SAMPLE LEASING AGREEMENT
September 21, 1999
Dear ______________,
Australian Grazing & Pastoral Co., Pty. Ltd. (hereinafter referred to as
First Party) agrees immediately after acceptance of this letter by
___________________________________________ (hereinafter jointly referred
to as Second Party) to negotiate in behalf of Second Party or their
nominee for V99-2 (hereinafter referred to as Concession) covering certain
lands ________________________________________________________.
Said negotiations are to be conducted by First Party or its agent or
representatives in Australia at First Party's risk and expense; provided,
however, that Second party shall at all times be kept informed as to the
progress of said negotiations and the terms and conditions involved in
obtaining said concession.
Terms and conditions of said Concession are intended to be in accordance
with the provisions of the Petroleum Act of the State of Victoria and will
be on the form issued by the State of Victoria. It is further agreed that
Second party will at its expense put up the $A__________ non-refundable
application fee to accompany the application and will complete and file
with the appropriate authorities all necessary papers and documents to
carry out the terms of this agreement. Second party will be consulted
prior to the filing of any such papers or documents and will, in any
event, be furnished with copies of all such papers and documents so filed.
First party will at its expense pay for registration costs of registering
______________________ in Australia as a foreign corporation.
It is further agreed for the purposes of this contract that if the
following terms and conditions are obtained, the Concession will be
satisfactory to Second Party and Second Party's attorneys:
(1) Period: Five (5) years from the date of issuance.
(2) Expenditures:
First Year: $A___________
Second Year: $A___________
Third Year*: $A___________
Fourth Year: $A___________
Fifth Year: $A___________
*The first three years to be guaranteed in that if the expenditures
are not made, or the area relinquished when the expenditures are
current, the Second Party will forfeit the area to the government.
(3) Oil Spill Insurance: Only after Government has made offer to
successful applicant and to be paid for by Second Party.
(4) Rentals: Second Party will pay the first year's rental when the
Government offers the concession to Second Party on the terms set out by
Second party in their application.
(5) Permit Conditions and Permit Administration: The conditions applying
to a permit granted under sections 22 (initial term) or 32 (renewal term)
of the Petroleum (Submerged Lands) Xxx 0000, and the continuing
administration of those conditions, will be as follows:
(a) the permittee will be required to undertake each component of the
minimum guaranteed work program in the designated year or earlier and,
unless conditions of "force majeure" apply, failure to do so will result
in cancellation of the permit. The minimum guaranteed work program will
not be reduced once the permit has been awarded. Surrender of the permit
in good standing may only be agreed prior to the beginning of the fourth
permit year if the total three year minimum guaranteed work program is
completed.
(b) no earlier than 6 months and no later than 3 months before the end of
the third year of the permit term, the permittee may submit a revised
secondary work program covering the remaining years of the permit term for
consideration by the Joint Authority and agreement on a mutually
acceptable work program. If agreement cannot be reached on a mutually
acceptable work program, the permit may be surrendered in good standing or
continue in force subject to the original secondary work program.
(c) on commencement of the fourth permit year the "secondary" program (as
revised, if agreed by the Joint Authority) becomes guaranteed on a year by
year basis and each component must be undertaken in the designated year or
earlier:
failure to do so will result in cancellation of the permit, unless
conditions of "force majeure" apply or where the permittee can provide
substantial and compelling evidence that the work program should be varied
on technical grounds prior to entry into any of the remaining years of the
secondary term (i.e. the permittee has the option to renegotiate the
secondary work program on an annual basis)
surrender of the permit in good standing may only be agreed in a permit
year if the work guaranteed for the year has been completed
(d) permittee may apply at any time for a variation of permit conditions
on the grounds of "force majeure", that is, where circumstances prevail
which are clearly beyond the control of the permittees
(e) permittees will be required to comply with the provisions of the Act,
the Regulations and Directions issued under the Act, and with any special
conditions associated with the permit area.
(f) first party has paid for the registration of ________________. Second
party will pay the cost of registering any additional companies in
Australia.
(g) Cost of making copies of seismic on area will be paid by second party.
Upon delivery of the concession, it is further agreed that Second Party
will forthwith grant and assign to First Party by an instrument in form
satisfactory to Counsel for Second Party and First Party an overriding
royalty of two percent (2%) of the total production of crude oil and
casinghead petroleum spirits and natural gas produced from the lands which
are the subject of the Concession, which overriding royalty shall be a
covenant running with the land, but which shall nevertheless cease as to
land which at any time may be surrendered or which may lapse or revert to
the government by reason of nondevelopment or any other cause. This
override shall also apply to any additions to the area of the basic
Concession, and any succession in titles, including leases and renewals.
Notwithstanding that Second Party may transfer all or part of its interest
in the Oil Concession, Second Party shall remain obligated to pay the said
overriding royalty interest to First Party until the transferee or
purchaser of the interest of Second Party in the Concession has entered
into an Agreement with First Party whereby such transferee or purchaser
agrees to pay First Party the appropriate portion of the said overriding
royalty interest.
If the Victorian Department of Natural Resources and Environment offers to
grant a concession to Second Party covering any part of the lands
represented by the Concession under different terms and conditions, and if
Second Party chooses to accept such terms and conditions, then Second
Party agrees to pay First Party $US___________, assign First Party an
overriding royalty of 2%, and abide by all other provisions of this
contract.
Should it be found that the Government fees will be higher than the total
price quoted herein, then the Second Party shall be notified and allowed
the option of going on such other terms as may be obtained, or assign all
rights and privileges of Second Party to First Party and/or its nominee
after the granting of the said Concession, and Second Party shall in this
latter event be relieved of all expenses and obligations under this
agreement and shall be obligated to pay no fees or expenses to First Party
and/or its nominee in this latter event. Second Party may exercise its
option by notifying First Party of its intention within three (3) days
from the date of receipt of such notification.
All notices to be given by and between the parties hereto shall be sent to
First Party at the address shown on this letterhead and to each Second
Party at the addresses shown on the first page hereof.
This agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto. This agreement shall be
governed by the laws of the State of Texas. If the terms and provisions
herein contained meet with your approval, please execute the duplicate
original of this instrument furnished you herewith and return to us within
five (5) days from the date hereof.
Sincerely,
Party of the First Part:
_________________________________
Parties of the Second Part:
_________________________________
