---------------------------------------------------
---------------------------------------------
AGREEMENT BETWEEN
THE MEREENIE PRODUCERS
and
THE PALM VALLEY PRODUCERS
---------------------------------------------
---------------------------------------------------
XXXXXXXX XxXXX XXXXX & XXXXXX
SOLICITORS & NOTARIES
000 XXXXX XXXXXX
XXXXXXXX
AGREEMENT BETWEEN
THE MEREENIE PRODUCERS
and
THE PALM VALLEY PRODUCERS
AGREEMENT made the 28th day of June, 1985
BETWEEN:
MAGELLAN PETROLEUM (N.T.) PTY. LTD.
the Party of the First Part
UNITED OIL & GAS CO. (N.T.) PTY. LTD.
the Party of the Second Part
CANSO RESOURCES LIMITED
the Party of the Third Part
OILMIN NL
the Party of the Fourth Part
PETROMIN NO LIABILITY
the Party of the Fifth Part
TRANSOIL NO LIABILITY
the Party of the Sixth Part
FARMOUT DRILLERS NL
the Party of the Seventh Part
C.D. RESOURCES PTY. LTD.
the Party of the Eighth Part
INTERNATIONAL OIL PROPRIETARY
the Party of the Ninth Part
PANCONTINENTAL PETROLEUM LIMITED
the Party of the Tenth Part
IEDC AUSTRALIA PTY. LIMITED
the Party of the Eleventh Part
AMADEUS OIL NL
the Party of the Twelfth Part
SOUTHERN ALLOYS VENTURE PTY. LIMITED
the Party of the Thirteenth Part
W H E R E A S:
A. The Palm Valley Producers have negotiated the terms of an agreement for
the sale by them severally to Gasgo Pty. Limited ("the Purchaser") of a
quantity of Gas from the Palm Valley Field for transmission through the
Trunk Pipeline leased by the Pipeline Trust for consumption primarily
by NTEC in electricity generation in Darwin.
B. The Purchaser has requested the Palm Valley Producers to relinquish
part of their entitlement to sell Gas to the Purchaser with a view to
permitting the Mereenie Producers to enter into an agreement with the
Purchaser for the sale of Gas and in the circumstances the Palm Valley
Producers felt compelled to agree with that request and the agreement
between the Palm Valley Producers and the Purchaser for the sale of Gas
("the Palm Valley Gas Purchase Agreement") reflects that agreement.
C. In consideration of the Palm Valley Producers agreeing to relinquish
part of their entitlement to sell Gas to the Purchaser, the respective
Mereenie Producers have agreed with the respective Palm Valley
Producers as provided in Clause 2 hereof and to participate in the
Pipeline Benefits in the manner provided in Clause 3 hereof.
D. In consequence of the agreement by the Palm Valley Producers referred
to in Recital B hereof, the Purchaser has entered into an agreement
("the Mereenie Gas Purchase Agreement") with the Mereenie Producers for
the purchase of certain quantities of Gas from the Mereenie Field.
E. The Northern Territory Government has agreed with the Producers to
sponsor the oversizing of the Trunk Pipeline between Palm Valley and
Matarauka and the construction of the Mereenie Spur Line.
F. The Pipeline Trust in return for the said oversizing and said
construction has offered to issue to a trustee on behalf of all the
Producers (for such beneficial interests as the Producers may agree
between themselves) a Special Unit in the Pipeline Trust ("the Pipeline
Benefits") which by the holding thereof will confer the right to
participate in certain pipeline tariff margins deriving from the
transmission through the Pipeline System of additional gas and also in
certain circumstances in the ownership of the Pipeline System in the
event of it being acquired by the Pipeline Trust.
G. The Palm Valley Producers and the Mereenie Producers have further
agreed that they will make mutual provision for the security of supply
of Gas in the manner provided in Clause 4 hereof.
H. Contemporaneously herewith there are being executed the following
documents:
(i) the Palm Valley Gas Purchase Agreement;
(ii) the Mereenie Gas Purchase Agreement.
NOW THIS AGREEMENT WITNESSES that the Parties hereto mutually covenant and agree
as follows:-
CLAUSE 1
DEFINITIONS
1.1 In this Agreement the following terms have the meanings ascribed to
them hereunder:
(a) Excluded Gas means natural gas from the Mereenie Field (other
than pursuant to the Mereenie Gas Purchase Agreement and the
proposed twenty year contract for the supply of natural gas to
Yulara) and from the Palm Valley Field (other than pursuant to
the NTEC (Xxxxx Springs) Agreement and the Palm Valley Gas
Purchase Agreement).
