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EXHIBIT 10
DAYWORK DRILLING CONTRACT
BETWEEN
UNION PACIFIC RESOURCES COMPANY
AND
NOBLE DRILLING (U.S.) INC.
JANUARY 1, 2000
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DAYWORK DRILLING CONTRACT
1.1 DATE AND PARTIES: This Contract is made as of this 1st day of January,
2000, between Union Pacific Resources Company, a Delaware corporation
(hereinafter referred to as "Operator"), and Noble Drilling (U.S.) Inc., a
Oklahoma corporation (hereinafter referred to as "Contractor"), each of which is
hereinafter referred to individually as "Party" and collectively as "Parties",
regarding operations to be conducted for Operator by Contractor utilizing the
Xxx Xxxxx semi-submersible drilling unit (hereinafter referred to as the "rig"
or "drilling unit"), subject to the terms and conditions set forth below.
1.2 EXHIBITS: This Contract consists of this writing, signed by the
Parties, and each of the following Exhibits:
EXHIBIT A: Contract Summary
EXHIBIT B: Personnel Furnished by Contractor
EXHIBIT C: Rig Description
EXHIBIT D: Associated Equipment, Services and Facilities
EXHIBIT E: Insurance
EXHIBIT F: Certificate of Compliance with Federal Contract Requirements
EXHIBIT G: Search and Seizure Policy
EXHIBIT H: Contractor Safety Requirements
2.1 TERM COMMENCEMENT DATE: When executed by both Parties hereto, this
Contract shall be effective as of the date set forth in Item A-1, Exhibit A. The
Term Commencement Date shall occur at such time as Contractor has "delivered"
the rig to Operator, being defined for purposes of this Article 2 as such time
when all anchors have been bolstered and the rig has been towed at least one
hundred yards (100 yds.) from the previous well location at Alaminos Canyon
Block 627.
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2.2 RIG DELIVERY AND ACCEPTANCE: Operator and Contractor agree that the rig
shall be delivered (as defined in Section 2.1) by Contractor (hereinafter
referred to as the "Delivery Date"), subject to Rig Acceptance as follows. Rig
Acceptance shall be defined as that point in time when Amerada Xxxx Corporation
(the "other Rig Share Party") accepted the Rig on January 1, 2000. Operator
shall have the right (but not the obligation) to make its own independent
inspection of the rig at any time prior to delivery of the rig to Operator
(provided that Operator shall not unreasonably interfere with the rig
operations) and also shall have the right to fully review the commissioning
reports as prepared by Contractor's surveyor/inspector MODU SPEC. Subject to
Operator being allowed access to the rig and to the MODU SPEC inspection reports
as described above, Operator shall stipulate in writing any deficiencies in the
rig (as compared to other specifications in the Exhibits attached hereto).
2.3 SPECIFIED CONTRACT TERM: Beginning upon the Contract effective date
(Item A-1, Exhibit A), Operator may utilize the rig during alternating Drilling
Slots (as particularly described below), such that, after completion of the
first Drilling Slot (which is to be used by the other Rig Share Party) Operator
will utilize the rig for a total of 456.25 days, which shall be deemed the
Specified Contract Term.
2.3.1 Subject to the other provisions of this Contract, the rig shall be
utilized by Operator as follows:
a) Year 2000- Ninety (90) days by the end of the first six months and a
cumulative of one hundred and eighty (180) days by the end of the
year.
b) Year 2001- A cumulative total of two hundred and seventy (270) days
by year end.
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c) Year 2002- A cumulative total of two hundred and seventy (270) days
by year end.
d) Year 2003- A cumulative total of three hundred and sixty five (365)
days by year end.
e) Year 2004- A cumulative total of four hundred fifty-six and one
quarter (456.25) days by year end.
2.3.2 This Section 2.3.2 shall determine the rotational sequence of
Operator's Drilling Slots.
(a) Subject to the other provisions of this Section 2.3.2, during the
Specified Contract Term, Operator shall have the right, but not the
obligation, to utilize the drilling rig on an alternating Drilling
Slot basis (i.e. every other Drilling Slot).
(b) During the first six months of the year 2000, and commencing with the
second Drilling Slot, Operator shall utilize the rig on an
alternating Drilling Slot basis until it has utilized the rig for at
least ninety days. During the second six months of the year 2000,
commencing with the next available Drilling Slot after June 30 of
that year, Operator shall utilize the rig on an alternate Drilling
Slot basis until it has utilized the rig for the cumulative period
set forth in Section 2.3.1(a).
(c) Commencing with the year 2001, in any calendar year in which Operator
has an unsatisfied cumulative obligation, Operator may utilize the
rig for the first Drilling Slot which becomes
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available and, if not utilized sooner, Operator shall utilize the rig
for the first Drilling Slot which becomes available after March 1
and, thereafter, will utilize the rig on an alternate Drilling Slot
basis for such year until Operator has met its cumulative obligation
for such year. Example: At the beginning of 2001, Operator has used
the rig for a cumulative 180 days. Operator is not obligated, but may
utilize the rig for the next available Drilling Slot in 2001, but
shall be obligated to utilize the rig for the first Drilling Slot
which becomes available after March 1, 2001.
(d) If in any calendar year Operator`s cumulative remaining obligation
for that year is less than 30 days, Operator shall have no obligation
to utilize the rig for the remainder of that year and such remaining
obligation will be carried forward and added to the succeeding
calendar year. Example: During the year 2000, Operator has utilized
the rig for a total of 170 days. Since the 10 days of remaining
cumulative obligation is less than 30 days, the 10 days shall carry
over to 2001 and Operator's obligation for that year will be 100 days
and its cumulative obligation will remain 270 days.
(e) If in any calendar year Operator is unable to meet its cumulative
obligation for that year because the rig is being used by another
party (including Contractor), then Operator's remaining obligation
for that year will be carried over to the next calendar year and
Operator's cumulative obligation will remain unchanged. Example:
During year 2003, Operator has utilized the rig for a cumulative
total of 320 days, but is unable to take a Drilling Slot to meet its
cumulative obligation because the rig is being utilized by another
party. The remaining 45 days obligation shall carry
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over to 2004 and Operator may utilize the rig in the first available
Drilling Slot in 2004, but shall be obligated to utilize the rig for
the first Drilling Slot which becomes available after Xxxxx 0, 0000
(x) If as a result of the application of this Section 2.3.2, and subject
to the other provisions of this Contract, Operator has not utilized
the rig for a cumulative total of 456.25 days by the end of year
2004, any remaining obligation shall carry over to the year 2005, and
Operator shall utilize the rig in the next available Drilling Slot
for that year and, thereafter, on an alternating Drilling Slot basis
until the end of the Specified Contract Term. Notwithstanding the
preceding sentence, Operator shall have no obligation to utilize the
rig in 2005 to the extent Operator has not been able to meet its
remaining cumulative obligation in 2004 because the rig was utilized
in full in 2004 by another operator (including Contractor when it is
utilizing the rig).
2.3.3 Contractor and Operator may, at any time after the Contract Effective
Date, agree to modify the above-described Drilling Slot rotational
sequence as required to fulfill Operator's term obligation above.
2.3.4 Operator may decide to assign one or more of its Drilling Slots
hereunder to a third party and that, subject to Contractor's approval
pursuant to Section 30.1, all such slots assigned by Operator shall be
utilized in calculating the duration and expiration of the Specified
Contract Term.
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2.4 DRILLING SLOTS:
a) The term "Drilling Slot", when used in this Drilling Contract, shall
be that period of time, not to exceed ninety (90) days (except as
provided in Section 2.4(c) below), that is required to mobilize the
rig to a drill site, drill one or more xxxxx (including partial
xxxxx), and demobilize the rig to the point where all anchors have
been bolstered and the rig has moved at least one hundred (100) yards
from the utilizing Party's well location. Operator's respective
Drilling Slots shall commence upon transfer of the rig to Operator
(as described in Section 19.10(ii)) and shall cease upon transfer of
the rig by Operator to the other Sharing Party, another operator or
to Contractor for stacking (as referenced in Section 19.10(i).
b) The Drilling Slot shall be construed to include, without limitation,
all pre-drilling of surface holes, drilling, mechanical side
tracking, geologic side tracks, batch setting casing strings,
installation of sub-sea equipment, deepening, testing, completing,
plugging, abandonment and associated operations, as appropriate, at a
single drill site (i.e. a well slot or template). A Drilling Slot
shall not be less than thirty (30) days nor more than ninety (90)
days, except as provided below. The term "Drilling Slot shall also
apply to (i) the use of the rig by the other Sharing Party or another
operator (including Contractor when Contractor is using the rig)
which shall be for the minimum and maximum periods set forth in this
Section 2.4; and (ii) Contractor's stacking of the rig; provided that
such stacking shall be for a minimum of ninety (90) days after
completion of a Drilling
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Slot (unless Contractor and Operator agree otherwise or after
stacking another operator takes the rig for a Drilling Slot), as
described in Section 2.4(a) above, before transfer of the rig back to
Operator.
c) If operations are continuing at the same drilling location (well slot
or template), then Operator's (or another rig sharing party's)
Drilling Slot can be extended by ninety (90) days up to a cumulative
total of 180 days without the Contractor's consent; provided that the
Operator shall notify the Contractor, at least thirty (30) days prior
to the end of the basic ninety (90) day Drilling Slot, of Operator's
intent to retain the rig beyond the end of said period. If Contractor
has a commitment to another sharing party for the next Drilling Slot,
Operator shall make every effort to suspend or abandon the well in
progress at or as near as possible to the expiration of the maximum
180-day period, unless the Contractor agrees in writing to further
extend the Drilling Slot.
d) If the time required to drill the initial well in any Drilling Slot
is less than thirty (30) days, then the Operator (or other rig
sharing party, as the case may be) shall have the right and
obligation to further utilize the rig to fulfill the minimum term of
its Drilling Slot, including the right to move the rig to a different
location.
e) During its use of the rig for a Drilling Slot, Operator shall provide
Contractor at least 30 days advance written notice of the date it
expects such Drilling Slot to cease. During times when Operator is
not utilizing the rig, Contractor shall provide Operator at least 30
days advance written notice of the next available Drilling Slot in
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order that Operator may prepare for and/or elect such Drilling Slot
in accordance with the provisions of this Contract. Operator shall
advise Contractor within 15 days after it receives Contractor's
notice whether it will utilize the rig in the next Drilling Slot.
2.5 OPERATOR'S SEPARATE SLOT USAGE: Operator's obligations to Contractor
under this Contract pursuant to its Drilling Slots shall be Operator's sole and
separate responsibility, as between Operator and Contractor; and likewise,
Operator shall have no obligation to Contractor with regard to any Drilling
Slots utilized (or failed to be utilized) by another sharing party, or utilized
by Contractor, or for stacking. It is agreed that this Drilling Contract shall
not apply to any Drilling Slots utilized by any other sharing parties and that
Operator shall have no collective, joint or other responsibility for any
liabilities, obligations, damages or other costs of whatever type incurred by
any person or party arising out of any Drilling Slots other than Operator's own
Drilling Slots. Operator will cooperate with Contractor and any rig sharing
party, in order to facilitate the alternating Drilling Slot procedure described
in Sections 2.3 and 2.4.
3.1 CONTRACTOR'S PERSONNEL: Contractor shall furnish, at Contractor's cost,
the personnel in the numbers, classifications and work schedules set forth in
Exhibit B. All such personnel shall be employed directly by Contractor and are
referred to in this Contract as "Contractor's Personnel". At the request of
Operator, Contractor shall furnish such additional personnel as Operator may
designate, such additional personnel to be considered as part of Contractor's
Personnel, and Operator shall reimburse Contractor for the direct costs and
expenses (such as hiring benefits, social security, wages and other
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direct payroll burdens) of furnishing all such additional Contractor's
Personnel, as set forth in Exhibit B. If, with Operator's consent, the number of
Contractor's Personnel is reduced, Operator shall be credited with the savings
thereby effected. Contractor shall have a full drilling crew of personnel, as
set forth in Exhibit B, working at all times when receiving pay at such of the
dayrates set forth in Exhibit A calling for a full drilling crew. If
circumstances beyond the control of Contractor temporarily prevent Contractor
from having a full drilling crew working, Contractor shall receive the full
applicable rate only if Operator determines, in its sole discretion, that there
is no delay in the progress of the work. Otherwise, the applicable rate shall be
reduced by the daily rate of pay and benefits for each person that a crew is
short.
4.1 CONTRACTOR'S EQUIPMENT: Contractor shall furnish, at Contractor's cost,
the drilling unit, equipment and facilities referred to in the Contract as
"Contractor's Equipment" and as set forth in Exhibit C. In addition, except for
Operator's Equipment as described in Section 7.1 and Exhibit D, all other
materials, equipment, tools, appliances, machinery, services and supplies for
the proper drilling, completing, abandoning, working over or deepening, and for
protecting the rig and xxxxx involved shall be furnished and installed by and at
the expense of Contractor. All such drilling unit equipment and other items to
be furnished by Contractor are hereinafter called "Contractor's Equipment".
4.2 RIG SPECIFICATIONS: If, as a result of the construction process or
field operations after delivery of the first EVA drilling units 1, 2, 3, and 4,
it is determined that certain design changes, additions or upgrades are
necessary for the "Noble Xxx Xxxxx" to achieve the efficient operational
capabilities as provided for in this Contract, the following shall apply:
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A. Any changes, additions or upgrades that Contractor provided for
at no additional cost to the other operators of the first EVA
drilling units, will be provided on the "Noble Xxx Xxxxx" by
Contractor at no additional cost and no increase to the dayrates,
if so desired by Operator.
B. Any other changes, additions or upgrades that are determined as
necessary by the Operator and Contractor will be provided in the
same manner as in A) above.
C. Should the Operator request any additions, upgrades or changes
that are cosmetic or are for general convenience purposes, same
shall be provided by Contractor and paid for by the Operator at
the actual documented cost incurred by Contractor.
Contractor and Operator agree that the goal of all Parties is for
Contractor to deliver the most efficient, cost effective and
operationally safe deepwater drilling unit possible, that is capable
of operating in water depths of 6000 feet and equipped on the Term
Commencement Date to drill in water depths of a maximum of 5,000 feet.
To this end, it is understood that good faith agreements will be made
in order to implement the foregoing provisions of this Section 4.2,
based on sound principles and good oilfield practices.
5.1 BASIC AGREEMENT: Contractor shall furnish and operate Contractor's
Equipment and shall furnish Contractor's Personnel for the purpose of drilling
xxxxx as programmed by Operator on the terms and conditions set forth in this
Contract. In the performance of the work contemplated by this Contract, time is
of the essence.
