunter, MAB hereby
relinquishes its right to the Carried Interest and Capital Costs Advances, as
defined in the Management Agreement and the MAB/PetroHunter Agreements, any
overriding royalty interest other than the Reserved ORRI, and any right to serve
as operator of the Properties (collectively the "Relinquishment"), and MAB shall
provide the Consulting Services described in Section 5, below.
3.7 INDEPENDENT EVALUATION. MAB hereby acknowledges that Gustavson
Associates LLC has been retained by PetroHunter to conduct an independent
analysis and evaluation of the reasonable value of the MAB Working Interest, the
Reserved ORRI, the Consulting Services, and all other consideration to be
exchanged by the Parties under this Agreement. MAB further acknowledges that
this Agreement and PetroHunter's obligation to
4
247148
close this transaction is contingent upon such evaluation concluding, and
PetroHunter's board of directors agreeing, that the consideration transferred
and assigned from MAB to PetroHunter under this Agreement represents a fair and
reasonable market value as compared to the consideration transferred and
assigned from PetroHunter to MAB.
4. ACCOUNTING
4.1 OWNERSHIP OF PRODUCTION. MAB shall be entitled to receive its
proportionate share of proceeds, less expenses, from all production and products
attributable to the Properties prior to the Effective Date (the "Net Proceeds").
All Net Proceeds after the Effective Date shall be for the account of
PetroHunter.
4.2 ACCOUNTING. No later than sixty (60) days following the Closing,
PetroHunter shall prepare and deliver to MAB a detailed accounting of the Net
Proceeds (the "Accounting"). MAB shall have ten (10) days to review the
Accounting. If MAB has no objections or does not object within said ten day
period, the Accounting shall be deemed final. If MAB objects to the Accounting,
the Parties shall use good faith efforts to resolve their differences with ten
(10) days. PetroHunter shall remit the Net Proceeds to MAB no later than thirty
(30) days following the Parties mutual written approval of the Accounting.
4.3 PRORATION OF TAXES. MAB shall be responsible for its proportionate
share of all taxes, including, but not limited to, excise taxes, state severance
taxes, ad valorem taxes, and any other local, state and/or federal taxes or
assessments attributable to the Properties ("Taxes") prior to the Effective
Date, and all deductions, credits, and refunds pertaining to MAB's proportionate
interest of the Taxes ("Deductions") prior to the Effective Date, no matter when
received, shall belong to MAB. All Taxes attributable to the Properties after
the Effective Date, shall be PetroHunter's responsibility, and all Deductions
pertaining to the Properties after the Effective Date, no matter when received,
shall belong to PetroHunter. The Parties' respective responsibility for ad
valorem Taxes shall be based on the tax year for purposes of assessment.
4.4 LETTERS-IN-LIEU. At Closing, the Parties shall execute all
documents necessary to effect change of ownership, such as letters-in-lieu of
division orders or transfer orders to each purchaser of production for the
Properties, instructing each to make payments for all purchases accruing after
the end of the month in which Closing occurs directly to PetroHunter.
4.5 PREPAIDS. Prepaid insurance premiums, utility charges, rentals and
any other prepaids or accrued payables applicable to periods following the
Effective Date, if any, attributable to the Properties shall be prorated as of
the Effective Date, and amounts owing from such proration shall be settled in
the Accounting.
4.6 AUDITS. In order to verify information provided by the Parties
under this Article 4, the Parties shall each have the right to conduct an audit
of the other Party's data relating thereto for a period of two (2) years after
the Closing Date.
5. CONSULTING SERVICES
5.1 SERVICES
. MAB shall provide the following services to PetroHunter during the
Term: (a) strategic business advice on an ongoing basis, including but not
limited to financing and financing strategies; (b) locate, identify and make
recommendations for the acquisition of additional
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properties by PetroHunter (the "Future Properties"); (c) review, analyze, and
assist in negotiating the acquisition of oil and gas properties identified by
PetroHunter; and (d) MAB's exclusive obligation to PetroHunter to identify
future acquisition opportunities, subject to Section 5.3, below. All services
described in (a) through (d) are referred to herein collectively as the
"Services".
5.2 MONTHLY FEE. In consideration for the Services, commencing on the
Effective Date and continuing through the Term, PetroHunter shall pay to MAB
$25,000 a month (the "Monthly Payment").
