EXHIBIT 10.15
INDEPENDENT ENERGY UK LIMITED (1)
-and-
ISO (U.K.) LIMITED AND
ARCHEAN ENERGY (U.K.) LIMITED (2)
-AND-
ALTWOOD PETROLEUM LIMITED (3)
___________________________________
FARMOUT AGREEMENT RELATING TO THE
UK LANDWARD EXPLORATION LICENCES
OF INDEPENDENT ENERGY UK LIMITED
___________________________________
LICENCE FARMOUT AGREEMENT
-------------------------
THIS FARMOUT AGREEMENT is made the 11th day of January 1999
BETWEEN
(1) INDEPENDENT ENERGY UK LIMITED whose registered office is at 00 Xxxxxxxxx
Xxxxxx, Xxxxxx XX0X 0XX (hereinafter called the "Farmor"); and
(2) ISO (U.K.) LIMITED whose registered office is at 4 & 0 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxx XX0 0XX ("ISO"); and
ARCHEAN ENERGY (U.K.) LIMITED whose registered office is at 4 & 0 Xxxxx
Xxxx, Xxxxxxxxxx, Xxxxx XX0 0XX ("Archean")
(the parties of the second part being hereinafter referred to as the
"Farmee"); and
(3) ALTWOOD PETROLEUM LIMITED whose registered office is at Xxxxxxx Xxxxx,
Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx, XX0 0XX, XX ("Altwood").
The Farmor and the Farmee being hereinafter collectively referred to as the
"Parties".
WHEREAS:-
(A) The Farmor and Altwood are together the beneficial owners of the entire
undivided interest in the Licence Areas.
(B) The Farmor holds a ninety six percent (96%) interest in the Farmin Areas
and Option Areas contained within the Licence Areas.
(C) The Farmee has been assigned the rights and liabilities of the Discovery
International Group (DIG) in the Letter Agreement by the Assignment
Agreement included as Schedule 11 hereto.
(D) The Farmee wishes to earn an interest in the Farmin Areas and an option
over the Option Areas by performing the Farmin Works as provided herein.
(E) By a Deed of Cross Indemnity in the form attached hereto as Schedule 9 of
even date with the Assignment of Percentage Interests, the Parties have
given certain undertakings with respect to the fulfilment of their
obligations as Licensees in so far as such obligations affect the Farmin
Areas.
(F) The Secretary's confirmation that he has no objection in principle to the
arrangements contemplated by this Agreement has been obtained in the letter
of 9th December 1998 from the Department of Trade and Industry.
NOW THEREFORE, in consideration of the mutual covenants and undertakings herein
expressed the Parties agree as follows:-
1. DEFINITIONS AND INTERPRETATIONS
1.1 Definitions
In this Agreement including the recitals, the following terms and
expressions shall have the following respective meanings:
"Abandon" - or any derivative of the word "Abandon" means:
(a) properly plugging and abandoning a Well in
compliance with all applicable Regulations;
(b) site restoration of the Wellsite to the
satisfaction of the terms of the planning
consent, and of any governmental body having
jurisdiction with respect thereto, and;
(c) the furnishing by the Farmee to the Farmor of
satisfactory evidence of compliance with the
foregoing requirements;
"Abandonment Costs" - means all costs and expenses incurred in or
incidental to the Abandonment of a Well and the
restoration of a Wellsite;
"Affiliate" - means, with respect to a Party, a person,
corporation, company or other legal entity or
partnership which controls, is controlled by or is
under common control with that Party and, for the
purposes of this definition, "control" means the
direct or indirect ownership of, or other ability
to direct, more than 50% of the voting rights in a
corporation, company or other legal entity or
partnership;
"Area" - means both a Farmin Area and an Option Area;
"Business Day" - means any day on which banks in London, England are
open to transact commercial business generally,
excluding any Saturday, Sunday or bank holidays in
England and Wales;
"Buy-in Agreement" - means the "Licence Buy-in Agreement" under which
the Farmor has arranged to sell a percentage
interest in the Farmin Areas and the right to buy
an interest in the Option Areas to the Buy-in
Party;
"Buy-in Party" - means Vulcan Energy Limited;
"Capping and - means to install production casing or liner
Suspension" and to shut-in the Well and suspend
operations in accordance with good oilfield
practice, and to secure the wellhead in a lockable
cage, and a security fenced area with lockable
gate, and the site enclosed by stock proof fencing;
"Capping Costs" - means all costs and expenses incurred in or
incidental to the Capping and Suspending of a Well
and Wellsite;
"Complete" - or any derivative of the word "Complete" means the
acquisition and installation of all tubing, all
subsurface equipment necessary to conduct
production testing and production, including pump
and sufficient tankage, if initially required, to
production test the Well, and all other equipment,
all procedures and all material necessary for the
permanent preparation of a Well for the taking of
production up to and including the outlet valve on
the wellhead;
"Completion Costs" - means all costs and expenses incurred in or
incidental to the Completion of a Well;
"Condensate" - means a mixture of mainly pentanes and heavier
hydrocarbons that may be contaminated with sulphur
compounds, that is recovered or is recoverable at a
Well from an underground reservoir and that may be
gaseous in its virgin reservoir state but is
liquid at the conditions under which its volume is
measured or estimated;
"Contract Depth" - means the lesser of:
a) the depth sufficient to evaluate to the
reasonable satisfaction of Farmor all zones
comprised in each of the respective Farmin
Areas, down to and including the geological
formations set forth in Schedule 3 hereto, and;
- b) the depths given in Schedule 3 hereto.