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6.1 CONTRACTOR'S REPRESENTATIONS: Contractor warrants that all of the
Contractor's Equipment, including the drilling unit and all supplies furnished
by Contractor in connection therewith, shall be in good condition and suitable
for the uses intended and that all of Contractor's Personnel shall be fully
qualified and fit for their respective assignments, both in accordance with good
oilfield practice and such governmental regulations affecting Contractor's
operations that may, at any time during the life of this Contract, exist.
7.1 OPERATOR'S EQUIPMENT: Operator shall furnish at its cost (or shall
reimburse Contractor for furnishing, as set forth in Section 19.7) the equipment
and facilities described in Exhibit D. All equipment and facilities supplied
under this Section are referred to in this Contract as "Operator's Equipment".
Contractor shall visually examine Operator's Equipment on the drilling unit and
shall report to Operator any visible defects in such equipment. Operator's
Equipment on the drilling unit shall be maintained in good condition and repair
by Contractor insofar as such equipment may be reasonably so maintained
utilizing Contractor's Personnel. Upon completion of operations under this
Contract, those items of Operator's Equipment then on the drilling unit shall be
redelivered by Contractor (unless it has been unavoidably lost or destroyed) to
Operator in as good a condition as when received by Contractor, ordinary wear
and use excepted, at such location as may be designated by Operator. In
delivering same, Operator shall reimburse Contractor for any incremental
shipping costs incurred and paid.
8.1 AREA OF OPERATIONS: The Area of Operations is set forth in Item A-11,
Exhibit A. Subject to Contractor's consent, which shall not be unreasonably
withheld, Operator may change said Area of Operations by giving Contractor
reasonable notice.
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8.2 DRILLING LOCATIONS: Operator shall designate the locations of xxxxx to
be drilled under this Contract within the Area of Operations. Prior to the
commencement of operations, Contractor's marine surveyor shall have the right to
approve the use of Contractor's Equipment at such locations.
9.1 DRILLING PROGRAM: Operator shall prepare and shall deliver to
Contractor Operator's drilling program for its xxxxx, and may amend such
drilling program or programs at any time. Operator shall provide Contractor with
copies of same in sufficient time for Contractor to comply. All drilling shall
be performed by Contractor in accordance with Operator's drilling program and
the written and/or verbal instructions of Operator's authorized representative,
and in a diligent, skillful and workmanlike manner in accordance with sound
engineering principles, and good oilfield practice., Contractor shall conduct
all operations hereunder on a 24 hour day, 7 day week basis.
10.1 OTHER OPERATIONS: Contractor shall repair, redrill, deepen, maintain,
rework and perform remedial or other operations in any well or xxxxx designated
by Operator. Such work shall be performed upon the request of Operator, at the
applicable dayrate.
The drilling of relief xxxxx under this Contract shall be by mutual
agreement of Operator and Contractor depending on the particular facts and
circumstances of any such relief well and the blowout or other cause
necessitating same. Approval of Contractor's underwriter is required, but shall
not be unreasonably withheld.
11.1 CASING PROGRAM: Contractor shall drill each well to the depth and
shall work with Operator's other contractors to land, set, cement and test
casing of the size and at the depth specified by Operator.
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12.1 CORING: Contractor shall core between such depths as shall be
specified by Operator and shall deliver all cores to Operator or to Operator's
representative. No one except Operator or Operator's representative shall have
access to cores.
13.1 TESTING: If, at any time during the course of drilling or upon
completion of drilling, Operator desires a formation test to be made to
determine the productivity of any formation(s) encountered, Operator shall
designate the testing methods and procedures and Contractor shall make such
test(s) as designated by and under the direction of Operator, provided there is
no unreasonable hazard to personnel and equipment posed by the conduct of such
test(s).
14.1 FORMATION CUTTINGS: Contractor shall save, wash, sack and identify
formation cuttings free from contamination and shall place them in separate
containers, properly labeled, furnished by Operator.
15.1 MEASUREMENT OF WELL DEPTH: Contractor shall measure total length of
drill string in service to determine well depth, with a steel tape, at
frequencies designated by Operator, such as before logging, coring, setting
casing or liner and upon reaching final depth.
16.1 COURSE OF WELL: Contractor shall use its best efforts, according to
the standard provided in Section 9.1, to drill holes which will not deviate in
course from the limits specified by Operator. Measurement of angles shall be
made by Contractor by methods acceptable to Operator at times and frequencies as
may be directed by Operator. When such measurements show a greater deviation the
drilling program specified by Operator, Contractor, at Operator's request, shall
redrill the hole to conform to the drilling program acceptable to Operator.
During such redrilling, Contractor shall be paid at the applicable
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dayrates as provided in this Contract. Contractor shall deliver to Operator the
data pertaining to all deviation measurements made by Contractor and all records
resulting therefrom. Special services and equipment for such surveying shall be
supplied as set forth in Exhibit D.
17.1 COMPLETION OR ABANDONMENT: If Operator directs a well to be completed
as a producing well, Contractor shall work with Operator's other contractors to
complete said well in the manner and using methods specified by and under the
direction of Operator. Operator may at any time elect to plug or abandon said
well at any depth. Contractor, upon notice from Operator of such election, shall
cease drilling operations and shall proceed to abandon or plug the well in the
manner specified by and under the direction of Operator.
18.1 BLOWOUT OR FIRE: Contractor shall observe Operator's and Contractor's
fire and safety regulations, shall maintain well control equipment in good
operating condition at all times and shall use all reasonable means to prevent
fires, explosions and blowouts and to protect the hole, all in accordance with
good oilfield practice. During drilling operations, Contractor shall use
adequate blowout prevention equipment approved by Operator. Contractor shall
examine and shall test all blowout prevention devices in accordance with
Operator's drilling or testing program and shall record the results of such
tests on the drilling reports. In the event of fire or blowout, Contractor shall
use all reasonable means to protect the hole and to keep said fire or blowout
under control; and Contractor shall cooperate with any third party services
employed by Operator to keep the well under control.
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19.1 COMPENSATION: Operator shall pay Contractor certain amounts as
provided below at the applicable rate of compensation for work performed
hereunder. The applicable rate shall be determined in accordance with Sections
19.2, 19.3, 19.4 and 19.5 hereunder and shall be calculated to the nearest
one-half (1/2) hour.
19.2 OPERATING RATE: Unless the Contract is terminated prior to the end of
the Specified Contract Term (as defined in Section 2.3), the Operating Rate as
specified in Item A-22, Exhibit A shall apply during the Specified Contract
Term, except for periods during which other rates are applicable or no payment
by Operator is required.
19.3 STAND-BY RATE: The Stand-By Rate as specified in Item A-23, Exhibit A
shall apply to periods during which the full complement of Contractor's
Personnel is on the drilling unit (except that the Stand-By Rate shall also
apply to periods as provided in 19.3.4), but no operations are being conducted
for any one or more of the following reasons:
19.3.1 Operator has instructed Contractor not to proceed with
operations, for any reasons other than Contractor's default
of any of its obligations regarding Contractor's Equipment
or Contractor's Personnel;
19.3.2 Except in situations where the Moving Rate is applicable,
Contractor's Equipment is being moved or is waiting to be
moved to or from Operator's well location or between
Operator's well locations and no mobilization or
demobilization fee is due;
19.3.3 Delay caused by Operator or its subcontractors, including
any delay necessary for repair of damage to Contractor's
Equipment caused by Operator or its subcontractors;
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19.3.4 Weather conditions or rough water, which shall include any
period of evacuation of Contractor's Personnel from the
drilling unit due to threat and/or occurrence of storm or
hurricane and Contractor's Personnel are held on stand-by
with pay at the nearest available safe point until
conditions permit return to the drilling unit; and
19.3.5 Failure of Operator to deliver any item of Contractor's
Equipment (after Contractor has made same available at
Operator's shore base with reasonable notice of its
requirements), which results in delays or in breakdown of
Contractor's Equipment or delays in repairing same,
notwithstanding the provisions of Section 19.4.
19.4 EQUIPMENT REPAIR RATE:
19.4.1 Surface Repairs: In the event it is necessary to shut down
Contractor's Equipment for repairs, excluding lubrication
and other routine servicing which Contractor is performing
hereunder (such as servicing the top drive, changing pump
liners, slipping the drill line, etc.), Contractor shall be
allowed the Equipment Repair Rate set forth in Item A-24,
Schedule A for each period of shut-down time up to a
maximum of six (6) hours for any applicable repair job and
a total of thirty (30) hours for all periods of shut-down
time during any thirty (30) day period. After the above
time limits have been reached, the Equipment Repair Rate
shall be reduced to zero compensation until the Drilling
Unit is ready for work.
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Breakdown or repair time shall commence from time of
failure and continue until Contractor has returned to that
particular stage of operations where the breakdown, loss or
failure of Contractor's Equipment occurred; provided that
any time spent or lost due to hole problems shall not be
included and counted against the thirty (30) hours of
allowed downtime. In the event of stuck pipe following such
breakdown, time spent or lost due to the drill string being
stuck shall not be included and counted against the thirty
(30) hours of allowed downtime, if the breakdown was beyond
the control of Contractor. Otherwise, in the case of stuck
pipe following breakdown which was within Contractor's
control, Contractor shall return to the particular stage of
operations where the breakdown, loss or failure of
Contractor's Equipment occurred, at a twenty percent (20%)
reduction in the Operating Rate.
Notwithstanding any other provision contained herein,
the Equipment Repair Rate payable under this Section 19.4.1
shall be zero compensation for all drilling and other
operations during the shorter of the following two time
periods: for the first well drilled under this Drilling
Contract utilizing the upgraded drilling unit; or for the
first ninety (90) days that the upgraded drilling unit is
utilized hereunder. Thereafter and continuing for the
remaining term of this Daywork Drilling Contract, the
Equipment Repair Rate shall be effective and applied as
particularly provided for hereinabove.
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19.4.2 Subsurface Repairs: If it becomes necessary to shut down
the drilling unit for subsurface repairs (defined as
anything normally in use below the surface of the water,
and additionally, those portions of the riser above the
surface of the water, the telescoping joint, the diverter
system, the guideline and riser tensioners and the mooring
equipment), Contractor will be paid at the Equipment Repair
Rate set forth in Item A-24, Schedule A under the following
conditions:
(a) In water depths ranging from zero feet (0 feet) to
three thousand five hundred feet (3,500 feet),
Contractor will be paid for each period of shut-down
time up to a maximum of twenty-four (24) hours for any
applicable repair job and a total of twenty-four (24)
hours for all shut down time for any thirty (30) day
period hereunder. After twenty-four hours, the
Equipment Repair Rate shall be reduced to zero
compensation until the Drilling Unit is ready for Work.
(b) In water depths ranging from three thousand five
hundred one feet (3,501 feet) to six thousand feet
(6,000) feet), Contractor will be paid for each period
of shut-down time up to a maximum of forty-eight (48)
hours for any applicable repair job and a total of
forty-eight (48) hours for all shut-
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down time for any thirty (30) day period. After
forty-eight hours, the Equipment Repair Rate shall
be reduced to zero compensation until the Drilling
Unit is ready for Work
(c) Breakdown or repair time shall commence from time of
failure until Contractor has returned to that
particular stage of operations where the breakdown,
loss or failure of Contractor's Equipment occurred, but
any time spent or lost due to hole problems shall not
be included and counted against the downtime allowed
for in items (a) and (b) above. In the event of stuck
pipe following such breakdown, time spent or lost due
to the string being stuck shall not be included and
counted against the downtime allowed for in items (a)
and (b) above, if the breakdown was beyond the control
of Contractor. Otherwise, in the case of stuck pipe
following breakdown, and the breakdown was within the
control of the Contractor, Contractor shall return to
the particular stage of operations where the breakdown,
loss or failure of Contractor's
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Equipment occurred, at a twenty percent (20%)
reduction in the Operating Rate.
Notwithstanding any other provision contained herein, the
Equipment Repair Rate payable under this Section 19.4.2 shall be
zero compensation for all drilling and other operations during
the shorter of the following two time periods: for the first well
drilled under this Drilling Contract utilizing the upgraded
drilling unit; or for the first ninety (90) days that the
upgraded drilling unit is utilized hereunder. Thereafter and
continuing for the remaining term of this Daywork Drilling
Contract, the Equipment Repair Rate shall be effective and
applied as particularly provided for hereinabove.
19.5 STAND-BY WITHOUT CREW RATE: The Stand-By Without Crew Rate as
specified in Item A-25, Exhibit A shall apply in the event an extended period of
suspended operations occurs hereunder, and Operator requests Contractor to
release all of Contractor's Personnel not required for the protection and
maintenance of Contractor's Equipment or for the orderly resumption of
operations.
19.6 RATE ADJUSTMENT: The rates as set forth in Exhibit "A" shall remain
firm from the Contract Effective Date through the Specified Contract Term,
subject only to changes in certain of Contractor's costs incurred after the Term
Commencement Date, as particularly provided below. The rates in Exhibit "A"
shall be revised by the actual amount of the change in Contractor's costs if: an
event as described below occurs; or the cost of any of the items hereinafter
listed changes by more than the amount indicated below from
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Contractor's cost thereof on the Term Commencement Date, or by the same amount
after the date of any revision pursuant to this Section:
(a) Contractor's labor costs change by five percent (5%) or more,
including all payroll burdens and benefits paid by Contractor for its
employees;
(b) Operator requires Contractor to move the drilling unit out of the U.S.
Gulf of Mexico area; or
(c) the cost of catering changes by five percent (5%) or more.
Notwithstanding the foregoing provisions, the rates set forth in
Exhibit "A" shall not be adjusted more than once every six (6) months after the
Term Commencement Date. All such dayrate adjustments shall be limited to
Contractor's actual, documented cost changes from the Term Commencement Date, or
the most recent, subsequent cost revision date, subject to Operator's audit
rights under Section 20.1.
The rates set forth in Exhibit "A" may also be adjusted in an amount based
upon the increased costs for changes, additions or upgrades to the rig, as
mutually approved by Operator and Contractor and amortized over the entire
Specified Contract Term, pursuant to Section 4.2.C.
19.7 REIMBURSABLE COSTS: Operator shall reimburse Contractor for
Contractor's costs of material, equipment, work or services which are to be
furnished by Operator as provided in Exhibit D, but which for convenience are
actually furnished by Contractor at Operator's request, plus the handling charge
set forth in Item A-27, Exhibit A.
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19.8 MOBILIZATION AND DEMOBILIZATION RATES: Operator shall pay Contractor
the respective mobilization and demobilization rates as set forth in Items A-20
and A-21 of Exhibit A.
