PURCHASE AND SALE AGREEMENT

 

                           PURCHASE AND SALE AGREEMENT

     THIS AGREEMENT, dated June 28, 1996, is made and entered into by and 
between CLOVELLY OIL CO., INC. ("Seller") and TIPPERARY OIL & GAS CORPORATION 
("Buyer").

     1.   BASIS OF AGREEMENT. Seller and Buyer are parties to that certain Joint
Operating Agreement, dated May 15, 1992, by and between Tri-Star Petroleum
Company, as Operator, and Seller, Buyer and others, as non-operators, relative
to the development of the area known as the Comet Ridge Project, State of
Queensland, Australia ("the Operating Agreement"). The Operating Agreement is
attached hereto as Exhibit "A" and incorporated herein by reference for all
purposes. Seller desires to sell a portion of its undivided interest which
Seller owns or has the right to acquire in the following described Assets to
Buyer, and Buyer desires to purchase a portion of the undivided interest which
Seller owns or has the right to acquire in the following described Assets from
Seller, all in accordance with the terms and conditions of this Purchase and
Sale Agreement ("the Agreement").

     2.   AS SETS TO BE PURCHASED AND SOLD. Subject to the terms set forth in
this Agreement, and the assumption of the obligations undertaken by Buyer in
this Agreement, including without limitation those set forth in Paragraph 8
below, Seller agrees to sell to Buyer and Buyer agrees to buy from Seller the
following interests credited to Seller under the "Percentage Interest of the
Parties" in paragraph 3 of Exhibit "A" to the Operating Agreement, to wit:

                                 B.                         C.
              A.           In Leasehold               In Acquisition,
              In         Ownership & Lease         Drilling, Development,
          Production     Operating Expenses       Workover & Capital Costs
             (%)                (%)                         (%)

Before Project Payout:

          13.2890625          14.765625                    15.750000

After Project Payout:

          11.3400000          12.600000                    12.600000

in and to the following described Assets, all subject to the terms and
conditions of the Operating Agreement:

     (a)  Seller's undivided interest in and to, and/or the right to acquire an
          undivided interest in and to, the Authority to Prospect hereto (the
          "ATP") listed and described on Exhibit "B" attached hereto, and on
          Exhibit "B" attached to the 

          Operating Agreement, and any extension, renewal or replacement of 
          the ATP, howsoever denominated;

     (b)  Seller's undivided interest in and to, and/or the right to acquire an
          undivided interest in and to the oil, gas and mineral licenses or
          leases listed and described on Exhibit "B" attached hereto (the
          "Leases") and any oil, gas and mineral licenses or leases issued in
          the future covering acreage described by the ATP or any extension,
          renewal or replacement of the ATP;

     (c)  Seller's undivided interest in and to the wells listed and described
          on Exhibit "C" attached hereto (the "Wells"), including all formations
          and depths within or below the wellbore, whether or not presently
          productive;
     
     (d)  Seller's undivided interest in and to all personal and mixed property
          located on the lands covered by the ATP and Leases and used in
          operations conducted on same, whether located on or off the wellsites,
          the Leases or the ATP;
     
     (e)  Seller's undivided interest in and to, and/or the right to acquire an
          undivided interest in and to, all permits licenses or leases,
          servitudes, rights-of-way, easements, pipeline licenses and any other
          tenements or similar rights associated with the ATP and Leases and/or
          operation of the ATP and Leases;
     
     (f)  Seller's undivided interest in and to, and/or the right to acquire an
          undivided interest in and to, any and all gas purchase and sale
          agreements, crude purchase and sale agreements, leases of equipment or
          facilities and any and all other agreements and rights which are (i)
          appurtenant to the ATP, Leases or Wells, or (ii) used or held for use
          in connection with the ownership or operation of the Wells or with the
          production, treatment, sale or disposal of water, hydrocarbons or
          associated substances produced, used or disposed of in connection with
          the Wells, ATP or the Leases;
     
     (g)  To the extent of the interest purchased and sold, Seller's contract
          rights under the Operating Agreement, of any nature whatsoever,
          including, but not limited to, all choses-in-action, whether or not
          presently owned by or vested in Seller; and
     
     (h)  To the extent of the interests purchased and sold, any and all of
          Seller's other right, title or interests of any nature whatsoever
          under the provisions of the Operating Agreement, including but not
          limited to any tax benefits or tax deductions under the laws of
          Australia, the State of Queensland or any municipality thereof,
          whether or not presently accrued, owned by or vested in Seller.

