JOINT VENTURE AGREEMENT THIS AGREEMENT made this 3rd day of November, 2006 BETWEEN BUFFALO RIVER DENE DEVELOPMENT CORPORATION a body corporate, incorporated under the laws of Saskatchewan, Having an office in Dillon, Saskatchewan (“hereinafter called...
THIS
AGREEMENT made this 3rd day of November, 2006
BETWEEN
BUFFALO
RIVER DENE DEVELOPMENT CORPORATION
a
body corporate, incorporated under the laws of
Saskatchewan,
Having
an office in Xxxxxx, Saskatchewan (“hereinafter called
BRDDC”)
OF
THE
FIRST PART
-
and
-
ACCESS
ENERGY INC.,
a
body corporate incorporated under the laws of Canada and having a head office
in
Toronto,
Ontario
(hereinafter
called "Access")
OF
THE
SECOND PART
WHEREAS
BRDDC has
expressed a desire to become directly involved in the development and management
of oil and gas reserves located on the traditional lands of the Buffalo River
Dene Nation (BRDN) to maximize the economic benefits available to the BRDN
through exploration of those resources;
AND
WHEREAS BRDDC is wholly owned private corporation of BRDN incorporated for
the
purpose of acquiring, holding and managing oil and gas properties and rights
on
behalf of the Members of the BRDN;
AND
WHEREAS BRDDC wish to have Access explore and develop its oil and gas reserves
on an exclusive basis within the Project Lands in their traditional lands;
AND.
WHEREAS Access has expressed a desire to explore, develop and produce the
petroleum, natural gas within the said traditional lands of BRDN on terms and
conditions suitable to BRDDC and Access;
AND
WHEREAS Access and BRDDC have agreed that this joint venture shall be named
.the
A10 PROJECT;
NOW
THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements herein contained the parties hereto do hereby agree
as
follows:
DEFINITIONS
1.1
|
In
this agreement, including the recitals, this clause and the Schedules
hereto, unless otherwise defined below and unless the context otherwise
required, the definitions as set out in the Operating Procedure
shall
apply and, in addition, the following words shall have the following
meaning:
|
a)
|
"Accounting
Procedure" means the 1996 PASWC Accounting Procedure as amended and
attached as a schedule to Schedule "A";
|
1
b)
|
"A10
Project or A10" means the Development and Operation of the A10 project
and
related facilities proposed to be constructed on the Traditional
Lands.
|
c)
|
"BRON"
means Buffalo River Dene Nation
|
d)
|
"Costs"
means all costs incurred by the Operator including required facilities
that are directly attributable to a Project;
|
e)
|
"Elections”
are those for the Operating Procedure attached as Schedule
"C";
|
f)
|
"Gas"
has the meaning ascribed to it in the Act;
|
g)
|
“Lands”
means those lands including all available Oil and Gas as of the date
of
this Agreement,
within the lands as identified in Schedule “B” attached
hereto.
|
h)
|
"Oil"
has the meaning ascribed to it in the Act;
|
i)
|
"Operating
Procedure" means the 1990 CAPL Operating Procedure attached as Schedule
"A" and includes the 0000 XXXXX Accounting procedure;
|
j)
|
"Operator"
shall mean Access Energy Ltd.
|
k)
|
"Payout"
means the point at which Access has recovered all costs directly
attributable to a Project including all costs associated with a facility
and calculated prior to any distribution of profits derived from
a
Project;
|
l)
|
"Project
Lands" means a site of a defined parcel of land to be negotiated
for due
consideration within the Traditional Lands;
|
m)
|
"Production
Spacing Unit" means the Spacing Unit designated by the applicable
government authority for the purpose of production;
|
n)
|
"Project"
means in the case of a gas or conventional oil discovery, the drilling,
completion and tie-in of a single gas well or conventional oil well,
and
in the case of a heavy oil discovery, an oil sands pool development
including all drilling, completions and facilities in conjunction
with it;
|
o)
|
"Traditional
Lands" means lands that are traditionally used by the Buffalo River
Dene
Nation;
|
p)
|
"Spacing
Unit" means the area allocated to a Well for the purpose of drilling
and
producing a Well pursuant to the applicable government laws, rules,
regulations or order now or hereafter in effect, and in their absence
means the section containing the Well;
|
q)
|
"Well"
has by meaning ascribed to it in the Mineral Resources Act, 1985,
S.S.
