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EXHIBIT 10.40
AGREEMENT
THIS AGREEMENT is dated the 12 day of August 1997
BETWEEN
LONMAN PTY. LTD. (CAN 002674 919) a company incorporated in New
South Wales and having its principal office at 00 Xxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxx Xxxxx Xxxxx 0000 (hereinafter called "Lonman")
AND
MOSAIC OIL N.L. (CAN 003 329 084) a company incorporated in New
South Wales and having its principal office at 00xx Xxxxx, 00-00
Xxxxx Xxxxxx, Xxxxxx, Xxx Xxxxx Xxxxx 200 (hereinafter called
"Mosaic");
INDO-PACIFIC ENERGY PTY. LTD. (ARBN) a company incorporated in
British Columbia and having its principal office at 000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxx Xxxxxxx (hereinafter called "Indo-Pacific"); and
WHEREAS
A. The Original Parties are the registered holders and legal
and beneficial owners of Petroleum Exploration Permit AC/P19
issued under the Petroleum (Submerged Lands) Xxx 0000 of the
Commonwealth of Australia.
B. The Original Parties have agreed to grant a carried interest
in the Permit to Lonman and Lonman has agreed to accept such
carried interest.
IT IS THEREFORE AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
"Act" means the Petroleum (Submerged Lands) Xxx 0000 of the
Commonwealth of Australia and any Act with which that Act is
incorporated, together with all regulations, directions,
determinations and administrative procedure under any of those
Acts.
"Carried to Production Interest" ("CTP1") means the IFCI as
varied pursuant to clause 2.2.
"Effective Date" means 12 August 1997
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"Farmout Equity" means the proportions of each of the Original
Parties Permit Interests which are to be earned by a Farminee or
Farminees during the drilling of the first obligation well in the
Permit.
"First Production Date" means the first date upon which
commercial production of Petroleum from the Permit is commenced.
"Permit" means Exploration Permit for Petroleum No. AC/P19 and
includes any renewal or substitution of it, and any Retention
Lease of Production License derived therefrom.
"Initial Free Carried Interest" ("IFCI") means 5% in the Permit
as granted to Lonman by the Original Parties in the proportions
as set out in clause 2.1.
"Permit Interest" means an interest in the Permit and in any
Petroleum recovered from the Permit to which Lonman will be
entitled to pursuant to this Agreement and held by the original
in the following proportions:
Mosaic 35%
Indo-Pacific 65%
2. THE CARRIED INTERESTS
1) With effect on and from the Effective Date, the Original
Parties hereby grant to Lonman a 5% IFCI, being 5% of their total
Permit Interest and granted to Lonman in the following
proportions:
ORIGINAL PARTIES IFCI LONMAN
Mosaic 1.75% 1.75%
Indo-Pacific 3.25% 3.25%
2) Upon the drilling of the first well within the Permit area
the IFCI will, in the event of a Farminee drilling or
contributing to the drilling of the well, become a CTP1 being 5%
of the amount of the Farmout Equity instead of the 5% of the
total Permit Interest.
Example
ORIGINAL FARMOUT LONMAN
PARTIES EQUITY CTP1
Mosaic 10% 0.5%
Indo-Pacific 10% 0.5%
TOTALS 20% 1%
3) Each of the Original Parties will carry the Lonman IFCI and
CTP1 as applicable pursuant to clause 2 until such time as;
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a. Lonman gives notice to the Original Parties that it wishes
to convert the IFCI or CTPI to a normal working Permit Interest
at any time prior to the first Production Date; or
b. the CTPI automatically converts to a working Permit Interest
on the first Production Date.
4) If at any time:
a. prior to the conversion of the IFCI or CTPE as applicable,
to a working Permit Interest, Lonman receives and offer from a
third party for the Lonman IFCI or CTPI, each of the Original
Parties will be entitled to match such third party offer on a pro
rata basis calculated in accordance with the percentages which
then comprise the IFCI or the total CTPI as applicable.
b. following conversion of the IFCI of the CTPI to a working
Permit Interest, Lonman receives an offer from a third party for
its working Permit Interest, Lonman shall be free to deal with
its working Permit Interest, subject only to the terms and
conditions of the Joint Operating Agreement which shall then be
governing the relationships of the Parties.