5.3 LIMITATIONS. MAB's performance of the Services shall be subject to
the following guidelines and criteria:
(a) From time to time during the Term, MAB shall prepare and
submit written recommendations to PetroHunter's board of directors for
acquisitions of Future Properties opportunities. PetroHunter shall have the
exclusive option to acquire said properties for a period of sixty days from the
date of MAB's written recommendation to PetroHunter, and if so acquired such
properties will become Future Properties. PetroHunter shall have no rights
whatsoever to claim an interest through MAB in any Future Property unless and
until MAB first submits said written recommendation;
(b) MAB shall have no obligation to recommend any particular
property or interest therein, but shall use its reasonable discretion in all
such decisions, based on (i) MAB's economic and technical evaluation of the
prospective acquisition; (ii) PetroHunter's available funds and ability to pay
its share of acquisition and development costs; and (iii) any and all other
reasonable and applicable factors and criteria;
(c) In the event PetroHunter disagrees with MAB's decision not
to recommend a particular property or any other oil and gas interest,
PetroHunter shall have no claim or recourse against MAB for MAB's decision, and
PetroHunter shall have the right to acquire all or any portion of such
properties or interest without any further obligation to MAB with respect to
such interest, including no obligation to assign an overriding royalty interest
with respect to such property;
(d) In the event MAB recommends that PetroHunter acquire an
interest in a property and PetroHunter declines to obtain such interest, MAB
shall have no further obligation to PetroHunter with respect to such property;
(e) PetroHunter shall not be obligated to acquire any interest
in any properties or potential Future Properties recommended by MAB, and shall
use its sole discretion with regard to any and all recommendations made by MAB
to acquire an interest in any properties.
(f) PetroHunter acknowledges that MAB has fully disclosed to
PetroHunter, and MAB represents and warrants to PetroHunter that it has
disclosed to PetroHunter, all matters regarding the individual obligations of
Marc A. Bruner ("Mr. Bruner"), the largest and controlling member of MAB, with
respect to Mr. Bruner's pre-existing and ongoing relationships with Gasco Energy
Corporation, Galaxy Energy Corporation, Exxel Energy Corporation, and Falcon Oil
& Gas Ltd. PetroHunter acknowledges that the obligations of MAB are not the
obligations of Mr. Bruner personally. PetroHunter further acknowledges that Mr.
Bruner is not exclusively obligated to any of the above-named entities,
including MAB or PetroHunter, and
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that Mr. Bruner will neither devote full time to MAB or PetroHunter, nor refrain
from his continuing pre-existing obligations to the above-named entities during
the term of this Agreement.
(g) In the event PetroHunter acquires an interest in one or
more Future Properties, PetroHunter shall convey to MAB the Reserved ORRI in the
same amount and payable in the same manner as set forth in Section 3.2, above,
on said Future Properties.
6. CLOSING CONDITIONS
6.1 MAB'S CLOSING CONDITIONS. Notwithstanding anything in this
Agreement to the contrary, the obligations of MAB under this Agreement are
subject, at the option of MAB, to the satisfaction prior to the Closing Date of
the following conditions precedent:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of PetroHunter contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date, and
PetroHunter shall have performed and satisfied all covenants required by this
Agreement to be performed and satisfied by PetroHunter at or prior to the
Closing Date in all material respects.
(b) NO ACTION. No order shall have been entered by any court
or governmental agency having jurisdiction over the Parties or the subject
matter of this Agreement that restrains or prohibits the purchase and sale of
the Properties or the sale and assignment of the Sweetpea Shares as contemplated
by this Agreement and which remains in effect on the Closing Date or seeks to
recover damages from MAB resulting therefrom.
6.2 PETROHUNTER'S CLOSING CONDITIONS. Notwithstanding anything in this
Agreement to the contrary, the obligations of PetroHunter under this Agreement
are subject, at the option of PetroHunter, to the satisfaction at or prior to
the Closing Date of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MAB contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date, and MAB shall have performed
and satisfied all covenants required by this Agreement to be performed and
satisfied at or prior to the Closing Date in all material respects.