19.9 MOVES BETWEEN OPERATOR'S LOCATIONS: The Moving Rate as specified in
Item A-26, Exhibit A shall apply to the periods of time when the drilling unit
is being moved from one of Operator's locations directly to another of
Operator's locations; provided that such period shall commence when the drilling
unit has been moved off of one of Operator's locations and shall terminate when
all anchors have been set and the unit is ready to ballast at Operator's next
well location.
19.10 MOVES BETWEEN RIG SHARING PARTIES: The Moving Rate as specified in
Item A-26, Exhibit A shall apply under this Contract only to the following
periods when the drilling unit is being moved from Operator's location to
another rig sharing party's location (or to Contractor's stack location), or
vice versa:
(i) from the time all anchors have been bolstered at Operator's
location until the rig has been moved one hundred (100) yards
from said location for transfer to another rig sharing party or
to Contractor for stacking; and
(ii) after the drilling unit has been moved one hundred (100) yards
from another rig sharing party's location or from Contractor's
stack location and has been transferred to Operator, until all
anchors have been set and the unit is ready to ballast at
Operator's location.
20.1 PAYMENT OF INVOICES; AUDIT: If requested by Operator, Contractor will
furnish Operator with satisfactory evidence of the validity and prior payment by
Contractor
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of all labor and material claims incurred by Contractor. Operator shall have the
right to withhold payment of any invoice or part of any invoice wherein there is
a bona fide question or dispute as to propriety and/or amount. Subject to this
right, Operator shall pay invoices within thirty (30) days of receipt from
Contractor. Any undisputed invoices not paid within fifteen (15) days of such
period shall bear interest at a rate of one-half of one percent (0.5%) above the
rate of interest announced publicly by Citibank, N.A., from time to time as its
prime rate.
Payment of any invoice shall not prejudice the right of Operator to
question the propriety of any charges therein, and Operator, prior to or
subsequent to making any payments to Contractor, shall have the right to audit
the books, records and invoices of Contractor which are involved in the
performance of this Contract, to verify any and all charges so made by
Contractor; provided, however, that Operator, at any time during this Contract
and continuing until two (2) years after the termination of this Contract, shall
deliver to Contractor written notice of objections to any item or items therein,
the propriety of which it questions, specifying the reasons for such objections.
Should Operator within such two (2) year period so notify Contractor, adjustment
shall be made between the parties accordingly as the propriety or impropriety of
such items shall be determined. Failure to notify Contractor within said two (2)
year period shall be deemed final approval of said invoice(s). Contractor shall
retain all records pertinent to its invoices for at least two (2) years
following the calendar year during which any such invoice(s) are received by
Operator. Notwithstanding the foregoing, Operator shall have no right to examine
or audit Contractor's trade secrets, proprietary information, confidential data,
costs, margins, and any other methods used to determine Contractor's dayrates
hereunder.
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20.2 TIME AND PLACE OF INVOICE PRESENTATION: Invoices, accompanied by
copies of the original vouchers or such records as are necessary to properly
support them, shall be presented to Operator's office as set forth in Item A-5,
Exhibit A, in the original and three (3) copies, on or before the tenth (10th)
day of each month next succeeding the month during which the work was performed
or the expense incurred.
20.3 PLACE OF PAYMENT: All payments hereunder shall be directed to the
address specified in Item A-10, Exhibit A.
21.1 LIENS: Contractor shall release, defend, indemnify and hold Operator
and its joint interest owners harmless from, and shall keep Operator's
Equipment, the leasehold, easements, well(s), and all interests therein and
production therefrom and also Contractor's Work hereunder, free and clear of all
liens, claims, assessments, fines and levies created or committed by Contractor
or by its subcontractors, suppliers and other parties claiming by, through or
under Contractor. Operator may post on Contractor's Equipment such notices as it
may desire to protect itself against such liens, claims, assessments, fines and
levies.
22.1 TAXES OR LEVIES: Contractor shall be responsible for all taxes, fees
and other assessments levied by any federal, state, county, parish or local
governmental entity having jurisdiction hereof, to the extent attributable to or
arising from any income or other payments received by Contractor hereunder
and/or the employment of Contractor's employees and other personnel hereunder,
including, without limitation, income taxes, social security taxes, and social
insurance organization charges. Contractor, at its sole cost, shall withhold
from wages and salaries of Contractor's Personnel all sums required by law to be
withheld, shall pay the same promptly when due to the proper authorities and
shall furnish Operator satisfactory evidence of such payments when required, and
shall,
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comply with all accounting and reporting required by any federal, state, county,
parish or local governmental agency or other authority having jurisdiction.
Except as provided above, Operator shall be responsible for any federal, state,
county, parish or local taxes that may be applicable to Operator's operations
hereunder.
23.1 INSURANCE: During the life of this Contract, Contractor shall, at its
sole expense, secure and maintain, with an insurance company or companies
authorized to do business in the Area of Operations (as set forth in Section 8.1
above and in Item A-11 of Exhibit A) and reasonably satisfactory to Operator, or
through a self insurance program reasonably satisfactory to Operator, insurance
policies or equivalent coverages of the kind and in the amounts as set forth in
Exhibit E.
Contractor's insurance shall be primary only to the extent of Contractor's
respective responsibilities, obligations and liabilities assumed hereunder, and
Operator's insurance policies shall not be called upon for contribution as to
such matters nor shall Operator have any obligation for "xxx and labor". In each
policy under which Operator is an assured, Contractor agrees to waive and agrees
to have its insurers waive any rights of subrogation they may have against
Operator, and all other indemnitees hereunder (as defined in Section 23.13), to
the extent of Contractor's respective responsibilities, obligations and
liabilities hereunder. It is further agreed that each such policy, other than
Worker's Compensation policies, shall name Operator and all other indemnitees
hereunder as additional insureds to the extent of Contractor's responsibilities,
obligations and liabilities hereunder. Contractor shall be solely responsible
for any deductibles required under each such policy.
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Prior to commencing work hereunder, Contractor shall furnish an Accord
Certificate of Insurance Form or other documentation evidencing the required
coverages, to Operator's reasonable satisfaction. The submission of said Form or
other documentation shall not constitute a waiver of the insurance requirements
set forth in Exhibit E. Each insurance policy shall contain a provision
obligating the insurer to give Operator written notice not less than thirty (30)
days prior to any change in the policy and ten (10) days prior to cancellation
thereof.
It is expressly agreed that the amounts of insurance set forth in Exhibit E
to this Contract are minimums only and in no way limit Contractor's obligations
and liabilities with respect to any defense, hold harmless and indemnity
obligations assumed by Contractor under the terms of this Contract. Operator and
Contractor further agree that the insurance coverages provided herein shall not
be a defense to the indemnity obligations of Contractor as the indemnitor.
23.2 SUBCONTRACTOR'S INSURANCE: Contractor shall require its subcontractors
to secure and maintain all of the insurance coverages set forth in Exhibit E,
and any deficiencies in the coverage or policy limits of such subcontractors'
insurance coverages shall be the responsibility of Contractor.
23.3 CONTRACTOR'S EQUIPMENT:
23.3.1 Surface Equipment. Contractor shall assume liability at
all times for, and shall defend, release, indemnify and hold
Operator harmless from and against, all claims, demands and
causes of action of every kind for damage to or loss or
destruction of its equipment above the surface of the water
(including, but not limited
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to, the drilling unit and all appurtenant drilling tools,
machinery and appliances and also in-hole equipment when not
in the hole, excluding only subsea equipment when below the
surface of the water as particularly provided for in Section
23.3.2 and equipment in the hole as described in Section
23.3.2) and for the removal of wreck or debris in connection
therewith. Operator shall be under no liability whatsoever
to reimburse Contractor for such damage, destruction or
loss.
23.3.2 Contractor's In-Hole and Subsea Equipment: Operator shall
assume all risk of loss of or damage to Contractor's in-hole
equipment, on a depreciated value basis, as particularly
provided in Section 23.3.3 below, when such equipment is in
the hole or below the surface of the water, regardless of
when or how such destruction or damage occurs, except that
Contractor shall assume all risk of the foregoing loss or
damage if caused by Contractor's gross negligence or willful
misconduct. In the event Contractor's subsea or mooring
equipment (including, but not limited to, blowout preventer,
connectors, buoys, pendant wires, anchors, and anchor chain,
but including no part of the drilling rig proper or its
appurtenances below the water line) is lost or damaged below
the surface of the water and such loss or damage is not
solely the result of Contractor or Contractor's employees'
or subcontractors' negligence or other fault, Operator
agrees to pay Contractor a sum
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equal to one-half (1/2) of Contractor's actual losses or
damage, but not to exceed One Hundred Fifty Thousand Dollars
($150,000) for each separate incident or occurrence and
Three Hundred Thousand Dollars ($300,000) in the aggregate
hereunder.
23.3.3 Equipment in the Hole. Operator assumes responsibility and
agrees, at Operator's option, to repair, replace with the
same type of equipment or reimburse Contractor, to the
extent not covered by Contractor's insurance, at the current
repair cost or ninety percent (90%) of the current new
replacement cost for drill pipe, tool joints and drill
collars, whichever is less, when any such equipment is
damaged or lost in the hole, unless such loss or damage is
caused by Contractor's gross negligence or willful
misconduct.
23.3.4 Property of Contractor's Subcontractors. Property of
subcontractors of Contractor shall be considered
Contractor's Equipment for the purposes of this Section
23.3.
23.4 OPERATOR'S EQUIPMENT:
23.4.1 Operator's Liability for Its Equipment. Operator shall
assume liability at all times for, and shall defend,
release, indemnify and hold Contractor harmless from and
against all claims, demands and causes of action of every
kind for damage to or loss or destruction of Operator's
property and equipment, including, but not limited to, any
well, platform or structure of Operator, and including
removal of
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wreck or debris. Contractor shall be under no liability
whatsoever to reimburse Operator for such damage,
destruction or loss.
23.4.2 Property of Operator's Subcontractors. Property of
subcontractors of Operator shall be considered Operator's
Equipment for the purposes of this Section 23.4.
23.5 EMPLOYEES: Contractor shall defend, release, indemnify and hold
Operator harmless from and against all claims, demands and causes of action of
every kind and character, without limit and without regard to the cause(s)
thereof or the negligence of any party or parties (including Operator) arising
in connection herewith, for injury to or illness or death of Contractor's
employees and for all damages to, loss or destruction of property of
Contractor's employees. Operator shall defend, release, indemnify and hold
Contractor harmless from and against all claims, demands and causes of action of
every kind and character, without limit and without regard to the cause(s)
thereof or the negligence of any party or parties (including Contractor) arising
in connection herewith, for injury to or illness or death of Operator's
employees and for all damages to, loss or destruction of property of Operator's
employees.
23.6 THIRD PARTIES: Contractor shall defend, release, indemnify and hold
Operator harmless and Operator shall defend, release, indemnify and hold
Contractor harmless, from and against all claims, demands and causes of action
of every kind and character, without limit, arising in connection herewith, for
injury to or illness or death of any third parties (i.e. all persons other than
Contractor's and Operator's respective employees, as provided for in Section
23.5 above) and for all damage to, loss or destruction of property of any third
parties (as defined above), to the extent that any of the foregoing is
attributable
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(i.e. in proportion, on a comparative fault basis, as applicable) to the
negligence (whether sole, gross, joint or concurrent, active or passive), breach
of warranty, premises liability, unseaworthiness or other defective condition
(whether pre-existing or otherwise) of any vessel, vehicle, facility, equipment,
tool, material or other items whatsoever, other fault or strict liability of the
indemnifying party or any of its employees.
23.7 LOSS OF HOLE: In the event the hole is lost or damaged, Operator shall
be responsible for any such loss of or damage to the hole; provided, however,
that if such loss or damage is caused by Contractor's sole or gross negligence
or willful misconduct, Contractor shall, at Operator's election, drill a new
hole on the same location or redrill such section of the hole as Operator may
require, and Contractor shall be paid at eighty percent (80%) of the applicable
dayrate, until the new hole has reached the depth at which the old hole was
abandoned or, as the case may be, the section has been redrilled to the
satisfaction of Operator.
23.8 BLOWOUT OR CRATER: In the event a well being drilled shall blowout or
crater from any cause, Operator shall bear the entire cost of killing the well
or otherwise bringing it under control, and shall hold harmless, release,
indemnify and defend Contractor for any such incident, subject to the provisions
of Section 23.13. This assumption applies only to the actual blowout or crater
and the cost of bringing the well under control and has no application to the
loss of property, injuries, damage or pollution caused by such blowout, which
are covered elsewhere in this Contract. Operator shall have the right to use all
Contractor's Equipment and Contractor's Personnel, subject to Contractor's
underwriter's approval (which shall not be unreasonably withheld), during such
times as Operator, or both Operator and Contractor, are engaged in bringing a
well under control. During such time
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that Contractor is involved in such efforts to bring a well under control,
Operator shall compensate Contractor under the applicable dayrate(s) as
determined under this Contract.
23.9 RESERVOIR LIABILITY: Operator assumes all liability for, and shall
indemnify, release, defend and hold harmless Contractor from and against, the
loss of or damage to any of Operator's geological formations, strata, or oil,
gas or other reservoirs beneath the surface of the earth, which shall also
include the loss of any such oil, gas or other substance which escapes above or
below the surface, subject to the provisions of Section 23.13.
23.10 POLLUTION OR CONTAMINATION, CONTRACTOR: Contractor shall assume all
responsibility for, including control and removal of, and shall indemnify,
release, defend and hold Operator harmless against and from all losses, damages
and other costs arising from pollution or contamination (including, without
limitation, all costs to respond, contain, clean-up, remove, dispose of and
remediate any such pollution), subject to the provisions of Section 23.13:
23.10.1 resulting from spills, leaks or dumping of fuels,
lubricants, motor oils, pipe dope, paints, solvents,
ballasts, bilge, garbage, sewerage, debris,
non-biodegradable objects and other materials exclusive of
those covered by 23.10.2, in Contractor's custody or
control, which originates from the rig or above the surface
of the land or water, whether occasioned, brought about or
caused in whole or in part by the negligence of Operator or
otherwise;
23.10.2 resulting from spills, leaks or dumping of oil emulsion,
oil base or chemically treated drilling fluids, contaminated
cuttings and lost
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circulation and fish recovery materials and fluids, which
originates above the surface of the land or water, when said
materials are in Contractor's custody or control, to the
extent - that any such spill, leak or dumping is
attributable (i.e. in proportion, on a comparative fault
basis, as applicable) to Contractor's negligence or failure
to comply with Operator's direction; provided that
Contractor's maximum liability to Operator under this
Section 23.10.2 shall not exceed One Million Dollars
($1,000,000) on a per occurrence basis, excepting only as
set forth in Section 23.13; or
23.10.3 resulting from leakage or other uncontrolled flow of oil,
gas or water from pipelines, including lines on or in
submerged lands, ruptured or damaged by Contractor's rig,
barge, anchors, equipment, or other operations, except that
Contractor shall not be responsible for pollution when the
pipeline rupture or damage is caused by the positioning or
operation of Contractor's Equipment at the specific location
designated by Operator, or by the actual positioning of such
equipment (whether or not correct) by Operator; provided
that Contractor's maximum liability to Operator under this
Section 23.10.3 shall not exceed One Million Dollars
($1,000,000) on a per occurrence basis, excepting only as
set forth in Section 23.13.