          The rights and interests described in paragraphs (a) through (h) above
are collectively referred to in this Agreement as "the Assets".

     3.   PURCHASE PRICE AND CLOSING. The Purchase Price for the Assets shall be
Six Million Ninety-two Thousand One Hundred and no/100 ($6,092,100) Dollars (the
"Purchase Price"). The sale shall be completed at a closing (the "Closing") to
be held in the office of Seller, 650 Poydras Street, Suite 2350, New Orleans,
Louisiana 70130, on or before June 28, 1996 (the "Closing Date"). At the
Closing, Seller shall deliver to Buyer a fully executed Assignment in the form
attached hereto as Exhibit "D". The Purchase Price, less Ten Thousand and no/100
($10,000.00) Dollars previously paid by Buyer to Seller, the receipt and
sufficiency of which is hereby acknowledged, shall be paid to Seller by
certified or cashier's check made payable to the order of Clovelly Oil Co.,
Inc., Taxpayer Identification No.47-0552306.

     4.   THE EFFECTIVE DATE. The Effective Date hereof, for all purposes, shall
be July 1, 1996, at 7:00 a.m., Greenwich Mean Time Plus Ten, Brisbane Australia.

     5.   POST CLOSING ADJUSTMENTS. Within sixty (60) days after the Closing, 
the parties shall undertake to agree with respect to the adjustments or payments
that were not finally determined as of the Closing, and the amount due from
Buyer or Seller, as the case may be, pursuant to the PostClosing adjustment.
Seller shall provide Buyer access to such of Seller's records as may be
reasonably necessary to a determination of Post-Closing adjustments. Payment by
Buyer or Seller shall be made in immediately available funds within five (5)
days of agreement. If the Post-Closing adjustment has not been agreed upon
within the time period set forth herein, either party may seek to enforce any
rights it claims hereunder.

     6.   MUTUAL REPRESENTATIONS AND WARRANTIES. Each party hereto represents 
and warrants to the other that:

          a. It is a corporation duly organized, validly existing and in
    good standing under the laws of the State of its incorporation;

          b. It has all authority necessary to enter into this Agreement
    and to perform all its obligations hereunder;

          c. Its execution, delivery and performance of this Agreement and
    the transactions contemplated hereby will not: (i) violate or conflict
    with any provision of its Certificate of Incorporation, By-Laws or
    other governing documents; (ii) result in the breach of any term or
    condition of, or constitute a default or cause the acceleration of any
    obligation under any agreement or instrument to which it is a party or
    by which it is bound; or (iii) violate or conflict with any applicable
    judgment, decree, order, permit, law, rule or regulation, state or
    federal, of the United States of America;

          d. This Agreement has been duly executed and delivered on its behalf,
    and at the Closing all documents and instruments required hereunder will
    have been duly executed and delivered. This Agreement, and all such
    documents and instruments shall constitute legal, valid and binding
    obligations enforceable in accordance with their respective terms, except
    to the extent enforceability may be affected by bankruptcy, reorganization,
    insolvency or similar laws affecting creditors rights generally; and
                                                             
          e. No legal or administrative proceeding is pending or threatened 
     that would prohibit it from entering into or consummating this Agreement.

