Exhibit 10.28
THIS DEED OF AGREEMENT is made on the 26 day of July 2006
BETWEEN
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(1) BALTIC PETROLEUM (E&P) LIMITED a company incorporated in England
under company number 05303991 and whose registered office is at 0-0
Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX, Xxxxxxx ("XX"); and
(2) SIBERIAN ENERGY GROUP INC a corporation incorporated under the
laws of the state of Nevada, United States if America, and whose
principal place of business is located at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, Xxxxxx Xxxxxx ("SEG"); and
(3) OOO ZAURALNEFTEGAZ a limited liability company incorporated under
the laws of the Russian Federation under the main state registration
number (ORGN) 1024500513950 located at 00 Xxxxx Xxxxxx, Xxxxxx 000000,
Xxxxxx Oblast, Russian Federation ("ZNG").
RECITALS
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(A) On 14th October 2005 BP, SEG and Zauralneftegaz Limited, a
company incorporated in England under company number 05525360 and
whose registered office is at 0-0 Xxxxxxxxx Xxxxxx, Xxxxxx X0 0XX,
Xxxxxxx ("ZL") entered into a joint venture shareholders agreement
("JV AGREEMENT") relating to ZL.
(B) On 9th November 2005 the JV Agreement was completed and pursuant
to the terms thereto a loan agreement ("LOAN AGREEMENT") was entered
into on this date between Caspian Finance Limited, a company
incorporated in England under company number 05530897 and whose
registered office is at Millenium Xxxxxx Xxxxx, 0 Xxxxxxx Xxxx, Xxxxxx
XX0X 0XX, Xxxxxxx (and which is an associated company of BP) ("CF")
(1) and ZNG (a 100% subsidiary company of ZL) (2).
(C) Pursuant to ongoing discussions between SEG and BP they have
agreed to enter into an additional agreement and to address other
matters on the terms as detailed herein.
(D) ZNG has entered into this Agreement by way of its agreement to
its terms and its undertaking to execute all such documents and do all
such things to give effect to the said terms.
NOW IT IS AGREED AS FOLLOWS:
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1. ADDITIONAL DRAWDOWN
In consideration of SEG entering into this Agreement and effecting (or
procuring there are effected) all of the matters detailed herein (and
notwithstanding that such payments are not yet due for payment) BP agrees
to procure that CF will allow the drawdown by ZNG within 10 days of the
date hereof of certain of the sums detailed in clause 8.1 (b) of the Loan
Agreement and being:
(a) the sum of $185,000 (ONE HUNDRED AND EIGHTY FIVE THOUSAND UNITED
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STATES DOLLARS) to OOO Business Standard ("BS") in consideration of
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BS' assistance in the granting to ZNG of the licences detailed at
Items (A), (B) and (G) of Schedule 2 to the Loan Agreement in full and
final settlement of all sums due by ZNG to BS (and so that no further
drawdown shall be permissible by ZNG under the Loan Agreement in
respect of payments to BS); and
(b) the sum of $170,000 (ONE HUNDRED AND SEVENTY THOUSAND UNITED
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STATES DOLLARS) to Messrs Xxxxxx Xxxxx and Xxxxxx Xxxxxxx in full and
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final settlement of all sums due to them by ZNG; and
(c) the sum of $44,000 (FORTY FOUR THOUSAND UNITED STATES DOLLARS)to
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Mr Mylarshikov in full and final settlement of all sums due to him by
ZNG.
2 FURTHER LOANS
2.1.1 The parties agree that, subject always to BP (or all or any of
its holding or subsidiary companies, including CF) being able to raise
suitable finance on terms acceptable to BP at its discretion on the
international capital markets and further subject to clause 3 hereof,
it is intended that CF and ZNG will enter into a further loan
agreement (" NEW LOAN AGREEMENT") on terms acceptable to CF (but
intended by the parties hereto to be on substantially the same terms
as the Loan Agreement including but not limited to interest amounts
and due dates) under the terms of which CF will provide additional
loans to ZNG in the currently envisaged sum of approximately
US$12,000,000 (TWELVE MILLION DOLLARS) to allow the carrying out of
seismic and drilling on a precise drawdown under budget and work
programme terms to be agreed between CF and the board of ZL ( acting
on behalf of ZNG)
2.1.2 The parties intend that upon the drawdown of all sums under the
New Loan Agreement that they will consider raising project finance or
similar debt to refinance the loans of ZNG and provide further
financing for ZNG from an investment grade institution (such as BNP
Paribas) subject to the same being available on commercial terms.
