Exhibit 10.19
JOINT VENTURE AGREEMENT
BETWEEN
OPTIMUM PETROLEUM DEVELOPMENT LIMITED
AND
AGBARA RESOURCES LIMITED
NIGERIAN OIL PROSPECTING LICENCE 310
Ince & Co.
Xxxxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
Ref: OW/JL/KAG/79/60/440
THIS JOINT VENTURE AGREEMENT is executed at Lagos, Nigeria on November 27, 1996
and made effective as of November 27, 1996 by and between:
OPTIMUM PETROLEUM DEVELOPMENT LIMITED, of 00X, Xxxxxxx Xxxx, Xxxxx, Xxxxxxx
(hereinafter referred to as the "Owner/Operator")
and
AGBARA RESOURCES LIMITED, of 0xx Xxxxx, Xxxxxxxx
Xxxxx, 00 Xxxxxxxxx Xxxx, Xxxxx, Xxxxx, Xxxxxxx,
(hereinafter referred to as "Technical Partner")
WHEREAS:
(a) The Minister approved the allocation of Oil Prospecting Licence No. 310
("OPL 310") to the Owner/Operator by a letter of allocation dated February
3, 1992 and referenced as PI.BAL/3750/V.3/49.
(b) In accordance with the letter of allocation referred to above, the Minister
issued OPL 310 to the Owner/Operator on July 27, 1993.
(c) OPL 310 has a term of five years commencing February 3, 1992 and grants to
the Owner/Operator the right inter alia, to prospect for Petroleum in and
under the area identified as being subject to the terms of the OPL 310.
(d) The letter of allocation and applicable Government legislation and policy
stipulates that the Owner/Operator is entitled to transfer a Participating
Interest in OPL 310 and the Owner/Operator has agreed to transfer such a
Participating Interest to the Technical Partner with full title guarantee,
free from liens, charges, equities and/or other encumbrances.
(e) It is an express term of this Agreement that in view of the remaining term
of the current OPL 310, the Owner/Operator is required to obtain an
extension or renewal OPL for Concession Block 310.
(f) The Owner/Operator and the Technical Partner have agreed to establish a
joint venture for the purposes of joint exploration, development,
production, sale, disposal and export of Petroleum won and saved pursuant
to OPL 310 and any extension, or renewals thereof, from that area
hereinafter defined as Concession Block 310, subject to and in accordance
with the terms hereof.
NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter
set forth, the Parties hereby agree as follows:
ARTICLEI - DEFINITIONS AND INTERPRETATION
-----------------------------------------
1.1 In this Agreement, and the recitals and schedules attached hereto, the
following words and expressions shall have the meanings respectively set
opposite them:
"ACCOUNTING PROCEDURE" means the accounting procedure attached to and forming
part of the Joint Operating Agreement in effect from time to time.
"AFFILIATE" means a company, partnership or other legal entity which controls,
or is controlled by, or which is controlled by an entity which controls a Party,
and for the purpose hereof, "CONTROL" means the ownership directly or indirectly
of more than seventy-five (75%) percent of the shares or voting rights or
privileges in a company, partnership or legal entity.
"AGREEMENT" "hereof", "herein", "hereto" and similar expressions means this
Joint Venture Agreement together with the schedules attached hereto and any
amendment or amendments made between the Parties in writing from time to time.
"COMMERCIAL QUANTITIES" means Petroleum in such quantities which, in the opinion
of the Technical Partner merits, and/or under the terms of prevailing Government
legislation or policy permits the Parties to make a joint application to the
Minister for an Oil Mining Lease, said OML to be issued if possible in the joint
names of both Parties as set forth in Article V herein.
"CONCESSION BLOCK 310" means the surface area to which the rights for Petroleum
prospecting, exploration, development, production, sale, disposal and export
conferred by OPL 310 are applicable, and which area is identified in red upon a
survey plan attached to the formal Oil Prospecting Licence document issued by
the Ministry, or elsewhere within the records of the Ministry and which term
shall throughout this Agreement include any and all extensions or renewals to
the term of OPL 310 that may be granted by the Ministry, any extension or
renewal oil prospecting licence effecting the same or a similar geographic area
issued by the Ministry or any oil mining leases arising therefrom.
"COST OIL" means forty (40%) percent of the total production of Petroleum from
Concession Block 310 which is allocated to the Technical Partner for the
recovery of Petroleum Costs.
"EFFECTIVE DATE" means the 27 day of November, 1996;
"GOVERNMENT" means the national government of the Federal Republic of Nigeria as
represented by the Minister and/or the Ministry of Petroleum Resources.
"JOINT ACCOUNT" means that account or accounts established and maintained by the
Technical Partner in accordance with the provisions of this Agreement and the
Joint Operating Agreement, the costs of which are chargeable to the Parties in
accordance with their Participating Interest of Petroleum Costs.
"JOINT OPERATING AGREEMENT" OR "JOA" means the Development Phase Joint Operating
Agreement, the Exploration and Production Phase Joint Operating Agreement,
and/or the Decommissioning Phase Joint Operating Agreement, as the case may be
to be entered into between the Parties during the term of OPL 310 and/or OML
310 as appropriate, in compliance with the provisions of Article X hereof, and
which agreement shall govern all present and future Joint Operations performed
on Concession Block 310.