7.   SELLER'S REPRESENTATIONS AND WARRANTIES.

          a. Seller agrees to convey, assign and transfer the undivided interest
    in the Assets to be purchased by Buyer without warranty of title, express or
    implied, not even for return of the purchase price, except that Seller
    shall agree to warrant and defend title to the interests and properties
    against every person claiming an interest therein by, through and under
    Seller, but not otherwise. This limited warranty of title shall expire two
    years from the anniversary date of the sale unless Buyer shall have
    furnished Seller with written notice, with reasonably full particulars, of
    its objection to title on or before the second anniversary of the Effective
    Date of the sale.

          b. Seller represents that the interests which Buyer shall receive
    shall include production from each well located on the ATP and Leases in an
    amount which is not less than the percentage net revenue interest set forth
    in Paragraph 2 above. In addition, Seller represents that the interest to
    be conveyed, assigned and transferred to Buyer shall not require Buyer to
    bear a greater percentage of costs and expenses than the percentage working
    interest set forth in Paragraph 2 above.

          c. To the best of its knowledge, Seller represents that the interest
    in Assets to be purchased by Buyer are free and clear of all liens,
    judgments, mortgages and other burdens or encumbrances.

          d. To the best of its knowledge, Seller represents that title to
    undivided interest in the Assets to be purchased by Buyer has not been
    forfeited under the terms of any Joint Operating Agreement covering said
    interests and that it is not in arrears with respect to any joint interest
    billing account.

          e. Seller agrees to transfer to Buyer the full right of subrogation to
    enforce the covenants and warranties, if any, which Seller is entitled to
    enforce against Seller's predecessors in title to the subject interest in
    the Assets to be purchased by Buyer hereunder.

     8.   BUYER'S PLUGGING AND ABANDONMENT OBLIGATIONS. Notwithstanding any
provision to the contrary, to the extent of the interest purchased and sold,
Buyer agrees to accept full 

responsibility for and all costs associated with the plugging and abandonment 
of all existing and subsequently drilled wells on the Assets, and the removal 
of all existing and subsequently installed pipelines to or from the Assets.

     9.   ALLOCATION OF LIABILITY AND INDEMNIFICATIONS.

               a.   DEFINITIONS.

                    The term "ASSUMED LIABILITIES" shall mean and
          include:

                    (i)   All costs, expenses, liabilities and
          obligations assumed or otherwise agreed to be paid by Buyer
          pursuant to the terms of this Agreement; and

                    (ii)  All costs, expenses, liabilities, claims and
          obligations arising out of, in connection with, or resulting
          directly or indirectly from the ownership or operation of
          the Assets, arising out of or resulting directly or
          indirectly from the ownership or operation of the Assets,
          but excluding Retained Liabilities, insofar as such claims
          relate to periods of time subsequent to the Effective Date.

                    The term "RETAINED LIABILITIES" shall mean and
          include:

                    (i)   All costs, expenses, liabilities and
          obligations assumed or otherwise agreed to be paid by Seller
          pursuant to the terms of this Agreement;

                    (ii)  All costs, expenses, liabilities, claims and
          obligations (except plugging and abandonment related costs,
          expenses, liabilities, claims and obligations attributable
          to the interest sold) arising out of, in connection with or
          resulting directly or indirectly from production or sale of
          hydrocarbons attributable to the Assets, insofar as such
          claims relate to periods of time prior to the Effective
          Date; and

                    (iii) All legal fees charged to the joint account and 
          attributable to the interests purchased and sold hereunder prior 
          to the Effective Date.

               b.   LIABILITIES.   Buyer agrees to assume, pay, perform,
     fulfill, discharge and be liable for all Assumed Liabilities, and
     Seller agrees to retain, pay, perform, fulfill, discharge and be and
     remain liable for all Retained Liabilities.

               c.   SELLER'S INDEMNITY. SELLER AGREES TO DEFEND, INDEMNIFY
     AND HOLD HARMLESS BUYER, ITS OFFICERS, DIRECTORS, AGENTS AND
     EMPLOYEES, OR ANY OF THEM, FROM AND AGAINST ANY AND ALL LOSSES,
     CLAIMS, SUITS, CONTROVERSIES, LIABILITIES AND EXPENSES (INCLUDING,
     WITHOUT LIMITATION, COURT COSTS, REASONABLE EXPENSES OF LITIGATION AND
     REASONABLE ATTORNEY'S FEES) ARISING DIRECTLY OUT 

