Exhibit 10.9
[ELPASO PRODUCTION LOGO]
April 1, 2006
Ridgewood Energy Corporation
00000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Re: Participation Agreement - Sunset Prospect
West Cameron Blocks 78-SW/4 and 95-W/2
Offshore Louisiana
Gentlemen:
When executed by Ridgewood Energy Corporation ("Ridgewood") in the space
provided below, this letter will evidence the Participation Agreement (the
"Agreement") between Ridgewood and El Paso Production Company ("El Paso")
whereby Ridgewood agrees to participate with El Paso in the drilling of the
OCS-G 19702 Well No. 2 (the "Test Well") to be drilled from a surface location
on El Paso's OCS Lease No. OCS-G 24710, Block 95, West Cameron Area, Offshore
Louisiana ("WC 95"), to a bottom hole location on that certain OCS Lease No.
OCS-G 19702, Block 78, West Cameron Area, Offshore Louisiana ("WC 78"). By
performing in accordance with the terms and conditions contained herein,
including, but not limited to, participating in the drilling of the Test Well,
Ridgewood shall earn fifty percent of six-sixths (50% of 6/6th,) operating
rights interest and 41.66666% of six-sixths (41.66666% of 6/6ths) net revenue
interest in the West half (W/2) of WC 95 from the stratigraphic equivalent of a
depth one hundred feet below the total depth drilled in the OCS-G 24710 Well No.
1 (which is currently being drilled) to the stratigraphic equivalent of 100 feet
below total depth drilled and logged in the Test Well, and fifty percent of
six-sixths (50% of 6/6th5) of El Paso's interest in that certain Farmout
Agreement dated April 12, 2006,between Eni Deepwater LLC and Nexen Petroleum
Offshore U.S.A., Inc., as Farmors, and El Paso Production Company, as Farmee,
("Farmout Agreement") which is attached hereto and made a part hereof as Exhibit
"A"). The foregoing interests are being hereinafter referred to as the "Assigned
Interests". This Agreement and the rights to be earned herein by Xxxxxxxxx are
made subject to the following terms and conditions:
1. On or before May 31, 2006, and immediately after El Paso completes the
drilling of the aforesaid OCS-G 24710 Well No. 1, El Paso, as operator, will
commence, or cause to be commenced, operations for the drilling of the Test
Well, using the same Diamond Offshore Company - Ocean King jackup rig, as a
directional well, from the existing caisson set by El Paso at a surface
El Paso Production
0000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 00000
PO Box 2511 Houston, Texas 77252.2511
tel: 000.000.0000
location of 4,560' from North line and 2,452' from West line of WC 95, to the
bottom hole location 50 feet from South line and 2,037 feet from West line of
WC78, to a depth of 15,765' measured depth (14,500' true vertical depth), or to
a depth sufficient to thoroughly test the Marg A formation (the "Objective
Depth"). The cost, risk and expense to set a caisson and drill the Test Well
(and any substitute well therefor, if prior to reaching the Objective Depth, the
Initial Well encounters mechanical difficulties, heaving shale, rock salt,
excessive saltwater flow, practicably impenetrable formations or other
conditions in the hole that would cause a reasonably prudent operator under the
same or similar circumstances to discontinue drilling and to abandon such well
and Ridgewood and El Paso elect to drill a substitute well) to Casing Point, as
defined below, shall be borne sixty-six and two-thirds percent (66.6667%) by
Xxxxxxxxx and thirty-three and one-third percent (33.3333%) by El Paso, provided
however that if, prior to reaching Casing Point, the actual cost to drill the
well exceeds one hundred ten percent (110%) of AFE, all costs thereafter will be
borne fifty percent (50%) by Xxxxxxxxx and fifty percent (50%) by El Paso. The
amount of the dry hole costs on which Ridgewood will bear a disproportionate
share is limited to the actual dry hole cost or $14.893 million dollars,
whichever is less based on 110% of El Paso's AFE as provided to Ridgewood.
Notwithstanding the foregoing, all costs, risks and expenses after Casing Point
(as defined below) shall be borne fifty percent (50%) by Xxxxxxxxx and fifty
percent (50%) by El Paso.
"Casing Point" shall be defined as that point in time at which the Test
Well (or a any substitute well therefor) has been drilled to the Objective
Depth, or a mutually agreed lesser depth, and has been fully evaluated by
running all open hole logs and conducting such other open-hole tests as the
parties deem appropriate, and after the results have been received by El Paso
and Ridgewood for the purpose of evaluating productive formations in the bore
hole in order to make a decision to attempt a completion or to plug and abandon
the Test Well.
2. Operations for the drilling of the Test Well, and all subsequent
operations on WC 78 and WC 95 will be in compliance with the Farmout Agreement,
and will be governed by the Offshore Operating Agreement ("Operating Agreement")
which is attached hereto and made a part hereof as Exhibit "B". El Paso shall be
named Operator under said Operating Agreement. If there are any conflicts
between the Operating Agreement or the Farmout Agreement and this Agreement,
this Agreement shall prevail.
3. Upon reaching Objective Depth in the Test Well, and if the well is
qualified as capable of producing oil and/or gas in paying quantities pursuant
to 30 CFR ss.250.115 et seq., and El Paso has earned an interest in WC 78
pursuant to the Farmout Agreement, and provided that Ridgewood is in compliance
with all of the terms and provisions of this Agreement, El Paso will assign the
Assigned Interests to Ridgewood pursuant to mutually-acceptable forms of
assignment of operating rights which are acceptable to the Minerals Management
Service.
4. Xxxxxxxxx acknowledges that the Assigned Interests shall be burdened by
the lessor's royalty, and the burdens set forth in the Farmout Agreement but
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shall be free and clear of any liens, claims, or other burdens encumbering El
Paso's interest, including, but not limited to, any other overriding royalty
interests, net profits interests, mortgages, production payments and any
commitments or dedications for any one or more of the transportation, processing
or marketing of production therefrom or attributable thereto.
5. If El Paso and Ridgewood agree to construct and install a production
platform or facility for the benefit of the joint account, El Paso will perform
those operations under the Operating Agreement, and the production platform and
related facilities will be owned by El Paso fifty percent (50%) and Ridgewood
fifty percent (50%), unless otherwise mutually agreed. However, it is understood
and agreed that El Paso and LLOG Exploration Offshore, LLC (collectively
referred to as the "Shallow Owners"), are currently drilling their OCS-G 24710
on WC 95 from a surface location near the Test Well which, if successful, may
require the use of that platform and facilities on WC 95, and in such event, the
Shallow Owners will have the option to tie their production into the platform
and facilities, subject to availability and capacity, and pursuant to a mutually
acceptable production handling agreement whereby the Shallow Owners agree to pay
Ridgewood and El Paso, as platform owners the following fees and associated
costs, subject to an annual XXXXX adjustment:
Gas Processing Fee: 12 cents per MCF
Condensate Handling Fee: 75 cents per BBL
Water Handling Fee: $1.00 per BBL
Compression Fee: 5 cents per MCF, per stage
Minimum Monthly Fee: $10,000
All of these fees and costs received by platform owners shall be shared in
proportion to their ownership interest in the platform and facilities. It is
also understood and agreed that the Shallow Owners shall bear all of the cost,
risk and expense of any capital expenditures required to modify or upgrade the
platform and/or facilities to accommodate their production, subject to review
and approval by owners of the platform. Nothing contained in the forgoing shall
be deemed to preclude either party from taking its share of production to an
off-lease host facility in lieu of constructing WC 95 facilities.
