Production Lease PL 09-04-15-01
Exhibit
10.01
PL
00-00-00-00
This Production Lease entered
into on the 15th day of April, 2009.
BETWEEN: HER MAJESTY THE QUEEN IN THE RIGHT OF
THE PROVINCE OF NOVA SCOTIA, as represented by the Minister of
Energy,
(hereinafter
referred to as the “Minister”)
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and-
ELMWORTH ENERGY CORPORATION, a
body corporate registered to carry on business in the Province of Nova
Scotia,
(hereinafter
referred to as the “Lessee”)
WHEREAS:
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A.
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Exploration
Agreement No. 00-00-00-00 was issued to Northstar Energy Corporation on
September 15, 1999;
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B.
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The
Lessee is a successor in title to Northstar Energy Corporation and the
current holder of Exploration Agreement No.
00-00-00-00;
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C.
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The
Lessee filed a Development Plan with the Minister under section 52 of the
Petroleum Resources
Regulations (the “Regulations”) on June 24,
2008;
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D.
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The
Minister is of the opinion that:
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(i)
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petroleum
can be commercially produced from the Lands;
and
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(ii)
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none
of the conditions referred to in section 54 of the Regulations
exist;
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NOW THEREFORE, in
consideration of the rentals, royalties and the covenants and agreements herein
contained, the Minister, on behalf of the Province, and the Lessee agree as
follows:
INTERPRETATION
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1.
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(1)
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(a)
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In
this Lease, a reference to the Petroleum Resources Act
(the “Act”) or to any Act of the Legislature of Nova Scotia shall be
construed as a reference to
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(i)
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that
Act, as amended from time to time,
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(ii)
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any
replacement of all or part of that Act from time to time enacted by the
Legislature, as amended from time to time,
and
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(iii)
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any
regulations, orders, directives, by-laws or other subordinate legislation
from time to time made under any enactment referred to in clause (i) or
(ii), as amended from time to time.
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(b)
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A
reference to the Minister includes the Deputy Minister of the Department
of Energy and any other person duly authorized by the Minister to act in
the Minister’s behalf.
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(2)
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Except
as provided in this Article and unless the context otherwise requires,
words used in this Lease have the same meaning as in the Act and
Regulations, and
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(a)
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“Administrator”
means the person appointed by the Minister under the Onshore Petroleum Drilling
Regulations;
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(b)
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“Anniversary
Date” means the anniversary date of the Effective Date of each year of the
term of this Lease;
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(c)
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“Commencement
Date” means the day on which commercial production
begins;
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(d)
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“Department”
means the Nova Scotia Department of
Energy;
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(e)
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“Development
Program” means the program described in Schedule
II;
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(f)
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“Designation
of Representative” means the designation of a representative made by the
Lessee pursuant to Section 3 of the Regulations and filed with the
Registrar in accordance with this
Lease;
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(g)
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“Effective
Date” means April 15, 2009;
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(h)
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“Lands”
means the lands described in Schedule I or such portion of those lands as
may from time to time be subject to this
Lease;
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(i)
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“Lease”
means this Production Lease entered into in accordance with and subject to
the Act and Regulations;
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(j)
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“1999
Agreement” means the Exploration Agreement (No. 00-00-00-00) issued on
September 15, 1999;
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(k) “Petroleum”
means petroleum as defined in the Act, excluding coal gas;
(l) “Province”
means the Government of the Province of Nova Scotia;
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(m)
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“Regulations”
mean the Petroleum
Resources Regulations, N.S. Reg. 178/85 as amended from
time to time;
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(n)
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“Waste”,
in addition to its ordinary meaning, means waste as understood in the
petroleum industry; and
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(o)
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“Year”
means the 12-month period beginning at 12:01 a.m. on the Effective Date or
Anniversary Date, as the case may
be.
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GRANT
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2.
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Subject
to the terms and conditions of this Lease, the Act and Regulations, the
Minister hereby grants to the Lessee the right to undertake the activities
described in the Development Program and to produce Petroleum from or
within those rock units found within the Lands, described as being from
the top of the Windsor group to the basement formation, together with the
right to market the Petroleum so produced and, provided always that title
to Petroleum subject at any time to any royalty right of the Minister
remains vested in the Minister, title to Petroleum so
produced.
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SURFACE
RIGHTS
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3.
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The
Lessee shall satisfy the Minister that it has the permission of the owner
of the surface rights or that it has been granted and has complied with
the terms of an order pursuant to subsection 24(3) of the Act, before
entering any lands pursuant to this
Lease.
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ROYALTIES
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4.
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(1)
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All
Petroleum produced under the authority of this Lease is subject to such
royalties payable to the Province in the nature and amount as prescribed
by the Regulations.
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(2)
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The
Province reserves the right at any time to review and amend any
regulations or enact new regulations respecting royalties under the Act
and Regulations.
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TERM/RENEWAL
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5.
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(1)
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This
Lease commences on the Effective Date and shall continue for a term of ten
(10) years from the Commencement Date unless it is renewed, surrendered or
cancelled.
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(2)
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Subject
to Article 5(4), on the expiration of the initial term of this Lease,
provided the Lessee has complied with all of the terms and conditions of
this Lease, the Act and Regulations, and provided that commercial
production of Petroleum has actually commenced and has not just been
deemed to have commenced under Article 7, the Lessee shall have the option
to renew the Lease, on the same terms and conditions, for a further term
of ten (10) years. The option to renew shall be exercised by the Lessee
providing to the Minister written notice within three (3) months from the
end of the initial term.
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(3)
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Subject
to Article 5(4), further renewals of this Lease may be granted by the
Minister upon such terms and conditions as the Minister may
determine.
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(4)
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The
renewal of this Lease for any term beyond the initial term shall be
subject to the surrender by the Lessee of those portions of the Lands
which the Minister determines are not producing Petroleum, or are not
capable of producing Petroleum, at the time of
renewal.
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DEVELOPMENT
PROGRAM
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6.
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(1)
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The
Lessee shall diligently carry out the Development Program attached hereto
as Schedule II during the term of the
Lease.
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(2)
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With
the written approval of the Minister, the Development Program may be
amended.
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(3)
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The
Development Program shall be stratigraphically defined to cover rock units
from the top of the Windsor group to the basement formation included in
the Lands.