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"JOINT OPERATIONS" means such field development and decommissioning activities
involving without limitation, acquisition, seismic operations, exploration,
development, exploitation, production, sale, disposal and export of Petroleum
won and saved from Concession Block 310, all decommissioning activities
performed thereon, together with any other activity which is desirable in the
reasonable opinion of the Technical Partner, and/or necessary to comply with
good oil field practice. All Petroleum Costs incurred in respect of Joint
Operations shall be for the Joint Account of the Parties hereto pro rata with
their respective Participating Interest of Petroleum Costs.
"JOINT PROPERTY" means, at any particular time, all xxxxx, reservoirs (whether
discovered or not), facilities, equipment, materials, information, funds and
other property held for the Joint Account and owned by the Parties pro rata
their respective Participating Interest of Production.
"MINIMUM WORK OBLIGATIONS" means those work and/or expenditure obligations
which must be performed or completed as part of the Work Program in order to
satisfy the minimum work and expenditure obligations specified and established
by the Ministry in OPL 310 or any extensions or renewals thereof, and which
obligations are set out in Schedule "B" hereto.
"MINISTER" means the Honourable Minister of the Ministry of Petroleum Resources
of the Government.
"MINISTRY" means the Ministry of Petroleum Resources of the Government.
"OIL MINING LEASE 310" OR "OML 310" means the oil mining lease issued or
issuable in the joint names of the Owner/Operator and the Technical Partner by
the Ministry following the submission of a joint application to the Ministry as
set out in Article V herein. The application for OML 310 shall occur following
the Technical Partner's determination that Commercial Quantities exist and/or
have been satisfied and/or satisfaction of the Minimum Work Obligations, and
which OML allows for continued long term exploration, development, production,
sale, disposal and export of Petroleum won and saved from Concession Block 310
in direct continuation of those rights previously granted to the Owner/Operator
under OPL 310 or any extensions or renewals thereof, all in accordance with
applicable Government legislation and administrative policy.
"OIL PROSPECTING LICENCE NO. 310" OR "OPL 310" means Oil Prospecting Licence No.
310 issued by the Minister to the Owner/Operator in accordance with the
provisions of applicable Government legislation on February 3, 1992, having a
term of 5 years from the date thereof and when used herein shall include (a) all
rights, title and interest granted by the Ministry therein, (b) any extension or
renewal of the existing oil prospecting licence and any new or replacement oil
prospecting licence issued by the Ministry to the Owner/Operator following the
expiry of the term of the current oil prospecting licence effecting the same or
substantially the same geographic area or any part thereof, and (c) all
schedules and plans attached thereto or referred to therein pursuant to which
the Owner/Operator (and the Technical Partner by virtue of this Agreement) have
acquired an interest in all Petroleum found and produced within the geographic
area defined and described in the oil prospecting licence and any extensions or
renewals thereof including specifically the right to prospect for, save and
remove, export and dispose by way of sale, any such Petroleum discovered.
"OWNER/OPERATOR" means Optimum Petroleum Development Limited of Lagos, Nigeria.
"OPERATING COMMITTEE" means the that committee designated as the Operating
Committee in accordance with the provisions of the JOA and which is established
in accordance with the terms of Article X.
"PARTICIPATING INTEREST" means the undivided interest of each Party, expressed
as a percentage, in the rights, benefits and obligations established by this
Agreement, as set forth and described in Article VI and Article VII hereof.
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"PARTICIPATING INTEREST OF PETROLEUM COSTS" means the undivided interest of each
Party, expressed as a percentage, in the right, benefits and obligations
established by this Agreement, as more particularly set forth and described in
Article VI hereof.
"PARTICIPATING INTEREST OF PRODUCTION" means the undivided interest of each
Party, expressed as a percentage, in the rights and benefits and obligations
established by this Agreement, as more particularly set forth and described in
Article VII hereof.
"PARTY" means any one party to this Agreement and any permitted successors or
assigns in accordance with the provisions of this Agreement.
"PARTIES" mean collectively the Owner/Operator and Technical Partner.
"PAYOUT" means that point in time when gross revenues from the sale of Cost Oil
is equal to the Petroleum Costs in respect of Concession Block 310.
"PETROLEUM" means all mineral oil (or any related hydrocarbons), natural gas as
it exists in its natural strata (including condensate, sulphur and any and all
other liquid and gaseous hydrocarbons) and does not include coal or bituminous
states or other stratified deposits from which oil can be extracted by
destructive distillation.
"PETROLEUM COSTS" means all obligations, liabilities, costs, claims and expenses
of whatever nature incurred by the Technical Partner, both within and outside of
Nigeria, whether incurred before, during or after the commencement of the
Minimum Work Obligations and/or commencement of Joint Operations on Concession
Block 310 or any extension thereof, and any and all operations thereon, or in
respect thereof. All such costs incurred shall be allocated to the Joint
Account whether those costs were incurred before or after the Effective Date
hereof. For the avoidance of doubt, any and all costs associated with
decommissioning of field operations of whatever nature on Concession Block 310
are included within this definition of Petroleum Costs.
"PROFIT OIL" means that percentage of the total production of Petroleum from
Concession Block 310, in excess of Cost Oil and Tax Oil (being 30% before
payout), which is allocated to the Parties in accordance with the provisions of
Article VII hereof.
"TAX OIL" means thirty percent (30%) of the total production of Petroleum from
Concession Block 310 which is allocated to the Government as full payment of any
and all royalties, taxes and petroleum profits taxes or other similar
assessments and includes any oil which the Government elects, in its sole
discretion, to take in kind.
"TECHNICAL ASSISTANCE AGREEMENT" means the Technical Assistance Agreement
between the Technical Partner and Owner/Operator setting forth the terms of the
technical and operational support to be provided by the Technical Partner to the
Owner/Operator, and which agreement is appended hereto as Schedule "C".