(b) NO ACTION. No order shall have been entered by any court
or governmental agency having jurisdiction over the Parties or the subject
matter of this Agreement, and no law or regulation shall be in effect, that
restrains or prohibits the purchase and sale or the Parties' respective
covenants and obligations contemplated by this Agreement and which remains in
effect on the Closing Date or seeks to recover damages from PetroHunter
resulting therefrom.
(c) TITLE TO PROPERTIES AND SWEETPEA SHARES. The execution of
the MAB/PetroHunter Assignment(s) and the Parties' rights and obligations
hereunder are subject to PetroHunter being satisfied in its sole discretion that
title to the Properties and the Sweetpea Shares have not been encumbered by MAB
during the period of its ownership.
(d) GUSTAVSON ASSOCIATES EVALUATION. The Gustavson Associates
evaluation referenced in Section 3.7, above, shall be prepared and delivered to
PetroHunter at least five days prior to Closing.
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7. REPRESENTATIONS AND WARRANTIES
7.1 EACH PARTY. The Parties each represent each to the other that:
(a) They each have the authority to enter into this Agreement
in the name, title and capacity herein stated with full and lawful authority on
behalf of their respective principals including a current authorization by their
respective boards of directors or managers approving the execution and delivery
of this Agreement;
(b) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, nor the compliance
with the terms hereof, will result in any default under any agreement or
instrument to which a Party is a party, or violate any order, writ, injunction,
decree, statute, rule or regulation applicable to a Party;
(c) This Agreement constitutes (and the assignment(s) to be
delivered herein, when executed and delivered, constitute) the legal, valid and
binding obligation of the Party, enforceable in accordance with its terms,
except as limited by bankruptcy or other laws applicable generally to creditor's
rights and as limited by general equitable principles;
(d) MAB and PetroHunter have not incurred any obligation or
liability, contingent or otherwise for broker's or finder's fees with respect to
the transactions provided for in this Agreement; and
(e) They each have, or will have when necessary, as applicable,
the authority and the ownership rights and interests to carry out the
undertakings of this Agreement.
8. CONDITIONS AND BREACH
8.1 CONDITIONS. If the closing conditions set forth in Sections 6.2,
above, are not satisfied on or before the Closing Date, then PetroHunter shall
have the right to terminate this Agreement.
8.2 BREACH. If any Party breaches this Agreement, the non-breaching
Party shall notify the breaching Party in writing of the breach, including all
particulars regarding the alleged basis for the breach. The notified Party shall
have thirty (30) days from receipt of such written notice to cure or correct the
alleged breach. Such notified Party shall commence all reasonable and necessary
steps to correct the breach within the thirty (30) day period and shall
thereafter diligently pursue the matter until the breach has been corrected. If
at the end of such period the alleged breach has not been adequately corrected,
then this Agreement shall be subject to termination by written notice from the
non-breaching Party, and the non-breaching Party shall have the right to take
appropriate action to recover damages and seek other remedies available at law
or equity.
9. INDEMNIFICATION
9.1 INDEMNIFICATION OF MAB. PetroHunter hereby agrees to indemnify MAB
for any claims or losses from any third party to the Underlying Agreements for
any obligations of MAB thereunder that PetroHunter has fully assumed under this
Agreement. Said indemnification shall specifically include any attorneys' fees
and court costs that MAB may incur as a result of any claim by a third party to
the Underlying Agreements.
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10. MISCELLANEOUS
10.1 AUDIT RIGHTS. MAB shall have the right to audit the books and
records of PetroHunter with respect to the Reserved ORRI. PetroHunter shall
permit MAB's representatives, including independent accountants, agents,
attorneys, and designated employees, to visit and (1) inspect and to review
MAB's books and records pertaining to the Reserved ORRI, (2) to make copies and
photocopies from such records and to write-down and record such information as
such representatives may request, (3) to have access to PetroHunter's
accountants and working papers (subject to such independent accountants'
policies respecting the availability to working papers), and (4) to reasonably
investigate and verify the accuracy of information furnished by PetroHunter in
connection herewith, all at MAB's expense.
10.2 PRESS RELEASES; CONFIDENTIALITY. The Parties shall consult each
other with respect to any press release or public announcement concerning this
Agreement and the transactions contemplated hereby, and, except as required by,
or pursuant to applicable law, or the applicable rules and regulations of any
governmental body or stock exchange, neither Party shall issue any press release
or public announcement without the prior written consent of the other Party, and
each Party shall keep this Agreement and its contents confidential.