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(4)
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The
Lessee acknowledges and agrees that, notwithstanding anything else in this
Lease, repeated or serious failure to comply with any material provision
of the Development Program shall constitute grounds for cancellation of
this Lease pursuant to Section 36 of the
Regulations.
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COMMERCIAL PRODUCTION AND
COMMENCEMENT DATE
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7.
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(1)
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The
Minister shall determine the time at which commercial production of
Petroleum has commenced under this
Lease.
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(2)
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If
the Minister has not made a determination that commercial production
commenced under Article 7(1) on or before the second Anniversary Date, the
parties agree that commercial production, for the purposes of determining
the date this Lease is to commence under subsection 15(3) of
the Act and section 64 of the Regulations, shall be deemed to be have
commenced on the first Anniversary
Date.
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CONDITIONS
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8.
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The
Lessee agrees to comply with the conditions set forth in Schedule IV
within the times set out in the Schedule and acknowledges that failure to
comply with any condition shall constitute a breach of this Lease
entitling the Minister to cancel the
Lease.
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DATA/INFORMATION
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9.
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(1)
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Except
as provided herein, the Lessee shall, in a timely manner, submit data and
information to the Minister as provided in Section 71 of the
Regulations.
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(2)
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Annual
progress reports shall include a summary of operations, activities and
findings related to this Lease and a prognosis for the subsequent
reporting period.
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(3)
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The
Lessee shall keep accurate books and records in accordance with generally
accepted accounting principles and applicable industry standards showing
the quantities and values of the Petroleum produced and expenditures from
the Lands.
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(4)
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Whenever
required to do so the Lessee shall, at reasonable times and upon
reasonable notice, submit such books and records for inspection or audits
by any officer or person authorized by the
Minister.
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(5)
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All
data and information shall be submitted by the Lessee in hard copy paper
format and electronically in a format deemed acceptable to the
Minister.
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CONFIDENTIALITY
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10.
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(1)
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This
Lease and all information provided to the Minister pursuant to the terms
of the Lease, the Act or Regulations is subject to the Freedom of Information and
Protection of Privacy Act and the head of the appropriate public
body shall make any decisions respecting release of any
information.
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(2)
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Subject
to Article 10(1) the Minister shall not knowingly disclose information
contained in the books and records of the Lessee unless authorized to do
so by the Act, Regulations, this Lease or as required by law, or unless
necessary for the purpose of the administration or enforcement of the Act
or Regulations or for the purpose of legal proceedings relating to such
administration or enforcement.
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OPERATIONS
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11.
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(1)
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General: All
operations under this Lease shall be
performed
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(a)
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in
accordance with all enactments, including the Act, the Regulations and
this Lease,
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(b)
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in
a manner to promote safety, the protection of the environment, the
conservation of the petroleum resource and the protection of correlative
rights, and
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(b)
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in
such manner as is usual and customary in similar petroleum
operations.
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(2)
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Reasonable
Measures: The Lessee shall take all reasonable measures
deemed necessary by the Administrator to accomplish the intent of this
Article which measures may include, but are not limited to, modification
to siting or design of facilities, timing of operations, and
specifications of interim and final reclamation
measures.
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(3)
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Seismic/Drilling
Programs: Approvals for seismic and drilling programs
and production operations shall be as provided in the Act and the Onshore Petroleum Geophysical
Regulations and the Onshore Petroleum Drilling
Regulations.
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(4)
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Well Sites/Pads
Sizes: Each well site/pad requires the prior written approval of
the Administrator.
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(5)
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Well Density:
Well spacing and siting requires the prior written approval of the
Administrator.
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(6)
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Flaring:
Flaring shall only be permitted with the prior written approval of the
Administrator and will only be permitted during well testing, and for a
brief time during the startup of the
well.
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(7)
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Compression:
Compression operations must comply with any noise levels/standards imposed
from time to time by the Nova Scotia Department of
Environment.
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SITE MAINTENANCE/LAND
RECLAMATION/FACILITIES DECOMMISSIONING
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12.
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(1)
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The
Lessee shall maintain work sites established on the Lands in a clean and
orderly manner at all times, and shall not cause or permit any nuisance or
damage to Lands or adjacent lands.
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(2)
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The
Lessee shall prepare and submit, a detailed program (the “Abandonment and
Reclamation Program”) acceptable to the Minister on or before the fifth
Anniversary Date.
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(3)
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Site
restoration in accordance with the Abandonment and Reclamation Program
shall be completed within 12 months of the end of the term of this Lease
or any renewal, or such additional time as may be agreed by the
Minister.
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(4)
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Unless
the Minister otherwise agrees in writing, well termination and facilities
shall be suspended or abandoned in the manner provided in Schedule
V.
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(5)
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Cessation
of operations or termination of this Lease for any reason shall not
relieve the Lessee from the obligations of this
section.
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CONSERVATION OF
RESOURCES
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13.
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The
Lessee shall take all reasonable measures to conserve the resources of the
Province and, except in an emergency situation, shall not, by any act or
omission, cause or allow any Waste of petroleum or mineral resources or
cause or allow any unreasonable damage to formations or deposits
containing the same beyond that which is usual, customary and acceptable
in skillful and proper operations of a similar
nature.
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COMPLIANCE WITH
LAWS/REGULATIONS
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14.
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(1)
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General: In
carrying out the Development Program, the Lessee, its employees,
administrators, agents, successors, contractors and sub-contractors shall
comply with all laws, including the provisions of the Environment Act, Occupational Health and Safety
Act and regulations thereunder, all of which may from time to time
be amended, and shall perform such site restoration as is required by the
Province and by law.
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(2)
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Groundwater
Protection/Produced Waste: The Lessee shall comply with all laws,
regulations, policies, standards and guidelines in effect now or
implemented in the future by the Nova Scotia Department of Environment
respecting groundwater protection and discharge water from its
operations.
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(3)
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Environmental
Assessments: The Lessee shall comply with all laws and regulations
respecting the environmental assessment of petroleum
operations.
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CONTINUING
OBLIGATIONS
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15.
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The
provisions of this Lease which, by their terms, are intended to survive or
which must survive in order to give effect to the continuing obligations
of the Minister and the Lessee shall survive the suspension or termination
of this Lease.
