EXHIBIT 10.22
JOINT STUDY AGREEMENT
BETWEEN
PETROCHINA COMPANY LIMITED
AND
SUNWING ENERGY LTD.
TO CONDUCT
A JOINT FEASIBILITY STUDY
OF THE ZITONGXI AND ZITONGDONG BLOCKS
IN NORTHWESTERN SICHUAN
FOR THE PURPOSES OF
ENTERING INTO PRODUCTION SHARING CONTRACTS
JOINT STUDY AGREEMENT
BETWEEN
PETROCHINA COMPANY LIMITED
AND
SUNWING ENERGY LTD.
TO CONDUCT
A JOINT FEASIBILITY STUDY
OF THE ZITONGXI AND ZITONGDONG BLOCKS
IN NORTHWESTERN SICHUAN
FOR THE PURPOSES OF
ENTERING INTO PRODUCTION SHARING CONTRACTS
Sunwing Energy Ltd. (Sunwing) sent a team of technical experts to visit the
Southwest Oil and Gasfield Company (SWOG) in Chengdu, Sichuan in November 2000.
SWOG is a subsidiary of PetroChina Company Limited (PetroChina). Technical
experts from SWOG presented overviews on the potential of six (6) natural gas
and oil exploration/development blocks. After further evaluation of the
preliminary data presented to Sunwing, Sunwing has recommended to PetroChina
that further detailed studies of the Zitongxi and Zitongdong blocks are required
prior to entering into any negotiations of a Production Sharing Contract(s).
Following additional discussion in January and February 2001, XxxxxXxxxx and
Sunwing have agreed to sign this Joint Study Agreement (JSA).
ARTICLE 1 - OBJECTIVE
Sunwing and PetroChina will form a Joint Study Team (Study Team) and will
cooperate diligently to carry out the Joint Feasibility Study (JFS) to confirm
the geophysical and geological model of the area, to estimate the ultimate
natural gas and oil potential of the area, to evaluate improved drilling
technology, to evaluate completion and stimulation solutions to improve gas and
oil recovery and establish economic criteria for a potential development.
The Study Team will prepare interim progress reports and a final report
recommending either onward work programs on one or both blocks or no further
activity on one or both of the blocks. The purpose of conducting the JFS is to
study the natural gas and oil reserve potentials associated with these blocks
and if considered feasible, a Production Sharing Contract or Contracts would be
entered into between PetroChina and Sunwing.
ARTICLE 2 - WORK SCHEDULE AND SCOPE OF STUDY AND TECHNICAL REQUIREMENTS
1. Sunwing will send a team of technical experts to the SWOG Chengdu office to
review relevant data and will travel to the actual block sites to observe
and review infrastructure and topography of the area.
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2. Following receipt of the entire data package, Sunwing will sort and
catalogue such data as to enable efficient onward retrieval and technical
use of the data during the JFS.
3. The Study f&am will complete the JFS within six (6) months upon finalizing
the cataloging of the data package. At the end of the JFS, the Study Team
will submit the final detail report to both XxxxxXxxxx and Sunwing.
4. Main studies and technical requirements.
During the JFS, the Study Team will prepare a study report, which shall
include but not be limited to the following:
o identify geological structures with significant exploration prospects
by using the available seismic and geological data. This may involve
the reprocessing of some of the available seismic data.
o Evaluate fields within the block boundaries in order to develop a
description of the reservoir and fluid properties that would most
likely be encountered in the exploration prospects.
o Determine the hydrocarbon in place and reserves for each of the
exploration prospects.
o Analyze the test data and production data from fields within the block
boundaries and develop a production forecast for each prospect.
o Evaluate drilling and completion techniques to be employed to best
exploit these prospects.
o Prepare capital cost estimates for drilling, completion, and
facilities, and prepare operating cost estimates. These cost estimates
will be used for economic evaluations.
o Conduct economic evaluations for each prospect.
o Rank the prospects according to the economic parameters and risk.
o Prepare a final study report that includes a proposed work program
complete with an economic analysis of the program.
5. The data package that PetroChina should provide to Sunwing includes but is
not limited to the following data for each block:
o Coordinates of proposed block area including exclusion areas for
existing gasfields, oilfields and other man made structures
o Surface infrastructure map including roads and villages
x Xxxxxxxx Anomaly map
o Gravity map
o Magnetic Anomaly map
o Map summarizing exploration activity within the block
o Composite columnar cross section to 4500 meters
o Topographic maps, current structure maps, basement burial depth maps,
current top of reservoir structure maps and surface oilfield facility
maps
o Geographic and geology maps of existing fields
o Map showing location of seismic lines
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o Detailed seismic lines including digital data from digitally recorded
lines
o Seismic cross sections
o Complete drilling well histories in each producing gasfield, including
daily reports, bit records, drilling fluids, etc.