1984-85-86 c. M-16.1, as amended, and the regulations thereunder.
|
1.2
|
The
following Schedules are attached to and made a part of this agreement:
|
Schedule
"A" 1990
CAPL
Operating Procedure and 1996 PASWC Accounting Procedure
Schedule
"B" Maps
Schedule
"C" Elections
Schedule
"D" Memorandum
of Understanding
2
1.3
|
If
any term or provision contained in the body of this Agreement conflicts
with a term or provision in a Schedule, the term or provision in
the body
of this Agreement shall prevail.
|
1.4
|
Nothing
herein contained shall be construed as creating a partnership or
association of any similar kind or as imposing upon any party hereto
any
partnership duty, obligation or liability to any other party hereto.
|
ARTICLE
I - GENERAL
PROJECT
DEVELOPMENT
2.1
|
At
Access's option but in consultation with BRDDC, BRDDC will consent
to and
BRDDC will jointly apply with Access, under this joint venture, for
leases, permits and licensing as required as permitted by laws and
regulations, and consent of the Buffalo River Dene Nation for the
exploration and development of the Project Lands which will be required.
|
2.2
|
It
is acknowledged by BRDDC that Access has expended monies, in connection
with this agreement, prior to the execution of this agreement and
acknowledges that those amounts are recoverable as project costs.
Access
will provide BRDDC with an accounting of those costs and the Operating
Procedure will apply.
|
OBLIGATIONS
3.1
|
Upon
execution of the Agreement, Access shall be the Operator subject
to the
Operating Procedure. Access shall have overall supervision, direction,
control, staging and phasing of the developments contemplated by
this
Agreement but at all times, in consultation with BRDDC. Access shall
at
all times, consult with BRDDC in a timely fashion (at least quarterly)
in
regard to all matters as contemplated by this Agreement. Access will
respect Traditional Environmental Knowledge in the decision making
process.
|
3.2
|
It
is acknowledged by ACCESS that this is agreement is· not intended nor will
it be construed by ACCESS or any party asserting an enforceable interest.
legal or otherwise, in the subject matter and no legal interests
are
created or implied by this agreement, nor is this agreement to be
an
Aboriginal "IMPACT AND MANAGEMENT OF BENEFITS AGREEMENT"
("IMBA")
and this agreement is not a
waiver
or release by BRDN of ACCESS or any third party asserting an interest
in
the subject matter of this agreement to abridge or replace any legal
requirement, duty, convention or practice of the Federal, Provincial
or
any municipal government to consult with BRDN as required under:
|
1.
|
practice;
|
2.
|
convention;
|
3.
|
the
common law;
|
4.
|
duty
to consult;
|
5.
|
honourable
dealing;
|
6.
|
the
constitutional laws of BRDN and the constitutional laws of Canada;
|
7.
|
statutory
law and regulations and requirements including land claims, specific
claims or TLE settlement agreements;
|
8.
|
regulatory
requirements including the regulatory duty to consult; and
|
9.
|
any
other understand, practice or law.
|
ARTICLE
II - MANAGEMENT
MANAGEMENT
3
4.1
|
A
Project Committee shall be formed which shall be comprised initially
of
two members designated by BRDDC and two members selected by ACCESS.
A
selection process will be carried by these members to appoint a fifth
member. The procedures, rules for appointment and replacement of
members,
terms of office, and authority of the Committee and similar matters
will
be as agreed by the Parties from time to time, and shall be consistent
with this agreement. The Project Committee shall have those advisory,
negotiating and other functions relating to the work to be carried
on
pursuant to this agreement that are agreed by the Parties from time
to
time, it being intended that the Project Committee will serve as
a forum
for ongoing communication, analysis, strategic planning, project
management, budget analysis and similar functions.
|
ARTICLE
III - DEVELOPMENT
SEISMIC
5.1
|
Access
shall be responsible for applying for all authorization, permits,
leases,
surface leases or rights of way required to carry out the Projects
and to
carry out its seismic programs (all of which are called the "Contracts").
BRDDC and BRDN agree to provide support and consultation in regard
to
these Contracts.
|
5.2
|
Access
shall assume the entire cost, risk and expense of all the seismic
programs
conducted or any seismic reprocessing required on the Project Lands.
In
the event that Access should receive a bona fide third party offer
to
purchase any of the seismic data acquired through such expenditure,
and
provided further that the sale of such data would not be detrimental
to
either of the parties hereto, then BRDDC and Access may sell the
said data
and equally share the net proceeds thereof.
|
5.3 |
Access
shall provide to BRDDC all information which it may obtain from the
seismic program or seismic programs conducted on the Project Lands
on the
understanding that such information shall remain strictly confidential
and
shall not be distributed or disseminated by BRDDC to any third party.
|
FEASIBILITY,
IMPACT and BENEFIT STUDY and REPORT
6.1
|
The
Parties agree that a feasibility and impact and benefit study is
necessary
which shall be undertaken as part of the preparation of a business
plan
related to the Development and Operation of the A 10 Project.
|
6.2
|
The
Parties agree that the federal and provincial governments may have
certain
grants, subsidies or other assistance available to assist in funding
all
or a portion of a feasibility study. The BRDDC, in consultation with
and
with the assistance of ACCESS may apply for all such grants, subsidies
and
other assistance of which it is aware.