     OF SELLER'S OWNERSHIP OR USE OF THE INTEREST IN THE ASSETS TO BE PURCHASED
     HEREUNDER; PROVIDED, HOWEVER, THAT THIS INDEMNITY SHALL BE LIMITED TO 
     THOSE CLAIMS, RIGHTS, DEMANDS AND CAUSES OF ACTION ARISING FROM ACTIVITY
     OCCURRING PRIOR TO THE EFFECTIVE DATE OF THE SALE.

               d.   BUYER'S INDEMNITY. BUYER AGREES TO DEFEND, INDEMNIFY AND 
     HOLD HARMLESS SELLER, ITS OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES, OR 
     ANY OF THEM, FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, SUITS, 
     CONTROVERSIES, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
     COURT COSTS, REASONABLE EXPENSES OF LITIGATION AND REASONABLE ATTORNEY'S 
     FEES) ARISING DIRECTLY OUT OF BUYER'S OWNERSHIP OR USE OF THE INTEREST IN
     THE ASSETS TO BE SOLD HEREUNDER; PROVIDED, HOWEVER, THAT THIS INDEMNITY 
     SHALL BE LIMITED TO THOSE CLAIMS, RIGHTS, DEMANDS AND CAUSES OF ACTION 
     ARISING FROM ACTIVITY OCCURRING ON OR AFTER THE EFFECTIVE DATE OF THE SALE.

     10.  CONDITION OF THE ASSETS. Prior to the Closing, Buyer shall have the
right to make an inspection of the Assets prior to the Closing. BUYER
UNDERSTANDS AND AGREES THAT THE PERSONAL PROPERTY INCLUDED IN THE ASSETS IS SOLD
"AS IS" AND "WHERE IS" WITH ALL FAULTS AND DEFECTS. WITHOUT RECOURSE BY BUYER,
ITS SUCCESSORS AND/OR ASSIGNS, AGAINST SELLER AND WITHOUT COVENANT,
REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY WHATSOEVER; AND
WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING CLAUSE, SELLER
EXPRESSLY DISCLAIMS AND NEGATES (A) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
FOR A PARTICULAR PURPOSE AND/OR TITLE TO THE ASSETS AND (B) ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY. BUYER HEREBY RELEASES SELLER FROM ANY AND
ALL LIABILITY WITH RESPECT TO THE CONDITION OF THE PERSONAL PROPERTY INCLUDED IN
THE ASSETS, WHETHER OR NOT CAUSED BY SELLER'S SOLE OR PARTIAL NEGLIGENCE AND
WAIVES ITS RIGHT TO RECOVER FROM SELLER ANY DAMAGES, CLAIMS, FINES, PENALTIES OR
EXPENSES, THAT MAY IN ANY WAY BE CONNECTED WITH THE PHYSICAL CONDITION OF THE
PERSONAL PROPERTY INCLUDED IN THE ASSETS, WHETHER NOW KNOWN OR UNKNOWN.

     11.  REVIEW AND INSPECTION OF THE ASSETS.  Prior to the Closing, Buyer 
shall have the right to perform due diligence review and inspection of the 
Assets. Seller shall make available, both before and after Closing, to Buyer 
all information and data relating to the Assets as they may have and as 
reasonably requested by Buyer, including, but not limited to the following 
(a) financial and accounting records; (b) production, engineering, geological 
and geophysical data and reports for the Leases; (c) copies of engineering, 
geological and geophysical studies, subject to any license and non-disclosure 
requirements; (d) copies of seismic data across any of the Leases (subject to 
any 