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MINERAL, PETROLEUM AND
UNDERGROUND HYDROCARBONS STORAGE RIGHTS
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16.
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The
Lessee agrees to conduct its operations upon the Lands in such a manner as
not to interfere with or disrupt the reasonably necessary activities of
the holder of any mineral rights, petroleum rights or underground gas
storage rights that are now or may hereafter be issued or entered into
pursuant to the Mineral
Resources Act, the Petroleum Resources Act
or the Underground
Hydrocarbons Storage Act, whichever may be the case, respecting all
or any portion of the Lands.
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POWERS OF
MINISTER
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17.
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Any
questions of interpretation on anything contained in this Lease or to any
matter or thing to which it pertains shall be decided by the Minister or
as specified in this Lease, by the Administrator and the decision of the
Minister or the Administrator shall be final and
binding.
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WAIVER
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18.
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No
waiver by the Minister or the Administrator of any breach of any of the
terms or conditions contained in this Lease shall take effect or be
binding upon the Minister unless the waiver is expressed in writing by the
Minister or the Administrator, and any waiver so expressed shall not limit
or affect the Minister’s rights with respect to any other or future
breach.
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INDEMNITY
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19.
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(1)
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For
purposes of this Article, "Interest Holder" shall not include any person
whose only interest in this Lease or in any right granted hereunder is a
mortgage or other security interest, but shall include any person who
acquires or holds any interest in this Lease or any right granted
hereunder as a result of any realization or enforcement
process.
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(2)
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Any
Interest Holder in this Lease shall, in respect of that portion of the
Lands to which each such Interest Holder’s interest relates, at all times,
jointly and severally, indemnify and save harmless the Minister from and
against all claims, demands, losses, costs, damages, actions, suits or
other proceedings by whomever made, sustained, brought or prosecuted, in
any manner based upon, occasioned by, or attributable to, anything done or
omitted to be done by the Lessee, its contractors, employees, servants or
agents, in the fulfilment of agreements made herein or in the exercise of
the rights or obligations contained
herein.
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(3)
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For
greater certainty, an Interest Holder in this Lease who does not hold an
interest with respect to that portion of the Lands in relation to which
claim, demand, loss, cost, damage, action, suit or other proceedings
arises is not liable to indemnify the Minister under
sub-article (2).
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(4)
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Notwithstanding
sub-article (2), the Interest Holders shall not be liable to indemnify the
Minister in respect of any claims, demands, loss, costs, damages, actions,
suits or other proceedings arising through any wilful or negligent act of
the Province or any of its agents or
employees.
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TERMINATION
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20.
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(1)
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Where
it is alleged that the Lessee breached or defaulted under the Act, the
Regulations, or this Lease or renewals thereof, or failed to perform the
work required under this Lease or renewals thereof, the Minister shall
give the Lessee at least thirty (30) calendar days to remedy the breach or
default.
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(2)
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The
Minister shall advise the Lessee by notice, in writing, of the alleged
breach or default and shall also advise the Lessee of the above noted
period of time which the Lessee may remedy the breach or default or show,
to the satisfaction of the Minister, that the Lessee has not breached or
defaulted.
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(3)
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If
the Lessee is not able to remedy the breach or default alleged in the
notice or show, to the satisfaction of the Minister, that the Lessee has
not breached or defaulted, the Minister may declare this Lease suspended
or cancelled.
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(4)
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Suspension
or cancellation of this Lease shall in no way relieve the Lessee of
obligations contained herein, including site reclamation and observance of
all obligations in law.
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GOODS AND
SERVICES
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21.
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Every
twelve (12) months during the term of this Lease, the Lease shall report
to the Minister, in such form as the Minister may determine, as
to
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(a)
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utilization
of services provided from within Nova Scotia and utilization of goods
manufactured in Nova Scotia or, where not so manufactured, provided from
within Nova Scotia;
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(b)
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the
number of qualified employees and independent contractors normally
resident in Nova Scotia providing services to the Lessee;
and
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(c)
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evidence
that the Lessee’s contractors and main sub-contractors are acquiring goods
and services in accordance with Section 20 of the
Regulations.
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SECURITY
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22.
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(1)
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The
Lessee shall provide security to the Minister, in a form satisfactory to
the Minister, acting reasonably, in a fixed amount representing 10 percent
of the value of the Development Program undertaken in each year that this
Lease is in effect, which shall secure performance of the obligation of
the Lessee under the Act, the Regulations, and this Lease for the term of
the Lease and any extension or
renewal.
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(2)
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At
the end of each year, the Minister reserves the right to adjust the amount
of the financial security provided under
(1).
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(3)
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The
security shall,
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(a)
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for
the first year of the Development Program, be provided within thirty (30)
days of the execution of the Lease and prior to commencement of the
Development Program; and,
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(b)
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in
respect of the second and subsequent years of the Lease, be provided on
the earlier of
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(i)
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the
Anniversary Date, or
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(ii)
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ten
(10) days prior to the commencement of a subsequent phase of the
Development Program.
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(4)
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The
Province shall return the security securing performance of the Lessee’s
obligations in any previous year or for a previous phase of the
Development Program upon receipt of any subsequent security required in
accordance with this Article.
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(5)
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Security
or the uncalled balance thereof shall be cancelled and the original
document returned by the Minister to the Lessee within a reasonable period
of time, where,
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(a)
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in
the opinion of the Minister, a failure to fulfill the obligations under
this Lease is the result of technical difficulties beyond the control of
the Lessee despite adherence to good oilfield
practices;
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(b)
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further
performance under this Lease would not be reasonable in the Minister’s
opinion; or
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(c)
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the
obligations for which the security was issued have been performed to the
satisfaction of the Minister.
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(6)
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Where
the Lessee proposes a modification to the Development Program which
increases its value, the Minister may require an additional sum to secure
the performance of the Lessee’s obligation pursuant to the Development
Program, which modification may require provision of an additional
security or, in the alternative, an increase in the amount of the security
referenced in Article 22(1).
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(7)
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In
addition to security required in relation to the Development Program, the
Minister may require the Lessee to furnish bonds in a form satisfactory to
the Minister in such amounts as the Minister considers appropriate to
ensure performance of obligations with respect to
royalty.