(b) Gas means for the purposes of Clause 4 hereof, natural gas
meeting the specifications contained in either the Palm Valley
Gas Purchase Agreement and the Mereenie Gas Purchase
Agreement.
(c) Incremental Gas means the first 45 petajoules of natural gas
(other than Excluded Gas) which is hereafter sold and
delivered into the Pipeline System pursuant to a contract or
contracts made with any one or more of the Producers or a
corporate vehicle controlled by any one or more of the
Producers as vendor or vendors and the gas specifications of
which contract or contracts gas from the Mereenie Field is
reasonably capable of meeting.
(d) Mereenie Field means the oil and gas field contained within
Petroleum Leases Numbers 4 and 5 in the Northern Territory.
(e) Mereenie Joint Venture means the joint venture which relates
inter alia to the Mereenie Field constituted pursuant to the
Mereenie Operating Agreement dated the Twenty-seventh day of
April, 1984 as amended by the amending agreement dated the
Third day of October, 1984.
(f) Mereenie Producers mean the Parties hereto whose names are
listed in the first column of the First Schedule hereto (being
all the current members of the Mereenie Joint Venture) and
their respective successors and assigns who become bound by
the terms of this Agreement.
(g) Mereenie Ownership Percentages mean the percentages set beside
the names of the respective Mereenie Producers in the second
column of the First Schedule hereto.
(h) Mereenie Gas Purchase Agreement means the agreement for the
sale of Gas from the Mereenie Field in the form and for the
quantities proposed to be entered into between the Mereenie
Producers and the Purchaser as recited herein.
(i) Mereenie Spur Line means the gas pipeline proposed to be
constructed in order to connect the Mereenie Field with the
Trunk Pipeline at Xxxxxx Pass.
(j) NTEC means the Northern Territory Electricity Commission.
(k) Palm Valley Field means the gas field contained within
Petroleum Lease No. 3 in the Northern Territory.
(l) Palm Valley Joint Venture means the joint venture which
relates to the Palm Valley Field constituted pursuant to the
Palm Valley Operating Agreement dated the Second day of April,
1985.
(m) Palm Valley Producers mean the Parties hereto whose names are
listed in the first column of the Second Schedule hereto
(being all the current members of the Palm Valley Joint
Venture) and their respective successors and assigns who
become bound by the terms of this Agreement.
(n) Palm Valley Ownership Percentages mean the percentages set
beside the names of the respective Palm Valley Producers in
the second column of the Second Schedule hereto.
(o) Palm Valley Gas Purchase Agreement means the agreement for the
sale of Gas from the Palm Valley Field in the manner and for
the quantities proposed to be entered into between the Palm
Valley Producers and the Purchaser as recited herein.
(p) Pipeline Benefits means the rights interests and benefits
accruing from the holding of the Special Unit which benefits
include those set forth in the Fourth Schedule of the trust
deed for the Pipeline Trust.
(q) Pipeline Benefit Percentage means in relation to each Producer
the sum of the Palm Valley Ownership Percentage (if any) and
the Mereenie Ownership Percentage (if any) of that Producer
divided by two; and Pipeline Benefit Percentages has a
corresponding meaning.
(r) Pipeline System means the Trunk Pipeline and the Mereenie Spur
Line.
(s) Pipeline Trust means the Unit Trust of which NT Gas Pty. Ltd.
is the Trustee formed for the purpose of transporting natural
gas through the Trunk Pipeline.
(t) Producer means a Party who is a Mereenie Producer and/or a
Palm Valley Producer.
(u) Purchaser means Gasgo Pty. Ltd. (a nominee of the Northern
Territory Government) who is to be the purchaser pursuant to
the Palm Valley Gas Purchase Agreement and the Mereenie Gas
Purchase Agreement.
(v) Special Unit means the Special Unit in the Pipeline Trust to
be issued to a trustee for the Producers as provided in
Recital D hereof.
(w) Trunk Pipeline means the gas pipeline proposed to be
constructed from the Palm Valley Field to Darwin.