license restriction and non-disclosure requirements); (e) title records, 
including, but not limited to, copies of the Leases; (f) material and 
relevant information concerning pending litigation (excluding information 
subject to attorney-client or attorney work product privilege); (g) 
regulatory compliance; (h) contracts between Seller and third parties with 
regard to the Assets; and (i) all permits and licenses pertaining to the 
Assets. Nothing contained in this paragraph shall obligate Seller to take any 
action or expend any money to acquire anything for Buyer which Seller does 
not already have in its possession. Seller does not represent that it has all 
of the above referenced material in its possession, nor does Seller warrant 
the accuracy of any such material. Buyer agrees that the burden of due 
diligence to satisfy itself as to the status of these matters by other means 
if Seller does not possess the listed material shall be upon Buyer.

     12.  WAIVER.   Seller and Buyer certify that they are not "Consumers"
within the meaning of the Texas Deceptive Trade Practices - Consumer Protection
Act, Subchapter E of Chapter 17, Sections 17.41, et seq., of the Texas Business
and Commerce Code, as amended (the "DTPA"). The parties covenant, for themselves
and for and on behalf of any successors and assignees, that if the DTPA is
applicable (a) the parties are "business consumers" hereunder, (b) each party
hereby waives and releases all of its rights and remedies thereunder (other than
Section 17.555, Texas Business and Commerce Code) as applicable to the other
party and its successors, and (c) each party shall defend and indemnify the
other from and against any and all claims, demands, or causes of action of or by
that party or any successor or any of its affiliates based in whole or in part
on the DTPA, arising out of or in connection with the transaction set forth in
this Agreement.

                          WAIVER OF CONSUMER RIGHTS

          PURCHASER WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE
          PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ.,
          BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
          RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY
          OF PURCHASER'S OWN SELECTION, PURCHASER VOLUNTARILY CONSENTS
          TO THIS WAIVER.

    13.   NOTICES.  All communications required or permitted under this
Agreement shall be in writing and any communication or delivery hereunder shall
be deemed to have been fully made if actually delivered, or if mailed by
registered or certified mail, postage prepaid, return receipt requested, to the
address as set forth below:

               SELLER
               
               Clovelly Oil Co., Inc.
               650 Poydras Street
               Suite 2350
               New Orleans, Louisiana 70130
               Attention: Richard G. Pfister

               Telephone:  (504) 522-7496
               Telecopier: (504) 523-6302
               
               
               BUYER
               
               Tipperary Oil & Gas Corporation
               533 Seventeenth Street
               Suite 1550
               Denver, Colorado 80202
               Attention:  David L. Bradshaw
               Telephone:  (303) 293-9379
               Telecopier: (303) 292-3428

     14.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING, HOWEVER, ANY
PROVISION OF TEXAS LAW THAT WOULD REOUIRE THE APPLICATION OF THE LAW OF A
DIFFERENT JURISDICTION.

     15. GOVERNMENTAL APPROVALS. Subsequent to the Closing, Seller agrees to
cooperate fully with Buyer in obtaining any desired consents or approvals of the
Government of Australia, or any State thereof, including the taking of any steps
necessary to seek the consent or approval of any transfer into Seller of any
part of the interests in the Assets acquired hereunder, together with the
execution of any document necessary, in the judgment of Buyer, or its counsel,
to obtain any such consent or approval.

     16. FURTHER ASSURANCES. Incidental and subsequent to Closing, each of the
parties shall execute, acknowledge, and deliver to the other such further
instruments (including any stamp duty or other form necessary for, or incident
to, the notation or transfer to Buyer of any title or interest in either the
Assets or the Operating Agreement), and to take such other actions as may be
reasonably necessary to carry out the provisions of this Agreement.

     17. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay its own fees and
expenses incident to the negotiation, preparation and execution of this
Agreement, including attorneys' and accountants' fees.