"TECHNICAL PARTNER" means Agbara Resources Limited with an office in Lagos,
Nigeria.
"WORK PROGRAM" means the general work program and Joint Operations to be
conducted on Concession Block 310, to be prepared by the Technical Partner and
approved by the Ministry.
1.2 Appended hereto are the following schedules:
-0-
Xxxxxxxx "X" - XXX 310 and related correspondence and documentation from
the Ministry issued as of the Effective Date hereof
Schedule "B" - Minimum Work Obligations
Schedule "C" - Technical Assistance Agreement
All schedules referred to above are incorporated into and form part of this
Agreement.
1.3 Wherever any provision of any schedule to this Agreement conflicts with
any provision in the body of this Agreement, the provisions of the body of this
Agreement shall prevail. Reference herein to a schedule shall mean a reference
to a schedule to this Agreement. References in any schedule to the Joint
Venture Agreement shall mean a reference to this Agreement.
1.4 Time shall be of the essence hereof.
1.5 The division of this Agreement into headings, sections, subsections,
clauses, subclauses, and paragraphs and the provision of headings herein is for
convenience of reference only and shall not affect the interpretation of this
Agreement.
1.6 In this Agreement, where the context requires, the singular shall
include the plural and the plural shall include the singular.
1.7 All references to currency, unless otherwise specified, are to lawful
money of the United States of America.
ARTICLE II - SCOPE
------------------
2.1 The Parties hereby undertake and agree subject to and in accordance
with the terms of this Agreement, to associate and participate together in a
joint venture for the conduct of Joint Operations on Concession Block 310. In
particular, the Parties agree that they shall at all times, use their best
endeavours to facilitate joint exploration, field development, exploitation,
production, sale and disposal, export of Petroleum won and saved and all
decommissioning activities relating thereto, together with other activities
necessary in the reasonable opinion of the Technical Partner to facilitate
exploration and development of Concession Block 310.
2.2 During the continuance of this Agreement, both the Owner/Operator and
the Technical Partner shall, in respect of any and all Joint Operations or other
operations performed on or under Concession Block 310, use their best endeavours
to ensure that such operations are conducted at all times in compliance with
good oil field practice. Each of the Parties shall continue to act at all times
in the manner which shall (a) ensure the continued good standing of OPL 310 or
any extensions or renewals thereof and/or OML 310 as appropriate, (b) maintain
the integrity of any Petroleum reservoirs contained within Concession Block 310,
and (c) ensure compliance with the terms of all contracts entered into in
respect of Concession Block 310 which are necessary for the conduct of Joint
Operations thereon.
ARTICLE III - GOVERNMENT APPROVAL
---------------------------------
3.1 The Owner/Operator will forthwith provide the Technical Partner with
satisfactory evidence that the Owner/Operator is the lawful and legal licensee
of OPL 310, that OPL 310 is valid and subsisting, that the Owner/Operator is not
in default thereof and that all terms imposed by the Minister and Ministry in
respect of OPL 310 are at any particular time including the Effective Date, in
good standing.
-5-
3.2 The Owner/Operator will supply the Technical Partner with a copy of
any and all documentation confirming the Owner/Operator's legal and beneficial
ownership interest of OPL 310 and any extensions or renewals thereof. In
particular the Owner/Operator accepts that it is required to demonstrate to the
satisfaction of the Technical Partner that it has full title guarantee, free
from any liens, charges, equities or other encumbrances in respect of OPL 310
and/or OML 310 as applicable.
3.3 The Owner/Operator shall also provide the Technical Partner with any
amendments and correspondence relating to its ownership interest in OPL 310,
including any and all applications for extensions or renewals thereof together
with copies of all geological, geophysical and any other technical data which
the Owner/Operator has in its possession relating to Concession Block 310 or
immediately surrounding concession blocks.
3.4 The Owner/Operator agrees with the Technical Partner that it shall
promptly provide the Technical Partner with true copies of all correspondence
concerning OPL 310 and, when applicable, OML 310 that are issued by the
Owner/Operator and/or the Ministry.
3.5 The Owner/Operator acknowledges to the Technical Partner that it shall
continuously maintain OPL 310 and/or OML 310 as applicable, in good standing
with the Government without interruption, and shall upon request by the
Technical Partner provide the Technical Partner with satisfactory evidence of
compliance with the provisions contained herein. The Technical Partner shall be
entitled to receive notice of and attend at any and all meetings effecting OPL
310 and any renewals or extensions thereof and OML 310 as applicable, between
the Owner/Operator and the Ministry.
ARTICLE IV - EXPLORATION PROGRAM
--------------------------------
4.1 The Parties shall carry out an exploration program upon Concession
Block 310 in accordance with the Work Program and which Work Program will, upon
completion be sufficient to meet the Minimum Work Obligations imposed by the
Ministry in respect of OPL 310, and any renewals or extensions thereof, and
which Minimum Work Obligations shall be sufficient to secure each of the Parties
with a Participating Interest of Production produced from Concession Block 310.
4.2 The conduct of the Work Program and all Joint Operations on Concession
Block 310 shall be in accordance with the terms of the JOA and in accordance
with prevailing good oil field practice.
ARTICLE V - APPLICATION FOR OIL MINING LEASE
--------------------------------------------
5.1 In the event that Petroleum is discovered in Commercial Quantities on
Concession Block 310 and/or the Parties have complied with the Minimum Work
Obligations set forth in OPL 310 or any renewals or extensions thereof, the
Owner/Operator together with the Technical Partner shall collectively make a
joint application on behalf of both Parties to the Ministry for OML 310 at the
earliest possible date. The application shall specifically request that the OML
be jointly issued in the names of both the Owner/Operator and the Technical
Partner.