|
6.3
|
Without
limiting the generality of the foregoing and save for any funding
which
may be available, all costs - of the feasibility, impact and benefit
study
shall be paid by ACCESS, and all such reasonable costs so paid shall
be
recoverable in full as Project Costs from proceeds of Project Financing
or
Operation.
|
ENGINEERING
DESIGN. CONSTRUCTION AND MANAGEMENT
7.1
|
The
Parties acknowledge that the professional engineering services will
be
required for many purposes relating to Development and Operation
of the A
10 Project, including design, selecting and qualifying equipment,
site
preparation, construction, project management, plant commissioning,
startup and ongoing Operation. The Parties agree that ACCESS is
authorized, but not obliged, to engage in its own name and on its
own
account with full disclosure to and in consultation with BRDDC, one
or
more recognized and suitable engineering firm(s) selected by ACCESS,
to
provide the required engineering services, following a formal bid
process
based on appropriate published criteria. Such contract, or contracts,
shall contain terms and conditions consistent with the published
formal
bid criteria and which are normal and customary for a project of
this
scope, kind and location.
|
4
7.2
|
Management
of the areas within the Project Lands will include undertaking
an
Environmental Impact Assessment, incorporating Traditional Environmental
Knowledge, which will include, but not be limited to, impact upon
flora
and fauna and culture.
|
7.3
|
Without
limiting the generality of the foregoing, all costs of any engineering,
design, construction, management and similar contracts shall be
paid by
ACCESS pending completion of the Agreements, and all such reasonable
costs
so paid shall be recoverable in full as Project Costs from proceeds
of
Project Financing or Operation.
|
ARTICLE
IV - PROFITS
PROFIT
DISTRIBUTION
8.1
|
The
Parties shall develop and operate·the A10 Project in a manner intended to
maximize the economic benefit to the Parties over the life of the
A 10
Project, and in a manner which meets or exceeds industry imposed
standards
and practices for such a project.
|
8.2
|
Subject
to the right of participation of BRDDC as set-out herein, if Access
proposes a Project or a Well for the Lands and thereby elects to
drill a
Well and pay 100% of the capital costs and expenses associated with
that
Well on the Lands, Access will earn a 100%
working
interest within the section of land comprising the Project or the
Well.
BRDDC's interest in the specific project related to it [confidential
treatment requested].
|
8.3
|
BRDDC
shall have the right to [confidential treatment requested] in any
Project
as contemplated herein on the Lands thereby reducing the cash contributed
and the earned interest of Access by the amount of the participation
of
BRDDC. For each Project proposed on the Lands, Access will deliver
a
Project Notice and Authority for Expenditure ("AFE") as well as
a
presentation by representatives of Access to BRDDC. BRDDC shall
make its
decision pursuant to Article 902 of the Operating Procedure.
|
8.4
|
The
definition of Payout as set-out herein in this Agreement shall
apply to
any Projects or Xxxxx related to the Projects on the Lands.
|
8.5
|
In
Summary:
|
BRDDC
will be entitled to the following interests:
BRDDC
will be entitled to participate in a Project "on a Project by Project/Well
by
Well basis" for an additional working interest, [confidential treatment
requested]:
Before
Payout Working Interest:
|
[confidential
treatment requested]
|
After
Payout Working Interest:
|
[confidential
treatment requested]
|
[confidential
treatment requested]
5
Access
would be entitled to the following interests if BRDDC chooses not to
participate:
Capital Costs of the Project: | 100% |
Before
Payout Earned Working Interest:
|
[confidential
treatment requested]
|
After
Payout Earned Working Interest:
|
[confidential
treatment requested]
|
Access
would be entitled to the following interests if BRDDC chooses to participate:
Capital Cost of the Project:100 % | 100% |
Before
Payout Earned Working Interest:
|
[confidential
treatment requested]
|
After
Payout Earned Working Interest:
|
[confidential
treatment requested]
|
Before Payout Earned Working Interest: | [confidential treatment requested] |
After Payout Earned Working Interest: | [confidential treatment requested] |
ARTICLE
V
MEETINGS
9.1
|
Access
will, in addition to the technical presentations held in conjunction
with
the serving of a Project Notice/AFE under, hold quarterly meetings
with
the BRDDC for the purpose of outlining the previous quarters' activity
and
at a minimum the proposed .work program for the next following quarter.
|
9.2 | Both parties agree that they will conduct a meeting at least once every 120 days for the purpose of discussion of any and all matters. |
ARTICLE
VI
ARBITRATION
10.1
|
In
the event 9f
any dispute, claim, question or difference arising out of or relating
to
this agreement or the breach thereof, the parties hereto shall use
their
best endeavours to settle such disputes, claims, questions or differences.