10.3 CONSTRUCTION OF AGREEMENT. In construing this Agreement, the
following rules shall apply:
(a) CAPTIONS. No consideration shall be given to the captions,
which are inserted only for convenience in locating provisions of this Agreement
and not as an aid in its construction.
(b) CONTROL OF DRAFTING. No consideration shall be given to
the fact or presumption that one Party has had a greater or lesser hand in
drafting this Agreement than any other Party.
(c) DEFINED TERMS. A defined term has its defined meaning
everywhere in this Agreement, regardless of whether the term appears before or
after the place in this Agreement where the term is defined.
(d) CONSTRUCTION. All documents that are collateral to and
supportive of this Agreement are supplemental to the terms and conditions of
this Agreement and the terms and conditions of this Agreement shall control in
the event of any conflict or question that might arise between such document,
including the exhibits attached, that is collateral to or supportive of this
Agreement and this Agreement itself.
10.4 ASSIGNABILITY. This Agreement is personal in nature and may not be
assigned by MAB or PetroHunter without the prior written consent of the other
Party, which consent shall not be unreasonably withheld. Any assignment of this
Agreement, or any interest in the Properties shall be made specifically subject
to the terms and conditions of this Agreement and any assignee shall agree in
writing to be bound by the terms of this Agreement.
10.5 SUCCESSORS AND ASSIGNS. This Agreement, and all the rights,
titles, interests, requirements, covenants, obligations, terms and conditions
set forth herein, shall be binding upon, and inure to the benefit of, the
Parties hereto and their respective partners, parties of interests,
beneficiaries, heirs, representatives, trustees, and permitted successors and
assigns.
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10.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, no one of which need be executed by all the Parties hereto. Each
Party hereby authorizes the removal of the signature pages and reassembly of the
same into a single document composed of one copy of the substantive portion of
the Agreement attached to the multiple, separately executed pages of the
signatures. A copy by reproduction showing signatures, including any copies
reproduced electronically by facsimile, telecopy or otherwise, will be deemed to
be as valid as an executed copy or original. Following each execution and
delivery by counterparts, the Parties shall thereafter execute and deliver "hard
copies" of the Agreement and related documents as well, but the failure or
refusal to execute and deliver such "hard copies" shall not invalidate the
Agreement.
10.7 WORDS AND GENDER. Words of any gender used in this Agreement or
any of the documents collateral to it will be held and construed to include any
other gender, and the words in the singular number will be held to include the
plural and vice versa unless the context clearly requires otherwise.
10.8 PARTIAL INVALIDITY. The invalidity or unenforceability of any
particular provision of this Agreement or any of the documents collateral to it
will not affect the other provisions hereof or thereof, and the Agreement and
any of the documents collateral to it will be construed in all respects as if
such invalid or unenforceable provisions were omitted.
10.9 INCORPORATION BY REFERENCE. Any and all exhibits or documents or
their record referred to or described herein or attached hereto are incorporated
herein by reference for all purposes as though same were set forth herein
verbatim.
10.10 NOTICES. Except as otherwise provided above, all notices required
under this Agreement will be given in writing and delivered in person, by United
States certified mail return receipt requested, courier service, facsimile,
telecopy or e-mail addressed to each of the Parties at the addresses listed
below:
MAB Resources LLC
1875 Lawrence Street, Suite 1400
Denver, CO 80202
Attention: Marc A. Bruner
Telephone: (303) 572-8900
Telecopy: (303) 572-8927
PetroHunter Energy Corporation
1875 Lawrence Street, Suite 1400
Denver, CO 80202
Attention: General Counsel
Telephone: (303) 572-8900
Telecopy: (303) 572-8927
Any notice delivered in person, by courier service, facsimile or
telecopy shall be deemed given when received by the Party to whom it is
addressed. Each Party has the right to change its address by giving written
notice thereof to the other Parties.