ARTICLEVI - PARTICIPATING INTEREST OF PETROLEUM COSTS
-----------------------------------------------------
6.1 All Petroleum Costs incurred in respect of Joint Operations whether
incurred before or after the Effective Date carried out in respect of Concession
Block 310, before Payout, shall be allocated as follows:
Owner/Operator 0%
Technical Partner 100%
6.2 All Petroleum Costs incurred in respect of Joint Operations carried out
in respect of Concession Block 310, after Payout, shall be shared and allocated
as follows:
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Owner/Operator 60%
Technical Partner 40%
6.3 All Petroleum (subject to Tax Oil), Joint Property and any and all
other equipment, material or property of whatsoever nature related to the
conduct of any Joint Operations on Concession Block 310 (other than equipment or
property that is leased from third parties) and any other assets acquired by the
Parties pursuant to the terms of this Agreement from time to time shall be owned
by the Parties in accordance with their respective Participating Interest of
Petroleum Costs.
6.4 Unless otherwise provided in this Agreement, the obligations of the
Parties herein and all liabilities and expenses incurred by the Technical
Partner in connection with the Joint Operations shall be charged to the Joint
Account and all credits to the Joint Account shall be shared by the Parties, as
among themselves, all in accordance with their respective Participating Interest
of Petroleum Costs.
6.5 Each of the Parties hereby covenants to contribute and/or pay the
Petroleum Costs which shall include the Technical Partner's assessment of
decommissioning costs (such costs to be assessed in accordance with good oil
field practice), in an amount equal to its respective Participating Interest of
Petroleum Costs from time to time, and to bear all Petroleum Costs paid or
incurred pursuant to this Agreement on behalf of such Party or Parties in
portions equal to their Participating Interest of Petroleum Costs.
6.6 Any tax credits, royalty credits or reduction in Tax Oil or any other
benefits generated by or resulting from or arising in connection with Joint
Operations carried out on Concession Block 310 shall be shared and allocated
equally between the Parties.
ARTICLE VII - PARTICIPATING INTEREST OF PRODUCTION
--------------------------------------------------
7.1 The Owner/Operator hereby acknowledges and confirms that the Technical
Partner is entitled to its Participating Interest of Production for Concession
Block 310 as set forth in Paragraph 7.2 below.
7.2 All benefits, revenues and receipts of whatsoever nature as same
relate to the sale of Petroleum produced from Concession Block 310 shall be
shared and allocated as follows:
(a) Before Payout:
Cost Oil Tax Oil Profit Oil
-------- ------- ----------
Technical Partner 40% 0% 20%
-------- ------- ----------
Owner/Operator 0% 0% 10%
-------- ------- ----------
Government 0% 30% 0%
-------- ------- ----------
(b) After Payout:
Cost Oil Tax Oil Profit Oil
-------- ------- ----------
Technical Partner 0% 0% 30%
-------- ------- ----------
Owner/Operator 0% 0% 40%
-------- ------- ----------
Government 0% 30% 0%
-------- ------- ----------
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7.3 In the event the Government elects to exercise its right to
participate in the development of Concession Block 310 such rights to include
the benefits and obligations associated with such participation, the
Participating Interest of Production of the Parties will be amended accordingly,
on a pro rata basis, based upon the level of Government participation provided
however that the Participating Interest of Production of the Technical Partner
shall in no event be reduced to less than 24%. The Parties agree to execute
such documents as may be necessary to reflect any such transfer of interest and
joinder of the Government as a party to the terms of this Agreement.
7.4 Subject to Article 7.3, the Owner/Operator agrees with the Technical
Partner that in the event that Tax Oil payable to the Government exceeds 30%,
that there will be no reduction to the Technical Partner's Participating
Interest of Production to less than 24%.
7.5 In the event of Government participation, the rights and obligations
of the Parties as set forth herein shall remain unchanged as they relate to one
another. However, at the request of the Technical Partner, the Parties shall
enter into separate JOA and other agreements with the Government with respect to
the rights, obligations and benefits of the Parties on the one hand and the
Government on the other. Any payments received from the Government arising out
of such participation shall be credited to the Joint Account and applied
pro-rata to the Parties Participating Interest of Production.
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ARTICLE VIII - DECOMMISSIONING
------------------------------
8.1 The Parties to this Agreement expressly acknowledge that they may be
liable to undertake decommissioning operations and consequently to make payments
in respect of future decommissioning expenditure either by Government law and/or
regulation or by operation of international law which the Parties agree shall be
based upon the level of the Participating Interest of Production attributable to
them during the term of this Agreement.
8.2 Accordingly, the Parties have agreed that the Technical Partner should
consult with technical taxation and such other specialists, as necessary,
operating in the area of decommissioning to obtain an estimate of the level of
decommissioning expenditures and to prepare a model for decommissioning
operations including a payments schedule.
8.3 In the event that both Parties decide to withdraw from operations or are
required to do so pursuant to this Article, the Parties agree that they shall be
bound by the terms and conditions of this Agreement for so long as may be
necessary to wind up the affairs of the Parties with the Government, to satisfy
any requirements of applicable law or to facilitate the sale, disposition or
decommissioning of property (whether Joint Property or otherwise) or interests
held by the Joint Account.
8.4 Nothing herein shall eliminate the obligations of the Parties for any
and all decommissioning liabilities or costs and the Parties agree to make
payment of their full decommissioning liability upon demand by the other Party
based upon their Participating Interest of Petroleum Costs at the time
decommissioning commences.