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INSURANCE
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23.
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(1)
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The
Lessee shall procure the insurance coverage as described in Schedule
III or shall cause the insurance coverage to be procured and
such insurance shall be maintained in full force during the term of this
Lease to protect all insureds for the purposes and risks outlined
therein.
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(2)
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Insurance
under subsection (1) shall provide coverage for the Lessee, its
subcontractors, consultants, their successors and assigns, and their
respective directors, officers, and employees, and protect all insureds
from all claims arising out of liability for property damage, bodily
injury including death and personal
injury.
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(3)
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All
policies shall be insured by financially sound insurers licensed to carry
on business in Canada. The policies described in Schedule III
shall be written on an occurrence
basis.
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(4)
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Certified
copies of all insurance policies required, or certificates of insurance
with endorsements acceptable in form and substance to the Province, shall
be delivered to the Province on execution of this
Lease.
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(5)
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The
Lessee, the Province, all subcontractors, consultants, subconsultants, and
other parties listed in subsection (2) shall be added as additional
insureds on the policy.
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(6)
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If
any policy can only be written on a "claims made" basis, the policy must
provide the Province and the Lessee with the right, upon cancellation or
termination by refusal to renew the policy, to purchase an extended
reporting period of not less than two (2)
years.
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(7)
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Each
of the policies of insurance maintained pursuant to this Lease shall
contain a waiver of the insurer's right of subrogation against any insured
under this Lease.
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NOTICE
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24.
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(1)
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Where
in this Lease or under the Regulations it is required that a notice,
communication or statement (hereinafter called “Notices”) be given, such
Notices may be served on the parties at the following
address:
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To
the Lessee at:
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Elmworth
Energy Corporation
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Xxxxx
0000, 000 -0xx
Xxxxxx, X.X.
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Xxxxxxx,
Xxxxxxx X0X 0X0
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Attention:
Xxxxxx Xxxxxxxx, President & Chief Operating
Officer
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Telephone: (000)
000-0000
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Fax:
(000) 000-0000
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To
the Minister at:
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Department
of Energy
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Bank
of Montreal Building
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0000
Xxxxxx Xxxxxx, Xxxxx 000
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PO
Box 2664
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Xxxxxxx,
XX X0X 0X0
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Attention:
Manager, Petroleum Resources
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Telephone:
(000) 000-0000
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Fax:
(000) 000-0000
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To
the Registrar at:
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Department
of Natural Resources
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0000
Xxxxxx Xxxxxx
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P.
O. Xxx 000
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Xxxxxxx,
XX X0X 0X0
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Attention:
Registrar of Mineral and Petroleum Titles
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Telephone:
(000) 000-0000
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Fax: (000)
000-0000
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and on
the Representative at the address specified in the Designation of Representative
filed with the Registrar.
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(2)
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Upon
giving the other party thirty (30) days notice in writing, the Minister or
the Lessee may amend the address for service from time to
time.
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(3) Notices
may be served:
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(a)
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personally,
and personally served Notices shall be deemed received by the addressee
when actually delivered; or
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(b)
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by
fax directed to the party on whom they are to be served at that party’s
address for service. Notices so served shall be deemed received
by the respective addressee thereof
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(i)
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when
actually received by them if received within the normal working hours of a
business day, or
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(ii)
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at
the commencement of the next ensuing business day following transmission
thereof, whichever is earlier.
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GENERAL
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25.
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(1)
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The
Lessee acknowledges that the laws of Nova Scotia govern all matters
relating to this Lease, and the Lessee acknowledges and submits to the
jurisdiction of the courts of the Province of Nova
Scotia.
|
|
|
(2)
|
The
Lessee shall comply with the provisions
of
|
|
|
(a)
|
the
Petroleum Resources Act,
the Energy
Resources Conservation Act, the Pipeline Act and the
Gas Distribution Act,
as amended, and
|
|
|
(b)
|
any
other Acts of the Legislature of Nova Scotia that prescribe, apply to or
affect the rights and obligations of the Lessee’s petroleum rights, or
that relate to or affect the Lessee in the conduct of operations or
activities under this Lease.
|
|
|
(3)
|
In
the event of conflict or inconsistency between a provision of this Lease
and a provision in the Act or Regulations, the latter provision
prevails.
|
|
|
(4)
|
The
Lessee agrees to waive and hereby waives all rights, prerogatives,
privileges and immunities that would otherwise exempt the Lessee from
compliance with any of the provisions of the Petroleum Resources Act
or of any Acts of the Legislature.
|
|
26.
|
All
schedules, maps and attachments affixed hereto constitute and form part of
this Lease.
|
|
27.
|
The
headings used in this Lease are inserted for convenience of reference only
and shall not affect the meaning of construction of any
provision.
|
|
28.
|
This
Lease represents the entire agreement between the parties respecting the
Lands and may be amended only in writing executed by both
parties.
|
|
29.
|
Time
shall be of the essence of this
Lease.
|
|
30.
|
This
Lease may be executed in several counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts together
shall constitute one and the same instrument, and it shall not be
necessary in proving the same to produce more than one set of such
counterparts.
|
CONSULTATION
|
31.
|
(1)
|
The
Lessee agrees to participate in a consultation program with respect to the
Development Program proposed under this Lease, including any community
based committee established by the
Minister.
|
|
|
(2)
|
The
Lessee agrees to use reasonable efforts to identify aboriginal groups who
may have an interest in this proposed Petroleum project and establish
contact with them.
|
IN WITNESS WHEREOF, these
presents are duly executed on the part of the Province in the name of the
Minister and by the Lessee under its corporate seal by its officers duly
authorized in that regard.
