EXHIBIT 10.14
ROYALTY AGREEMENT
Date effective the 2nd day of December, 1994.
BETWEEN:
LIBERTY TECHNICAL SERVICES LTD.
body corporate, having an office in the City of
Lagos, Nigeria (the "Grantor")
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ABACAN INTERNATIONAL RESOURCE MANAGEMENT INC.
a body corporate, having an office in the City of
Lagos, Nigeria (the "Royalty Owner")
RECITALS:
1. The Royalty Owner was instrumental in introducing the Grantor to the
Nigerian oil industry, the Indigenous Nigerian Oil Program and certain
indigenous Nigerian oil concession owners;
2. The Royalty Owner was instrumental in assisting the Grantor with obtaining
recognition with the Nigerian Ministry of Petroleum Resources, such
recognition being a requirement of the Ministry for a company to acquire
and maintain a Participating Interest in oil concession properties located
in Nigeria;
3. The Grantor and Royalty Owner have agreed that the Royalty Owner shall be
entitled to a gross overriding royalty on petroleum substance production by
or through the Grantor in Nigeria.
NOW THEREFORE, the Grantor and Royalty Owner agree as follows:
1. The Grantor hereby grants to the Royalty Owner, effective as of April 5,
1995, and subject to the limitations set forth in Paragraph 2 herein, an
overriding royalty (the "Overriding Royalty") on any and all oil, natural
gas and condensate ("Petroleum Substances") produced from Nigerian oil
concession block OPL 237 ("Concession Block 237"). The gross volume of
Petroleum Substances comprising the Overriding Royalty shall be three
percent (3%) of the gross monthly production of Petroleum Substances
generated from producing xxxxx attributable to the Grantor. For greater
certainty, the Royalty Owner shall be entitled to receive 1.501% of all
Petroleum Substances produced from Concession Block 237 before payout and
0.764% of all Petroleum Substances produced from Concession Block 237 after
payout. The Overriding Royalty shall not be considered to be an interest in
land, but rather an interest only in the Petroleum Substances actually
produced from Concession Block 237.
2. The grant of the Overriding Royalty to the Royalty Owner shall not include
Petroleum Substances which the Grantor uses and considers to be reasonably
necessary for the Grantor's drilling and production operations for
Concession Block 237 and shall not include Petroleum Substances which the
Grantor unavoidably loses in those drilling and production operations.
These drilling and production operations include the use of the Petroleum
Substances in batteries, treaters, compressors, separators, satellites and
similar equipment serving only royalty xxxxx on Concession Block 237 but
shall not include the use of Petroleum Substances for any enhanced recovery
operations or fuel stock for any battery or satellite serving xxxxx in
addition of royalty xxxxx on Concession Block 237 or for any gas plant or
refinery.
3. The proceeds of sale of the Overriding Royalty which the Grantor realizes
from the disposition of Petroleum Substances produced from the Royalty
Lands shall be subject to the same adjustments for costs and expenses of
bringing the Petroleum Substances to the point of sale as the Grantor would
be entitled to deduct therefrom if the Overriding Royalty were the lessor
royalty accruing to the Nigerian Ministry of Petroleum Resources.
Regulations pertaining to prices for the calculation of royalties payable
to the Government of Nigeria for Concession Block 237 shall apply to the
Petroleum Substances relating the Overriding Royalty in determining the
value of the Overriding Royalty.
4. When the Grantor receives any money on account of or as the proceeds of
sale of the Petroleum Substances relating to the Overriding Royalty, the
Grantor shall receive that money as trustee for the Royalty Owner. The
Grantor shall remit to the Royalty Owner all monies accruing to the Royalty
Owner on account of the Overriding Royalty on or before the last day of the
calendar month next following the calendar month in which such Petroleum
Substances were sold. The Grantor shall enclose with that payment a copy of
all reports the Grantor is required to submit under any applicable
government regulations for the production of such Petroleum Substances and
a written statement showing in reasonable detail the manner in which the
Grantor calculated that payment.
5. The Grantor shall comply with all terms and conditions of the oil
prospecting license or oil mining lease in effect for Concession Block 237,
including the payment of rentals, royalties and the performance of all
things necessary to maintain the title documents in good standing and in
full force and effect, all in accordance with and subject to the provisions
of the Joint Venture Agreement between the Grantor and the owner of
Concession Block 469. This Clause shall not, however, obligate the Grantor
to conduct any drilling, geophysical or geological operation on Concession
Block 237 or to pay compensatory royalty to maintain a title document, as
it pertains to Concession Block 237, in full force and effect where the
requirement to conduct such operation or to pay compensatory royalty may be
avoided by the surrender of lands subject to the affected title document to
the issuer thereof. The Grantor shall comply with all terms and conditions
of any encumbrances agreed to be borne by the Grantor.