CLAUSE 2
CONSIDERATION FOR THE PALM VALLEY PRODUCERS
2.1 Lump Sum Payment
Each Mereenie Producer hereby severally undertakes and agrees with each
Palm Valley Producer that on the 30th June, 1987 it will pay its Mereenie
Ownership Percentage of the sum of FIVE MILLION NINE HUNDRED THOUSAND DOLLARS
($5,900,000.00) to the respective Palm Valley Producers in proportion to their
Palm Valley Ownership Percentages PROVIDED HOWEVER that each Mereenie Producer
may discharge its obligation aforesaid prior to the 30th day of June, 1987 by
paying in the manner aforesaid its Mereenie Ownership Percentage of the said
$5,900,000.00 discounted back from the 30th day of June, 1987 to the date of
payment at a discount rate of 15 percent per annum.
2.2 Sales of Incremental Gas
(a) With respect to sales of Incremental Gas each Producer
undertakes and agrees with each other Producer as follows:-
(i) Any sale of Incremental Gas shall be negotiated in
good faith and on an arm's length basis. Without the
approval of each of the Palm Valley Producers no sale
of Incremental Gas shall be made except upon such
basis.
(ii) All gas required for sales of Incremental Gas shall
be produced treated and delivered into the Pipeline
System from the Mereenie Field.
(iii) Upon the production and treatment of any Incremental
Gas the Palm Valley Producers shall be deemed to have
acquired in proportion to their respective Palm
Valley Ownership Percentages thirty five percent
(35%) thereof ("the Palm Valley Producers'
Percentage") and in like Ownership Percentages shall
be deemed for the purposes only of this Agreement to
have sold the Palm Valley Producers' Percentage of
Incremental Gas to the buyer or buyers thereof.
(iv) Promptly upon the making of a contract which provides
for the sale in whole or in part of Incremental Gas
each Palm Valley Producer shall be supplied with a
copy thereof.
(b) Each Mereenie Producer undertakes and agrees with each of the
Palm Valley Producers that it will do all that is required on
its part to ensure that the Proceeds of Sale (as hereinafter
defined) of the Palm Valley Producers' Percentage of any
Incremental Gas sold will be paid promptly to the respective
Palm Valley Producers in proportion to their Palm Valley
Ownership Percentages.
(c) Proceeds of Sale in relation to any Incremental Gas means the
gross selling price thereof determined on the basis that such
Incremental Gas is sold at the delivery point into the
Pipeline System and delivered into the Pipeline System free of
prior charge.
2.3 Appointment of Agent
A Producer may agree upon the appointment of an agent or agents for the
purpose of receiving and distributing the payments required to be made pursuant
to Clauses 2.1 and 2.2 hereof.
CLAUSE 3
PIPELINE BENEFITS
3.1 Trustee for Producers
The Producers hereby acknowledge that Lohengrin Pty. Ltd. (a company
whose name is to be changed to Gas Producers Pty. Ltd. and whose shares are to
be owned by the Producers in proportion to their Pipeline Benefit Percentages
and is hereinafter referred to as "the Producers' Trustee") is and will be a
trustee for the Producers holding the Special Unit and the Pipeline Benefits for
the Producers as tenants in common in proportion to their Pipeline Benefit
Percentages.
3.2 Decisions by Trustee
(a) Any decision of the Producers' Trustee:-
(i) with respect to the election of Option A or Option B
pursuant to Clause 4.1.2 of the Fourth Schedule to
the trust deed for the Pipeline Trust; or
(ii) with respect to the election to acquire equity
pursuant to Clause 4.1.3 or Clause 5 of the said
Fourth Schedule,
shall be made by a simple majority of the Mereenie Producers
only voting in proportion to their respective Mereenie
Ownership Percentages but after consultation with the
respective Palm Valley Producers.
(b) Any other decisions with respect to the rights and obligations
or the actions of the Producers' Trustee with respect to the
Pipeline Benefits shall be made by a simple majority of the
Producers voting in proportion to their Pipeline Benefits
Percentages.
(c) Any decision made pursuant to the provisions of this Clause
3.2 shall be binding upon the Producers' Trustee and each
Producer.
3.3 Distribution of Pipeline Tariff Margin
Any payment including any distribution of the share of pipeline tariff
margins or other distribution or payment of profits received by the Producers'
Trustee in respect of the Special Unit shall be distributed without delay to the
Producers in proportion to their Pipeline Benefits Percentages.
