COAL BED METHANE RESOURCES AGREEMENT
COOPERATION FOR EXPLORATION AND DEVELOPMENT
OF XXXX XXXX TIEFA
MINING AREA AND SHANXI HANCHANG MINING AREA
(TWO AREAS)
This agreement is signed on March 31, 1995 in Beijing, PRC, for
Cooperation in the exploration and development of coal bed methane in
The Two Areas, by China National Administration of Coal Geology
(Coal Geology) and XCL Ltd. (XCL).
Coal Geology has studied the exploration and development of coal
in China for 40 years. Starting in 1989 Coal Geology has devoted
study to the exploration and development of coal bed methane.
XCL has agreed based on geological results of these studies to
start cooperation with Coal Geology for the exploration and development
of coal bed methane in the Two Areas.
The parties have reached the following agreement:
1. XCL will send its experts to China within 30 days after signing
this agreement to work with Coal Geology's experts to gather all the
information and data required to plan an exploration program in the Two
Areas.
2. As soon as Coal Geology has gathered all necessary data and
information, Coal Geology will send a technical team to Louisiana,
United States, to work with XCL's experts to plan an exploration program
in the Two Areas. XCL will pay the travel and living expenses incurred by
the Coal Geology Team on the visit. The parties estimate that it will
require about 60 days for this phase of work in Louisiana.
3. At the end of the study period in Louisiana, the parties will
jointly agree on an exploration plan in the Two Areas. The parties expect
that 2 xxxxx will be drilled in each of The Two Areas.
4. Coal Geology and XCL will jointly conduct the exploration
program, using each party's technical teams. All work will be
performed under a Joint Management Committee, with each party having
3 members. XCL shall be the operator.
5. Coal Geology will do the drilling with it's crews and equipment.
XCL will pay for the drilling and testing, with 50% of the cost being
paid after the first week of drilling and the remaining 50% to be paid
15 days after drilling and testing is completed. Actual costs of
drilling and testing will be negotiated by the parties. And the parties
will establish the budget and work plan for the JMC approval and
implementation. After the location of the exploration well have been
select, as well as well design, well completion, production test, and
operation time. During the production testing stage Coal Geology will
provide all needed assistance to coordinate and be responsible for all
work and will be responsible for all costs in excess of the cost agreed
upon by the parties prior to the start of drilling and testing. Each party
will be responsible for damage to its equipment.
6. Coal Geology will be responsible to provide all related exploration
data and information for The Two Areas. The parties will not give this
information to any other persons or parties, and will not negotiate
agree with any third parties on any matter in The Two Areas. XCL will use
the data for development of the coal bed methane resources in the Two
Areas and will return the data at the end of the contract.
7. XCL will be the operator of the exploration and development and
will be responsible for the analysis and evaluation on the data and
information on The Two Areas and will combine the result from the joint
testing program to assure and confirm the potential for exploration and
development of coal bed methane in The Two Areas. The parties will
strengthen their cooperation by taking steps to study coal bed methane
development and exploration in other areas.
8. Coal Geology will be responsible for obtaining all required permits
to operate in the Two Areas.
9. Coal Geology will be responsible to provide all geological,
engineering and other data on the Two Areas. XCL will pay Coal Geology
for total US $125,000 for the Two Areas, US $41,700 is payable after the
information has been released, and the balance is payable after signing
the formal contract. The costs incurred by each party during the
exploration and development of the Two Areas will be recovered by the
parties from the profits from the commercial development. Such costs
must be adequately documented. All accounting for the joint venture
will be done according to accounting principles which agreeable by the
parties.
10. Force' majeure conditions severally accepted in international
contracts will protect the parties from default under the agreement,
but each party shall do its best to perform under all condition.
11. If a provision of the agreement is invalid, the other provision
will still be effective as long as the commercial results of
the agreement can be realized.
12. Written modification and communication should be in Chinese with
registered letter, fax, telephone or telefax sent to the other
parties latest address notified to the other party. The communication
will be effective when the receipt is signed or 2 days after a
fax is received.
13. Both sides will resolve disputes based on mutual friendship and
negotiation.
14. The agreement will be pursuant to the laws of the PRC.
15. The agreement will be written in both Chinese and English and both
version shall be valid, with total 4 copies.
16. After the evaluation work is completed in Louisiana as provided for
in paragraph 2 of this agreement, the parties will enter into a
comprehensive agreement which will provide for a detail operation plan
profit sharing, investment, ownership, management and all other matter
required to insure that the joint venture will be incorporated profitable
for all parties. The provision of this agreement will in such final
agreement with such modification as the parties may agrees. Such final
agreement may also provide a basis and reference for coal bed methane
exploration and development in other areas.
17. This agreement will be terminated by Dec. 30, 1996, or if parties has
intention to extend the termination date as describe above, the parties
should through friendly consultation to extend the termination date.
18. The Two Areas are identified as the attached maps.
19. Both sides sign this agreement in Beijing, PRC, on March 31,1995.
CHINA NATIONAL
ADMINISTRATION XCL LTD.
OF COAL GEOLOGY
/s/ Qi Shang Xian /s/ Marsden X. Xxxxxx, Xx.
General Manager Chairman