ARTICLE IX -
------------
ASSIGNMENT OF PARTICIPATING
---------------------------
INTEREST AND RESTRICTIONS OF SHARE TRANSFER
-------------------------------------------
9.1 Subject always to the requirements of this Agreement, including, the
obligation of the Owner/Operator to maintain OPL 310 and/or OML 310, as
applicable, in good standing with the Government at all times, the transfer of
all or part of a Party's Participating Interest shall be effective only if the
transferring Party satisfies the terms and conditions set forth herein.
9.2 The Owner/Operator shall not permit any transfer or issuance of its
shares or those of its Affiliates that will result in:
(a) those shareholders of the Owner/Operator or its Affiliates on the
Effective Date holding less than 75% of the shares of the
Owner/Operator or its Affiliates following the share sale transaction;
and
(b) any of the shares of the Owner/Operator being held by any person,
corporation or other entity that is or is regarded as being a foreign
entity under the terms of letter of allocation from the Ministry to
the Owner/Operator dated February 3, 1992 or under any other
Government legislation or policy.
9.3 Notwithstanding Article 9.2(a) above, the Owner/Operator including its
Affiliates who have or may acquire a Participating Interest in OPL 310 and/or
OML 310 as appropriate,expressly agrees that it shall be prohibited from
undertaking any share issuance or transfer, including the pledge of its shares
as security or otherwise, where such dealings may have the effect of
constituting a breach of any of the terms of OPL 310 and/or OML 310, as
appropriate, the letter of allocation, the OPL 310 deed document, or any
applicable Government legislation or policy. Such a restriction shall also
apply to the Technical Partner subsequent to its name appearing on the OPL 310
and/or OML 310, as appropriate.
-9-
9.4 The Owner/Operator shall not transfer, assign, farmout, pledge, charge
or otherwise encumber its Participating Interest in OPL 310 or OML 310, as
applicable, with any third party without the express written consent of the
Government, such consent to specifically state that following the transfer,
assignment, farmout, pledge, charge or encumbering that OPL 310 and/or OML 310,
as appropriate, continues to be in all respects valid and in good standing.
Such a restriction shall also apply to the Technical Partner subsequent to its
name appearing on the OPL 310 and/or OML 310, as appropriate.
9.5 The Owner/Operator expressly accepts that the foregoing restrictions on
its dealings with its shares and Participating Interest is essential in order to
maintain OPL 310 and/or OML 310 as appropriate, in good standing for continued
benefit of both Parties to this Agreement.
9.6 Subject always to receipt of the requisite consents and Government
approvals to any transfer of interest as set forth in this Article IX, if a
Party transfers all or part of its Participating Interest herein, the Parties
shall amend this Agreement to reflect the revised Participating Interests of the
Parties.
ARTICLE X
JOINT OPERATING AGREEMENT AND TECHNICAL ASSISTANCE AGREEMENT
------------------------------------------------------------
10.1 The Parties hereto agree that the Joint Operations on Concession Block
310 shall be conducted in accordance with the provisions of a Joint Operating
Agreement and Technical Assistance Agreement, and which JOA shall establish an
Operating Committee in accordance with the terms hereof.
10.2 The Parties hereby adopt, approve and agree to abide and be bound by
the terms of the Technical Assistance Agreement in the form attached hereto as
Schedule "C";
10.3 With reference to Article 10.1 above, the Parties agree that within
120 days of the date of execution of this Agreement, the Parties shall enter
into a Development Phase JOA to be prepared by the Technical Partner (the
Development Phase JOA) in a format to be agreed between the Parties which
format shall (without limitation) deal with the following matters:
(a) the role of the Operator;
(b) establishment and role of the Operating Committee in keeping with the
powers and obligations referred to throughout this Agreement;
(c) role of the Technical Partner vis-a-vis the Operator and the Operating
Committee;
(d) the role/function of the Technical Assistance Agreement;
(e) issues of liability;
(f) the Parties' relationships;
(g) Joint Operations including;
- Programs
- Budgets
- Authorizations For Expenditure
- Audits
- Contract procurement and approval
(h) Sole Risk Operations;
(i) Non consent;
(j) Default;
(k) Offtake and access to the reservoir;
(l) Minimum shareholding restriction on the Owner/Operator consistent with
the provisions herein;
(m) Assignment and withdrawal;
(n) Unit operating agreements;
(o) Decommissioning;
- Framework
- Joint and several liability
- Policy
- Establishment of a fund or other payment device
- Formula
- Nature of security
-10-
- Timing of security
- Failure to provide security
- Default
10.4 The Parties acknowledge that for the duration of the term of the
Technical Assistance Agreement, the Operating Committee established under the
JOA shall be comprised of three representatives of the Technical Partner and two
representatives of the Owner/Operator and that thereafter, the Operating
Committee shall be comprised of three representatives of the Owner/Operator and
two representatives of the Technical Partner. The Operator (as defined in the
JOA) shall at all times be subject to the inherent supervision and direction of
the Operating Committee.
10.5 In addition, when Commercial Quantities are proven and/or the Minimum
Work Obligations are satisfied and the Parties have successfully applied for and
have been jointly issued OML 310 by the Ministry, the Parties shall review the
provisions of the existing Development Phase JOA to be entered into in
compliance with Article 10.3 above. If in the opinion of the Technical Partner
acting reasonably and in compliance with good oil field practice, a new or
revised JOA governing Joint Operations relating to the conduct of ongoing
production activities on Concession Block 310 is regarded as being necessary,
the Parties shall enter into a Production Phase JOA (the "Production Phase JOA")
to be prepared by the Technical Partner within 120 days of the date of the
Technical Partners' written request for execution of such an agreement.