6. During the term of this Agreement, if any Party hereto (the "Acquiring
Party") acquires an interest, or the right to acquire an interest, in the South
half (S/2) of West Cameron Block 78 or in the Southeast quarter (SE/4) of West
Cameron Block 79, Offshore Louisiana, (collectively, the "Area of Mutual
Interest"), then the other Party(ies) (the "Non-Acquiring Party(ies") shall have
the right, but not the obligation, to acquire from the Acquiring Party its
respective Working Interest percentage of the interest or right so acquired by
the Acquiring Party. The Acquiring Party shall notify the Non-Acquiring
Party(ies) in writing within fifteen (15) days of such acquisition (such
notification to include the terms and conditions of such acquisition) and the
Non-Acquiring Party(ies) shall have thirty (30) days from receipt of such notice
to advise the Acquiring Party whether or not the Non-Acquiring Party(ies) elects
to acquire its respective percentage of the interest or right so acquired. If
the Non-Acquiring Party(ies) elects to exercise its right, the Non-Acquiring
Party(ies) shall pay or tender to the Acquiring Party the Non-Acquiring
Party's(ies') respective Working Interest percentage of the consideration
3
actually paid by the Acquiring Party to acquire such interest or right and
assume its Working Interest share of obligations and burdens associated with
such interest or right. Simultaneous with such payment or tender, the Acquiring
Party shall deliver to the Non-Acquiring Party(ies) an assignment (in a form
mutually acceptable to the parties) with warranty of title by, through and under
the Acquiring Party, but not otherwise, of the Non-Acquiring Party's(ies')
Working Interest percentage of such interest.
7. For general notice purposes and except as may be otherwise provided by
either party, the following persons may be contacted:
El Paso Production Company Ridgewood Energy Corporation
0000 Xxxxxxxxx Xxxxxx 00000 Xxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx Attn: X. Xxxx Xxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
7. This Agreement is not intended to create, and shall not be construed to
create, a relationship or partnership, joint venture or an association for
profit between or among the parties hereto. Notwithstanding any provision herein
that the rights and liabilities hereunder are several and not joint or
collective, or that this Participation Agreement and operations hereunder shall
not constitute a partnership, if for federal income tax purposes, this
Participation Agreement and the operations hereunder are regarded as a
partnership, each party thereby affected elects to be excluded from the
application of all of the provisions of Subchapter K, Chapter 1, Subtitle "A'
("Subchapter K") of the Internal Revenue Code of 1986, as amended (the "Code"),
as permitted and authorized by Section 761 of the Code and the regulations
promulgated thereunder. Should there be any requirement that each party hereby
affected give further evidence of this election, each such party shall execute
such documents and furnish such other evidence as may be required by the
Internal Revenue Service or as may be necessary to evidence this election. No
such party shall give any notices or take any other action inconsistent with the
election made hereby. If any present or future income tax laws of the States of
Texas or Louisiana, or any future income tax laws of the United States contain
provisions similar to those in Subchapter K of the Code, under which an election
similar to that provided by Section 761 of the Code is permitted, each party
hereby affected shall make such election as may be permitted or required by such
laws. In make the foregoing election, each such party states that the income
derived by such party from operations hereunder can adequately determined
without the computation of partnership taxable income.
8. THE PARTIES AGREE THAT THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS EXCLUDING ANY CHOICE OF LAW RULES
THAT WOULD CAUSE THE LAW OF ANOTHER JURISDICTION TO APPLY. ANY LEGAL PROCEEDING
ARISING OUT OF OR IN RELATION TO THIS AGREEMENT SHALL BE BROUGHT EXCLUSIVELY
4
IN THE APPROPRIATE COURT (STATE OR FEDERAL) IN XXXXXX COUNTY, TEXAS. THE PARTIES
IRREVOCABLY SUBMIT TO THE JURISDICTION OF SAID COURT.
9. The parties agree that, with respect to the subject matter hereof this
Agreement together with all Exhibits shall constitute the full and complete
understanding and agreement of the Parties, and there are no other
understandings, obligations, relationships or agreements, written or oral. The
terms, covenants, conditions and provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Parties, and said terms, covenants, conditions and provisions shall be deemed to
be covenants burdening and running with the Lease.
If the terms and conditions contained in this letter are acceptable, please so
indicate by executing two originals of this letter in the space provided below
and returning one original to the attention of the undersigned.
Sincerely,
El Paso Production Company
/s/ Xx X. Xxxxxxxx [SEAL]
Xx X. Xxxxxxxx
Vice President
AGREED TO AND ACCEPTED THIS
28TH DAY OF APRIL, 2006.
Ridgewood Energy Corporation
By: /s/ X. Xxxx Xxxxx
------------------
Name: X. Xxxx Xxxxx
Title: Executive Vice President
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EXHIBIT "A"
Made a part of that certain Participation Agreement
dated April 1, 2006, by and between El Paso Production
Company and Ridgewood Energy Corporation
April 18, 2006
El Paso Production Company
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Mr. Xxxxx Xxxxxx
RE: Farmout Agreement
OCS-G 19702; West Cameron Block 78, SW/4
Central Gulf of Mexico, Offshore Louisiana
Gentlemen:
When fully executed by the parties hereto, this document (together with the
attached Exhibits), shall constitute a farmout agreement ("Agreement") between
Eni Deepwater LLC ("Eni") and Nexen Petroleum Offshore U.S.A. Inc. ("Nexen"),
hereinafter collectively referenced as "Farmors" and individually as "Farmor",
and El Paso Production Company, hereinafter referenced as "Farmee", (Farmors and
Farmee are also referred to herein individually as a "Party" and collectively as
the "Parties"), whereby effective as of the date first written above (the
"Effective Date") Farmors agree, subject to the terms of this Agreement, to
farmout to Farmee all of their respective operating rights interest in and to
the lands and depths covered by the following described portion of that certain
oil and gas lease ("Eni/Nexen Lease") which is more completely described as
follows:
Oil and Gas Lease of Submerged Lands, bearing Serial No. OCS-G 19702 dated
effective August 1, 1998, by and between the United States of America, as
Lessor, and British-Borneo Exploration, Inc. and CXY Energy Offshore Inc.,
as Lessees, covering all of Block 78, West Cameron Area, OCS Leasing Map,
Louisiana Map No. 1, INSOFAR AND ONLY INSOFAR AS said Lease covers and
affects the Southwest Quarter (SW/4) of said Block 78, containing
approximately 1,250 acres, and only insofar as said SW/4 covers depths
below the stratigraphic equivalent of 13,950' MD/11,643' TVD as seen in
the Newfield Exploration Company OCS-G 19702 Well No. 1.
Farmors and Farmee hereby agree that Farmee may pool and combine the Eni/Nexen
Lease with its leasehold interests covering a portion of West Cameron Block 95
which is more completely described below, and the Parties hereby create a joint
development area covering the Southwest Quarter (SW/4) of West Cameron Block 78,
and the Northwest Quarter (NW/4) of West Cameron Block 95, INSOFAR AND ONLY
INSOFAR as said 2,500-acre area covers rights below the stratigraphic equivalent
of 13,950' MD/11,643' TVD as seen in the Newfield Exploration Company OCS-G
19702 Well No. 1 (the "Joint Development Area" or "JDA"), under the terms and
conditions set out herein. That portion of Xxxxxx's adjacent leasehold interests
contributed to the JDA ("El Paso Lease") is described as follows:
Oil and Gas Lease of Submerged Lands bearing Serial No. OCS-G 24710, dated
effective July 1, 2003, by and between the United States of America, as
Lessor, and El Paso Production Company, as Lessee, covering Block 95, West
Cameron Area, as shown on official OCS Leasing Map, Louisiana Map No. 1,
INSOFAR AND ONLY INSOFAR as said Lease covers the Northwest quarter (NW/4)
of said Block 95, containing approximately 1,250 acres and only insofar as
it covers those depths below the stratigraphic equivalent of 13,950' MD/
11,643' TVD as seen in the Newfield Exploration Company OCS-G 19702 Well
No. 1.
6
I.