POLLUTION OR CONTAMINATION, OPERATOR: Operator shall assume all
responsibility for and shall indemnify, release, defend and hold Contractor
harmless against and from, all losses, damages and other costs arising from the
following types of
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pollution or contamination (including, without limitation, all costs to respond
to, contain, clean-up, remove, dispose of and remediate any such pollution),
subject to the provisions of Section 23.13:
23.10.4 resulting from fire, blowout, cratering, seepage, or any
other uncontrolled flow of oil, gas or water during the
conduct of operations hereunder, subject to the provisions
of Sections 23.8 and 23.10.3;
23.10.5 resulting, except as provided in 23.10.2, from possession,
use or disposition of oil emulsion, oil base or chemically
treated drilling fluids, contaminated cuttings, and lost
circulation and fish recovery materials and fluids,
including such possession, use or disposition by Operator's
other contractors; or
23.10.6 resulting from, as referenced in 23.10.3, the positioning
or operation of Contractor's Equipment at the specific
location, or on the specific route, designated by Operator,
or by the actual positioning of such equipment (whether or
not correct) by Operator.
Contractor shall assume responsibility for and defend, indemnify and hold
the Operator harmless from all claims, demands, causes of action, damages,
losses, liabilities and other costs whatsoever (including, without limitation,
all costs to respond to, contain, clean-up, remove, dispose of and remediate all
pollution) to the extent attributable to any toxic, hazardous or extremely
hazardous waste, material or substance (as those terms are defined by applicable
federal, state or other law) generated by Contractor hereunder.
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Operator shall assume responsibility for and defend, indemnify and hold the
Contractor harmless from all claims, demands, causes of action, damages, losses,
liabilities and other costs whatsoever (including, without limitation, all costs
to respond to, contain, clean-up, remove, dispose of and remediate all
pollution) to the extent attributable to any toxic, hazardous or extremely
hazardous waste, material or substance (as those terms are defined by applicable
federal, state or other law) generated by Operator hereunder.
Without relieving Contractor of any of its obligations above provided, it
is agreed that Operator may (upon giving prior written notice, as reasonably
practicable) take part to any degree it deems necessary in the response to,
containment, clean-up, removal, disposal and remediation of any pollution or
contamination which is the responsibility of Contractor under the foregoing
provisions; and Contractor shall reimburse Operator for the actual costs
thereof. In addition, Operator reserves the right to perform subsea inspections
for pollution and contamination which is the responsibility of Contractor during
operations conducted hereunder. In the event pollution or contamination is
discovered through such inspection which is the responsibility of Contractor as
set forth hereinabove, Contractor agrees to reimburse Operator for the actual
costs of the inspection.
In addition, as required by law, Operator agrees to make application with
and obtain from the U.S. Coast Guard a Certificate of Financial Responsibility
to cover the drilling unit in order to enable such unit to operate in the U.S.
Outer Continental Shelf.
23.11 PATENT LIABILITY: Contractor agrees to defend, release, indemnify and
hold harmless Operator against any and all claims, demands, causes of action,
damages, losses, liabilities and other costs (including attorneys fees and court
costs) arising from infringement or alleged infringement of patents covering
Contractor's Equipment, property,
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methods or processes furnished by Contractor. Operator agrees to defend,
release, indemnify and hold harmless Contractor against any and all claims,
demands, causes of action, damages, losses, liabilities and other costs
(including attorneys fees and court costs) arising from infringement or alleged
infringement of patents covering Operator's Equipment, property, methods or
processes furnished by Operator.
23.12 DRILLING LOCATION: Operator shall be responsible for selecting and
clearing the drilling location at its own expense and will advise Contractor of
any known hazards or obstructions. Operator will provide Contractor with site
condition surveys sufficient to satisfy Contractor's Marine surveyor. Prior to
moving the drilling unit to the drilling location, Contractor will determine,
based upon the said surveys, that said location is free from impediments and/or
hazards, including but not limited to, pipelines, cables, boulders, mud-filled
depressions, and other obstructions. In the event the drilling location is not
free from impediments and/or hazards, Operator shall remove such impediments
and/or hazards, as requested by Contractor prior to moving the drilling unit to
the drilling location, or Operator shall select another drilling location
satisfactory to Contractor. Contractor shall not move the drilling unit to the
drilling location until it notifies Operator that such location is acceptable.
Upon commencement of moving the drilling unit to the drilling location,
Contractor shall be deemed to have assumed all risks associated with the
drilling location and to have released Operator from any and all liabilities and
costs with respect thereto, except to the extent attributable to an error(s) in
any site condition survey or other information furnished by Operator.
23.13 GENERAL DEFENSE, RELEASE, HOLD HARMLESS & INDEMNITY: It is the
specific and expressed intent and agreement of Operator and Contractor that all
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defense, release, hold harmless and indemnity obligations and/or liabilities
assumed by Operator and Contractor respectively under the terms of this
Contract, unless expressly limited or otherwise provided for in this Contract,
shall be without limit and without regard to the cause or causes of any incident
giving rise to any such obligations and/or liabilities, including, without
limitation, the negligence (whether active or passive, sole, joint, concurrent
or gross), other fault (excepting only as otherwise provided hereinbelow), or
strict liability of any Party, the unseaworthiness of any vessels or crafts
(including the drilling unit), ruin or defective premises, equipment,
facilities, appurtenances or location of any Party under any code, law,
regulation, order or other governmental directive, whether or not such ruin or
defect pre-exists this Contract and/or is latent, patent or otherwise.
Notwithstanding any of the foregoing, none of the defense, release, hold
harmless and indemnity obligations and/or liabilities assumed by Operator under
this Contract shall apply to protect Contractor from any claims, liabilities,
losses, causes of action, damages or other costs to the extent attributable to
Contractor's recklessness or intentional misconduct, except that in no event
shall Contractor be liable for damage to Operator's geological formations,
strata or oil and gas reservoirs and also except that Contractor's liability to
Operator for pollution or contamination shall not exceed a maximum of One
Million Dollars ($1,000,000) per occurrence in the event of Contractor's
recklessness and Two and One-Half Million Dollars ($2,500,000) per occurrence
for Contractor's intentional misconduct.
As used in Sections 23.1 through 23.16, references to "Operator", when such
word is used in the context of an indemnitee or other protected party, shall
include Operator, its co-venturers, co-lessees, their affiliates (as such term
is defined in Regulation C of the Securities Act of 1933) and subsidiaries and
their respective owners, directors,
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officers, agents, employees and insurers; and references to "Contractor", when
such word is used in the context of an indemnitee or other protected party,
shall include Contractor, Contractor's parent, affiliates and subsidiaries, and
their respective owners, directors, officers, agents, employees and insurers,
and the drilling unit, its owners and insurers.
In the event all or any portion of any indemnity, insurance or other
provision(s) of this Contract is held or otherwise determined to be illegal,
invalid or unenforceable pursuant to any law, rule, regulation, order or other
directive of any judicial or governmental body, agency or other authority having
jurisdiction thereof (including, without limitation, if it is judicially
determined by any lawfully constituted tribunal with jurisdiction over the
Parties that the monetary limits of insurance carried by Operator and
Contractor, which shall also be deemed to include any self insurance, or the
monetary limits of the hold harmless, defense, release and indemnity agreements
voluntarily and mutually assumed by Operator and Contractor in this Contract
exceed the maximum limits permitted under applicable law), the unenforceable or
invalid portion(s) of such provision shall be deemed to be automatically deleted
and/or amended, as of the effective date of such holding, to the extent required
to fully comply with such holding, including, without limitation, the automatic
amendment of any insurance (including self insurance), hold harmless, defense,
release and indemnity agreements to conform to the maximum monetary limits
permitted under such law or holding). All provisions of this Contract which are
unaffected by any such law or other holding shall continue in full force and
effect, together with the amended provisions as described above.
23.14 CLAIMS: All claims against Contractor for labor (including, but not
limited to, social benefits, termination pay or similar benefits), services and
other items required or
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used hereunder by Contractor shall be paid promptly when due, and Contractor
shall indemnify, release, defend and hold harmless Operator from and against all
liabilities, demands and expenses involving all such claims.
23.15 CONSEQUENTIAL DAMAGES: Notwithstanding any other provision contained
herein, neither Party shall be liable to the other for special, indirect or
consequential damages resulting from or arising out of this Contract, its
performance or breach, which shall be deemed to include, without limitation,
loss of profit, delay in or loss of production or business interruptions,
however same may be caused.
23.16 ENFORCEMENT: In the event that either Party hereto is required to
seek judicial enforcement of the contractual indemnities and other obligations
and liabilities of the other Party, the Party entitled to such protection
hereunder shall recover all reasonable attorneys' fees, court costs and other
expenses incurred in connection with pursuing that claim, through litigation or
otherwise.
24.1 OPERATOR'S AUTHORIZED REPRESENTATIVES: Operator shall furnish
Contractor in writing a list of Operator's representatives and employees
authorized to receive all information pertaining to logs, records, reports,
cores, core data and any other information on xxxxx drilled or any work
performed under this Contract. Operator, its representatives and authorized
employees shall have the right at all times to receive all information, to
inspect all work performed hereunder, to witness and check all measurements and
tests and to have free access to the drilling unit.
25.1 RECORDS AND REPORTS: Contractor shall furnish and shall prepare a
complete and accurate record on the IADC-API Daily Drilling Report form of all
work performed under this Contract on all xxxxx hereunder and shall furnish
Operator with three
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(3) legible carbon copies of said report properly signed by Contractor's and
Operator's representatives. Contractor shall keep and provide Operator, in the
manner specified by Operator, with delivery tickets and any other warehouse
records covering any materials and supplies furnished to Operator for which
Contractor shall be reimbursed by Operator. The quantity, description and
condition of material and supplies shall be properly certified by Contractor.
25.2 CONFIDENTIAL NATURE OF RECORDS: All logs, cores, core data, cuttings,
reports and records pertaining to the performance under the Contract shall be
open at all times to the inspection of Operator, its representatives and
authorized employees, and shall not be exhibited nor the contents divulged by
Contractor or Contractor's Personnel to any other person, without Operator's
prior written consent.
26.1 DISCIPLINE AND SAFETY: Contractor shall, at all times, maintain strict
discipline and good order among its employees, and its subcontractor's
employees, and shall take full responsibility for the safety of its work,
including the supervision and performance of all its employees and
subcontractors. Contractor shall maintain and enforce at all times a safety
program covering its employees, subcontractors and other workers associated with
the drilling unit and shall take all other necessary precautions, in order to
perform its work hereunder in a safe manner and to avoid and eliminate any
hazards present at the work site or otherwise involving Contractor's work
(including, without limitation, any work involving the use of any toxic,
hazardous or extremely hazardous chemicals).
Without limiting its foregoing obligations, Contractor shall use its best
efforts to ensure that its employees, subcontractors and other workers become
familiar with and
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abide by Operator's "Contractor Safety Requirements" attached hereto and made a
part hereof as Exhibit "H". Operator's "Contractor Safety Requirements" shall
not be deemed to be an exclusive description of Contractor's safety obligations
hereunder and shall be in addition to Contractor's own program.
No smoking or open flame or matches or lighters shall be permitted on the
drilling unit except in areas designated by Contractor in consultation with
Operator as areas wherein smoking or open flame are permitted. Contractor shall
conduct safety drills aboard the drilling unit for all personnel and shall
report same on the IADC-API Daily Drilling Report.
In order to confirm Contractor's and its subcontractor's compliance with
all safety obligations hereunder, Operator shall have the right to audit and
review Contractor's (including all its subcontractors') safety procedures,
manuals, training and inspection records and other safety files whatsoever,
pursuant to the same procedures as for the auditing of Contractor's accounting
and other records, as described in Section 20.1
Any violation of the foregoing safety obligations shall be considered a
material breach of this Contract; provided that Contractor shall have fifteen
(15) days after receipt of written notice to cure said breach or, if same is not
capable of cure within fifteen (15) days, to commence to cure same within said
period and diligently prosecute all corrective actions thereafter until
successfully completed.
27.1 RELATIONSHIP OF PARTIES: Contractor shall be an independent Contractor
with regard to all services performed and other operations conducted hereunder;
and neither Contractor, its employees, Contractor's subcontractors or their
employees are agents or employees of Operator. The entire performance, including
but not limited to
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operation, management and control of the drilling unit and other items of
Contractor's Equipment, shall be under the exclusive control and command of
Contractor. It shall be the sole and exclusive duty of Contractor to determine
by Contractor's own inspection that all supplies and items of equipment are
loaded and stored aboard said drilling unit in a proper manner, that said
drilling unit is in all respects able to undertake any contemplated operation
under the then existing conditions, in accordance with Section 6.1, and that all
operations are performed in a prudent and workmanlike manner, in accordance with
the prevailing standards for drilling contractors having experience and
expertise similar to Contractor. Operator's primary interest is in the results
to be obtained by Contractor's performance under this Contract as an independent
Contractor.