CLAUSE 4
SUPPLY SECURITY FOR EACH GAS FIELD
4. In the event that at any time or from time to time:
(a) any event in relation to one of the Palm Valley Field or the
Mereenie Field ("the Deficiency Field") results or is likely
to result in a deficiency ("the Deficiency") in the delivery
to the Purchaser of any quantity of Gas which is required to
be delivered to the Purchaser pursuant to the relevant Gas
Purchase Agreement; and
(b) there are then proven deliverable and uncommitted reserves of
natural gas in the other Field ("the Available Reserves
Field"),
the respective Producers of the Available Reserves Field shall negotiate in good
faith with the respective Producers of the Deficiency Field an arrangement to
supply Gas on equitable terms and to the extent permitted by good oil field
practice in order to make up or as far as possible reduce the Deficiency.
Failure to agree upon any such arrangement shall not prejudice any other rights
and obligations of the parties hereunder.
CLAUSE 5
ASSIGNMENT
5.1 Assignments by Mereenie Producers
Each Mereenie Producer covenants with each of the other Parties hereto
that:-
(a) it will not assign in whole or in part its rights or
obligations hereunder except as part of an assignment of an
equivalent interest in the Mereenie Joint Venture, the
Mereenie Field and the Mereenie Gas Purchase Agreement;
(b) it will use its best endeavours (whether by seeking an
amendment of the Mereenie Operating Agreement or otherwise) to
ensure that no Party will assign an interest in the Mereenie
Joint Venture, the Mereenie Field or the Mereenie Gas Purchase
Agreement without at the same time assigning an equivalent
interest in its rights and obligations under this Agreement;
(c) it will procure the assignee of the whole or any part of its
interest under this Agreement to enter into a Deed of Covenant
with the other Mereenie Producers in a form satisfactory to
them assuming all the obligations of the assignor in respect
of the interest assigned.
5.2 Assignments by Palm Valley Producers
Each Palm Valley Producer covenants with each of the other Parties
hereto that: -
(a) it will not assign in whole or in part its rights or
obligations hereunder except as part of an assignment of an
equivalent interest in the Palm Valley Joint Venture, the Palm
Valley Field and the Palm Valley Gas Purchase Agreement;
(b) it will use its best endeavours (whether by seeking an
amendment of the Palm Valley Operating Agreement or otherwise)
to ensure that no Party will assign an interest in the Palm
Valley Joint Venture, the Palm Valley Field or the Palm Valley
Gas Purchase Agreement without at the same time assigning an
equivalent interest in its rights and obligations under this
Agreement;
(c) it will procure the assignee of the whole or any part of its
interest under this Agreement to enter into a Deed of Covenant
with the other Palm Valley Producers in a form satisfactory to
them assuming all the obligations of the assignor in respect
of the interest assigned.
CLAUSE 6
MISCELLANEOUS
6.1 Default Interest
In the event that any Producer ("the Defaulting Producer") shall make
default in the payment on its due date of any amount payable to another Producer
("the Creditor") the Defaulting Producer shall pay to the Creditor interest on
the amount in default computed from its due date until the actual date of
payment thereof at the then Westpac Lending Indicator rate from time to time
plus two percent (2%) which interest shall accrue from day to day.
6.2 No Partnership
Nothing contained in this Agreement or arising out of this Agreement is
intended to or does create a partnership between any two or more of the
Producers.
6.3 Notices
(a) Each Party shall keep the other Parties advised of its current
address in Australia to which any notice communication request
consent payment demand or information required to be given or
furnished under this Agreement is to be addressed.
(b) Such address for service of each Party shall be the same
address as is advised from time to time pursuant to the Palm
Valley Operating and/or Mereenie Operating Agreement. Notices
shall be given in the same manner as provided in the said
Operating Agreements.
6.4 Stamp Duties
Any stamp duty payable on this Agreement shall be borne and paid by the
Producers in proportion to their respective Pipeline Benefit Percentages.
6.5 Governing Law
This Agreement shall be deemed to have been made in the Northern
Territory and shall be governed by the law of the Northern Territory.
6.6 Jurisdiction
Each Party hereto submits to the non-exclusive jurisdiction of the
Courts of the Northern Territory and the State of Queensland.
6.7 Successors Bound
This Agreement shall enure for the benefit of and bind the Parties and
their assigns and successors in title.
6.8 Further Assurance
Each Party agrees that it will perform execute acknowledge and deliver
all such further acts deeds assurances and instruments as shall be reasonably
required for the purposes of this Agreement or otherwise to carry out the
agreements made herein.
6.9 Agreement Conditional
This Agreement is conditional upon the execution of the other
agreements whose contemporaneous execution is referred to in Recital H hereof.
This Agreement shall not come into effect unless and until such other agreements
also come into effect.