o Access to complete drilling well histories of all other xxxxx drilled
in the proposed blocks
o Complete electric well log data (in digital form where available)
o All core data, representative core samples, core analysis reports and
relative permeability data
o Completion and stimulation data on existing xxxxx
o Formation pressure data and temperature data/logs
o All water, gas composition analysis
o AOF test data and deliverability test data on the existing xxxxx
o Copies of existing seismic or geological reports on each block
o Statistical data or reports for seismic, geology and drilling
6. Estimated Work schedule following receipt of the complete data package by
Sunwing:
o Upon receipt of the data package, Sunwing's staff will catalogue all
data.
o During the next six months, the Study Team will carry out the JFS
under terms of the JSA, and xxxx prepare and present a written, final
report to XxxxxXxxxx and Sunwing. During the term of the JFS, the
Study Team will present interim progress reports after two and
four-month periods to PetroChina and Sunwing. The Study Team will also
be responsible for preparing an economic evaluation.
7. In order to facilitate the JFS, Sunwing will invite at its expense, the
following experts (as required) to either its Calgary or Bakersfield
office:
Senior Geologist
Senior Geophysicist
Senior Reservoir Engineer
Senior Log Analyst
Senior Drilling Engineer
Senior Operations/Production Engineer
Senior Economist
Translator
ARTICLE 3 - RIGHTS AND OBLIGATIONS OF THE PARTIES
1. Based on this agreement, XxxxxXxxxx's rights and obligations include but
are not limited to the following:
1.1. Participate in all the studies as provided for in this agreement.
1.2. Provide assistance to Sunwing to obtain necessary permits and
approvals for the JFS.
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1.3. Provide or assist to provide necessary and appropriate data pertinent
to the JFS, including data in PetroChina possession or data in the
hands of other government organizations necessary for the JFS if it is
available.
1.4. Provide technical experts to help conduct the JFS. Priority is to
provide technical experts who will likely participate in this program
and the execution phase of any future Production Sharing Contract(s).
1.5. Within two (2) months after XxxxxXxxxx has accepted the feasibility
study report from Sunwing, both parties will commence negotiations on
a Production Sharing Contract(s).
2. Based on this agreement, Sunwing's rights and obligations include but are
not limited to the following:
2.1. Sunwing shall pay a data package fee of one hundred and eighty
thousand US Dollars (US$l80,000) to CCAD (the official authority in
charge of onshore Sino-foreign cooperation as authorized by
XxxxxXxxxx) for data as outlined in Article 2 Clause 5 of this
agreement.
The payment will be made in three (3) installments.
o The first installment one hundred and five thousand US Dollars
(US$105,000) shall be paid within thirty (30) days upon signing
of this Agreement.
o The second installment thirty-five thousand US Dollars
(US$35,000) shall be paid within thirty (30) days upon receipt of
the data package.
o The third installment forty thousand US Dollars (US$40,000) shall
be paid within thirty (30) days upon expiration of the Study
period.
2.2. Apply the appropriate advanced technology as commonly practiced in
the international oil community in conducting the JFS.
2.3. Provide the necessary technical experts to work on the JFS.
2.4. Carry out the data analysis and processing as approved in the study
plan.
2.5. Bear all costs related to the JFS, including the cost of data
acquisition, the costs associated with the business expenses incurred
by PetroChina personnel (including international travel and
accommodation and related business expenses) assigned to the Study
Team and costs incurred for travel and travel related business
expenses for the Study Team while in China, Calgary or Bakersfield.
2.6. Unless otherwise agreed to by the Parties in writing, for a period of
nine (9) months from the signing of this JSA, Sunwing will have the
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exclusive right to negotiate with PetroChina for Production Sharing
Contracts in these two blocks.
ARTICLE 4 - CONFIDENTIALITY
1. All data provided by PetroChina and/or other government organizations to
Sunwing are confidential. The data cannot be transferred, presented as
gift, sold, published or made public without the written approval from
PetroChina or other government organizations. Sunwing will not provide the
data to any third party except for consultants hired by Sunwing for the
purposes of completing or auditing the JFS and only after they sign a
non-disclosure agreement.
2. Without approval from the other party, PetroChina or Sunwing shall not
provide the results of this Study to any third party other than their
affiliated companies.
3. The above confidentiality of this agreement will remain effective after the
expiration of this agreement.
ARTICLE 5 - Others
1. This agreement is under the jurisdiction of the laws of the People's
Republic of China.
2. This agreement is written and signed in both Chinese and English, and they
have equal force and effect.
3. Contact address of the parties:
PetroChina Company Limited Sunwing Energy Ltd.
World Tower, #I6 Ande Road, Room 1928, China World Trade
Dongcheng District Center, #I Jianguomenwei Dajie,
Beijing 100011 Beijing 100004
/s/ Zeng Xing/Xxx /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------- -------------------------------
Xxxx Xxxx\Xxx, Xxxxxx X. Xxxxxxxxx,
General Manager Co-Chairman
Foreign Cooperation Administration Sunwing Energy Ltd.
Department
PetroChina Company Limited
Date: 29-03-2001 Date: March 29, 2001
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