28.1 FORCE MAJEURE: Except as otherwise provided in this Section, each
Party to this Contract shall be excused from performing under the terms of this
Contract, if and for so long as such performance is hindered or prevented by
occurrences, or the resulting effects therefrom, such as but not limited to
riots, labor disputes, strikes, lock-outs, wars (declared or undeclared),
insurrections, rebellions, terrorist acts, civil disturbances, dispositions or
orders of governmental authority, whether such authority be actual or assumed,
acts of God (other than adverse sea, weather conditions or loop currents),
inability to obtain equipment, supplies or fuel, or by any other act or cause
which is beyond the reasonable control of such Party, any such event and the
effect or results of such, being herein sometimes called "Force Majeure." If
performance is prevented by failure to comply with any governmental law, rule,
regulation,
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disposition or order as aforesaid and the affected Party is operating in
accordance with good oilfield practice in the Area of Operations and is making
reasonable efforts to comply with such law, rule, regulation, disposition or
order, the matter shall be deemed beyond the control of the affected Party. In
the event that either Party hereto is rendered unable, wholly or in part, by any
such occurrence, or the resulting effects therefrom, to carry out its
obligations under this Contract, it is agreed that such Party shall give notice
and details of Force Majeure and its resulting effects in writing to the other
Party as promptly as possible after its occurrence. In such cases, the
obligations of the Party giving the notice shall be suspended during the
continuance of any inability so caused, except that Operator shall be obligated
to pay to Contractor the Equipment Repair Rate, the Stand-By Rate or the
Stand-By Without Crew Rate provided for in this Contract as may be applicable
and subject to any limitations associated with the appropriate rate; provided
that Operator shall not be liable to compensate Contractor for a total of
greater than fifteen (15) days hereunder, per force majeure event, occurrence,
circumstance or other condition; and the zero dayrate shall apply thereafter
until Contractor re-commences operations hereunder. At the end of one hundred
eighty (180) days from the date of such notice, either Party shall have the
option to cancel this Contract upon written notice to the other, in which
instance no further payments shall be due from Operator to Contractor, other
than as specified in Item A-21, Exhibit A. Operator shall have the right and
option, to be exercised in writing at least ninety (90) days prior to the
expiration of the Specified Contract Term, to extend said Term by the identical
number of days during which Contractor's operations for Operator were
discontinued due to any Force Majeure condition, occurrence or circumstance
hereunder. Said option shall be separately exercisable from Operator's option to
extend pursuant to Section 31.1 below.
29.1 REPRESENTATIVES FOR NOTICES: Operator and Contractor shall each
designate a representative to receive notices as set forth in Items A-4 and A-7,
Exhibit A.
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Such representatives may be changed by written notice to the other Party
designating a different representative.
30.1 ASSIGNMENT: Operator, at its option, may assign this Contract, for all
or part of the term remaining, to any other Party, but only with the prior
written approval of Contractor, which shall not be unreasonably withheld.
Contractor hereby consents to any assignment of this Contract by Operator to the
other Rig Share Party. Contractor, at its option, may assign this Contract, for
all or part of the term remaining, to any other Party, but only with the prior
written approval of Operator, which shall not be unreasonably withheld.
31.1 OPTION TO EXTEND: Upon completion of the Specified Contract Term,
Operator shall have the option, of extending the term of this Contract for the
period set forth in Item A-34, Exhibit A, upon Operator giving Contractor
written notice of its desire to extend the Contract on or before the time set
forth in Item A-35, Exhibit A, prior to expiration of the minimum Specified
Contract Term set forth in Item A-16, Exhibit A.
The Specified Contract Term or any extension period (if such option is
exercised by Operator) shall be continued automatically from day to day for the
time necessary to complete the well or related operations in progress upon
expiration of the Specified Contract Term or any extension period.
31.2 TERMINATION BY OPERATOR: Subject to the fulfillment of all then
existing obligations under this Contract and except as hereinafter provided,
Operator may terminate this Contract effective upon delivery to Contractor of
written notice of such termination:
31.2.1 At any time after total or constructive loss of the drilling
unit (i.e. accident or other occurrence which renders the
drilling unit
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permanently incapable of performing the work contemplated by
this Contract);
31.2.2 At any time after the drilling unit becomes incapable of
performing the work contemplated by this Contract due to
circumstances within Contractor's control and Contractor fails
to make the unit capable of performing such work within sixty
(60) days following written notice of termination;
31.2.3 At any time greater than one hundred eighty (180) days after
notice of Force Majeure, as set forth in Section 28.1 above;
31.2.4 If Operator has provided written notice to Contractor that any
of the following has occurred and Contractor has failed to cure
same within ten (10) days thereafter, unless same is not
capable of cure within ten (10) days, in which case Contractor
shall diligently prosecute all corrective actions thereafter
until successfully completed: Contractor has failed to conduct
its operations under this Contract in accordance with good
oilfield practice, as a result of causes within the control of
Contractor; Contractor has failed to furnish or maintain
Contractor's Equipment in good condition and/or suitable for
the use intended; or Contractor has not removed from operations
under this Contract any of Contractor's Personnel or other
personnel which Operator considers to be incompetent or
otherwise detrimental to the normal operational efficiency of
Operator's drilling program; or
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31.2.5 At any time, for any reason other than as set forth in Sections
31.2.1-4 hereinabove, provided that Operator shall elect in
writing, within thirty (30) days after such termination notice
is issued, to pay Contractor under either of the following
provisions, as settlement in full for all of Contractor's
damages and other costs, and for all other liabilities which
Operator may have to Contractor, arising directly or indirectly
out of such termination by Operator:
(a) Pay Contractor a lump sum fee equal to the net present
value (calculated to the date of payment) of the Contract. The
net present value shall be calculated by multiplying the
Operating Rate in Exhibit "A-22" by the number of days
remaining in the Specified Contract Term at the time of
Operator's payment and applying a 7.5% discount rate which
assumes a rig use at the mid-point of each remaining year for
the number of applicable days of required rig utilization for
that year. Example: Operator provides notice to terminate in
year 2004 and has utilized the rig for a cumulative total of
365 days by the end of year 2003. The net present value
calculation will be for a remaining 91.25 days and an assumed
rig utilization at mid-year where one-half of the remaining
days are before July 1 of that year and one-half are after July
1.
(b) Pay the Standby Without Crew Rate as applicable from
the date of termination notice until the earlier of (i) the
expiration of the remainder of Operator's Specified Contract
Term or (ii) the
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drilling unit commences operations for, and Contractor is
entitled to receive, equal payments from another party for the
remainder of the Specified Contract Term. In the event the
Operator elects to terminate pursuant to this paragraph (b),
Contractor shall exert every reasonable effort to find
alternate employment for the drilling unit. In the event
Contractor, with Operator's approval, is able to secure a
contract with another party for the remaining balance of the
Specified Contract Term, or for a portion thereof, at an
operating rate less than that provided for in this Contract,
the difference of the two rates will be payable by Operator to
Contractor under this Section 31.2.5 (b) for the duration of
the Specified Contract Term, and if such other contract(s)
terminates prior to the end of the Specified Contract Term,
Operator shall pay Contractor the Stand-by Without Crew Rate
for such portion of the remaining Specified Contract Term that
the drilling unit is not under another contract. Contractor
shall invoice Operator on a monthly basis for any remaining
payments due under this Section 32.2.5(b), subject to
Operator's audit rights under Section 20.1. Operator's
remaining Specified Contract Term shall be deemed to run as per
the Drilling Slot rotation set forth in Section 2.3 and
assuming a rig use at the mid-point of each year for the number
of days or required rig utilization for that
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year (unless modified by mutual agreement of Operator,
Contractor and other sharing parties) for the purposes of
determining Operator's payment obligation to pay Contractor the
Standby Without Crew Rate, less any applicable offsets
(pursuant to the calculation procedure in the preceding
paragraph) for those portions of days in Operator's remaining
Drilling Slots in which the rig is utilized pursuant to third
party contracts subsequently entered into by Contractor.
In the event Operator terminates this Contract in accordance with
Sections 31.2.1, 2, 3 or 4 above, such termination shall be without penalty to
Operator, and Contractor shall not be entitled to any early termination
compensation. Contractor shall be paid all compensation earned prior to the
termination date and also the demobilization rate set forth in Item A-21. If
Operator terminates this Contract pursuant to Section 31.2.5 (a) or (b), the
payment made thereunder by Operator to Contractor shall be deemed liquidated
damages, and not a penalty, and shall constitute settlement in full of all
claims whatsoever which Contractor may have against Operator arising out of such
termination, except that Operator shall remain responsible for payment of the
demobilization rate set forth in Item A-21 and also all liabilities which
Operator incurred hereunder prior to such termination.
To the extent of any conflict between the provisions of this Section
and the terms and provisions of the remainder of this Contract, the provisions
of this Section shall control.
31.3 TERMINATION BY CONTRACTOR: Subject to the provisions of Section 20.1,
in the event that any payments due (except any invoices that are in dispute or
in the
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process of being settled) are not paid when due, Contractor shall notify
Operator of nonpayment and shall give Operator twenty (20) days from receipt of
said notice to pay. In the event Operator fails to pay within said twenty (20)
day period, Contractor may terminate this Contract by notifying Operator in
writing to that effect and the Contract shall terminate thirty (30) days after
receipt of the latter notice, unless payment of all invoices then overdue and
not in dispute is received by Contractor prior to the expiration of said thirty
(30) day period. In the event the Contract is terminated pursuant to this
Section, Contractor shall be under no obligation to finish any well or work in
progress.
32.1 UNSATISFACTORY PERFORMANCE: If Contractor has failed to conduct its
operations under this Contract in accordance with good oilfield practice as a
result of causes within the control of Contractor, or Contractor has failed to
furnish or to maintain Contractor's Equipment in good condition and/or suitable
for the use intended, or members of Contractor's Personnel or other personnel
engaged by Contractor are considered by Operator to be incompetent or otherwise
detrimental to Operator's drilling program, Operator may give Contractor written
notice of default, specifying Contractor's performance failures or deficiencies.
Should Contractor fail or refuse to remedy the matters complained of within ten
(10) days after its receipt of such written notice (unless such matter is not
capable of cure within ten (10) days, provided that Contractor shall diligently
prosecute all corrective actions thereafter until successfully completed),
Operator may (i) terminate this Contract with no penalty or early termination
compensation as provided in Section 31.2.5 above or (ii) take over the exclusive
operation of Contractor's Equipment and Personnel for the purpose of conducting
operations hereunder, notwithstanding anything to the contrary contained in this
Contract, excepting only the required approval of Contractor's underwriter,
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which shall not be unreasonably withheld. In the event operations are taken over
by Operator:
32.1.1 Operator shall pay Contractor the Stand-By Without Crew
Rate set forth in Item A-25, Exhibit A, plus the value of
any drilling supplies belonging to Contractor and used by
Operator for the period of such operations by Operator;
32.1.2 Operator shall pay all costs and wages (but not handling
charges) in connection with Contractor's Equipment and
Personnel;
32.1.3 Operator shall return Contractor's Equipment to Contractor
in as good condition as when taken over by Operator, normal
wear and use excepted; and
32.1.4 All operations shall be at Operator's risk, and any
representations and indemnity provisions of this Contract
whereby Contractor undertakes to protect, indemnify,
release, defend or to hold harmless Operator, in any
respect (other than Patent Liability set forth in Section
23.11 above) shall be suspended; provided, however, that
such protection, indemnity, release, defense or hold
harmless provisions shall survive and be applicable to the
extent that loss, harm or damage is attributable to acts or
events which transpired before operations were taken over
by Operator.
33.1 CONFLICT OF INTEREST: Contractor shall not, at any time, make, offer,
provide or agree to make, offer or provide any payment, gift, fee, discount,
commission, percentage, loan, service, entertainment, substantial favor or
anything of value to (i) any
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employee, agent or representative of Operator, (ii) any member of their
immediate families, or (iii) anyone claiming to act or acting for or on behalf
of any such person, nor shall Contractor permit any such person described in
(i), (ii) or (iii) above, to have any financial or economic interest in
Contractor or any subsidiary or affiliate of Contractor. In the event Contractor
is requested to make or provide any such payment, gift, fee, discount,
commission, percentage, loan, service, entertainment, substantial favor or
anything of value, by any such person described in (i), (ii) or (iii) above,
Contractor shall report such request immediately to Operator. Contractor further
acknowledges and agrees that the material breach by Contractor of any or all of
the provisions of this Section, if not cured by Contractor within thirty (30)
days after receipt of written notice thereof from Operator, shall be grounds for
immediate suspension or termination of this Contract.
34.1 SEVERABILITY; WAIVER; TITLE HEADINGS; ENTIRE AGREEMENT; MODIFICATION:
No failure or failures on the part of either Party to enforce, from time to
time, all or any portion of the terms or conditions of this Contract shall be
interpreted as a waiver of such terms or conditions. Title headings contained in
this Contract are for identification and reference only, and shall not be used
in interpreting any part of this Contract. This Contract, together with the
Exhibits incorporated and made a part of this Contract by reference, constitute
the entire agreement of the Parties; no other writings or conversations shall be
considered a part of this Contract. No promises, representations or inducements
not expressed in this Contract were made or relied upon by any Party hereto.
This Contract can only be modified by written instrument properly executed by
duly authorized representatives of the respective Parties. This Contract shall
be construed and
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the relations between the Parties determined in accordance with the laws as set
forth in Item A-32, Exhibit A, as particularly provided for in Section 39.1.
35.1 REGULATIONS: Contractor represents that all of Contractor's Equipment
shall comply with design criteria and specifications of all governmental
authorities having jurisdiction. Contractor agrees to comply with all laws,
rules and regulations, Federal, State or municipal, which are now or may become
applicable to operations covered by this Contract or arising out of the
performance of such operations. The terms of Exhibit F attached hereto, where
applicable, shall apply to this Contract.
36.1 BANKRUPTCY: Should Contractor become insolvent or make an assignment
for the benefit of creditors or be adjudicated as bankrupt or admit in writing
its inability to pay its debts generally as same become due, or should any
proceedings be instituted by Contractor under any State or Federal Law for
relief from creditors or for the appointment of a receiver, trustee or
liquidator of Contractor, or should a petition or other request for adjudication
of Contractor as an insolvent or a bankrupt be filed, or should an attachment be
levied upon the Contractor's Equipment and not removed within ten (10) days
therefrom, then upon the occurrence of any such event, Operator shall thereupon
have the right to cancel this Contract and to terminate immediately all work
then being performed thereunder.
37.1 SECURITY OF WORK PREMISES: Only Contractor's authorized employees or
other employees and persons authorized by Operator or governmental agencies will
be permitted to enter any Work Premises as defined below. Contractor is
obligated to take such steps as are necessary to prevent unauthorized persons
from entering the Work Premises.
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Contractor shall institute all procedures necessary to enforce the absolute
prohibition on: the use, possession, or transportation of firearms, alcoholic
beverages, illegal drugs, narcotics, or other controlled dangerous substances,
and unauthorized drugs for which a person does not have a current prescription
while on the Work Premises. The term "Work Premises" is used in its broadest
sense to include all work locations, buildings, structures, installations, rigs
and other facilities, both onshore and offshore, including the point of
embarkation and debarkation for all boats, planes and helicopters owned or
controlled by Operator or one of its affiliated companies or otherwise being
utilized by or for Operator or one of its affiliated companies for Operator
business or for transportation of persons to and from these facilities.
To ensure compliance with this policy, Operator may conduct unannounced
periodic inspections of all individuals and their personal effects at the point
of embarkation, while on the Work Premises, on the drilling unit, and at the
point of debarkation, pursuant to the Search and Seizure Procedure attached
hereto and incorporated herein by reference as Exhibit "G".