TEST WELL
---------
On or before April 30, 2006, Farmee will have the option, but not the
obligation, subject to timely receipt of all regulatory approvals and
availability of a suitable drilling rig, to commence operations for the drilling
of a test well from a surface location on the El Paso Lease which lies 4,560'
FNL and 2,452' FWL of West Cameron Block 95, to a bottom hole location of its
choice on the Eni/Nexen Lease, which lies in the South half of Southwest Quarter
of Southwest Quarter (S/2 of SW/4 of SW/4) of West Cameron Block 78, and to be
drilled to the shallower of 14,500' TVD or to a depth sufficient to test the
Marg "A" Sand horizons (the "Test Well"). Xxxxxx agrees to bear one hundred
percent (100%) of the cost, risk, liability and expense to drill said well in a
good and workmanlike manner to a depth of 14,500' or to a depth sufficient to
test the aforesaid Marg "A" horizons, (such depth being hereinafter referred to
as "Objective Depth"). Upon reaching Objective Depth, Farmee shall have the
option, but not the obligation, at its sole discretion, to drill the Test Well
to a deeper objective to earn additional rights in the same manner provided
herein, but in no event deeper than 15,500' TVD. If Farmee does not Commence
Actual Drilling Operations on or before April 30, 2006, then this Agreement
shall terminate, unless the Parties agree in writing for an extension. In case
of termination however neither Party would have any further obligations or
liability to the other Party under this Agreement, except that Farmee shall
continue to be responsible for all of Farmee's obligations and/or liabilities
which accrue from or are the result of acts or omissions by Farmee, and for any
restoration of the premises required as a result of Xxxxxx's operations.
"Commence Actual Drilling Operations" shall mean that time when the drill bit of
the drilling rig being used to drill the Test Well, or any Substitute Well (as
defined in Article II below) actually begins turning below the mudline in the
JDA.
Xxxxxx shall perform and abide by the following conditions:
A. To conduct all operations in accordance with good industry practices;
B. To make reasonable tests of all formations encountered during the drilling
which give indication of containing hydrocarbons and to act as a reasonably
prudent operator, in accordance with good oil field practices to otherwise
adequately evaluate the producing capability of the Test Well, or a
Substitute Well therefor (as defined in Article II below); and
C. To give Farmors all notices and information and to have a representative
present for specified occurrences as provided in Article IV below.
The Test Well, or any Substitute Well (as defined in Article II below)
therefore, drilled under the terms of this Agreement, shall be drilled free of
any cost, risk or liability of any kind or character to either Farmor, and all
risk, liability, costs or expenses incurred in connection with drilling,
testing, completing, and equipping said well or xxxxx or permanent or temporary
plugging or abandoning of said well or xxxxx shall be borne solely by Farmee,
except as provided below. Xxxxxx agrees to RELEASE, DEFEND, INDEMNIFY and HOLD
HARMLESS FARMOR GROUP (as defined in Article VIII, B below) from and against,
any and all such costs, risks, claims and liabilities associated with all of
Farmee's operations carried out under this Agreement, WHETHER OR NOT SUCH COSTS,
RISK CLAIMS OR LIABILITIES ARE THE RESULTS OF THE NEGLIGENCE OR FAULT, IN WHOLE
OR IN PART, OF EITHER FARMOR.
Page 2 of 11
Notwithstanding anything to the contrary in this Article I or elsewhere in this
Agreement, Farmee shall not be obligated to drill any well to Objective Depth,
under the terms of this Agreement, and Farmee will suffer no penalty other than
the forfeiture of all rights under this Agreement. However, in the event that
Farmee does not drill or complete drilling the Test Well, or any Substitute Well
to Objective Depth in accordance with the terms of this Agreement, Farmee shall
continue to be responsible for all obligations and/or liabilities accruing or
resulting from acts or omissions by Farmee, and for any restoration of the
Eni/Nexen Lease or the El Paso Lease.
II.
SUBSTITUTE WELL
---------------
If the Test Well is drilled to its Objective Depth, in accordance with the terms
hereof, and is a dry hole, or if, during the drilling of the Test Well, Farmee
encounters impenetrable substances or conditions, including loss of the hole due
to mechanical difficulties which in the opinion of a reasonably prudent operator
under the same or similar conditions would render further drilling impracticable
or hazardous, and such conditions prevent further drilling of the Test Well,
Farmee may, not later than one hundred twenty (120) days after both Farmors'
receipt of written notice from Farmee of the dry hole or impenetrable substances
or conditions, whichever applies, Commence Actual Drilling Operations on a
sidetrack of the Test Well, or a substitute well for the Test Well (in either
case a "Substitute Well") at a location of its choice in the JDA. In either
event, said well shall be drilled pursuant to all the terms and provisions of
this Agreement applicable to the well for which it is substituted. If such
Substitute Well is commenced and otherwise drilled in compliance with the
requirements of this Agreement, the Substitute Well shall in all respects be
considered as the Test Well.
Until Farmee earns an interest in the Eni/Nexen Lease, Farmee shall have the
continuing right to drill successive Substitute Xxxxx on either lease within the
JDA, provided that no more than one hundred twenty (120) days elapse between the
date both Farmors receive written notice from Farmee of the dry hole or
impenetrable substances or conditions, whichever applies, on each such
Substitute Well and that such well shall be subject to all the terms and
provisions of this Agreement applicable to the well for which it is substituted.
III.
INTEREST EARNED
---------------
A. Should Farmee drill and complete the Test Well, or any Substitute Well
therefor, as applicable, to the Objective Depth on the Eni/Nexen Lease, in
compliance with the terms of this Agreement, and if the well meets the
criteria of a producible well, pursuant to 30 CFR 250.115 or 250.116 (or if
not meeting these qualifications, Farmors and Farmee mutually agree the
well is capable of producing in paying quantities and Farmee elects to
suspend drilling operations on the Test Well pending subsequent completion
and development), then said well shall be deemed to be the "Earning Well"
and each Farmor shall, within thirty (30) days after written notice from
Farmee, deliver a mutually acceptable form of Assignment of Operating
Rights to Farmee, in and to the Eni/Nexen Lease, limited to those depths
from the stratigraphic equivalent of 13,950' MD/11,643' TVD as seen in the
Newfield Exploration Company OCS-G 19702 Well No. 1, down to 100' below the
deepest depth completed in the Earning Well. Subject to force majeure
conditions, or availability of materials and equipment, Farmee must have
drilled and completed the Earning Well, if at all, within one year from the
date of this Agreement, otherwise this Agreement shall terminate and Farmee
shall forfeit all its rights under this Agreement. In like manner, and at
Page 3 of 11
the same time, Farmee shall deliver an acceptable form of Assignment of
Overriding Royalty Interest to each Farmor, in and to the El Paso Lease, also
limited to those depths from the stratigraphic equivalent of 13,950'MD/11,643'
TVD as seen in the Newfield Exploration Company OCS-G 19702 Well No. 1, down to
100 feet below the deepest depth completed in the Earning Well. Each of the
Assignments shall contain the following terms and conditions as set forth in
Section III B and D below.
B. In each Assignment referenced above, the interests conveyed shall be made
subject to Lessor's royalty interest, but shall be free and clear of any
overriding royalty interests, net profits interests or production payments
or any other lease or interest burdens, except that each Farmor's
assignment of the Eni/Nexen Lease to Farmee shall be specifically made
subject to the terms and conditions of that certain Assignment of
Overriding Royalty Interest from British-Borneo Exploration, Inc. and CXY
Energy Inc., as Assignors, to Fairfield Industries Incorporated, as
Assignee, last acknowledged on September 30, 1998 and recorded on June 10,
1999 in Book 896, under File No. 260479 of the Conveyance Records of
Cameron Parish, Louisiana, and will reserve unto each Farmor, and Farmee's
overriding royalty assignment in the El Paso Lease to each Farmor shall
convey unto each Farmor, its proportionate fifty percent (50%) share of an
undivided 4.291666% net overriding royalty interest, of all oil, gas and
other liquid or gaseous hydrocarbons produced, saved and marketed from the
JDA and the Earning Well. Notwithstanding anything contained herein to the
contrary, all overriding royalty interests retained by or conveyed to
Farmors shall be computed and paid in the same manner, and at the same time
as Xxxxxx's royalty.