5) The CTPI will remain with and be carried by the Original
Parties until:
a. it is converted to a working Permit Interest in accordance
with clause 2.3.1; or
b. it is assigned to a third party, subject to the prior
consent of Lonman, provided however that Lonman shall not be
entitled to any part of share of the consideration for such
assignment.
3. IFIC AND CTPI COSTS AND RECOVERIES
1) Prior to the Production Date, the Original Parties will bear
and pay for all costs associated with the IFCI and the CTPI as
applicable in proportion to their respective percentages of the
Lonman IFCI or CTPI as calculated in accordance with clause 2.
Such costs include all costs of whatsoever kin or nature required
to be expended to meet the Permit work Obligations and to keep
the Permit in good standing, including but not limited to all
exploration, development and administrative costs which shall
include all fees paid in accordance with any provision of the
Act.
2) With effect on and from the Production Date, Lonman will
pay, or the Original Parties will be entitled to take in kind,
from the Lonman entitlement to production of Petroleum, an amount
equal to 50% of the net cash proceeds from such entitlement,
after deduction of all relevant taxes, royalties, operating costs
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and any other costs not otherwise incurred pursuant to clause
3.1, until the costs incurred pursuant to clause 3.1 are fully
amortised.
The accrual of such costs will commence from and relate back to
the date the Parties first formed the AC/P19 study group and will
be subject to adjustment by the Australian CPI for the period
between when such costs were incurred and the date of payment.
1. ACCESS TO INFORMATION
1) Until the Lonman CTPI is converted to a working Permit
Interest, Lonman shall have the right of access to all technical
data with respect to the Permit, at all reasonable times. Lonman
will also have the right to attend the statutory TCM/OCM which
will be defined in the joint Operating Agreement to be agreed
between the Parties, but will not have a right to vote unless or
until the Lonman CTPI is converted to a working Permit Interest.
2) Lonman agrees to keep all information obtained from the data
or the TCM/OCM meetings confidential.
3) The Original Parties agree that, in the process of agreeing
the terms and conditions of a Joint Operating Agreement, Lonman
shall be included as a participating party to that process.
2. NOTICES
1) Any notice required under this Agreement must be in writing,
in the English language, and sent by registered mail of facsimile
transmission to the address of the receiving party as stated in
this Agreement, or to such other address as a Party may advise
from time to time.
2) A notice sent by registered mail is effective upon receipt.
3) A notice sent by facsimile transmission is effective upon
transmission unless it is transmitted after the close of normal
business hours, or on a Saturday, Sunday or public holiday, in
which case it is effective on the opening of business on the next
business day at the intended place of receipt.
3. INDEMNITY
1) Each of the Original Parties, to the extent of its
proportion of the Lonman CTPI, hereby indemnifies Lonman against
any loss of or damage to any property whatsoever and personal
injury (including death or disease) to any person whomsoever,
which arises out of or in connection with any act, matter or
thing directly or indirectly related to the Permit and without
regard to the cause or causes thereof or the negligence of any
party.
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2) The indemnity in clause 6.1 will cease to apply on and from
the date upon which the Lonman CTPI is converted to a
working Permit Interest pursuant to this Agreement.
4. GOVERNING LAW AND JURISDICTION
1) This Agreement and all questions arising in connection with
it are governed by and will be construed according to the
laws from time to time in force in the State of Victoria and
the Parties irrevocably submit to the authority of the
Courts in and of that State.
5. MISCELLANEOUS
Any approval and registration of this Agreement in accordance
with the provisions of the Act shall be obtained by Lonman,
subject always to clause 3.1.
IN WITNESS WHEREOF the Parties have executed this Agreement
Agreed and accepted by Agreed and accepted by
/s/ D. Lonman /s/ Xxxx Xxxxxxx
For and on Behalf of For and on Behalf of
Lonman Pty. Ltd. Mosaic Oil N.L.
Agreed and accepted by
/s/ X.X. Xxxxxxx
For and on Behalf of
Indo-Pacific Energy Pty. Ltd.