Violation of the above policy or refusal to submit to an inspection by any
individual will be cause for immediate removal of the individual from the Work
Premises and/or Contractor's drilling unit, as applicable.
38.1 CHOICE OF LAWS: THIS CONTRACT SHALL BE CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE GENERAL MARITIME LAWS OF THE UNITED STATES, EXCEPTING AS
TO ANY CONFLICT OF LAW PROVISIONS WHICH WOULD REFER ANY MATTER HEREUNDER TO THE
LAWS OF A STATE OTHER
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THAN TEXAS; PROVIDED, HOWEVER, TO THE EXTENT THAT GENERAL MARITIME LAWS ARE NOT
APPLICABLE TO ANY PORTION OF THE WORK WHICH IS HEREUNDER, THE LAWS OF THE STATE
OF TEXAS SHALL APPLY.
IN WITNESS WHEREOF, the undersigned Parties have executed this
Agreement effective as of the date first hereinabove written.
UNION PACIFIC RESOURCES COMPANY
By:
-----------------------------------
Xxxxxxx X. Xxxxxx
Attorney in Fact
NOBLE DRILLING (U.S.) INC.
"CONTRACTOR"
By:
-----------------------------------
Xxxx X. Xxxx
Vice President Marketing
and Contracts
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EXHIBIT A
CONTRACT SUMMARY
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1, 2000 by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
A-1 Contract Effective Date January 1 , 2000
A-2 Operator Union Pacific Resources Company
A-3 Operator's Address for X.X. Xxx 0, XX 00-00
Notification Purposes Xxxx Xxxxx, Xxxxx 00000-0000
Telecopy Number (000) 000-0000
Telephone Number (000) 000-0000
A-4 Operator's Representative Mr. Xxxx Xxxxxx
A-5 Operator's Address for Invoice Presentation X.X. Xxx 0, XX 00-00
Xxxx Xxxxx, Xxxxx 00000-0000
A-6 Contractor Noble Drilling (U.S) Inc.
A-7 Contractor's Representative Xx. Xxxx X. Xxxx
A-8 Contractor's Telephone Number (000) 000-0000
Contractor's Telecopy Number (000) 000-0000
A-9 Contractor's Address for 00000 Xxxxxxxx Xxx., Xxxxx 000
Notification Purposes Xxxxxxx, Xxxxx 00000
X-00 Xxxxxxxxxx'x Xxxxxxx or Bank and Account Number As Per Invoice
and Method for Invoice Payments
A-11 Area of Operations U.S. Gulf of Mexico, Federal OCS Waters
A-12 Location of Initial Well
Mississippi Canyon Area
A-13 Name of Drilling Unit Noble Xxx Xxxxx
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A-14 Type of Drilling Unit EVA-4000 Semisubmersible
A-15 Rig Delivery Date January 1, 2000
A-16 Specified Contract Term 456.25 days (in the aggregate) of rig usage by
or before five years after Term Commencement
Date
A-17 Number of Xxxxx TBD
A-18 Maximum Water Depth 6,000 feet
A-19 Maximum Well Depth 25,000 feet
A-20 Mobilization Rate $145,000/Day plus cost of tugs
A-21 Demobilization Rate $145,000/Day plus cost of tugs
A-22 Operating Rate: $/Day $155,000/Day
A-23 Stand-By with Crew Rate: $/Day $155,000/Day
A-24 Equipment Repair Rate: $/Day $155,000/Day
A-25 Stand-By Without Crew Rate: $/Day $150,000/Day
A-26 Moving Rate: $/Day $145,000/Day plus cost of tugs
A-27 Handling Charge on Items Supplied by Contractor +5%
A-28 Port or Place at which the mobilization of the Alaminos Canyon #627
Drilling Unit shall commence (Amerada Xxxx location)
A-29 Commencement of Dayrates Term Commencement Date (as defined in Section
2.1 of Contract)
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A-30 Cessation of Dayrates Upon the expiration of the Specified Contract
Term, when the drilling unit has been released
from Operator's last location drilled and is
ready for tow to another operator's well
location or, if the drilling unit is not under
contract to another operator upon the
expiration of the Specified Contract Term, when
the drilling unit has been safely moored and
stacked at a mutually agreed location.
A-31 Redrilling Rates 80% of A-22
A-32 Governing Law U.S. Maritime Law
A-33 Location of shorebase and port facilities Cameron, LA (or as otherwise designated by
Operator)
A-34 Term of Contract Extension, at Operator's option One well at the Contract rates
A-35 Time of Notice to Exercise Option to Extend 45 days written notice prior to end of
Contract Specified Contract Term
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EXHIBIT B
PERSONNEL FURNISHED BY CONTRACTOR
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1 , 2000 by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
PERSONNEL - NOBLE DRILLING
GULF COAST MARINE - EVA 4000(TM)
(14 DAYS ON - 14 DAYS OFF)
NORMAL OVERTIME ADDITIONAL
JOB NO. ON TOTAL WORKING HOURLY RATE W/45% CREW COST PER DAY
CLASSIFICATION BOARD PAYROLL HR./DAY RATE BURDEN
---------------------------- ------------- -------------- --------------- ------------- ------------------ -------------------
DRILLING CREW
Offshore Inst'l Mgr. 1 2 12 Salaried Salaried $667
Rig Manager 1 2 12 Salaried Salaried $572
Driller 2 4 12 $19.25 $41.87 $502
Asst. Driller 2 4 12 $15.15 $32.95 $395
Derrickman 2 4 12 $14.25 $30.99 $372
Floorman 6 12 12 $12.50 $27.19 $326
Roustabout 8 16 12 $11.00 $23.93 $287
Barge Engineer 1 2 12 Salaried Salaried $501
Subsea Engineer 1 2 12 Salaried Salaried $515
Ballast Control Operator 2 4 12 $16.25 $35.34 $424
Rig Maint. Supv. 1 2 12 Salaried Salaried $501
Mechanic 1 2 12 $18.60 $40.46 $485
Electrician 1 2 12 $18.60 $40.46 $485
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Electronic Technician 1 2 12 Salaried Salaried $458
Motorman 2 4 12 $13.75 $29.91 $359
Welder 1 2 12 $14.35 $31.21 $375
Crane Operator 2 4 12 $15.50 $33.71 $405
Safety Training Specialist 1 2 12 $14.40 $31.32 $376
--- ---
TOTAL 36 72
Overtime for the crew personnel when requested by the Operator will be
reimbursed at Overtime Rates. Extra personnel requested by the Operator will be
reimbursed to Contractor at the Additional Crew Cost Rate. In the event the
drilling crew is not manned at the specified complement, a deduction will be
made from the daily rate based upon the crew members regular hourly rate. The
catering crew is provided under separate contract by Contractor. Meals and bunks
for Operator's excess personnel above 3 per day will be billed at $12.50 per
each meal and bunk.
Additional personnel, if necessary to a safe and efficient rig operation, shall
be determined by Operator, Contractor and the other Rig Share Party, and this
Exhibit B shall be modified accordingly.
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EXHIBIT C
RIG DESCRIPTION
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1, 2000 by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
EVA - 4000 EQUIPMENT LIST
SEMI-SUBMERSIBLE DRILLING UNIT
Union Pacific Resources Company - U.S. GULF OF MEXICO
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EXHIBIT D
EQUIPMENT, SUPPLIES AND SERVICES TO BE FURNISHED
This Exhibit is attached to and made a part of that certain Daywork Drilling
Contract dated, January 1, 2000 by and between Union Pacific Resources Company
as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
CATEGORY
1. FURNISHED BY CONTRACTOR, PAID BY CONTRACTOR
2. FURNISHED BY CONTRACTOR, PAID BY OPERATOR, PLUS HANDLING CHARGE
3. FURNISHED BY CONTRACTOR, PAID BY OPERATOR, NO HANDLING CHARGE
4. FURNISHED BY OPERATOR, PAID BY OPERATOR
MISCELLANEOUS CATEGORIES
------------- ----------
1. Contractor's Equipment. 1
2. Transportation of Contractor's Personnel and Equipment from Operator's
shorebase to well locations. 4
3. Maintenance and Repair of Contractor's Equipment. 1
4. All charges relative to acquisition and shipping to dock at Operator's
shorebase of Contractor's Equipment and supplies. 1
5. Contractor's Personnel including replacement, subsistence, insurance, wages,
benefits and other related costs. 1
6. Extra Personnel in excess of normal complement of Contractor's Personnel when
required by Operator. 3
7. Overtime beyond normal work schedule for Contractor's Personnel when requested
by Operator. 3
8. Required licenses, permits and clearances to enter upon drilling location.
4
9. Surveying service and marker buoys to stake location. 4
10. Required sea floor or water bottom surveys. 4
11. Potable water to capacity of distillation units on Drilling Unit. 1
12. Drill water and excess potable water if required. 4
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MISCELLANEOUS CATEGORIES
------------- ----------
13. Drilling mud and additives. 4
14. Welding services required on Operator's Equipment to extent available from
Contractor's labor, excluding overtime. 1
15. Welding materials used on Operator's Equipment. 2
16. Supply, crew, Stand-By vessels. 4
17. Any replacement or additional hoses between supply vessels and
Drilling Unit for unloading fuel, water and bulk cement and mud
materials.
2
18. Mooring system between supply vessels and Drilling Unit including repair and
replacement. 4
19. Cargo baskets for use in transporting Contractor's and Operator's supplies on 1/4
supply vessels.
20. Labor required aboard supply vessels (in excess of supply vessels'
personnel) when alongside drilling unit to unload or load Contractor's
and/or Operator's supplies and Equipment, such labor, if required,
shall be Contractor's roustabouts from aboard drilling unit, excluding
overtime.
1
21. Towing to and from well location with towing vessels. 3
22. Setting and retrieving of anchors, including special crews. 4
23. Anchor piles and mat if required. 4
24. Placement of anchor piles and mat. 4
25. Drill pipe casing protector rubbers for Contractor's drill pipe for surface
pipe depth only, initial set. 1
26. Drill pipe casing protectors on drill pipe furnished by Operator. 4
27. Xxxxx saver sub rubbers and replacements for Kellys furnished by Contractor. 1
28. Drill pipe wipers for Contractor's drill pipe. 1
29. Fishing tools other than furnished on Drilling Unit. 4
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MISCELLANEOUS CATEGORIES
------------- ----------
30. Repair and/or replacement parts for Contractor furnished fishing tools.
2
31. Drilling bits, stabilizers, hole openers, reamers, underreamers, wall
scrapers, drilling bumper subs, shock subs, pressure balanced subs,
drilling safety joints, hydraulic drilling jars and other special
in-hole equipment, including replacement parts for same.
4
32. Directional surveying equipment and service. 4
33. Deflection drilling tools and service. 4
34. Drill pipe, drill collars and handling tools for same other than Contractor
furnished drill strings and tools. 4
35. Wellhead equipment. 4
36. Tubular goods, hangers, packers and accessories. 4
37. (a) Screens for shakers under 80 mesh. 1
(b) Screens for shakers over 80 mesh, or any screen if Operator requests
replacement or change before screen is worn out.
(c) Flowline mud cleaner screens. 3
3
38. Casing shoes, float collars, baskets, centralizers, scratchers, scrapers,
baffles and other casing accessories. 4
39. Casing tools and crews other than those supplied by Contractor In Exhibits "B&C" 4
40. Tubing tools, including slips elevators, wrenches and tubing pipe wipers.
4
41. Swabbing equipment, including lubricator, swab valve, swabs, rubbers, oil
savers, oil saver rubbers, sinker bars, rope socket and jars if required
(except sand line). 4
42. Electric logging unit rental and logging services. 4
43. Wireline formation testing and sidewall sampling equipment and services. 4
64
MISCELLANEOUS CATEGORIES
------------- ----------
44. Drill stem test equipment and services. 4
45. Gun perforating and services. 4
46. Cement and cementing services. 4
47. Cementing unit, rental and maintenance (if applicable). 4
48. Third Party labor and materials to install the following services, as provided
by Operator aboard the Drilling Unit:
Mud logging unit. 4
Diving equipment. 4
Skid mounted well test unit. 4
49. Well testing unit complete with separators, heaters, gas vents
metering test tanks, piping and valves to be situated aboard the
Drilling Unit.
4
50. Oil and/or gas burner, necessary booms, piping, igniters, fabrication and
installation. 4
51. Shore base with dock and loading/unloading facilities and labor.
4
52. Detection, personnel safety and other necessary equipment and services for
working in H2S area. 4
53. Special transportation for crews to Operator's shore base. 2
54. Catering for Contractor's Personnel and three (3) Operator's Personnel.
1
55. Catering for others than in Item 54. 3
56. Diving and related services. 4
57. Boots, coveralls, slicker suits for those personnel exposed to oil base or
toxic fluids. 2
58. Replacement of packing elements for Contractor's B.O.P.s
- Initial packing element 1
- Replacement packing element 4
59. All fuel for Contractor's and Operator's Equipment. 4
65
MISCELLANEOUS CATEGORIES
------------- ----------
60. All greases, lubricants, hydraulic fluid and additives for Contractor's
equipment, excluding B.O.P.s. 1
61. Hydraulic fluid and additives for B.O.P.'s and B.O.P. control system.
- Initial fluids 1
- Replacement fluids 3
62. Prior to first well, Contractor to furnish Operator with new drill pipe, drill
collars, and other in-hole equipment or satisfactory evidence of inspection
(according to API-IADC standards) of used equipment since last well drilled for
others. 1
63. After initial inspection, inspection of Contractor's drill pipe, drill collars
and other in-hole equipment (according to API-IADC standards) as required by
Operator. 2
64. Primary anchors.
- Initial set. 1
- Replacement anchors 3
65. Piggyback anchors for all primary anchors.
- Initial set 4
- Replacement anchors 4
66. All pendant wire required between primary anchors and piggyback anchors.
4
67. Pendant wire from anchors to buoys.
- Initial set 4
- Replacement wire 4
68. Anchors buoys with flashing lights (per U.S. Coast Guard regulations) for
marking anchor patterns.
- Initial set 4
- Replacement buoys 4
69. All anchor chain. 1
70. Any charges relative to transportation of Contractor's Personnel between
Operator's base and rig. 4
71. Radio equipment for communication with supply vessels and helicopters including
portable sets required by Contractor. 1
66
MISCELLANEOUS CATEGORIES
------------- ----------
72. Radios as required for registry of the Drilling Unit and law of Area of
Operation. 1
73. Permits, licenses required for operation of Contractor's communication
equipment. 1
74. First Aid medical attention for persons aboard the Drilling Unit.
1
75. First Aid equipment and hospital room on board the Drilling Unit.
1
76. Safety hats, shoes and gloves, if supplied, for Contractor's Personnel.
1
77. Fire fighting equipment for Contractor's Equipment according to all Outer
Continental Shelf Orders and U.S. Coast Guard Regulations.