C. If Farmee earns an interest in the Eni/Nexen Lease, Farmors and Farmee
shall promptly exchange and deliver the necessary assignments required to
properly convey the relevant ownership interests.
D. Each of the forgoing Assignments shall also:
1. Be prepared by each assignor, with the effective date of the
Assignment being the Effective Date of this Agreement.
2. Be made with full substitution and subrogation of all rights and
actions of warranty assignor may have against all others as to the
interest to be assigned, but otherwise without warranty of title,
statutory, express or implied; provided however, each assignor hereby
agrees to warrant and defend assignee's title against all claims
arising by, through and under assignor, but not otherwise.
3. Be made acceptable to the Minerals Management Service, and also made
acceptable for recordation in Cameron Parish, Louisiana.
4. Until Farmee earns an interest under this Agreement, or until this
Agreement terminates, whichever occurs first, each assignor agrees not
to create any additional lease burdens on its respective lease (i.e.
other than those created herein, or existing as of the time of this
Agreement) and not to assign all or a portion of its interest in its
lease unless such assignment is made expressly subject to this
Agreement.
Page 4 of 11
5. With respect to the leases, each assignor reserves all rights,
horizons, strata and formations not affected by this Agreement
including, but not limited to, the rights to the concurrent use of the
surface and the right to drill to shallower and deeper intervals not
covered by this Agreement to the extent said rights are owned by such
assignor.
Farmee shall also apply for and diligently seek appropriate government
approval for any and all requisite operations or other such similar
documents as contemplated in this Agreement or as otherwise occasioned by
its operations on the JDA. Farmors shall be furnished with copies of any
and all applications, flings, permits and governmental reports of any
nature whatsoever submitted by Farmee to the MMS or other governmental
agencies. Likewise, Farmee shall furnish each Farmor with permit approvals
and other documents which Farmee may receive from the MMS or other
governmental agencies.
IV.
INFORMATION REQUIREMENTS
------------------------
Farmee shall deliver, free of cost to Farmors, the information set out in the
Exhibits "A-1" and "A-2" which are attached hereto and made a part hereof, and
any other information or logs which Farmee might acquire from any well drilled
by Farmee on the JDA. Subject to Farmors' obligations of confidentiality set
forth in Article VI below, each Farmor shall have the right to copy, use, make
derivatives from and modify all such information. Although Eni will provide
Farmee copies of permits and site data, if and when available, NEITHER FARMOR
MAKES ANY WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND HEREBY
EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES, AS TO THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION, PERMITS OR DATA SO FURNISHED. FARMEE HEREBY EXPRESSLY ASSUMES
THE RISK OF THE INACCURACY OR INCOMPLETENESS OF SUCH INFORMATION, PERMITS OR
DATA, WAIVES ANY CLAIMS AGAINST EITHER FARMOR REGARDING SUCH INFORMATION,
PERMITS OR DATA, AND ACKNOWLEDGES THAT, WITHOUT SUCH WAIVER, FARMORS WOULD NOT
FURNISH SUCH INFORMATION, PERMITS OR DATA.
V.
NOTICES
-------
All notices given hereunder, except information as specified in Exhibits "A-1"
and "A-2", shall be given to the Parties at the following addresses:
Eni Deepwater LLC
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Email: xxxx.xxxxxxxx@xxxxxxxxxxxx.xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Nexen Petroleum Offshore U.S.A. Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
Page 5 of 11
Email: xxx_xxxxx@xxxxxxxx.xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
El Paso Production Company
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxx
Email: xxxxx.xxxxxx@xxxxxx.xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All notices hereunder shall be sufficiently given for all purposes if in writing
and delivered personally, sent by documented mail or overnight delivery service
or, to the, extent receipt is confirmed by an automatically generated process in
writing, email, telecopy, facsimile or other electronic transmission service to
the appropriate address or number set forth above.
VI.
CONFIDENTIALITY
---------------
For the purposes of this Agreement, the term "Confidential Information" shall
include any geological, geophysical, engineering, technical, production test,
exploratory, or reservoir information, or any logs or other information
delivered to Farmors by Farmee pursuant to Article IV above and any information
that Farmors will provide to Farmee. Confidential Information shall be the
property of the Parties and shall be maintained by Farmee and Farmors as
confidential for a period of two (2) years from the effective date of this
Agreement or until such information is made public by a governmental authority,
or unless all Parties agree in writing to a lesser period of time. The
obligation of each Party to protect Confidential Information shall be considered
met by using at least the same degree of care as it uses in protecting its own
proprietary materials of like kind.
Exceptions. The Parties shall not have any obligation to limit disclosure or use
of any portion of Confidential Information which:
(a) is already in a Party's possession prior to receipt hereunder;
(b) is now in or hereafter becomes publicly available through no fault of
the receiving party;
(c) is disclosed to the Party without obligation of confidence by a third
party which has the right to make such disclosure; or
(d) is independently developed by or for the receiving Party without
reference to Confidential Information received under this Agreement.
Limited Disclosure. Notwithstanding any other provision of this Agreement,
either Party may make Confidential Information available to third parties
without the consent of the other Party as follows:
(a) To a consultant or engineering firm for hydrocarbon reserve or other
technical evaluation, analysis or interpretation or for reprocessing
for the Parties, provided that such consultant or engineering firm is
Page 6 of 11
is not allowed to retain a copy of the Confidential Information after
completion of its services and agrees in writing to treat it as
confidential.
(b) To show, but not provide copies thereto, a third party with which (i)
such Party hereto is negotiating the sale of its interest, or part
thereof, under this Agreement and/or its working interest in the Joint
Development Area; or (ii) such Party hereto is negotiating a possible
merger or consolidation or sale of its business operations, including
this Agreement or any asset or interest relating to this Agreement;
provided that such third party or parties agree in writing to hold all
such Confidential Information in confidence. In the event of
completion of a transaction contemplated by this paragraph, a copy of
all Confidential Information may be provided to the successor in
interest of such Party and such Party may also retain copies of the
Confidential Information with all the rights and obligations which it
had prior to the completion of the transaction.
(c) To show, but not provide copies thereof, to any third party or parties
with which it is negotiating an agreement relating to the development,
including transportation or sale, of minerals in, on or under any
region which is geologically related to the area described in the JDA.
d) To show and provide copies of the Confidential Information to an
affiliate provided that such affiliate agrees to be bound by the
confidentiality provisions of this Agreement. For the purpose of this
Agreement "Affiliate", means any company or legal entity that (i)
controls the receiving party either directly or indirectly, or (ii)
the receiving party controls either directly or indirectly, or (iii)
is directly or indirectly controlled by a company or legal entity
which also directly or indirectly controls the receiving party.
"Control" means the right to exercise more than the 50% of voting
rights of a company or entity.
(e) To show the Confidential Information to and provide copies thereof to
agencies of federal and/or state governments having jurisdiction, to
the extent required by applicable law, rule or regulation, provided
that such Party shall promptly advise the other Party of each request,
demand, order, etc. for the Confidential Information, to whom
disclosure is to be made, and the law, rule or regulation requiring
disclosure, and shall take all actions and assist in taking all
actions, as permitted by such laws, rules and regulations and as
advised by its legal counsel to object to such disclosure and to
require the confidential treatment of the Confidential Information
which must be disclosed.
VII
INSURANCE
---------
During the term of this Agreement, Farmee shall acquire and maintain at least
the minimum levels of insurance coverage set forth on Exhibit "B", Insurance
Requirement, which is attached to and made a part of this Agreement. Farmee
shall, upon request, provide Farmors with a Certificate of Insurance stating
those minimum levels of insurance coverage.
VIII.