However, failure to enter into such an agreement within 120 days of the date of
request by the Technical Partner shall mean that then prevailing JOA shall
continue to apply to Joint Operations upon Concession Block 310.
10.6 A further review of the terms of the then current JOA shall be
undertaken by the Parties, upon the decision by the Operator following the
advice of the Technical Partner that it is necessary to commence decommissioning
operations in respect of Concession Block 310. If a new or revised JOA
governing Joint Operations relating to decommissioning activities on Concession
Block 310 is necessary in the opinion of the Technical Partner acting reasonably
and in compliance with good oil field practice, the Technical Partner shall make
a written request that the Parties enter into a Decommissioning Phase JOA (the
"Decommissioning JOA") to be prepared by the Technical Partner within 120 days
of the date of written request by the Technical Partner.
10.7 All Joint Operations upon Concession Block 310, including formation of
an Operating Committee to govern Joint Operations upon Concession Block 310,
shall be carried out in accordance with the provisions of the then current Joint
Operating Agreement and Accounting Procedure.
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ARTICLE XI - DISPUTE RESOLUTION
-------------------------------
11.1 This Agreement shall be governed by, construed, interpreted and applied
in accordance with the laws of England and Wales.
11.2 For the benefit of each Party, each Party agrees and hereby submits
themselves to the exclusive jurisdiction of the High Court of Justice in England
for resolution of all disputes arising out of or relating to this Agreement
between them, without recourse to arbitration, and accordingly submits to the
jurisdiction of the English courts.
ARTICLE XII - ENTIRE AGREEMENT
------------------------------
12.1 This Agreement constitutes the entire agreement between the Parties in
connection with the subject matter and supersedes and cancels all previous
negotiations, commitments or writings with respect to the subject matter
referenced herein and the Parties acknowledge that neither Party has entered
into this Agreement in reliance upon any representation, warranty and/or
undertaking which is not set out or referred to in this Agreement.
ARTICLE XIII - EFFECTIVE DATE AND TERM
--------------------------------------
13.1 This Agreement shall have effect from the Effective Date and shall,
subject always to the Parties' continuing obligations under Articles V, VIII and
XV herein, continue in full force and effect until:
(a) all xxxxx have been properly abandoned in accordance with Article 8;
(b) all obligations, claims, arbitrations and lawsuits (if any) have been
settled or otherwise disposed of in accordance with the terms of the
applicable JOA;
(c) the time relating to the protection of confidential information and
for proprietary technology has expired in accordance with Article 15;
and
(d) in the opinion of the Technical Partner acting reasonably, it has been
determined that Commercial Quantities have not or cannot be
established or are economically unrecoverable.
ARTICLE XIV - FINANCIAL YEAR
----------------------------
14.1 The financial year end of the joint venture shall be December 31 or
such other date as agreed in writing by the Parties hereto.
14.2 The financial books and records of the joint venture shall be kept in
accordance with generally accepted accounting principles and procedures of such
jurisdiction as the Operating Committee may determine based upon the
recommendation of the Technical Partner.
14.3 Subject to the terms of the Joint Operating Agreement to be entered
into in compliance with Article X above within 120 days hereof, an annual audit
of the joint venture's balance sheet, profit and loss statement and other
related financial records shall be made by a recognized public accounting or
chartered accounting firm, which is mutually agreeable to the Parties hereto.
The Parties shall be entitled to have members of its internal audit staff
inspect the records and books of the joint venture at any time and at its own
expense. In addition, either Party may, at its sole expense, engage an
independent public accounting or chartered accounting firm to audit the
financial records of the joint venture from time to time.
-12-
ARTICLEXV - FIDUCIARY RELATIONSHIP
----------------------------------
15.1 The Parties covenant and agree that they are entering into a joint
venture relationship and owe each other the highest level of fiduciary
responsibility and, subject to Article 15.2 herein, will not, while Parties to
this Agreement or for a period of five years following the expiry of this
Agreement, disclose to any other person, firm, corporation or entity, any
proprietary or confidential information obtained in the course hereof, or as
result of the Joint Operations contemplated in this Agreement. Any information
not generally available to the public shall be construed as proprietary or
confidential for the purposes of this Agreement including, without limitation,
all agreements between the Parties, information relating to Joint Operations,
seismic and other data, drilling techniques and results, technology, suppliers
of equipment, and names of customers, information relating to sales, markets,
target markets, strategies, advertisements, business procedures and all
financial information.
15.2 The obligation of the Parties as set forth in Article 15.1 hereof to
maintain confidentiality shall not apply to such knowledge, information,
material or business data obtained pursuant to this Agreement or relating to any
material to the joint venture which:
(a) was demonstratably known to a Party prior to the Effective Date of
this Agreement;
(b) is available to the public in the form of written publication issued
by a third party;
(c) shall have become available to the Parties in good faith from a third
party who has a bona fide right to disclose same;
(d) is required to be disclosed to any federal, provincial, state or local
government or governmental branch, board, agency or instrumental
mentality in order to comply with applicable laws, or is required to
be disclosed to regulatory authorities including stock exchanges
having jurisdiction in respect of securities of either parties.
(e) is required to be disclosed by a Party pursuant to public disclosure
requirements imposed under applicable securities legislation.
(f) is required or desired to be disclosed to a Party's financial
advisors, banks, other financial institutions, contractors or
potential investors in the project.