6.10 No Partnership
Nothing contained in this Agreement or arising out of this Agreement is
intended to or does create a partnership between any two or more of the
Producers.
THE FIRST SCHEDULE
THE MEREENIE PRODUCERS
NAME MEREENIE OWNERSHIP
PERCENTAGES
Magellan Petroleum (N.T.) Pty. Ltd. 20%)*
)* 35.00%*
United Oil & Gas Co. (N.T.) Pty. Ltd. 15%)
Canso Resources Limited 15.00%*
Oilmin NL 21.00%
Petromin No Liability 13.75%
Transoil No Liability 9.00%
Farmout Drillers NL 6.25%
-------
100.00%
=======
* These percentages are subject to variation in consequence of the unitisation
agreement between Magellan Petroleum (N.T.) Pty. Ltd., United Oil & Gas (N.T.)
Pty. Ltd. and Canso Resources Limited.
THE SECOND SCHEDULE
THE PALM VALLEY PRODUCERS
NAME PALM VALLEY
OWNERSHIP
PERCENTAGES
Magellan Petroleum (N.T.) Pty. Ltd. 50.775%
C.D. Resources Pty. Ltd. 9.375%
Farmout Drillers N.L. 9.375%
Canso Resources Limited 15.375%
International Oil Proprietary 3.504%
Pancontinental Petroleum Limited 3.000%
IEDC Australia Pty. Limited 1.248%
Amadeus Oil NL 1.248%
Southern Alloys Venture Pty. Limited (AIDC) 6.100%
--------
100.00%
=======
IN WITNESS WHEREOF the Parties have executed this Agreement on the day and year
first herein set out.
EXECUTED by MAGELLAN PETROLEUM ) MAGELLAN PETROLEUM (N.T.)
(N.T.) PTY. LTD. by ) PTY. LTD.
Xxxx XxXxxxxx Xxxxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ Xxxx X. Xxxxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by UNITED OIL & GAS ) UNITED OIL & GAS CO.
CO. (N.T.) PTY. LTD. by ) (N.T.) PTY. LTD.
Xxxx XxXxxxxx Xxxxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ Xxxx X. Xxxxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by CANSO RESOURCES ) CANSO RESOURCES LIMITED
LIMITED by _____________________ )
its duly constituted Attorney )
in the presence of: ) /s/ ____________________
/s/ Xxxxxx Xxxxxx
EXECUTED by OILMIN NL by ) OILMIN NL
X. X. Xxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ X. X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by PETROMIN NO ) PETROMIN NO LIABILITY
LIABILITY by )
X. X. Xxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ X. X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by TRANSOIL NO ) TRANSOIL NO LIABILITY
LIABILITY by )
X. X. Xxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ X. X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by FARMOUT DRILLERS ) FARMOUT DRILLERS NL
NL by ___________________________ )
its duly constituted Attorney )
in the presence of: ) /s/ ____________________
/s/ Xxxxxx Xxxxxx
EXECUTED by C.D. RESOURCES PTY. ) C.D. RESOURCES PTY.
LTD. by Rupert Xxxxx Xxxxx ) LTD.
its duly constituted Attorney )
in the presence of: ) /s/ Xxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by INTERNATIONAL OIL ) INTERNATIONAL OIL
PROPRIETARY by ) PROPRIETARY
X. X. Xxxxxx )
its duly constituted Attorney )
in the presence of: ) /s/ X. X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by PANCONTINENTAL ) PANCONTINENTAL
PETROLEUM LIMITED by Xxxx Xxxx Xxxxxx ) PETROLEUM LIMITED
its duly constituted Attorney )
in the presence of: ) /s/ Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by IEDC AUSTRALIA PTY. ) IEDC AUSTRALIA PTY.
LIMITED by Xxxxx Xxxxx Xxxxxx ) LIMITED
its duly constituted Attorney )
in the presence of: ) /s/ Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by AMADEUS OIL NL by ) AMADEUS OIL NL
Xxxx Surrey Bogg )
its duly constituted Attorney )
in the presence of: ) /s/ Xxxx X. Xxxx
/s/ Xxxxxx Xxxxxx
EXECUTED by SOUTHERN ALLOYS ) SOUTHERN ALLOYS VENTURE
VENTURE PTY. LIMITED by ) LIMITED
Xxxxx Xxxxxxxxx Adby )
its duly constituted Attorney )
in the presence of: ) /s/ Xxxxx X. Adby
/s/ Xxxxxx Xxxxxx