INDEMNITIES
-----------
A. Farmee agrees to (i) maintain the El Paso Lease free of, and (ii) RELEASE,
DEFEND, INDEMNIFY and HOLD HARMLESS Farmor Group (as herein defined) from
Page 7 of 11
and against, any and all debts, charges, liens or other like encumbrances
associated with Farmee's operations under this Agreement. Farmee shall
RELEASE, DEFEND, INDEMNIFY, and HOLD HARMLESS Eni and Nexen, and their
respective parent, subsidiary and affiliated companies, its and their joint
owners, co-lessees, partners, joint venturers, and the officers, directors,
agents, consultants, insurers and employees of all of the foregoing
(individually and collectively referred to as the "Farmor Group") from and
against any and all claims, demands, causes of action and judgments of
whatsoever nature (together with all costs and fees in connection with
same) arising in favor of any person or entity (including Farmee, its
employees, each Farmor's employees and any other person or entity
whomsoever) for or on account of personal injury, death, or property
damage, incident to or arising out of Farmee's operations under this
Agreement and EXPRESSLY INCLUDING THE SOLE, JOINT OR CONCURRENT NEGLIGENCE,
FAULT OR STRICT LIABILITY, OF ANY MEMBER OF FARMOR GROUP, provided,
however, that in no event shall Farmee be liable under this paragraph for
any claims, demands, causes of action or judgments that are the result of
the gross negligence or willful misconduct of any member of any member of
the Farmor Group.
X. Xxx agrees to (i) maintain the Eni/Nexen Lease free of, and (ii) RELEASE,
DEFEND, INDEMNIFY and HOLD HARMLESS Farmee Group (as herein defined) from
and against, any and all debts, charges, liens or other like encumbrances
associated with operations conducted on or for the benefit of the Eni/Nexen
Lease by or for Eni or Nexen or their respective
predecessor(s)-in-interest. Farmors shall RELEASE, DEFEND, INDEMNIFY, and
HOLD HARMLESS Farmee, its parent, subsidiary and affiliated companies, its
and their joint owners, co-lessees, partners, joint venturers, and the
officers, directors, agents, consultants, insurers and employees of all of
the foregoing (individually and collectively referred to as the "Farmee
Group") from and against any and all claims, demands, causes of action and
judgments of whatsoever nature (together with all costs and fees in
connection with same) arising in favor of any party (including Farmors,
their employees, Xxxxxx's employees and any other party whomsoever) for or
on account of personal injury, death, or property damage, incident to or
arising in connection with operations by Farmors on the Eni/Nexen Lease,
and EXPRESSLY INCLUDING THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, FAULT OR
STRICT LIABILITY, OF FARMEE GROUP, provided, however, that in no event
shall Farmors be liable under this paragraph for any claims, demands,
causes of action or judgments that are the result of the gross negligence
or willful misconduct of any member of the Farmee Group. For avoidance of
doubt, Farmors' release, defense, indemnity and hold harmless obligations
herein do not apply to any operations conducted by Farmee.
IX.
ASSUMPTION OF LIABILITIES
-------------------------
It is understood that Farmee shall assume all duties, responsibilities and
liabilities in connection with all of its operations on the Joint Development
Area, including but not limited to their release, surrender, reversion, or from
any breach of any covenant or condition of this Agreement and that Farmee shall
perform all duties and make any and all filings and reports as necessary and
obtain all necessary permits in connection with the drilling and plugging and
abandoning of any well or xxxxx drilled under the terms of this Agreement and
Farmee does hereby agree to RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS Farmors
from and against any such duties, responsibilities and liabilities. Farmors
hereby consent to providing Farmee copies of permits and site data (including
Page 8 of 11
any shallow hazard surveys, bathymetry reports, and any soil boring reports in
return for Farmee reimbursing Farmors for their respective cost) if and when
available, subject to Article IV.
X.
SEVERAL LIABILITY
-----------------
The Parties hereby agree that the respective obligations and liabilities of the
Parties under this Agreement shall be several, not joint or collective, and each
Party shall be responsible for its own obligations and liabilities. Neither
Party shall be liable to the other for punitive, special or consequential
damages. It is not the intention of the Parties to create, nor shall this
Agreement be construed as creating, a mining or other partnership, agency or
association between the Parties or to render them liable as partners, agents or
associates.
XI.
COMPLIANCE WITH LAW
-------------------
Xxxxxx agrees to comply with all laws and regulations applicable to any
activities carried out by Farmee, under the provisions of this Agreement and any
amendments hereto. ALL OPERATIONS CONDUCTED HEREUNDER BY FARMEE SHALL BE SUBJECT
TO ALL VALID AND APPLICABLE LAWS, RULES, REGULATIONS AND ORDERS OF THE UNITED
STATES DEPARTMENT OF INTERIOR, MINERALS MANAGEMENT SERVICE. THIS AGREEMENT SHALL
OTHERWISE BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS
OF THE STATE OF LOUISIANA, EXCLUSIVE OF ANY PROVISIONS THAT WOULD DIRECT THE
APPLICATION OF THE SUBSTANTIVE LAW OF ANY OTHER JURISDICTION. In the event this
Agreement or such operations, or any part thereof, contemplated hereby are found
to be inconsistent with or contrary to any such laws, rules, regulations or
orders, the laws, rules, regulations or orders shall be deemed to control and
this Agreement shall be regarded as modified accordingly and as so modified
shall continue in full force and effect.
XII.
CONSENT TO ASSIGN
-----------------
Xxxxxx agrees that it will not assign, sublease or transfer, in whole or part,
any rights acquired under this Agreement, including and any interest in the
Eni/Nexen Lease, to which Farmee may become entitled without obtaining each
Farmor's prior written consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, Farmors hereby agree that Farmee shall have the
right to assign to any of its respective Affiliates, or to Ridgewood Energy
Corporation, subject to the terms of this Agreement but not otherwise. In any
such assignment, sublease or transfer, Farmee shall require its assignees,
sublessees, and transferees to expressly assume all obligations owed to either
or both Farmors under the terms of this Agreement, and all such pertinent terms
shall be incorporated into any and all future instruments translative of title.
Any assignment, sublease or transfer executed in contravention of this provision
shall be null and void
Notwithstanding the forgoing, neither Farmor shall be under any obligation to
recognize any assignment of this Agreement pursuant to the terms hereof and
Farmee shall remain fully liable to each Farmor for the performance of all
obligations required under this Agreement, until it has received from Farmee a
true and correct copy of same evidencing that assignee agreed to assume all
obligations owed to each or both Farmors under this Agreement and has otherwise
ratified this Agreement. This Agreement shall be binding upon and inure to the
Page 9 of 11
benefit of the Parties and their respective heirs, successors, representatives,
and assigns and shall constitute a covenant running with the leases.
Anything contained in this Agreement to the contrary notwithstanding, each
Farmor shall have the right, in its sole discretion, to assign to any of its
respective Affiliates or to any third party, from time to time, and in whole or
in part, its respective rights hereunder.
XIII.
FORCE MAJEURE
-------------
All obligations imposed by this Agreement on a Party, except for the payment of
money and providing of indemnification, shall be suspended and all periods of
time for exercising any rights hereunder shall be extended while compliance is
by such Party is prevented, in whole or in part by Force Majeure. For the
purpose of this Agreement "Force Majeure" includes but is not limited to, a
labor dispute, fire, flood, hurricane, war, civil disturbance, or terrorist act
or act of God; or prevention of performance by applicable laws, governmental
rules, regulations, or orders, or by governmental action or governmental delay;
or by any other cause, whether similar or dissimilar, beyond the reasonable
control of the said Party; provided, however, that performance shall be resumed
within a reasonable time after such cause has been removed; and provided further
that no Party shall be required against its will to settle any labor dispute.
Whenever a Party's obligations or rights are suspended or extended hereunder,
such Party shall immediately notify the other Party in writing, giving full
particulars of the reason for such suspension or extension, and such Party shall
thereafter diligently endeavor to remove or correct the cause of such Force
Majeure event as soon as reasonably possible.
XIV.
MISCELLANEOUS
-------------
A. Any overriding royalty interest, working interest, production payment, net
profits interest or other lease or interest burden that may be created
subsequent to the date of this Agreement, other than the overriding royalty
interest and/or for any other interest reserved by each Farmor under this
Agreement ("Excess Burdens"), shall be the sole responsibility and bore out
of the interest of the Party creating such burden.