1
78. Navigation aids as required by government regulations in either stationary or
moving mode. 1
79. Approved safe storage and refueling equipment on Drilling Unit for helicopter
fuel. 4
80. All necessary life saving and safety equipment to conform to all existing Outer
Continental Shelf Orders and U.S. Coast Guard regulations.
1
81. Helicopter pad to accommodate Sikorsky 61 helicopter or similar.
1
82. All hand and power tools required for normal maintenance of rig components.
1
83. Space for geologist's lab on Drilling Unit. 1
84. Licensed and competent radio operator(s) aboard the Drilling Unit.
4
85. Any items of clothing, additional to that which is normally supplied
by Contractor, as a result of any change in legislation in the Area of
Operation.
2
86. Onshore accommodations for Contractor's Personnel in the event of temporary rig
evacuation for only those personnel required to remain on stand-by at
Operator's request. 3
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MISCELLANEOUS CATEGORIES
------------- ----------
87. Any aircraft (including paramedics and associated costs) called for medical
evacuation of Contractor's Personnel. 4
88. All casing running tools, other than those supplied by Contractor In Exhibit "C" 4
89. Centrifuge and screens (if required). 4
90. Weather forecast services (if required). 4
91. Rental of all Atmospheric gas detectors ( not provided in Exhibit "C") 4
92. Rental of SWACO choke (currently on board Drilling Unit). 1
93. Rental of mud monitoring equipment (currently on board Drilling Unit). 1
94. Rental of drilling recorder (currently on board Drilling Unit). 1
95. Rental of trash compactor (currently on board Drilling Unit). 1
96. Trash compactor bags. 4
97. Additional costs (i.e. overtime, lodging, transportation, etc.) resulting from
required evacuation of Contractor's employees from the Drilling Unit due to 3
adverse weather conditions.
98. Additional marine riser to drill in water depths greater than 5,000 feet. 3
68
EXHIBIT E
INSURANCE
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1, 2000 by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
CONTRACTOR SHALL MAINTAIN THE FOLLOWING MINIMUM INSURANCE*:
* (The term "insurance" shall be deemed to include equivalent coverage
mechanisms for purposes of this Exhibit E).
1. Worker's Compensation Insurance, which shall be written to cover the
employees of Contractor in compliance with the state having jurisdiction over
each employee, with the following endorsements and limits:
Endorsements Limits
------------ ------
Basic Worker's Compensation Statutory Limits
Policy, endorsed to provide
Longshoremen's and Harbor
Worker's Act Coverage,
including the Outer
Continental Shelf Land Act.
Employer's Liability Combined Single Limit per
Voluntary Compensation occurrence of $5,000,000
Borrowed Servant
In Rem
Admiralty Coverage II
Gulf of Mexico Extension
Death on the High Seas
Xxxxx Act Xxxxxx
2. Comprehensive General Liability Insurance, which shall be written to
include the following endorsements and limits:
Endorsements Limits
------------ ------
Personal Injury Combined Single Limit
Completed Operations per occurrence of
Broad Form Contractual Liability $5,000,000
Broad Form Property Damage
Premises
Product Liability
Sudden and Accidental Seepage
and Pollution
Independent Contractor
Borrowed Servant
Gulf of Mexico Extension
Deletion of Watercraft Exclusion
Waiver of Subrogation
Operator as an Additional Insured
69
3. Comprehensive Automobile Liability Insurance, which shall be written to
include the following endorsements and limits:
Endorsements Limits
------------ ------
Owned Vehicles Combined Single Limit
Non-Owned Vehicles per occurrence of
Hired Vehicles $1,000,000
Waiver of Subrogation
Operator as an Additional Insured
4. If Watercraft are used in Contractor's operations:
A. Protection and Indemnity Insurance on the SP 23 Form or its
equivalent shall be written to include the following endorsements and limits:
Endorsements Limits
------------ ------
Chartered Vessel Combined Single Limit
Members of the Crew per occurrence of
Marine Contractual $5,000,000
Tower's Liability
In Rem
Collision Liability
Pollution Liability Coverage
Deletion of "Other than Owner"
limitation clause
Waiver of Subrogation
Operator as an Additional Insured
70
X. Xxxx and Machinery Insurance on the American Institute Hull Clause
(June 2, 1977) Form or its equivalent shall be written to include the following
endorsements and limits:
Endorsements Limits
------------ ------
Collision Liability Value of Vessel or
Deletion of "Other than Owner" $5,000,000, whichever is
limitation clause greater
Waiver of Subrogation
Operator as an Additional Insured
5. If Aircraft, including helicopters, are used in Contractor's
operations, Aircraft Liability, Passenger Liability, and Property Damage
Liability Insurance shall be written to include the following endorsements and
limits:
Endorsements Limits
------------ ------
Owned Aircraft Combined Single Limit
Non-Owned Aircraft per occurrence of
Hired Aircraft $5,000,000
Voluntary Settlement
Waiver of Subrogation
Operator as an Additional Insured
6. Excess liability Insurance over the schedule underlying policies
described above for $15,000,000 excess of the specified limits.
The requirement that Operator be named as an additional insured with
regard to any of Contractor's coverage obligations hereunder shall only apply to
the extent of any indemnity obligations or other liabilities assumed by
Contractor under this Contract.
To the extent which Operator is required to be an additional insured in
the aforesaid policies, the following "Other Insurance" Endorsement shall be
included in such policies with the exception of Aviation, Workers Compensation
and Automobile Liability policies:
"Underwriters acknowledge the existence of liability and
property damage insurance carried by Union Pacific Resources
Company and its affiliates and it is understood and agreed
that the provisions relating to other insurance in this
policy, if any, shall not be applicable to Union Pacific
Resources Company or its affiliates. It is further understood
that the insurance provided by this policy shall be primary
insurance for all assureds only with regard to all indemnity
obligations and other liabilities assumed by Contractor under
the subject Contract, and such other insurance carried by
Union Pacific Resources Company and its affiliates, shall not
be called upon by these insurers for contributing, deficiency,
concurrent or double insurance or otherwise."
71
EXHIBIT F
CERTIFICATE OF COMPLIANCE WITH FEDERAL CONTRACT REQUIREMENTS
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1, 2000, by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
I. EQUAL EMPLOYMENT OPPORTUNITY CLAUSE (48 CFR 52.222-26)
During the performance of this Contract, Contractor will not
discriminate against any employee or applicant for employment because
of race, color, religion, sex or national origin. The Equal Opportunity
Clause published in 48 CFR 52.222-26, implementing Executive Order
11246 is hereby incorporated in this Certificate by reference.
II. CERTIFICATION OF NON-SEGREGATED FACILITIES (48 CFR 52.222-21)
The Contractor certifies that it does not and will not maintain or
provide for its employees any segregated facilities at any of its
establishments, and that it does not and will not permit its employees
to perform their services at any location under its control where
segregated facilities are maintained. The Contractor agrees that a
breach of this certification is a violation of the Equal Opportunity
Clause in the Contract. Contractor agrees to comply with all the
provisions of 48 CFR 52.222-21, which are incorporated in this
Certificate by reference.
III. AFFIRMATIVE ACTION FOR SPECIAL DISABLED AND VIETNAM ERA VETERANS
(48 CFR 52.222-35)
Contractor agrees to comply with the Affirmative Action Clause and the
regulations of 48 CFR 52.222-35, which are incorporated in this
Certificate by reference.
IV. AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS (48 CFR 52.222-36)
The Contractor agrees to comply with the Affirmative Action Clause and
the regulations of 48 CFR 52.222-36, which are incorporated in this
Certificate by reference.
V. UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL DISADVANTAGED BUSINESS
CONCERNS (48 CFR 52.219-8)
The Contractor agrees to comply with the provisions of 48 CFR 52.219-8,
which are incorporated in this Certificate by reference.
72
VI. SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN
(48 CFR 52.219-9)
The Contractor agrees to comply with the provisions of 48 CFR 52.219-9,
which are incorporated in this Certificate by reference.
VII. CLEAN AIR AND WATER (48 CFR 52.223-2)
The Contractor agrees to comply with provisions of 48 CFR 52.223-2,
which are incorporated in this Certificate by reference.
73
EXHIBIT G
SEARCH AND SEIZURE POLICY
This Exhibit is attached to and made a part of that certain Daywork
Drilling Contract dated January 1, 2000, by and between Union Pacific Resources
Company, as Operator, and Noble Drilling (U.S.) Inc., as Contractor.
It is the Exploration and Production Offshore policy of Union Pacific
Resources Company ("Company") to maintain a work environment that is safe for
all employees and others and conducive to maintaining high work standards. As
part of this policy, no illegal drugs, intoxicating beverages, explosives,
firearms or other weapons are allowed on the facilities operated by or
contracted to Company. Illegal drugs include marijuana and all other controlled
substances not prescribed by a licensed physician for use by the person
possessing them. All Company employees, contractors and visitors should be aware
of, and must comply with, this policy.
As a further safety precaution, entry into or remaining upon Company
facilities is conditioned upon the Company's right to search the person and
personal effects of the individual for illegal drugs, intoxicating beverages,
explosives, firearms or other weapons or unauthorized possession of Company
property. These searches may be made without warning and may include lockers,
rooms and work stations on any offshore platform or other work area operated by
the Company, if appropriate. Searches may also be made on departure from any
Company facility.
Drug screening may be conducted on persons seeking access to or who are on
Company property. Drug screening is a scientific analysis of urine samples. The
analysis will be performed by authorized laboratory technicians. Samples will be
requested by an authorized Company representative.
Prior to any search or screening, employees, contract personnel and third
Parties seeking admission to or from Company facilities will be requested to
sign a form stating that they understand the drug screening and search policy
and consent to it.
Employees and non-employees have the right not to be searched or submit to
the drug screening. However, refusal of an employee to submit to a search or
drug screening will be cause for disciplinary action up to and including
immediate discharge. In all cases of a refusal to consent to a search and/or
drug screening, the responsible supervisor will arrange for the refusing person
to be removed immediately from Company property. Non-employees refusing to allow
a search or drug screening will not be allowed entry on Company property.
Prohibited items discovered through these Company searches may be taken
into custody and may be turned over to the proper law enforcement authorities,
if appropriate.
This policy is in effect at all Company offshore drilling and production
facilities as well as any Company warehouse or shorebase facility.
74
EXHIBIT H
CONTRACTOR SAFETY REQUIREMENTS
Attached to and made a part of that certain Contract dated January 1, 2000,
between Union Pacific Resources Company as Operator and Noble Drilling (U.S.)
Inc., as CONTRACTOR.
UNION PACIFIC RESOURCES COMPANY
U.S. EXPLORATION & PRODUCTION
Contractor Safety Requirements
NOTE: The following information is intended to set forth the minimum safety
requirements Union Pacific Resources Company expects from its
Contractors (including their Subcontractors) in the performance of
their operations. Each Contractor shall be responsible for ensuring
that both Contractor and Subcontractor personnel comply with all
applicable requirements. This document does not, however, address
every conceivable practice or procedure that could affect safety in
field production, drilling, well servicing or gas plant operations. It
is the responsibility of each Contractor to implement and enforce any
additional safety practices or procedures that may be necessary for
the safe performance of operations by Contractor and Subcontractor
personnel.
I. PRE - JOB MEETING
Complete understanding of the safety and health requirements of the job
is critical to the overall success of the project. After awarding of
bids, Contractors may be required to attend a pre-job meeting to
discuss Contractor Safety Requirements and jobsite safety/hazard
information.
II. REPORTING TO WORK
All Contractor personnel shall report to the appropriate Union Pacific
Resources Company representative upon arrival at a work location.
Contractor Management shall assure that Contractor personnel are given
safety orientations for familiarization with potential jobsite hazards
and emergency procedures.
75
III. ACCIDENT, INJURY AND ILLNESS REPORTING PROCEDURES
All work-related accidents, injuries and illnesses shall be reported
immediately or as soon as is safely possible to the appropriate Union
Pacific Resources Company representative. It is the responsibility of
the Contractor's designated person-in-charge to ensure that all
accidents on the property or leases of UPR involving personnel injury
or illness, fire and/or explosions, property damage, hazardous material
spills and vehicles are reported both to UPR and to all applicable
federal, state and local governmental bodies and agencies having
jurisdiction thereof.
IV. CONTRACTOR RESPONSIBILITIES
A. Contractor shall designate a person-in-charge for
administration of these requirements. For contracts involving
25 or more contract workers onsite, Contractor shall designate
or provide a full-time "Site Safety Representative" to enforce
UPR and Contractor Safety Requirements. For contracts
involving less than 25 workers onsite, Contractor shall
designate one onsite individual as the person responsible for
supervision of Contractor safety.
B. Contractor is to assure that all Contractor personnel are
qualified and trained to perform contracted services.
C. Contractor is to provide its personnel with proper and well
maintained equipment and tools necessary for the particular
job being performed, unless otherwise specified by contract
language.
D. Contractor is to adhere to all applicable federal, state and
local. regulations pertaining to a particular operation for
which its services are contracted.
E. Contractor is responsible for ensuring that all operations are
conducted in a safe manner, and for promptly correcting and
reporting to UPR and to Contractor's employees and
Subcontractors all known or suspected hazards or unsafe
conditions.
F. Contractor is to instruct its personnel to report any known or
suspected hazards or unsafe conditions to their immediate
supervisor. Contractor shall immediately notify the
appropriate Union Pacific Resources Company representative if
known or suspected hazards or unsafe conditions involve UPR
equipment/personnel.
G. Contractor is to assure the work area is maintained in a clean
and orderly fashion.
76
H. Contractor is responsible for supplying its personnel with all
necessary personal protective equipment and other safety
equipment, unless otherwise specified by contract language.
I. Contractor is responsible for enforcing UPR safe work
policies, practices and procedures as specified in this
document, in order to provide a safe working environment.
J. Contractor personnel violating any UPR safety policy, practice
or procedure or applicable governmental regulation are subject
to immediate removal from UPR property.
V. PERSONAL PROTECTIVE EQUIPMENT
This section lists general personal protective equipment requirements
for Contractors working at UPR locations. Additional personal
protective equipment or other special items may be specified by UPR
Operations Management.
A. Head Protection
A non-conductive hard hat that meets the requirements of ANSI
Z89.1 shall be worn in all work areas where a hazard to the
head exists or can be anticipated, or when required by UPR
Operations Management.