DATED AT
Halifax this 15th day of
April, 2009.
|
HER
MAJESTY THE QUEEN IN THE
RIGHT
OF THE PROVINCE OF NOVA
SCOTIA
|
||
|
/s/ XXXXXX XXXXX
|
/s/ XXXXX XXXXXX
|
|
|
Witness
|
Minister
of Energy
|
DATED AT
Halifax this 15th day of
April, 2009.
|
ELMWORTH
ENERGY CORPORATION
|
||
|
/s/ XXX XXXXXXX
|
/s/ J. XXXXXX XXXXXXXX
|
|
|
Witness
|
Per
|
|
|
Witness
|
Per
|
SCHEDULE
I
Production
Lease No. PL #00-00-00-00
Kings,
Hants, and Colchester Counties
|
Reference
Map
|
Reservation
|
|
|
11
D 13 C
|
W
|
|
|
11
E 4 B
|
R S
T U V W
|
|
|
11
E 4 C
|
R S
T U V W
|
|
|
11
E 4 D
|
T U
V W
|
|
|
11
E 5 A
|
R S
T U V
|
|
|
11
E 5 B
|
R S
U
|
|
|
21
A 16 C
|
U
V*
|
|
|
21
A 16 D
|
T*
U* V W*
|
|
|
21
H 1 A
|
R
S* T U V W
|
|
|
21
H 1 B
|
R
U* X
|
|
|
00
X 0 X
|
X
|
|
|
00
X 1 D
|
R S
T U V
|
Total
hectares (less excluded and submarine areas)
192,074
ha (more or less)
* Areas
contain Water Supply Areas. Notice of any work within the Water
Supply Area is to be provided to the Registrar prior to
commencement. Ground disturbance activity within a Water Supply Area
is to be conducted only with the prior consent from the Department of
Environment.
The
following Sections are excluded from forming a part of the Agreement Lands
contained with this Schedule I
|
Reference
Map
|
Reservation
|
Tract
|
Section
|
|||
|
11
D 13 C
|
W
|
831
|
M+
|
|||
|
11
D 13 C
|
W
|
841
|
F+G+H+J
KL+O+P+ Q+
|
|||
|
11
D 13 C
|
W
|
851
|
A+B+
|
|||
|
00
X 00 X
|
X
|
0000
|
XXXX
XX
|
|||
|
00
X 00 X
|
X
|
0000
|
XXXX
Q
|
|||
|
11
E 4 B
|
S
|
102
|
CDEF
|
|||
|
00
X 0 X
|
X
|
000
|
XXXX
|
|||
|
11
E 4 B
|
S
|
113
|
L+M+N+O+
P+Q+
|
|||
|
11
E 4 B
|
S
|
143
|
A+B+C+
|
|||
|
11
E 5 A
|
T
|
604
|
N+
|
|||
|
11
E 5 A
|
T
|
614
|
A+B+C+D
EFGH JKLM NOPQ
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXxXx
XxXXX XXX
|
|||
|
11
E 5 A
|
T
|
634
|
H+JK+L+
M+NOP Q
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXxXx
XXXX MNOP Q
|
|||
|
11
E 5 A
|
T
|
654
|
A+BC+D+
EFGH JKLM NOPQ
|
|||
|
11
E 5 A
|
T
|
664
|
A+B+C+D+
EFGH JKLM NOPQ
|
|||
|
11
E 5 A
|
U
|
535
|
M+
|
|||
|
11
E 5 A
|
U
|
544
|
J+Q+
|
|||
|
11
E 5 A
|
U
|
724
|
H+JK+L
N+O+PQ
|
|||
|
11
E 5 A
|
U
|
704
|
L+M+NO+
P+
|
|||
|
11
E 5 A
|
U
|
694
|
J+K+L+M+
NOPQ
|
|||
|
11
E 5 A
|
U
|
684
|
J+M+NO+
P+Q
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXxXx
XxXXX NOPQ
|
|||
|
11
E 5 A
|
V
|
734
|
ABCD+
EFGH JKLM NOPQ
|
|
Reference
Map
|
Reservation
|
Tract
|
Section
|
|||
|
11
E 5 A
|
V
|
744
|
E+F+G+H+
J+KLM NOPQ
|
|||
|
11
E 5 A
|
V
|
754
|
A+B+CD
EFGH+ JKLM NOPQ
|
|||
|
11
E 5 A
|
V
|
764
|
All
Sections
|
|||
|
11
E 5 A
|
V
|
774
|
All
Sections
|
|||
|
11
E 5 A
|
V
|
784
|
All
Sections
|
|||
|
11
E 5 A
|
V
|
91-96
incl4
|
All
Sections
|
|||
|
11
E 5 A
|
V
|
974
|
ABCD
EFGH JKL+M+NO+P+Q+
|
|||
|
00
X 0 X
|
X
|
000
|
XXXX
EFGH J+KLM NO+P+Q+
|
|||
|
11
E 5 A
|
V
|
99-1024
|
All
Sections
|
|||
|
11
E 5 B
|
R
|
294
|
M+N+O+P+
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXXx
XxXxXxX XXXX XX
|
|||
|
11
E 5 B
|
S
|
104
|
N+
|
|||
|
11
E 5 B
|
S
|
114
|
E+K+L+M+
NOP+Q+
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXXx
XxXxXX XXXX XX
|
|||
|
00
X 0 X
|
X
|
13-14incl4
|
All
Sections
|
|||
|
11
E 5 B
|
S
|
154
|
A+B+C+D
EFGH+ JKLM NOPQ
|
|||
|
11
E 5 B
|
S
|
164
|
E+K+L+M+
NOPQ+
|
|||
|
00
X 0 X
|
X
|
174
|
N+
|
|||
|
11
E 5 B
|
S
|
314
|
A+B+C+E+F+GHJKL+M+NOPQ
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXXx
XxXxXxX XXXX XX
|
|||
|
00
X 0 X
|
X
|
33-36incl4
|
All
Sections
|
|||
|
11
E 5 B
|
U
|
454
|
D+E+F+K+
L+MNO P+
|
|||
|
11
E 5 B
|
U
|
444
|
A+B+CD
EFGH JKLM NOPQ
|
|||
|
11
E 5 B
|
U
|
434
|
All
Sections
|
|||
|
11
E 5 B
|
X
|
000
|
XxXx
|
|||
|
00
X 0 X
|
X
|
000
|
XxXxXXx
XxX
|
|||
|
11
E 5 B
|
U
|
524
|
A+B+CD
EFGH+ J+KLM NOPQ
|
|||
|
11
E 5 B
|
U
|
53-54incl4
|
All
Sections
|
|||
|
11
E 5 B
|
U
|
67-70incl4
|
All
Sections
|
|||