15.3 Except as expressly provided in this Agreement, each Party shall have
the right to independently engage in and receive full benefits from other
business activities, whether or not competitively with the joint venture hereby
created, without consulting the other Party, and no Party shall have any
obligation to the other Party with respect to any opportunity to acquire any
assets at any time outside the terms of the joint venture hereby constituted.
15.4 Disclosure pursuant to Article 15.2(f) shall not be made unless prior
to such disclosure, the disclosing Party has obtained a written undertaking from
the recipient to keep the data and information strictly confidential and not to
use or to disclose the data or information except for the express purpose for
which the disclosure is to be made.
15.5 Any Party ceasing to own a Participating Interest during the term of
this Agreement shall nonetheless remain bound by the obligations of this Article
XV and any disputes shall be resolved in accordance with Article XI hereof.
15.6 Nothing in this Agreement shall require a Party to divulge proprietary
technology to the other Party; provided that where the cost of development of
proprietary technology has been charged to the Joint Account, such proprietary
technology shall be disclosed to all Parties bearing a portion of such costs and
may be used by such Party or its affiliates in other operations.
-13-
15.7 Notwithstanding the foregoing provisions of this Article, the Technical
Partner with the approval of the Operating Committee, may make well trades and
data trades for the benefit of the Parties, with another company or body to
secure data, the cost of which shall be charged to the Joint Account. Data
obtained shall be furnished to all Parties. In such a situation, Technical
Partner must enter into an undertaking with any third party to such trade to
keep such information confidential.
ARTICLE XVI - AMENDMENT AND WAIVER
----------------------------------
16.1 Neither this Agreement nor any of its provisions may be changed,
waived, discharged or terminated orally or by any course of conduct but only by
an instrument in writing signed on behalf of each Party.
16.2 No failure to exercise or delay in exercising any right, power or
privilege under this Agreement or the part of any of the Parties shall act as a
waiver. No singular or partial exercise of any such right, power or privilege
shall preclude any other or any further exercise or the exercise of any other
right, power or privilege. The rights and remedies provided in this Agreement
are cumulative and not exclusive of any other right or remedies otherwise by
provided by law unless expressly stated.
ARTICLE XVII - COVENANTS
------------------------
17.1 The Owner/Operator covenants with the Technical Partner as follows:
(a) the Owner/Operator is a company duly incorporated, validly existing
and in good standing under the laws of the Federal Republic of Nigeria
and that it has all necessary corporate powers to enter into this
Agreement and to carry on business herein contemplated;
(b) the Owner/Operator is the lawful licensee of OPL 310 and the
geographic area contained within Concession Block 310, and the
Owner/Operator has not transferred, conveyed, sold, farmed out,
granted royalties to third parties or in any way encumbered its legal
or beneficial interest as licensee of OPL 310 and confirms that it has
full title guarantee free from any liens, charges, equities and/or
encumbrances with respect to OPL 310 and/or OML 310 as appropriate;
(c) the Owner/Operator has the right and authority to execute this
Agreement and has the lawful authority under the terms of OPL 310 and
otherwise, to transfer and assign an unencumbered Participating
Interest with full title guarantee, free from any liens, charges,
equities and/or encumbrances, to the Technical Partner all in
accordance with the provisions set forth herein;
(d) the form of oil prospecting licence identified as OPL 310 is, to the
best of the knowledge and belief of the Owner/Operator, the present
and subsisting oil prospecting licence for the geographic area
contained in Concession Block 310, and OPL 310 is valid and in good
standing with the Government and all other regulatory agencies and
authorities;
(e) the Owner/Operator shall assist in the promotion and successful
conduct of the joint venture including obtaining and providing the
Technical Partner with (1) all necessary Government and other
approvals required to perform the Joint Operations, (2) a copy of the
oil prospecting licence deed document, (3) any correspondence or other
documentation (including geological, geophysical and other technical
data) which the Owner/Operator now has in its possession relating to
Concession Block 310, and (4) any and all future correspondence
between the Owner/Operator and the Ministry in connection with OPL 310
and any extensions or renewals thereof;
-14-
(f) the Owner/Operator shall, upon execution of this Agreement, forthwith
make application to the Ministry for such extension, renewal or
replacement of OPL 310 as is necessary to enable the performance of
the Minimum Work Program within two years of the date hereof. The
Owner/Operator acknowledges that the obtaining of an extension,
renewal or replacement of OPL 310 is a strict condition of this
Agreement in favour of the Technical Partner and that the Technical
Partner shall not be required to initiate work on OPL 310 or make any
additional payments to the Owner/Operator herein until it is satisfied
that the Owner/Operator has obtained or will obtain an extension,
renewal or replacement of OPL 310, all to the satisfaction of the
Technical Partner;
(g) The Owner/Operator and the Technical Partner shall work together to
meet the Minimum Work Obligations and/or to demonstrate that
Commercial Quantities of Petroleum exist within Concession Block 310
and upon meeting either, or both of these criteria, the Owner/Operator
and the Technical Partner shall make a joint application for a OML to
be issued in the joint names of both Parties to this Agreement in
compliance with Articles 5.1 and 5.2 above, and the Owner/Operator
covenants that upon establishment of Commercial Quantities, it will
use its best endeavours to secure the issue of OML 310 in respect of
Concession Block 310 in the joint names of both Parties to this
Agreement in compliance with Articles 5.1 and 5.2;
(h) The Owner/Operator expressly acknowledges that it is bound by the
restrictions on transfer set out in Article IX herein in order to
maintain OPL 310 and/or OML 310 as appropriate in good standing with
the Ministry.