3 GROSS OVERRIDE ROYALTY
3.1.1 Upon (and conditional on) CF and ZNG entering into the New Loan
Agreement detailed in clause 2 above the SEG, BP and ZNG will at the
same time enter into a gross override royalty agreement in form
acceptable to BP in order to compensate BP and its shareholders for
any dilution that they may suffer as a result of procuring the
provision of finance to ZNG detailed in clause and under the terms of
which ZNG shall xxxxx x xxxxx override royalty ("GOR") to BP equal to
3% of the gross turnover on all production of oil and gas at the
wellhead in Kurgan by ZNG (or any holding, associated or affiliated
company) until BP shall have received the total aggregate figure of
US20,000,000 (TWENTY MILLION UNITED STATES DOLLARS)("GOR SUM") in oil
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at the relevant wellhead and at the oil valuation detailed in the
financial records of ZL and ZNG, which amount will be at the best
achievable price.
3.1.2 In the event that the actual sum loaned by or on behalf of BP to
ZNG under the New Loan Agreement is less than or greater than (as the
case may be) the sum detailed in clause 2.1 above then the value of
the GOR Sum shall be then decreased or increased (as the case may be)
on a pro rata basis.
3.1.3 BP shall be responsible for payment of all of the relevant
taxation and the transport costs etc due on the export or sale of all
or any oil or gas extracted under the GOR.
3.1.4 SEG and BP agree that subject to ZNG producing sufficient
cashflow to service the interest and capital repayments due under the
Loan Agreement and, where applicable, the GOR, then BP and SEG will
agree that an amount out of distributable reserves of ZNG (and ZL) is
allocated as available to pay distributions to SEG and BP on the terms
of clause 10 of the JV Agreement during the term of payment of the GOR
detailed in clause 3.1.3 above.
4 GENERAL
4.1 COUNTERPARTS
This Agreement may be entered into in any number of counterparts,
all of which taken together shall constitute one and the same
instrument. Any party may enter into this Agreement by executing any
such counterpart.
4.2 GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance
with English Law and all of parties irrevocably agree that the courts
of England shall have exclusive jurisdiction to settle any dispute
which may arise out of or in connection with this the Agreement and
that waive any right to object to proceedings in any court on the
basis that they have been brought in an inconvenient form.
4.3 ASSIGNMENT
No party may assign this Agreement to any other party without the
written consent of the other parties.
4.4 OTHER AGREEMENTS
This Agreement shall be executed as a deed but shall not
supersede or vary the JV Agreement of the Loan Agreement save as
expressly detailed herein and shall be without prejudice to all or any
rights of SEG or BP under the JV Agreement . Each party confirms it
has taken independent legal advice as to all matters in this Agreement
and the fair nature of the same.
IN WITNESS WHEREOF THE PARTIES HAVE THIS DAY SET THEIR HANDS AND
SEALS.
EXECUTED AS A DEED BY )
BALTIC PETROLEUM (E&P) LIMITED )
Acting by a director and a )
Director/ Secretary )
/s/ Xxxxx Xxxxxx
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DIRECTOR
/s/ Xxxxxx Xxxxx
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DIRECTOR/SECRETARY
EXECUTED AS A DEED BY )
SIBERIAN ENERGY GROUP INC )
Acting by Xxxxx Xxxxxx ) /S/ XXXXX XXXXXX
Chief Executive Officer )
EXECUTED AS A DEED BY )
OOO ZAURALNEFTEGAZ )
Acting by Xxxx Xxxxxxxxx ) /s/ Xxxx Xxxxxxxxx
General Director )