B. Each Farmor, upon written notice to Farmee, shall have the right, for a
period of thirty six (36) months from the end of the calendar year in which
an overriding royalty interest disbursement is or should have been
received, to audit Xxxxxx's records of all proceeds, operating expenses and
any other data or information attributable to rights of that Farmor
pursuant to this Agreement.
C. This Agreement contains and comprises the entire agreement between the
Parties regarding the Joint Development Area and farmout of operating
rights in the JDA and supersedes any previous agreements, oral or written,
and negotiations or documents related thereto. Any amendments, changes or
modifications to the rights and obligations of the Parties hereto shall be
in writing and shall be effective only when agreed in writing by all
Parties.
D. The section headings used herein are for convenience only and shall not be
construed as having any substantive significance or as indicating that all
of the provisions of this Agreement relating to any particular topic are to
be found in any particular section.
Page 10 of 11
E. This Agreement may be executed in multiple, separate duplicate
counterparts. Each such counterpart hereof shall be considered an original
but all such counterparts together shall constitute one and the same
instrument. No original or counterpart shall be considered enforceable
until each Party has signed an original or a duplicate counterpart thereof.
If the foregoing terms and conditions are acceptable, please evidence your
agreement by executing and returning one (1) original copy of this Agreement to
the undersigned, whereupon, when executed by all Parties, the Agreement will be
effective as of the Effective Date.
Very truly yours,
FARMOR:
ENI DEEPWATER LLC
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Name: Xxxx X. Xxxxxxxx
Title: Land Manager Gulf of Mexico
NEXEN PETROLEUM OFFSHORE U.S.A. INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
AGREED TO AND ACCEPTED THIS
THE 26th DAY OF APRIL, 2006.
FARMEE:
EL PASO PRODUCTION COMPANY
By: /s/ Xx X. Xxxxxxxx [SEAL]
------------------
Name: Xx X. Xxxxxxxx
Title: Vice President
Page 11 of 11
EXHIBIT "A-1"
Made a part of that certain Farmout Agreement dated effective April 18, 2006, by
and between Eni Deepwater LLC and Nexen Petroleum Offshore U.S.A. Inc.,
individually as Farmor and collectively as Farmors, and El Paso Production
Company, as Farmee.
ENI DEEPWATER'S GEOLOGICAL REQUIREMENTS
---------------------------------------
Please send the below listed items in the quantities specified to the following
Address:
Eni Deepwater LLC
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx
Geological Well Program and Drilling Program: 1
Copy of Certified Well Location Plat: 1
Federal Reports (MMS - XXX, APD completion reports etc.: 1
Reports Transmission from Rig:
------------------------------
A. Mud logs, show reports, mud logger report, mud logs data, xxxxxx plots,
QFT mud additives report, MWD/
LWD logs and reports, and directional data reports;
Fax: (000) 000-0000 attention: Xxxxxx Xxxxx
e-mail: xxxxxx.xxxxx@xxxxxxxxxxxx.xxx
xxxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
B. Daily Drilling Reports
Week Days Weekend
Fax: (000) 000-0000 000-000-0000
attention: Xxxxxxx Xxxxxxx
Week Days/Weekend/Holidays
email: xxxxxx.xxxxx@xxxxxxxxxxxx.xxx
xxxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
xxxxxxx.xxxxxxxxx@xxxxxxxxxxxx.xxx
Wireline Logging Data Transmission from Rig:
--------------------------------------------
Logs; Fax: (000) 000-0000 attention: Xxxxxx Xxxxx
Electronic digital data transfer
e-mail on internet drop box location. e-mail: xxxxxx.xxxxx@xxxxxxxxxxxx.xxx
e-mail: xxxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
e-mail: xxxxxxxx.xxxxxxxxxx@xxxxxxxxxxxx.xxx
Other Special Requests:
-----------------------
Digital Log Data (Wireline and Logging While Drilling) should be available for
file transfer via internet (either e-mail or drop box).
Page 12 of 11
Digital Mud Logging Data (daily) should be available in .xls format for file
transfer via internet to Xxxxxx Xxxxx:
e-mail: xxxxxx.xxxxx@xxxxxxxxxxxx.xxx
Total Gas and Gas Chromatograph measured in ppm
Advance notice on Geological Operations:
----------------------------------------
24 hours advance notice is required prior to performing logging, coring, testing
operations and recommendations to set casing or P&A the well. Notify Xxxxxx
Xxxxx with these recommendations.
Contact Numbers:
----------------
Switchboard: (000) 000-0000 Telefax: (000) 000-0000
Contacts for Geological Operations and Petrophysics:
Office Home
Name Phone Phone Home Fax Pager Cell Phone
---- ----- ----- -------- ----- ----------
Xxxxxx Xxxxx (000)000-0000 (000)000-0000
Xxxxxxx Xxxxxxx (000)000-0000 (000)000-0000 (000)000-0000 (000)000-0000 (000)000-0000
Digital Log Data Transmission: e-mail Address Files
Xxxxxxxx Xxxxxxxxxx xxxxxxxx.xxxxxxxxxx@xxxxxxxxxxxx.xxx Wireline and LWD LAS
Xxxxxx Luise xxxxxx.xxxxx@xxxxxxxxxxxx.xxx Wireline and PDS/LAS
Well Data -- Paper:
=======================================================================================================================
Surveys Field Prints Final Fax Sepias
Prints
-----------------------------------------------------------------------------------------------------------------------
Primary log (GR/Resistivity/ Acoustic Logs -or triple 2 2 1
combo etc.)
-----------------------------------------------------------------------------------------------------------------------
Nuclear logging tools/porosity logs 2 2 1
-----------------------------------------------------------------------------------------------------------------------
Dipmeter /Borehole imaging logs 2 2
-----------------------------------------------------------------------------------------------------------------------
Nuclear Magnetic Resonance logs 2 2
-----------------------------------------------------------------------------------------------------------------------
Reservoir sampling tools/RFTs 2 2 Summary
Table
-----------------------------------------------------------------------------------------------------------------------
Other logging surveys 2 2 1
-----------------------------------------------------------------------------------------------------------------------
Velocity Survey 2 1 1
-----------------------------------------------------------------------------------------------------------------------
Core Analysis 2 2 1
-----------------------------------------------------------------------------------------------------------------------
Directional Surveys 2 2 1
-----------------------------------------------------------------------------------------------------------------------
MWD/LWD Logs 2 2 1
-----------------------------------------------------------------------------------------------------------------------
Mud Logs 2 2 1
-----------------------------------------------------------------------------------------------------------------------
Paleontological Reports 1 2 1
-----------------------------------------------------------------------------------------------------------------------
Production Test Reports 2 2 1
-----------------------------------------------------------------------------------------------------------------------
PVT Test Reports 2 2 1
=======================================================================================================================
Page 13 of 11
Well Data -- Paper:
=======================================================================================================================
Surveys Field Prints Final Fax Sepias
Prints
-----------------------------------------------------------------------------------------------------------------------
Cased Hole Logs
-----------------------------------------------------------------------------------------------------------------------
Cement Evaluation Logs 1 2 1
-----------------------------------------------------------------------------------------------------------------------
Cased Hole RFTs 1 2 1
-----------------------------------------------------------------------------------------------------------------------
Through Casing Formation Evaluation Logs 1 2 1
=======================================================================================================================
Well Data -- Digits:
===============================================================================================================================
Preleminary Final Survey Data.