17.2 The Technical Partner covenants as follows:
(a) the Technical Partner is a corporation duly incorporated, validly
existing and in good standing under the laws of the Bahamas and has
all necessary corporate powers to enter into this Agreement and to
conduct and to carry on business as herein contemplated.
(b) it shall fulfil its financial obligations to the Owner/Operator as set
forth in Article 16 hereof.
(c) the Technical Partner shall provide all necessary financial, technical
and operational support for the conduct of the Joint Operations as
required from time to time pursuant to the terms of this Agreement and
the Technical Assistance Agreement, and shall conduct its activities
in accordance with good oilfield practice.
17.3 For the avoidance of doubt, the entire provisions of this Article
XVII are cumulative, and the Parties must ensure that these covenants continue
to remain valid at all times during the term of this Agreement. At any time
during the continuance of this Agreement, either Party may ask the other for
evidence that it is continuing to comply with these covenants in a format
satisfactory to it.
ARTICLE XVIII - MISCELLANEOUS
-----------------------------
18.1 Each of the Parties shall execute and deliver such other
certificates, agreements and other documents and take such other actions as may
reasonably be required by the other Party in order to consummate or implement
the transactions contemplated by this Agreement.
18.2 The liability and obligation of the Parties hereto shall be several
and not joint or collective and each Party shall be responsible only for its
obligations as herein set forth, provided however that both Parties shall be
liable to each other for the decommissioning obligations set forth in Article
XIII herein. It is expressly declared that it is not the purpose of this
Agreement to create any partnership or syndicate and neither this Agreement nor
the operations hereunder shall be construed or considered as creating any
partnership or syndicate.
18.3 All notices, requests, demands or other communications hereunder
shall be delivered by hand or sent by mail as appropriate or by facsimile, telex
or telegram to the Parties at the address provided below:
-15-
Owner/Operator:
Optimum Petroleum Development Ltd.
00X Xxxxxxx Xxxx
Xxxxx, Xxxxxxx
Fax: 00-000-0-000-000
Attention: The Managing Director
Technical Partner:
Agbara Resources Limited
0xx Xxxxx, Xxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxx, Xxxxx, Xxxxxxx
Fax: 00-000-0-000-0000
Attention: Xxxx X. Cherwayko
President
Any Party may from time to time change its address for service hereunder upon
written notice to the other Party. Any notice may be served by personal
delivery or by mailing the same by registered post, in a properly addressed
envelope addressed to the Party to whom such notice is to be given at it address
for service hereunder and shall be deemed to be given and received forty-eight
(48) hours after the delivery thereof. Any notice may be served by prepaid
telegram, telex or telecopy addressed to the Party to whom such notice is to be
given and any such notice so served shall be deemed to be given and received by
the addressee eighteen (18) hours after the time of delivery.
18.4 If at anytime, one or more of the provisions of this Agreement is or
becomes invalid, illegal or unenforceable for any reason in respect of or under
any law or regulation, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not, as a result be effected or
impaired in any way.
18.5 Each Party shall, when required to do so by the other Party to this
Agreement now or at any future time, do, or so far as each is able to do,
procure the doing of all such acts and/or execute or procure the execution of
all such documents in a form satisfactory to the other Party as required.
18.6 This Agreement may be executed in one or more counterparts and
evidenced by facsimile copy thereof and all such counterparts or facsimile
copies together shall constitute one and the same agreement.
18.7 Each Party shall be responsible for payment of its own legal,
accounting and other costs in respect of the negotiation, completion, execution
and implementation of this Agreement.
18.8 The Owner/Operator expressly acknowledges that the Technical Partner
shall be under no obligation to initiate Joint Operations or incur Petroleum
Costs until an extension or renewal OPL for Concession Block 310 has been
granted by the Government in a form satisfactory to the Technical Partner.
-16-
SCHEDULE A
TO THE JOINT VENTURE AGREEMENT
DATED NOVEMBER 27, 1996 BETWEEN
OPTIMUM PETROLEUM DEVELOPMENT LIMITED
AND AGBARA RESOURCES LIMITED
SCHEDULE B
TO THE JOINT VENTURE AGREEMENT
DATED NOVEMBER, 1996 BETWEEN
OPTIMUM PETROLEUM DEVELOPMENT LIMITED
AND AGBARA RESOURCES LIMITED
MINIMUM WORK OBLIGATIONS
(to be completed prior to the expiry of OPL 310)
1. Seismic operations and the drilling of 3 xxxxx, all as approved by the
Ministry; or
2. The establishment of Commercial Quantities (as defined in the Joint
Venture Agreement) that permit the Owner/Operator and the Technical Partner to
jointly apply to the Government for the conversion of OPL 310 into OML 310.
SCHEDULE C
TO THE JOINT VENTURE AGREEMENT
DATED NOVEMBER, 1996 BETWEEN
OPTIMUM PETROLEUM DEVELOPMENT LIMITED
AND AGBARA RESOURCES LIMITED
TECHNICAL ASSISTANCE AGREEMENT
[This document is filed as Exhibit 10.20 to the Form 10-KSB dated effective
March 1, 1999]
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers and representatives as of the day and year first
written above.
OPTIMUM PETROLEUM DEVELOPMENT LIMITED
Per: /s/ Alhaji Ubrahim Bunu
--------------------------
Title: Chairman
--------
AGBARA RESOURCES LIMITED
Per: /s/ Xxxx Xxxxxxxxx
--------------------
Title: President
---------