|
11
E 5 B
|
U
|
714
|
A+B+C+D+
EFGH JKLM NOPQ
|
|||
|
11
E 5 B
|
U
|
724
|
D+
|
|||
|
21
A 16 C
|
U
|
466
|
All
Sections
|
|||
|
21
A 16 C
|
U
|
476
|
All
Sections
|
|||
|
21
A 16 D
|
V
|
767
|
JKLM
NOPQ
|
|||
|
21
A 16 D
|
V
|
777
|
JKOP
Q
|
|||
|
21
A 16 D
|
V
|
000
|
XXXX
XXXX XXXX XX
|
|||
|
21
A 16 D
|
V
|
937
|
BCDE
FGHJ KLMN OPQ
|
|||
|
21
A 16 D
|
V
|
947
|
XXXX
|
|||
|
00
A 16 D
|
V
|
997
|
CDEF
GM
|
|||
|
00
X 00 X
|
X
|
0000
|
XXXX
EFGH JMN
|
|||
|
00
X 00 X
|
X
|
0000
|
XXXX
FGHJ K
|
|||
|
21
H 1 A
|
R
|
28
|
MNO
|
|||
|
21
H 1 A
|
R
|
38
|
GHJK
LNOP Q
|
|||
|
21
H 1 A
|
R
|
198
|
AFGH
JKLO PQ
|
|||
|
21
H 1 A
|
R
|
20-21incl8
|
All
Sections
|
|||
|
21
H 1 A
|
R
|
228
|
ABCD
EFGH JKLM XXX
|
|||
|
00
X 0 X
|
X
|
000
|
XX
|
|||
|
00
X 1 A
|
R
|
288
|
ABCD
EFGH KLMN O
|
|||
|
21
H 1 A
|
R
|
298
|
All
Sections
|
|||
|
21
H 1 A
|
R
|
308
|
ABHJ
Q
|
|||
|
21
H 1 A
|
S
|
359
|
N+
|
|||
|
21
H 1 A
|
S
|
369
|
J+K+L+M+
N+O+P+Q+
|
|||
|
21
H 1 A
|
T
|
379
|
A+BCD+
F+GHK
|
|||
|
21
H 1 A
|
T
|
389
|
D+
|
|||
|
21
H 1 B
|
R
|
259
|
J+Q+
|
|
Reference
Map
|
Reservation
|
Tract
|
Xxxxxxx
|
|||
|
00
X 0 X
|
X
|
0000
|
XxXxXxXx
|
|||
|
00
X 1 B
|
V
|
9410
|
N+
|
|||
|
21
H 1 C
|
R
|
14
|
E+F+G+H+
JKLM+ NOPQ
|
|||
|
21
H 1 C
|
R
|
24
|
J+K+L+O+
P+
|
|||
|
21
X 0 X
|
X
|
000
|
XxXxXxX
|
|||
|
00
X 1 C
|
R
|
214
|
D+E+FK+
L+MNO P+Q+
|
|||
|
21
H 1 C
|
R
|
224
|
Q+
|
|||
|
21
H 1 C
|
R
|
234
|
A+B+C+F+
GH+J+K L+N+OP Q
|
|||
|
21
H 1 C
|
R
|
244
|
ABC+F+
G+HJK L+M+NO PQ
|
|||
|
21
H 1 C
|
R
|
25-26incl4
|
All
Sections
|
|||
|
21
H 1 C
|
R
|
274
|
A+E+G+H+
JK+L+M+ NOPQ
|
|||
|
21
H 1 C
|
R
|
284
|
A+BCD
EFGH JKLM NOPQ
|
|||
|
21
H 1 C
|
R
|
294
|
AB+F+G
HJKL+ M+N+OP Q
|
|||
|
21
X 0 X
|
X
|
000
|
XxXx
|
|||
|
00
X 1 D
|
S
|
114
|
A+BCD
EFGH+ J+KLM NOPQ
|
|||
|
21
H 1 D
|
S
|
12-14incl4
|
All
Sections
|
|||
|
21
X 0 X
|
X
|
000
|
XxXxXxXx
|
|||
|
00
X 1 D
|
S
|
3212
|
N+
|
|||
|
21
X 0 X
|
X
|
0000
|
XxXxXxXx
XxXxXx
|
|||
|
00
X 1 D
|
S
|
3412
|
A+
|
|||
|
21
X 0 X
|
X
|
000
|
XxXXxXx
XXXx
|
|||
|
00
X 1 D
|
S
|
35-36incl4
|
All
Sections
|
|||
|
21
H 1 D
|
T
|
37-38incl4
|
All
Sections
|
|||
|
21
H 1 D
|
T
|
394
|
C+DEF+
L+MNO+ P+
|
|||
|
21
H 1 D
|
T
|
4012
|
A+H+
|
|||
|
21
X 0 X
|
X
|
0000
|
XxXxXxXx
|
|||
|
00
X 1 D
|
T
|
5612
|
L+M+N+O+
P+
|
|||
|
21
H 1 D
|
T
|
59-62incl4
|
All
Sections
|
|||
|
21
H 1 D
|
T
|
634
|
B+CDE
FG+H+J+ KLMN OPQ
|
|||
|
21
X 0 X
|
X
|
0000
|
XxXxXx
|
|||
|
00
X 1 D
|
T
|
6612
|
E+F+G+
|
|||
|
21
H 1 D
|
T
|
7011
|
JKPQ
|
|||
|
21
X 0 X
|
X
|
0000
|
XXXX
|
|||
|
00
X 1 D
|
U
|
7411
|
CDEF
|
|||
|
21
X 0 X
|
X
|
0000
|
XXXX
|
|||
|
00
X 1 D
|
V
|
914
|
C+D+EF+
G+H+J+K LMNO PQ
|
|||
|
21
H 1 D
|
V
|
924
|
M+N+O+P
Q
|
|||
|
21
H 1 D
|
V
|
974
|
K+L+O+P+
Q+
|
|||
|
21
H 1 D
|
V
|
98
|
B+C+D+G+
M+N+
|
|||
|
21
X 0 X
|
X
|
00
|
XxXxXxXxXxXxXxXxXXXXXXx
|
|||
|
00
X 1 D
|
V
|
100
|
D+EF+G+
H+JKL MNOP Q
|
|||
|
21
H 1 D
|
V
|
101
|
A+B+CD
EFGH JKLM NOPQ
|
|||
|
21
H 1 D
|
V
|
102
|
All
Sections
|
+
portions of Section only
1
Department of National Defence Lands
2
Non-Mineral Registration Xx. 000
0 Xxxxxx’x
Xxxxxxxxxx Xxxx
4
Submarine lands
5 Xxxxxxx
Provincial Park
6 Uranium
Closure
7
Non-Mineral Registration No. 001
8
Non-Mineral Registration No. 002
9 Indian
Reservation Xx. 00 - Xxxxxx
00 Xxxxx
Xxx Xxxxxxxx Xxxx
11 Mineral
Lease No. 00-1
12
Xxxxxxxx Protected Beach
SCHEDULE
II
Development
Program
Production
Lease No. PL#00-00-00-00
This
schedule provides the details of the Development Program, revised from that
which was submitted as part of Elmworth’s Development Plan dated June 24
2008. The first table is an updated Table 1-1 which outlines the
minimum work required prior to specific deadlines. This table has
been revised for prevailing economic and operational conditions. The
second is a schedule of estimated annual capital expenditures.