     18. EXISTING RELATIONSHIP. Seller and Buyer are co-working interest owners
in the Assets. As a result of this relationship, Buyer acknowledges that it is
thoroughly familiar with the condition of the interests and properties to be
sold to it, and that it has extensive and personal knowledge of all operations
which have been conducted by the working interest owners on and with respect to
the interests and properties which are the subject of this Agreement.

     19. ANNOUNCEMENTS. Seller and Buyer shall consult with each other prior to
the release of any press releases and other announcements concerning this
Agreement or the transactions contemplated hereby.

     20. ARBITRATION. Seller and Buyer agree that all disputes or disagreements
arising under the terms of this Agreement or arising with respect to any
obligations assumed by the parties hereto shall be submitted to binding
arbitration subject to the rules of the American Arbitration Association, except
as to the choice of arbitrators. The arbitrators shall be chosen by each party
choosing an arbitrator who shall select a third arbitrator. If the chosen
arbitrators fail to agree on a third arbitrator, either party may petition any
state District Court in Midland County, Texas, to select a third arbitrator.

     21. EXHIBITS. The exhibits to this Agreement are incorporated herein by
reference.

     22. SUCCESSORS AND ASSIGNS. The terms, covenants and conditions hereof
bind and inure to the benefit of Buyer and Seller and their successors and
assigns.

     23. CONFLICTS. In the event of a conflict between this Agreement and the
terms and conditions of the Operating Agreement, the provisions of this
Agreement shall prevail. In all other respects, this Agreement shall supersede
all prior agreements regarding the subject matter hereof, whether written or
oral.

     24. SURVIVAL. The covenants, obligations, indemnities, representations and
warranties included in this Agreement shall survive the Closing and remain
actionable thereafter.

     25. PRODUCT OF NEGOTIATION.  This Agreement is the product of negotiation
between Buyer and Seller. No fiduciary duty owed by Buyer and Seller in any
prior agreement between Buyer and Seller shall apply to the process of
negotiation of this Agreement.

     IN WITNESS WHEREOF, this Agreement has been executed by the parties before
the undersigned competent witnesses as of the date first written above.

WITNESSES:                             SELLER:

                                       CLOVELLY OIL CO., INC.
/s/ Leisa S. Smith
- ------------------------------

/s/ Lisa C. Spizale
- ------------------------------         By: /s/ Richard G. Pfister
Richard G. Pfister                         ----------------------------------
                                               RICHARD G. PFISTER
                                       Its: President

                                       BUYER:

                                       TIPPERARY OIL & GAS
                                       CORPORATION
/s/ Leisa S. Smith
- ------------------------------

/s/ Lisa C. Spizale
- ------------------------------         By: /s/ David L. Bradshaw
                                           ------------------------------------
                                               DAVID L. BRADSHAW
                                       Its: President

 

Basic Info X:

Name: PURCHASE AND SALE AGREEMENT
Type: Purchase and Sale Agreement
Date: Dec. 30, 1996
Company: TIPPERARY CORP
State: Texas

Other info:

Date:

  • May 15 , 1992
  • June 28 , 1996
  • July 1 , 1996

Organization:

  • Tri-Star Petroleum Company
  • Comet Ridge Project
  • Leasehold In Acquisition
  • Ownership & Lease Drilling
  • Clovelly Oil Co. , Inc.
  • Taxpayer Identification No.47-0552306
  • Greenwich Mean Time Plus Ten
  • Texas Business and Commerce Code
  • Tipperary Oil & Gas Corporation 533 Seventeenth Street Suite
  • American Arbitration Association

Location:

  • Wells
  • Queensland
  • Brisbane Australia
  • United States of America
  • New Orleans
  • Louisiana
  • Denver
  • Colorado
  • Midland County
  • Texas
  • TIPPERARY

Money:

  • $ 6,092,100 Dollars
  • $ 10,000.00 Dollars

Person:

  • Wells
  • Richard G. Pfister Richard G. Pfister
  • Leisa S. Smith
  • Lisa C. Spizale
  • DAVID L. BRADSHAW

Time:

  • 7:00 a.m.

Percent:

  • %