===============================================================================================================================
Surveys Data Transfer
Format Edited Medium Format
Open Hole Library
-------------------------------------------------------------------------------------------------------------------------------
Wireline Logs
Primary log ( GR/Resistivity/ Acoustic Files e-mail or LAS/PDS 1 CD ROM LAS
Logs -or triple combo etc.) drop box
-------------------------------------------------------------------------------------------------------------------------------
Nuclear logging tools / porosity logs Files e-mail or LAS/PDS 1 CD ROM LAS
drop box
-------------------------------------------------------------------------------------------------------------------------------
Dipmeter / Borehole imaging logs Files e-mail or PDS 1 CD ROM LAS
drop box
-------------------------------------------------------------------------------------------------------------------------------
Nuclear Magnetic Resonance logs PDS 1 CD ROM LAS
3.5"
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Reservoir sampling tools / RFTs e-mail or fax Excel 1 3.5" LAS
summary Floppy
-------------------------------------------------------------------------------------------------------------------------------
Other logging surveys Files e-mail or LAS/PDS 1 CD ROM LAS
drop box
-------------------------------------------------------------------------------------------------------------------------------
Cased Hole logs e-mail or drop LAS 1 CD ROM LAS
box
-------------------------------------------------------------------------------------------------------------------------------
Pulsed Neutron logs e-mail or drop LAS CD ROM LAS
box
-------------------------------------------------------------------------------------------------------------------------------
Mechanical Service Logs e-mail or drop LAS/PDS CD ROM LAS
box
-------------------------------------------------------------------------------------------------------------------------------
Pipe Recovery Logs e-mail or drop LAS/PDS CD ROM LAS
box
-------------------------------------------------------------------------------------------------------------------------------
Velocity Survey e-mail Excel 2 CD ROM Excel
===============================================================================================================================
Page 14 of 11
-------------------------------------------------------------------------------------------------------------------------------
Core Analysis 3.5" Excel
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Directional Surveys e-mail Excel 1 3.5" Excel
Floppy
-------------------------------------------------------------------------------------------------------------------------------
MWD/LWD Logs e-mail LAS 1 CD ROM LAS
-------------------------------------------------------------------------------------------------------------------------------
Mud Logs e-mail LAS 1 3.5" LAS
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Mud Logging Data e-mail Excel 1 3.5" LAS
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Paleontological Reports e-mail Excel 1 3.5" Excel
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Production Test Reports Excel 1 3.5" Excel
Floppy
-------------------------------------------------------------------------------------------------------------------------------
PVT Test Reports Excel 1 3.5" Excel
Floppy
-------------------------------------------------------------------------------------------------------------------------------
Geochemical Analysis Files e-mail Excel 1 3.5" Excel
Floppy
===============================================================================================================================
H:\wpdata\operate\San Xxxxxxxx\wldatreg.doc
CUTTINGS
1 Set unwashed to:
Xxxxxxxxx & Associates, Inc.
0000 Xxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attn: X. Xxxxx Xxxxxxxx
000-000-0000
Page 15 of 11
EXHIBIT "A-2"
Made a part of that certain Farmout Agreement dated effective April 18, 2006, by
and between Eni Deepwater LLC, and Nexen Petroleum Offshore U.S.A. Inc.,
individually as Farmor and collectively as Farmors, and El Paso Production
Company, as Farmee
NEXEN PETROLUEM OFFSHORE'S GEOLOGICAL REQUIREMENTS
--------------------------------------------------
A. Introduction
---------------
The following instructions are for the distribution of the data from the
Prospect Name #1 operations. Contact Xxxx Xxxxxx (xxxx_xxxxxx@xxxxxxxx.xxx) if
any clarification is required.
B. Pre-Drilling
---------------
B.1.1 Engineering Data
Copies of the following information should be sent to the attention of Xxxxxx
Xxxxxxx in our Engineering Department.
Location Plat
Drilling Permit
Well Program and Prognosis
Drilling Contract
E-mail: xxxxxx_xxxxxxx@xxxxxxxx.xxx or
Fax: Xxxxxx Xxxxxxx Server: 000-000-0000 Alternate 000-000-0000
Phone: 000-000-0000
B.1.2 Formation Evaluation Data
Copies of the following information should be sent to attention of Xxxx Xxxxxx
in our Exploration Department
Well Program and prognosis
Days vs. Depth and Cost vs. Depth graph and spreadsheet
Proposed Well Bore Schematic w/ evaluation plan summary
E-mail: xxxx_xxxxxx@xxxxxxxx.xxx
Phone: 000-000-0000
C. Daily Distribution
---------------------
C.1.1 All Daily Digital Data
All daily digital data, including all surveys, logs, LAS files, reports and
correspondence, to be copied to a vendor secure data distribution site and/or
Emailed to Prospect Xxxx@xxxxxxxx.xxx; xxxx_xxxxxx@xxxxxxxx.xxx;
Page 16 of 11
xxxxx_xxxxxxxxxx@xxxxxxxx.xxx; xxxxx_xxxxxxx@xxxxxxxx.xxx; xxxxxxxx@xxxxxx.xxx
by 8:00 a.m.
C.1.2 Digital Data - Real Time Mudlogging, Wireline and LWD Data
Please set up key Nexen personnel with Vendor's secure site. Cleared personnel
are listed on page 5.
C.1.3 Mudlogging, Wireline and LWD Data
Field data in Graphics files and LAS format Version 2.0 should be provided by
vendor on their secure site.
Mudlogging data should include lithology percents. Graphic file formats
compatible to Nexen include: *.emf, *.ps (post script), *.tif, *.PDF, *.PDS
(Schlumberger), *CGM (Xxxxx Atlas). Digital File formats include: *.asc (ASCII),
*.LAS (Vers 2.0), *.DLIS (Schlumberger)
Printers: Itera Elite page width 8.5", Epson 1520 page width 8.5", HP Designjet
800ps page width 9.25"
D. Cuttings Samples
-------------------
Collect 1 set of wet samples, over interval to be specified by operator, to TD
of the well. Catch samples at 30' intervals. If operator are sending samples to
Xxxxxxxxx, Xxxxx are agreeable with sending one larger sample for Xxxxxxxxx to
process and split. All samples are to be sent to:
Xxxxxxxxx & Associates
0000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(000) 000-0000
Shipping Notes
Clearly label each sample bag, using indelible ink as follows:
"Prospect Name #1 Block Name along with the DEPTH INTERVAL (MD from
KB).
On a separate document, provide a listing of measured depth and
corresponding TVD for the bagged samples. Label samples from bypass or
sidetrack hole sections as appropriate. Before shipment, samples are
to be isolated (by use of tightly sealed plastic bags or some other
suitable container) to prevent damage by leaking drilling fluid.
Page 17 of 11
E. Pressure Points, Fluids, Whole Core and SWC
----------------------------------------------
Pressure, fluid, SWC and whole core sample points and analysis to be discussed
with Nexen geologist. Access given to data posted on analysis company's
websites.
F. Contact Information
----------------------
All data for Nexen unless otherwise stated should be sent to Nexen Operations
Geologist.
Nexen Petroleum Offshore U.S.A. Inc.
Attn: Xxxx Xxxxxx
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
*Geological representative should be notified as to upcoming coring, logging, or
testing procedures.
*Engineering representatives should be notified as to upcoming testing,
completion or abandonment decisions.
G. End of Well
--------------
Deliver the following data within 10 working days of the final run.