The total
well count of ten has not changed from the Development Plan as originally
submitted. Three of those xxxxx had already been drilled prior to the
effective date, during the period in which the Development Plan was being
approved by the Department of Energy, leaving seven xxxxx to be drilled within
the first five years of the lease. The change from Elmworth’s
original submission is the need for an additional year to drill the remaining
Kennetcook xxxxx, and two additional years for the remaining outlying
xxxxx.
Two more
xxxxx will be drilled in the Kennetcook area before the second anniversary of
the lease or the end of Phase I, approximately March 2011, and the remaining 5
xxxxx will be drilled in the outlying areas before the 5th
anniversary, or end of Phase II, approximately March 2014.
If xxxxx
are drilled sooner than outlined in the schedule, they will count towards the
final tally of xxxxx required under this program.
|
Revised
Table 1-1
|
||||||||||||||
|
Delineation
Program Minimum Drilling Commitment
|
||||||||||||||
|
Area
|
Anniversary of
Effective Date
|
Minimum
Well
Commitment
per original
Table 1-1
|
Drilled
during
approval
process
|
Xxxxx
remaining
|
||||||||||
|
Kennetcook
|
2nd
|
4
|
2
|
2
|
||||||||||
|
Xxxxxxx
|
5th
|
2
|
1
|
1
|
||||||||||
|
Avon
|
5th
|
2
|
0
|
2
|
||||||||||
|
Wolfville
|
5th
|
2
|
0
|
|
2
|
|||||||||
|
Total
|
10
|
3
|
7*
|
|||||||||||
* These
xxxxx are to be drilled by the end of the 5th year of
this lease agreement
The
second table shows estimated capital expenditures by calendar
year. Although future costs may change, estimated year 1
capital of $2 million is the value on which the initial 10% performance bond
should be based. Note that completion costs beyond year 1 are not included due
to geologic uncertainty of whether xxxxx will be completed if successful versus
abandoned if dry
Estimated
Annual Activity and Capital Expenditure to Satisfy Minimum Work Commitment
based
on
Table 1-1
|
Prior to
Anniversary
|
Xxxxx Drilled
|
Drilling
Capital
($million)
|
Xxxxx
Completed
|
Completion
Capital
($million)
|
Seismic
Work
|
Seismic
Capital
($million)
|
Total
Capital
($million)
|
||||||||||||||||||
|
approval
period
(activity)
|
3
|
$ | 12.0 | 0.5 | $ | 4.0 |
Processing
|
$ | 0.1 | $ | 16.1 | ||||||||||||||
|
1st –
2010
|
0
|
$ | 0.0 | 2.5 | $ | 1.5 |
110
km 2D
|
$ | 0.5 | $ | 2.0 | ||||||||||||||
|
2nd –
2011
|
2
|
$ | 3.0 | 0 | * | $ | 0.0 |
Processing
|
$ | 0.2 | $ | 3.2 | |||||||||||||
|
3rd -
2012
|
2
|
$ | 3.0 | 0 | * | $ | 0.0 | $ | 3.0 | ||||||||||||||||
|
4th –
2013
|
2
|
$ | 3.0 | 0 | * | $ | 0.0 | $ | 3.0 | ||||||||||||||||
|
5th –
2014
|
1
|
$ | 1.5 | 0 | * | $ | 0.0 | $ | 1.5 | ||||||||||||||||
|
Total
Phase I & II
|
7
|
$ | 10.5 | 2.5 | $ | 1.5 | $ | 0.7 | $ | 12.7 | |||||||||||||||
|
Grand total
|
10
|
$ | 22.5 | 3 | $ | 5.5 | $ | 0.8 | $ | 28.8 | |||||||||||||||
Note: Anticipated
schedule of work may change based on geological results, operational
restrictions and annual access to capital funding.
Production Lease – Years Six
through Ten
Within 60
days of the 5th
anniversary of the Effective Date in 2014, the Lessee shall submit to the
Minister a revised Development Plan to describe its planned activities for the
five remaining years of the Lease. This revised Development Plan will
review the results of the work program undertaken during the first five years of
the lease, and will provide an estimate of work expected to be undertaken in the
next five years.
SCHEDULE
III
Insurance
Production
Lease No. PL#00-00-00-00
1.
Commercial General Liability Insurance
This
insurance will include the following provisions:
(a)
policy limit of liability of at least Five Million Dollars ($5,000,000.00) per
occurrence (can be structured as primary plus supplemental layers, or primary
plus umbrella and/or excess);
(b)
products hazards and completed operations coverage subject to separate annual
aggregate limits equal to the policy limit of liability;
(c)
personal injury liability;
(d)
blanket written and oral contractual liability;
(e)
contingent employer’s liability;
(f) broad
form occurrence property damage;
(g)
non-owned automobile liability;
(h)
tenants legal liability (broad form);
(i)
cross-liability and separation of interest with respect to each
insured;
(j)
insurer must give ninety (90) days prior written notice of cancellation of or
material change to the policy to the Province and the Lessee;
(k)
primary insurance without right of contribution of any other insurance carried
by the Province.