6. Each Party entitled to information obtained hereunder may use such
information for its sole benefit. However, the parties shall take such
measures with respect to operations and internal security as are
appropriate in the circumstances to keep confidential from third persons
all such information, except information which the Parties have expressly
agreed among themselves to release and information disclosed by a Party:
(a) When and to the extent required by any government regulations and
securities laws applicable to such Party, provided that such Party
shall invoke any confidentiality protection permitted by such
government regulations and securities law;
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(b) to an affiliate, provided that such Party shall be deemed to have
required such affiliate to maintain the confidential status of the
disclosed information and that such affiliate shall be deemed to have
accepted such obligation and that such Party shall be liable for any
loss suffered by the Parties, or any of them, because of the failure
of such affiliate to maintain such information confidential;
(c) to a third person to which such Party has been permitted to assign a
portion of its interest hereunder, provided that a binding covenant is
obtained from such third person prior to disclosure which provides,
inter alia, that none of such information shall be disclosed by it to
any other third person;
(d) to the technical, financial or other professional consultants of such
Party which require such information to provide their services to such
Party or to a bank or other financial institution from which such
Party is attempting to obtain financing, provided that a binding
covenant is obtained from such consultant or financier, as the case
may be, prior to such disclosure, which provides, inter alia, that
none of such information shall be disclosed by it to any other third
person or use for any purpose other than advising such Party or
providing financing to such Party, as the case may be; and
However, the confidentiality obligation in this Clause shall not
extend to information to the extent it is in the public domain,
provided that specific items of information shall not be considered to
be in the public domain merely because more general information is in
the public domain.
7. If any Party is prevented by force majeure from fulfilling any obligation
hereunder, the obligations of the Party, insofar only as its obligations
are affected by the force majeure, shall be suspended while the force
majeure continues to prevent the performance of such obligation and for
that time thereafter as that Party may reasonably require to commence to
fulfil such obligation. A Party prevented from fulfilling any obligation by
force majeure shall promptly give the other Parties notice of the force
majeure and the affected obligations.
For the purpose of this Clause, "force majeure" means an occurrence beyond
the reasonable control of the Party claiming suspension of an obligation
hereunder, which has not been caused by such Party's negligence and which
such Party was unable to prevent or provide against by the exercise of
reasonable diligence at a reasonable cost and includes, without limiting
the generality of the foregoing, an act of God, war, revolution,
insurrection, blockage, riot, strike, a lockout or other industrial
disturbance, fire, lightning, unusually severe weather, storms, floods,
explosion, accident, shortage of labour or materials or government
restraint, action, delay or inaction.
8. No waiver by any Party of any breach (whether actuator anticipated) of any
of the covenants, provisos, conditions, restrictions or stipulations herein
contained shall take effect or be binding upon that Party unless the same
is expressed in writing under the authority of that Party. Any waiver so
given shall extend only to the particular breach so waived and shall not
limit or affect any rights with respect to any other future breach.
9. Each Party shall from time to time and at all times do all such further
acts and execute and deliver all further deeds and documents as may be
reasonably required in order to perform and carry on the terms of this
Royalty Agreement.
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10. This Royalty Agreement supersedes all other requirements, documents,
writing and verbal understandings among the Parties relating to Concession
Block 237 and any production facilities, and expresses all of the terms and
conditions agreed upon by the Parties with respect to the Concession Block
237.
11. This Royalty Agreement shall enure to the benefit of and shall bind the
Parties, their respective successors and assigns and the heirs, executors,
administrators and assigns of natural persons who are or become Parties.
12. This Royalty Agreement shall for all purposes be construed and interpreted
according to the laws of England applicable therein. The courts having
jurisdictions with respect to matters relating to this Royalty Agreement
shall be the Courts of England.
THIS AGREEMENT EFFECTIVE as of the day and year first above written.
LIBERTY TECHNICAL SERVICES LTD.
Per: /s/ Xxxx Xxxxxxxxx
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ABACAN INTERNATIONAL RESOURCE MANAGEMENT INC.
Per: /s/ Xxxx Xxxxxxxxx
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