--------------------------------------------------------------------------------
Final Distribution and Number of Copies
--------------------------------------------------------------------------------
Nexen
--------------------------------------------------------------------------------
MWD
--------------------------------------------------------------------------------
Standard Composite LWD Color Prints of all 3
field and computing center logs
1" and 5" MD and TVD
--------------------------------------------------------------------------------
Final Directional Survey - Hard Co 2
--------------------------------------------------------------------------------
Well Summary Report - Form MMS-125 1
Item 77
--------------------------------------------------------------------------------
End of Well Report 2
--------------------------------------------------------------------------------
Final well report in word or pdf format 1
Final Digital Data -- LAS, ASCII, DLIS format
and graphics files CDROM
--------------------------------------------------------------------------------
Final Digital Directional Survey - CDROM 1
w/ final directional survey in MMS format
--------------------------------------------------------------------------------
Page 18 of 11
MUDLOGGING
--------------------------------------------------------------------------------
1" MD Combo Log to TD 3
--------------------------------------------------------------------------------
1" TVD Combo Log to TD 3
--------------------------------------------------------------------------------
5" MD Combo Log to TD 3
--------------------------------------------------------------------------------
5" Detail Show Log 3
--------------------------------------------------------------------------------
1" Drilling Eng. Log 3
--------------------------------------------------------------------------------
1" = 1000' Pressure Log 3
--------------------------------------------------------------------------------
2
Final Report
--------------------------------------------------------------------------------
Final Digital Data -- Final Report in word or pdf 1
format LAS and ASCII format and graphics files
CDROM
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WIRELINE LOGGING
--------------------------------------------------------------------------------
Standard Composite Wireline Log Color Prints of 3
all field and computing center logs (including all
computing center processing) 1" and 5" MD and TVD
if applicable)
--------------------------------------------------------------------------------
Final Digital Data 1
(all wireline customer data and computing center
processing )
LAS, ASCII, DLIS format and graphics files
DVD/CDROM
--------------------------------------------------------------------------------
Check Shot Survey - VSP report and DVD/CDROM 1
--------------------------------------------------------------------------------
Deliver as available
--------------------------------------------------------------------------------
Paleontology, Geochemistry, Fluid, SWC and Whole Core
Analysis
--------------------------------------------------------------------------------
Hard copy of interim and final reports 2
--------------------------------------------------------------------------------
Final Digital Data - Final Report in word or pdf 1
format .xls LAS and ASCII format and graphics
files CDROM
--------------------------------------------------------------------------------
Page 19 of 11
X. Xxxxx Authorized Access and Contact Information for the Prospect Name #1
well:
-------------------------------------------------------------------------------------------------------------------
NEXEN PETROLEUM U.S.A.
00000 Xxxxx Xxxxx,
Xxxxx 000
Xxxxxx, XX 00000
Main No. 000-000-0000
Main Fax No. 000-000-0000
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Title Office HOME CELL
-------------------------------------------------------------------------------------------------------------------
Primary Contact
Xxxx Xxxxxx Operations 972-450- 972-985- 214-208-
xxxx_xxxxxx@xxxxxxxx.xxx Geologist 4419 1595 0083
-------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx
xxxxx_xxxxxxx@xxxxxxxx.xxx Project Geologist 000-000-0000 000-000-0000 000-000-0000
xxxxxxxx@xxxxxx.xxx
-------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxxxxxx
xx_xxxxxxxxxxx@xxxxxxxx.xxx Project Geophysicist 000-000-0000 000-000-0000
xxxx@xxxxxxx.xxx
-------------------------------------------------------------------------------------------------------------------
Xxxxx XxXxxxxxxx Project Reservoir 000-000-0000 000-000-0000 000-000-0000
xxxxx_xxxxxxxxxx@xxxxxxxx.xxx Engineer
-------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx Exploration 000-000-0000 000-000-0000 000-000-0000
xxxx_xxxxxxx@xxxxxxxx.xxx Manager
-------------------------------------------------------------------------------------------------------------------
Xxxxx_Xxxxxxxxxxxx Exploration VP 000-000-0000 000-000-0000 000-000-0000
xxxxx_xxxxxxxxxxxx@xxxxxxxx.xxx
-------------------------------------------------------------------------------------------------------------------
Xxx Xxxxxx Drilling manager 000-000-0000 000-000-0000 000-000-0000
xxxxxx_xxxxxx@xxxxxxxx.xxx
-------------------------------------------------------------------------------------------------------------------
xxxx_xxxxxx@xxxxxxxx.xxx; xxxxx_xxxxxxx@xxxxxxxx.xxx; xxxxxxxx@xxxxxx.xxx;
xx_xxxxxxxxxxx@xxxxxxxx.xxx; xxxx@xxxxxxx.xxx; xxxx_xxxxxxx@xxxxxxxx.xxx;
xxxxxx_xxxxxx@xxxxxxxx.xxx; xxxxx_xxxxxxxxxxxx@xxxxxxxx.xxx; Prospect Name@
xxxxxxxx.xxx
-------------------------------------------------------------------------------------------------------------------
Page 20 of 11
EXHIBIT "B"
Made a part of that certain Farmout Agreement dated effective April 18, 2006, by
and between Eni Deepwater LLC and Nexen Petroleum Offshore U.S.A. Inc.,
individually as Farmor and collectively as Farmors, and El Paso Production
Company, as Farmee.
Insurance
---------
A. At all times while operations are being conducted hereunder, FARMEE shall
provide or cause to be provided (as to its interest and rights hereunder)
the following types of insurance:
1. Worker's Compensation: Such insurance shall be in full compliance with
the law in the. state where the work is to take place. Where
applicable, coverage shall also be provided to comply with the:
a. U.S. Longshoremen's and Harbor Worker's Compensation Act, and the
b. Outer Continental Shelf Lands Act.
It is agreed that FARMEE, to the extent permitted by the laws in the
state or jurisdiction where the work is to take place, shall have the
option to self-insure all or any portion of the Worker's Compensation
exposures arising out of operations conducted hereunder.
2. Employer's Liability: Such insurance shall have a limit of liability
of $1,000,000 per accident and shall be endorsed, where applicable, to
provide:
a. All necessary Maritime coverage including transportation
wages, maintenances and cure.
b. A claim "in rem" will be treated as a claim "in personam".
3. Comprehensive General Liability: Such insurance shall have the
following limits of liability:
a. Bodily Injury - $1,000,000 per person/$5,000,000 per
occurrence.
b. Property Damage - $1,000,000 per occurrence/$ 10,000,000
aggregate.
c. Such insurance shall be primary as to other insurance
available to FARMEE.
4. Blanket Charterers' Legal Liability: Such insurance shall have a limit
of liability of not less than $1,000,000.
5. Seepage and Pollution Insurance: Such insurance shall be in the
minimum amount as may be required from time to time for seepage and
pollution coverage in compliance with the OCSLA 1978 requirements and
the Oil Pollution Act of 1990.
6. Control of Well Insurance: Such insurance shall be in the minimum
amount of $20,000,000 for the total loss of a well.
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7. Umbrella Liability Insurance: Such insurance shall be in the amount of
$25,000,000, excess of all primary limits, covered by Items 1 through
6.
8. Financial Responsibility: To the extent required upon the effective
date of the regulations implementing the Oil Pollution Act of 1990
that mandates a certificate of financial responsibility in the amount
as may be required for the owner operator of an offshore facility, the
FARMEE will obtain and provide any such certificate to the government.
9. In each of the above described policies, XXXXXX agrees to waive and
agrees to have its insurers waive any rights of subrogation they may
have against either FARMOR, or their respective parents, affiliated
companies, joint-owners, non-operators, and their officers, directors,
employees, or agents or any of them and their respective underwriters.
It is further agreed that each such policy, other than Workers'
Compensation and Control of Well policies, shall name ENI and NEXEN
and their respective parents and affiliated companies as Additional
Insureds. ENI and Nexen shall be named as loss payees as respects to
the Control of Well policy. FARMEE shall be solely responsible for
deductibles required under such policies, and FARMEE shall not under
any circumstances call upon ENI or NEXEN for payment of such
deductibles and FARMEE shall defend, indemnify and hold ENI and NEXEN,
and their respective parents and affiliated companies and
joint-owners, and their officers, directors, employees and agents from
and against any and all claims, demands, causes of action or suits
with respect to such deductibles, regardless of the cause or the
reasons for or howsoever occurring, AND EVEN IF AS A RESULT OF THE
NEGLIGENCE IN WHOLE OR IN PART OF EITHER ENI OR NEXEN, OR THEIR
RESPECTIVE PARENTS AND AFFILIATED COMPANIES.
10. FARMEE shall submit certificates of insurance to each Farmor
reflecting satisfaction of the foregoing requirements within ten (10)
days before commencing to drill the Test Well.
B FARMEE shall require its contractors and subcontractors or third parties
performing work on Lease to provide such insurance as is reasonable and
consistent with the foregoing requirements and industry standards in
relation to the work to be performed by said contractors, subcontractors or
third parties.
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