(l)
Environmental Impairment Liability (may be on a separate policy and may be
issued on “claims made” basis).
2.
Automobile Liability Insurance
Automobile
Liability Insurance shall insure all licensed vehicles owned, or operated by the
Lessee. This insurance will include the following
provisions:
(a)
policy limit of liability of at least Two Million Dollars ($2,000,000.00) per
occurrence (can be structured as primary plus supplemental layers, or primary
plus umbrella and/or excess);
(b)
insurer must give ninety (90) days prior written notice of cancellation of or
material change to the policy to the Lessee and the Province;
(c) the
Lessee shall ensure that all subcontractors have Automobile Liability Insurance
in the amount of Two Million Dollars ($2,000,000.00) per occurrence with a
maximum deductible of Fifty Thousand ($50,000.00) per occurrence.
3. Workers’
Compensation Insurance
(a)
Workers’ Compensation Insurance shall be maintained for the Lessee’s employees
in accordance with the requirements of the laws of the Province of Nova
Scotia. The Lessee must ensure that evidence of coverage required by
law is provided by all subcontractors.
SCHEDULE
IV
Additional Terms and
Conditions
Production
Lease No. PL#00-00-00-00
The
Approval in Principle, of the Production Lease will be in a phased approach for
the 10-year term of the Production Lease; with the following structural
breakdown:
Phase One
– Two (2) Years from the Effective Date
Phase Two
– Up to the fifth (5th)
Anniversary Date
Phase
Three – To the end of the initial term
The
additional conditions identified are:
|
Condition
1
|
A
Water Disposal Plan will be developed on or before the second Anniversary
Date of the Lease, the Lessee must file a water disposal plan, acceptable
to the Minister of Energy that will address large scale water
disposal.
|
|
|
Condition
2
|
On
each Anniversary Date of the Lease the Lessee must present, in a form
acceptable to the Minister, a detailed technical report and presentation
that addresses reservoir characteristics, well productivity, recovery
factors, completions and any reservoir updates of the project as
prescribed by the Minister.
|
|
|
Condition
3
|
On
each Anniversary Date of the Lease the Lessee will provide, in a form
acceptable to the Minister, a report on the economic benefits of the
project in terms of local goods and services used and procurement
opportunities for Nova Scotians.
|
|
|
Condition
4
|
The
Lessee must adhere to the requirements of the Environment Act for all
work proposed under the approved Development Program.
|
|
|
Condition
5
|
Following
the completion of each of Phases One and Two of the Development Program,
the Minister and the Lessee will complete a technical evaluation of the
focused lands (as described in the Development Program), and if, in the
opinion of the Minister the technical information does not establish
possible reserves in the focused area then at the request of
the Minister, the Lessee shall surrender to the Minister such portions of
the focused area lands as determined by the Minister.
|
|
|
Condition
6
|
Following
the completion of each of the first two milestones of the Development
Program, the Minister will assess, based upon the Lessee's reporting of
its activities to prove reserves, whether on the basis of those
activities, any Lands other than the focused area lands should be
surrendered. At the request of the Minister, the Lessee shall surrender to
the Minister such portions of the Lands as determined by the Minister on
this basis.
|
|
|
Condition
7
|
The
Lessee must file an abandonment and reclamation program, acceptable to the
Minister of Energy on or before the fifth Anniversary Date of the
Lease.
|
|
|
Condition
8
|
The
Lessee agrees to participate in a consultation program with respect to the
Development Program proposed under this Lease, including any community
based committee established by the Department. The Lessee agrees to use
reasonable efforts to identify aboriginal groups who may have an interest
in this proposed natural gas project and establish initial contact with
them. As the Department is consulting with the aboriginal community
respecting this Lease, the Lessee will work with the Department to
discharge this
duty.
|
SCHEDULE
V
Well Termination
Guidance
Production
Lease No. PL#00-00-00-00
PART
6
WELL
TERMINATION
Suspension
or Abandonment
57. The licensee shall ensure
every well and facility is abandoned in accordance with an abandonment plan that
has been submitted to and approved by the Chief Operations Officer and the Chief
Environmental Officer.
58. The licensee shall ensure
every well that is abandoned or suspended
(a) can be readily
located,
(b) is left in a condition
that prevents any formation fluid from flowing through or
escaping
from the well bore and that provides for isolation of all
(i)
petroleum bearing zones,
(ii)
discrete pressure zones, and
(iii)
potable water zones, and
(c) is monitored and
inspected to maintain its continued integrity and to prevent
pollution.
Responsibility
to Abandon
59. (1) If the licensee fails
to abandon a well or facility in compliance with section 58, the Chief
Operations Officer may by order direct that the well be abandoned in accordance
with the regulations by the owners of the working interests in the well or by
any one or more of those owners and shall specify in the order the deadline for
compliance.
(2) The
Chief Operations Officer may order that a well or facility be abandoned at
Government expense if the licensee fails to abandon the well or facility
pursuant to section 58 and the owners of the working interests in the well or
facility fail to comply with an order to abandon the well or facility issued
under subsection (1).
(3) Where
the Government incurs abandonment costs in respect of a well or facility as a
result of an order under subsection (2), the Government may recover those
abandonment costs from the security deposit held for that well or
facility.
(4) If
the security deposit is insufficient to cover the abandonment costs
(a) subject to paragraph (b),
the owners of the working interests in the well or facility are primarily liable
to the Government for the abandonment costs in proportion to the respective
percentage shares of those working interests;
(b) where the owner or any
one or more of the owners of a working interest is a
corporation,
(i) the
owner or owners of the working interest, and
(ii) the
person or persons who control that corporation, are jointly and severally liable
to the Government for the portion of the abandonment costs that is proportionate
to the percentage share of that working interest.
(5) If
the Government is unable to recover that portion of abandonment costs of a well
from the owners of the working interest and any other persons referred to in
subsection (2), the Government may recover any remaining unpaid amount from the
holder of the petroleum lease where the well was drilled.
Drilling
Rig Removal
60. No person shall remove or have removed
a drilling rig from a well drilled under these Regulations, unless the well has
been terminated in accordance with these Regulations.