To this effect, they shall consult and negotiate with each other,
in good
faith and understanding of their mutual interests, to reach a just
and
equitable solution satisfactory to both parties. If they do not reach
such
solution within a period of thirty (30) days, then upon notice by
either
party to the other in writing, the disputes, claims, questions or
differences (referred to herein as "disputes") shall be finally settled
by
arbitration in accordance with the provisions of the Arbitrations
Act (Saskatchewan)
including any amendments thereto and the following shall apply to
such
arbitration:
|
a)
|
The
disputes shall be referred to the arbitration and final decision
of one
arbitrator to be appointed by mutual agreement between the parties;
|
b)
|
Should
there be a failure to appoint an arbitrator as provided above,
such
arbitrator shall be appointed by Her Majesty's Court of Queen's
Bench for
Saskatchewan;
|
c)
|
The
arbitrator shall have the power to obtain the assistance, advice
or
opinion of any expert as he may think fit and shall have the discretion
to
act upon any assistance, advice or opinion so obtained;
|
d)
|
The
arbitrator shall be instructed that time is of the essence in proceeding
with his determination of any dispute, claim, question or difference;
|
6
e)
|
The
costs of the arbitrator and any costs associated with the proceedings
shall be borne equally by both parties and each party shall be
responsible
for any costs associated with its own legal and counseling advisors,
unless otherwise decided by the arbitrator;
|
f)
|
The
arbitration award shall be given in writing, and shall be final,
binding
on the parties, not subject to any appeal, and shall deal with
questions
of cost of arbitration and all matters related thereto;
and
|
g)
|
Judgment
upon the award rendered may be entered into any court having jurisdiction,
or application may be made to such court for a judicial recognition
of the
award or an order of enforcement, thereof, as the case may be.
|
ARTICLE
VII
APPLICATION
OF OPERATING PROCEDURE
11.1
|
The
Operating Procedure shall apply to all operations carried out on
the
project Lands and such lands shall be the "Project Lands" under the
Operating Procedure. The participating interests of the parties in
such
joint lands for purposes of the Operating Procedure shall be the
working
interests that are established by this Agreement. The parties agree
that
Access shall be the Operator under the Operating Procedure.
|
ARTICLE
VIII
DISPOSITION
OF INTERESTS
12.1
|
Disposition
of Interests will be governed by Article 2401 of the Operating Procedure
and Article 2402 will not apply.
|
ARTICLE
XIV
GENERAL
13.1
|
Addresses
for notices authorized or required to be given pursuant to this agreement
are as follows:
|
Toronto,
Ontario
|
Access:
Access Energy Inc.
|
Attention:
|
|
BRODC:
|
Buffalo
River Dene Development Corporation
|
General
Delivery
|
|
Dillon,
Saskatchewan S0M 0S0
|
|
Attention:
|
13.2
|
All
notices authorized or required to be given pursuant to this Agreement
shall be in writing and may be delivered by hand, mailed by registered
or
certified first class airmail or sent by telecommunication.
|
13.3
|
The
notice shall be deemed to have been given and
received
|
7
a) if
delivered on the day on which it was delivered;
b) if
mailed, five days after the date of mailing;
c) if
sent
by telecommunication, on the first business day following the day it was
dispatched.
13.4
|
No
notice shall be effective if mailed during any period in which Canadian
postal workers are on strike or if a strike of postal workers is
imminent
and may be anticipated to affect normal delivery
thereof.
|
13.5
|
A
party may change its address for the receipt of notices at any time
by
giving notice thereof to the other
parties.
|
13.6
|
This
Agreement shall include the Memorandum of Understanding attached
as
Schedule “D”.
|
13.7
|
If
there is a conflict between the provisions of the Operating Procedure
and
this Agreement, then this Agreement shall prevail.
|
13.8
|
The
term of this Agreement shall be for twenty (20) years from the date
of
this Agreement as first written above and thereafter for so long
as there
is continuous production from the Project Lands in commercial quantities.
|
13.9
|
Each
of the Parties represents to the other that it has full legal capacity
and
Authority to execute and deliver this joint venture.
|
13.10
|
This
agreement shall enure to the benefit of and be binding upon the Parties
and their respective successors and permitted
assigns.
|
IN
WITNESS WHEREOF the parties hereto have duly executed this agreement as of
the
date first above written.
ACCESS
ENERGY INC.
Per: /s/
Xxxx
Xxxxxxxxx
Per:
/s/ H. Xxxxxxxx X.
Xxxxxx
BUFFALO
RIVER DENE DEVELOPMENT CORPORATION
Per:
/s/ Xxxxx Chinalqury
Per:
______________________________________
This
is
the execution page to a Joint Venture Agreement dated November, 3, 2006
made
between
Access
Energy Inc.
and
Buffalo
River Dene Development Corporation
8