B. Foot Protection
Safety shoes or boots in good condition, with slip-resistant
soles, that meet the requirements of ANSI Z41.1, shall be worn
in all work areas when a hazard to feet exists or can be
anticipated, or when required by UPR Operations Management.
C. Eye/Face Protection
1. Eye protection shall be worn in all work areas when
known or potential hazards to the eyes or face exist
or can be anticipated, or when required by UPR
Operations Management. Minimum protective eyewear
shall be clear safety glasses with side xxxxxxx. All
eye/face protection shall meet the requirements of
ANSI Z87.1.
2. When eye protection is required, safety goggles or
faceshield shall be worn over prescription eyewear if
such eyewear does not meet ANSI Z87.1 requirements.
3. Face xxxxxxx must be worn over protective eyewear for
work that involves a potential for corrosive/caustic
chemical splash on the face, or when required by UPR
Operations Management.
77
D. Hearing Protection
Hearing protection devices that meet the standards of OSHA
1910.95 shall be worn in all posted high noise areas, or when
required by UPR Operations Management. (Hearing protection is
required in all known or suspected areas where noise levels
exceed 85 dbA).
E. Protective Clothing
1. Protective clothing shall be worn when handling
hazardous materials or chemicals, when such is
specified by the applicable Material Safety Data
Sheet (MSDS), or when required by UPR Operations
Management. Protective clothing that becomes
contaminated with hazardous materials chemicals must
be decontaminated at the end of the work shift,
and/or disposed of properly.
2. Fire Retardant Clothing (FRC) made of Nomex or other
approved fire retardant material shall be worn as an
outer garment in all Gas Plant "designated FRC areas"
when required by UPR Operations Management.
3. Contractor personnel involved in spray painting,
coating, or abrasive blasting operations shall wear
an outer garment of disposable Tyvek or similar
material to prevent contamination of personal
clothing or FRC.
F. Hand Protection
Protective gloves shall be worn where there is risk of
exposure to high temperatures, sharp edges, chemicals, or any
other conditions or materials which may cause injury to the
hands, or when required by UPR Operations Management.
G. Fall Protection
1. All work performed 6' above ground level, or where a
fall hazard of 6' exists, will be conducted in
accordance with the applicable requirements of OSHA
1926 Subpart M - Fall Protection and UPR
requirements.
2. Work performed from ladders should be minimized
whenever possible. Scaffolding, bosun chairs,
crane-operated personnel baskets, or bucket trucks
shall be used to perform work at elevated locations.
No painting, coating, or abrasive blasting is to be
78
performed from ladders, except minor brush work or
touch-up with prior UPR approval.
3. Ladders must be properly secured. Non-conductive
ladders must be used around electrical conduits or
electrified equipment. Personnel working from ladders
should not overextend their reach. PERSONNEL SHOULD
MOVE LADDERS TO PROVIDE PROPER ACCESS.
4. Scaffolding must meet the requirements of OSHA
1910.28 - Safety Requirements for Scaffolding and
OSHA 1926.451 - Scaffolding, and must be
inspected/approved by a person familiar with OSHA's
scaffolding requirements before its use.
H. Respiratory Protection Equipment
1. Respiratory protection equipment shall be utilized
whenever work activities involve potential exposure
to atmospheres that are oxygen-deficient or contain
air contaminants that may be harmful to health, or
when required by UPR Operations Management.
2. Contractor's respiratory protection equipment shall
be selected, inspected, maintained, and used in
accordance with OSHA 1910.134 - Respiratory
Protection, and UPR requirements.
3. Contractors shall ensure that personnel using
respiratory protection equipment have received
appropriate respiratory protection training.
4. Breathing air used in supplied-air or self-contained
respiratory protection equipment must meet or exceed
the standards of Grade "D" air, as specified in OSHA
1910.134. A laboratory analysis or manufacturer's
certificate verifying Grade "D" breathing air should
be available for inspection upon request.
5. Compressors used to provide breathing air must be
equipped with a high temperature alarm, carbon
monoxide (CO) monitor/alarm, and air
cleaning/filtering devices as needed to produce Grade
"D" quality breathing air. A laboratory analysis
verifying Grade "D" output air for breathing should
be available for inspection upon request.
I. Personal Flotation Device (PFD)
1. Contractors working or traveling over water shall
have access to a U.S. Coast Guard approved personal
flotation device (PFD).
2. A PFD must be available when riding in a boat. The
PFD must be worn when riding anywhere other than
inside the cab of the boat.
79
When riding or working in a small open boat, a PFD
must be worn at all times.
3. When working within a platform guardrail, a PFD need
not be worn. If the work is being done outside of the
guardrail, or if there is no guardrail, each employee
must be wearing a PFD.
4. A PFD shall be worn by any person involved in
transfers between vessels and structures and while
working on barge decks.
J. Other Personal Protective Equipment
In addition to the protective equipment described above,
special situations may require the use of additional personal
protective equipment. Each Contractor shall be solely
responsible for recognizing when such equipment is required
and shall be responsible to provide such equipment. Additional
personal protective equipment requirements may also be
specified by UPR Operations Management.
VI. SAFE WORK PRACTICES
The following items address recognized basic safe work practices:
A. Safety Meetings
1. Prior to beginning an unfamiliar, potentially
hazardous or major project, Contractor personnel must
conduct a safety meeting to discuss safe procedures
and work practices.
2. Contractors are encouraged to conduct daily
"tailgate" safety meetings to discuss the day's work
assignments and proper safety precautions.
3. Contractor personnel may attend UPR on-the-job safety
meetings when held at UPR locations, at the
discretion of the appropriate UPR representative.
B. Smoking
Smoking is absolutely prohibited at all facilities except in
designated smoking areas.
C. Signs
Contractor personnel shall be familiar with and comply with
all signs posted throughout UPR facilities.
80
D. Control of Hazardous Energy (Lockout-Tagout)
All Contractors are required to be familiar with and comply
with UPR site-specific lockout-tagout procedures while working
on powered equipment, when performing confined space entry
operations, or when engaged in other work activities where the
control of hazardous energy is necessary to assure personnel
safety.
E. Permit to Work Systems
1. Gas Plant Operations: A "Safe Work Permit" is
required for all work activities conducted in or
around Plant process areas, and for other work as
required by Plant Management. Permits must be issued
before the work begins, and may only be issued by UPR
personnel. Contractors must be familiar with and
comply with Safe Work Permit program requirements
when working at U.S. Gas Plant facilities.
2. Production Operations: A "Hot Work Permit" and/or
"Confined Space Entry Permit" are required for hot
work, confined space entry, and other hazardous work
activities conducted at Production facilities.
Permits must be issued before the work begins, and
may only be issued by UPR personnel. Contractors must
be familiar with and comply with applicable work
permit program requirements when working at
Production facilities.
F. Confined Space Entry
All Contractors performing work involving "Confined Space
Entry" shall be familiar with and comply with UPR
site-specific confined space entry permit procedures.
G. Hot Work
All Contractors conducting "Hot Work" (welding, cutting, etc.)
shall be familiar with and comply with UPR site-specific hot
work permit procedures.
H. Hazard Communication
1. Contractor shall be familiar with and comply with UPR
sitespecific Hazard Communication Program
requirements and procedures.
2. UPR will provide to Contractor, upon request, an
appropriate Material Safety Data Sheet (MSDS) for
hazardous chemicals or materials maintained onsite by
UPR.
81
3. Contractor shall maintain onsite an appropriate MSDS
for any hazardous material or chemical which
Contractor brings onsite. Such hazardous materials or
chemicals will be properly stored and marked in
accordance with OSHA Regulations.
I. Hydrogen Sulfide (H2S) Operations
1. All work involving H2S must be conducted in
accordance with applicable state or federal
regulations, and UPR requirements.
2. H2S training, respiratory protection equipment, gas
detection/alarm equipment, and other protective
measures may be required, depending upon the nature
of the work to be performed and whether the presence
of H2S is anticipated.
J. Excavation and Trenching
All excavation related work must be conducted in accordance
with OSHA 1926 Subpart P - Excavations, and UPR requirements.
K. Drilling and Well Service/Workover Operations
All drilling and well servicing/workover operations should be
conducted in accordance with applicable recommendations of the
American Petroleum Institute (API) RP 54 - "Recommended
Practices for Occupational Safety for Oil and Gas Well
Drilling and Well Servicing Operations", and/or the
Association of Oilwell Service Contractors (AOSC) -
"Recommended Safe Procedures and Guidelines for Oil and Gas
Well Servicing".
L. Acid and Hydraulic Fracture Stimulations
In addition to compliance with applicable sections of the
documents referenced in K - Drilling and Well Service/Workover
Operations, work involving acid and hydraulic fracture
stimulations must include the following:
1. One UPR employee shall be designated to be
responsible for the decision making process during
the treatment.
2. All key personnel onsite must have radios and
headsets, to assure adequate communication.
3. A pre-job meeting must be conducted with all
personnel who are going to be onsite during the
treatment.
82
4. Emergency services equipment, personnel and
contingency plans must be prepared, in place, and
understood by all personnel onsite. As a minimum, the
following must be addressed:
a. Emergency transportation to the nearest
medical facility.
b. Wash truck or wash station (when pumping
acids).
c. First Aid/CPR trained personnel and supplies
onsite.
d. Fire extinguishers, minimum of one 30 lb.
dry chemical extinguisher per pump unit,
with trained personnel.
e. Adequate fire protection or standby fire
trucks, if available (when pumping
flammables).
5. Emergency equipment should be positioned and
available for ready access in an emergency.
6. All personnel should be aware of the expected surface
treating pressures. One or more individuals should be
designated to tend the well during treatment, and all
other personnel should stay clear of high pressure
lines during treatment.
M. Fire Prevention and Control
1. Smoking is permitted only in designated smoking areas
approved by UPR Management.
2. Welding and cutting is prohibited outside of
designated safe welding areas unless controlled by a
written hot work permit system. A fire watch is
required for all hot work conducted at field
production or gas plant facilities unless the work
takes place inside a designated safe welding area.
3. Approved fire extinguishers must be available at all
jobsites involving drilling, well servicing/workover,
field production, or gas plant operations, or
wherever hot work, open flames, or use of flammable
gas/liquids presents a risk of fire. Personnel
designated to utilize fire extinguishers should be
familiar with their proper use and limitations.
Fire extinguishers must be maintained in good working
order, and inspected in accordance with state or
federal regulations.
4. Good housekeeping is an important part of fire
prevention, and must be strictly enforced. Oily rags,
debris, trash, and other unnecessary material must be
picked up and disposed of regularly. Trash
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receptacles must be available in the area and emptied
on a regular basis.
5. Minor spills or leaks of flammable/combustible
liquids must be cleaned up promptly, and the source
of spill/leak repaired.
6. Bulk transporters or tank trucks loading or unloading
flammable liquids must utilize grounding/bonding
equipment to prevent ignition of flammable vapor due
to static electrical discharge.
7. The potential for static electrical discharge should
be considered for other flammable liquid transfers,
such as filling drums, buckets, or other small
containers. Use of bonding equipment and other
precautions to prevent ignition of flammable vapors
should be utilized whenever appropriate.
8. Gasoline is a fuel, and should not be used as a
cleaning agent. Gasoline and other flammable liquids
should not be stored in glass or plastic containers.
U.L./F.M. approved metal safety cans are recommended.
(NOTE: Gasoline is prohibited at all offshore
locations).
9. Portable tanks and drums for flammable liquid storage
should be:
a. Constructed of metal unless the liquid is
corrosive to metal.
b. Adequately vented, with flame arresting
capability whenever possible.
c. Equipped with self-closing spouts to prevent
spillage.
d. Located as far as feasibly possible from
equipment, both electrical and mechanical.
N. Work Clothes/Jewelry
1. Contractor personnel should report to work in clean
work clothes that provide a reasonable fit and are
not contaminated with oil or chemicals. Long pants
and shirt, or coveralls, are required. Long sleeves
are recommended. Short pants and sleeveless shirts
are not permitted as work clothing.
2. Conductive metal jewelry (rings, wrist watches,
necklaces, etc.) must not be worn when working around
electricity.
O. Vehicle Operations
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1. Contractors must operate vehicles in full compliance
with all applicable federal, state, and local
regulations.
2. STAY WITHIN POSTED SPEED LIMITS. On lease roads or
other roadways which do not have posted speed limits,
SLOW DOWN and be alert for other vehicles,
pedestrians, livestock, etc.
3. Seat belt use is mandatory for all persons riding in
UPR owned or operated vehicles which are equipped
with seat belts.
4. DRIVE DEFENSIVELY at all times.
5. All vehicle contractor accidents that occur on UPR
property must be reported promptly to the UPR
Supervisor in Charge.
P. Emergency Drills
Contractor personnel shall become familiar with their
prescribed assignments in an emergency and participate in all
drills conducted on UPR facilities.
Q. Entry into Water
Non-rescue entry into the water from an UPR facility is
strictly prohibited, if not specifically authorized by UPR in
order to perform services (i.e., diving).
R. Equipment Operator Qualifications
Any Contractor employee required to operate a crane, or other
heavy equipment, shall be familiar and comply with UPR crane
operating procedures. All operator qualifications are subject
to approval by UPR.
VII. TRAINING
Contractor is responsible for conducting and documenting all Contractor
employee training required by federal, state, or local safety and
health regulations. Such documentation may be subject to review by UPR
at any time prior to or after completion of the project.
VIII. PROCESS SAFETY MANAGEMENT
Contractors working at Gas Plants or other UPR facilities covered by
OSHA 1910.119 - "Process Safety Management", and whose work involves
plant process areas, product storage areas, or other "covered
processes" (as defined by OSHA) must:
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A. Establish procedures to properly conduct those
contractor-performed maintenance activities which affect
process safety.
B. Document that each contract employee has been trained in the
work practices necessary to safely perform his/her job.
C. Document that each contract employee has been instructed in
the known and potential fire, explosion, or toxic release
hazards related to his/her job and the process.
D. Document that each contract employee has been instructed in
the applicable provisions of the facility Emergency Action
Plan.
E. Assure that each contract employee follows all applicable
safety rules of the facility.
F. Advise UPR of any unique hazards presented by the Contractor's
work, and any hazards identified by the contractor or its
employees during the work.
Documentation required in "B", "C" and "D" above must include the name
of each contract employee, the date of training, and the means utilized
to verify that the employee understood the training.
IX. CONTRACTOR SAFETY PROGRAM INFORMATION
Contractor may be asked to provide accident/incident rates, workers'
compensation experience modification rates, and other information in
order to assist UPR in evaluating Contractor safety management
practices and performance.
Requests for such information will be made at the discretion of UPR
Operations Management, using the "Contractor Safety Performance Survey"
form.