10.11 GOVERNING LAW. The laws of Colorado shall govern the validity of
this Agreement, the construction of its terms, and the interpretation of the
rights and duties of the Parties, without regard to the principles of conflicts
of laws, including, but not limited to, matters
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of performance, non-performance, breach, remedies, and procedures. The laws of
Colorado shall govern the validity, construction and interpretation of any
conveyances executed pursuant to this Agreement. Forum and venue shall be
exclusively in state or federal court in Denver, Colorado.
10.12 ENTIRE AGREEMENT. This Agreement and all of its exhibits
constitute the entire agreement among the Parties respecting the subject matter
of the transactions contemplated hereby. There are no other agreements among
them other than the terms and conditions contained herein. This Agreement shall
govern the Parties' relationship with respect to the Properties as of the
Effective Date and the MAB/PetroHunter Agreements and the Management Agreement
will no longer govern the Parties relationship with respect to the Properties,
with the exception of any rights and obligations which accrued prior to the
Effective Date, which shall survive the termination of the Management Agreement.
10.13 NO THIRD PARTY BENEFICIARIES. This Agreement is intended to
benefit only the Parties hereto and their respective successors and assigns.
10.14 NO RECORDING. Except for the MAB/PetroHunter Assignment(s), the
Parties agree not to record all or any portion of this Agreement in any county
or other public records.
10.15 NECESSARY DOCUMENTS. The Parties further agree to prepare,
execute and deliver all such other documents that may be reasonably necessary to
fully effectuate all the terms and conditions herein required.
EXECUTED by each Party, effective as of the Effective Date.
MAB RESOURCES LLC PETROHUNTER ENERGY CORPORATION
By: /s/ MARC A. BRUNER By: /s/ GARRY D. LAVOLD
------------------------------- --------------------------------------
Marc A. Bruner, President Garry D. Lavold, President
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SCHEDULE 1
(Acquisition and Consulting Agreement Between
PetroHunter Energy Corporation and
MAB Resources LLC, dated effective January 1, 2007)
ISSUANCE OF ADDITIONAL SHARES TO MAB
PROVED RESERVES NUMBER OF SHARES TO BE
THRESHOLDS (BILLIONS OF ISSUED TO MAB UPON
CUBIC FEET) REACHING THRESHOLD
BCF
-------------- -----------------
150 5,000,000
300 6,000,000
500 9,000,000
1,000 30,000,000
-----------------
TOTAL 50,000,000
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SCHEDULE 2
(Acquisition and Consulting Agreement Between
PetroHunter Energy Corporation and
MAB Resources LLC, dated effective January 1, 2007)
DETERMINATION OF PROVED RESERVES THRESHOLDS
1. PetroHunter shall calculate Proved Reserves no less frequently than
on a semi-annual basis each fiscal year. In the event PetroHunter files an 8-K
with the Securities Exchange Commission describing an event which could
reasonably be expected to result in a material increase in Proved Reserves,
PetroHunter shall undertake a calculation of Proved Reserves irrespective of
whether PetroHunter has already satisfied its obligation to calculate Proved
Reserves no less frequently than on a semi-annual basis each fiscal year.
2. In the event a Proved Reserves Threshold on Schedule 1 has been met,
PetroHunter shall give prompt notice to MAB, and shall promptly issue to MAB the
number of Additional Shares corresponding to that Proved Reserves Threshold.
3. To the extent a preceding Proved Reserves Threshold on Schedule 1
has not been previously met, but a subsequent Proved Reserves Threshold has been
met, PetroHunter shall give prompt written notice to MAB, and shall promptly
issue to MAB the total number of Additional Shares corresponding to all Proved
Reserves Thresholds that have been met.
EXAMPLE. PetroHunter's first two calculations of Proved Reserves
indicate less than 150 Bcf of Proved Reserves, but the third
calculation of Proved Reserves indicates 1,000 Bcf of Proved
Reserves. Under this example, PetroHunter would issue to MAB all
50,000,000 Additional Shares.
4. For purposes of this Agreement, PetroHunter may utilize reasonable
internal calculations of Proved Reserves, as such term is defined herein, and
MAB shall accept such calculations as valid and final.
5. PetroHunter calculations of Proved Reserves constitute highly
confidential and proprietary information, except in the case where such
calculations are based upon information previously disclosed to the public. MAB
agrees to enter into a confidentiality agreement and such other arrangements as
will be required to comply with financial reporting disclosure and securities
laws.
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