"Contract Operator" - means Archean;
"Crude Oil" - means a mixture mainly of pentanes and heavier
hydrocarbons that may be contaminated with sulphur
compounds, that is recovered or is recoverable from
a Well and that is liquid at the conditions under
which its volume is measured or estimated and
includes all other hydrocarbon mixtures so
recovered or recoverable except raw gas and
Condensate;
"Drill" - or any derivative of the word "Drill" means the
drilling, coring, logging, wireline and drill stem
testing of a well to explore for and produce
Petroleum;
"Drilling Costs" - means all costs and expenses incurred in or
incidental to the Drilling of a Well and, in the
case of a Well that is not Capped for the
subsequent taking of production, includes the
Abandonment Cost of the Well;
"Effective Date" - means the date hereof;
"Equip" - or any derivative of the word "Equip" means the
installation of equipment required to produce
Petroleum from a Well including, without
limitation, a pump or other artificial lift
equipment, the installation of flowlines on the
Wellsite and production tankage serving such Well,
where necessary a heater, dehydrator, separator,
compression facilities or other facility for the
initial treatment of the Petroleum produced from
such Well, in order to treat or prepare such
production for
transport to market, but excluding costs incurred
beyond the point of entry into a gathering system,
plant or other common facility;
"Equipping Costs" - means all costs and expenses incurred in or
incidental to the Equipping of a Well;
"Farmin Account" - is the joint bank account holding monies to be
used for the conduct of the Farmin Works;
"Farmin Areas" - are the seven (7) carve-out areas from the Farmin
Licences, Farmin Percentage interests in which are
to be earned by the Farmee by drilling the Xxxxxx
Xxxxx. Such areas are detailed by the National Grid
References in Schedule 2;
"Farmin Licences" - means the UK Landward Petroleum Licences containing
the Farmin Areas, as set forth in Schedule 1
hereto;
"Farmin Percentage" - has the meaning attributed to it in Clause 4.1;
"Farmin Procedure" - means the procedure set forth in Schedule 12
hereto;
"Farmin Period" - is the period of time from the Effective Date until
the fulfilment of the Farmin Works in accordance
with this Agreement;
"Farmin Well" - is any one of the seven (7) xxxxx to be drilled by
the Farmee upon the Farmin Areas and constituting
part of the Farmin Works, as applicable;
"Farmin Works" - means all work performed by the Farmee in the
Drilling to Contract Depth, Capping and Suspension
or Abandoning, as the case may be, of a Farmin Well
on each of the seven Farmin Areas, including
shooting and the processing of at least 150
kilometres of 2D seismic data over the Option
Areas;
"Farmin Works - are the costs, and expenses of executing the Farmin
Costs" Works. Such costs to be inclusive of but not
restricted to the costs of seismic permitting,
access, damages, the
seismic survey contract, the drilling site
construction and access, the drilling contractor,
waste disposal, drilling supplies and fuel, all
well evaluation surveys, wireline and drill stem
testing, casing, cementing, Capping and Suspension
or Abandonment;
"Finishing Date" - is the date upon which any one of the Xxxxxx Xxxxx
has been Capped and Suspended or Abandoned in
accordance with this Agreement and to the
satisfaction of the HSE/DTI;
"GAAP" - means generally accepted accounting principles for
the United Kingdom;
"Gross Proceeds" - means the total amount payable by the purchaser of
Petroleum at the Gross Sales Price;
"Gross Revenue" - means the difference between Gross Proceeds and the
transportation costs incurred or allocated in
connection with the applicable Petroleum produced
from a Well from the well site to the point of
sale, treatment costs to render Crude Oil and
Condensate saleable and, if sales of Crude Oil and
Condensate are not made at the outlet of the on-
site tankage for the particular Well, the
transportation of such Crude Oil and Condensate to
the point of sale, and for Natural Gas, the actual
costs payable to third parties to gather, compress,
treat, process and transport such Natural Gas up to
the point of sale or, if such gathering,
compressing, treatment, processing or
transportation facilities owned by the Farmee are
used to gather, compress, treat, process or
transport such Natural Gas, a reasonable fee,
comprised of both operating and return on capital
components, for the use of such facilities;
"Gross Revenue - has the meaning attributed to it in Clause 8.4 and
Interest" as set forth in Clause 7.1;
"Gross Sales Price" - is the price obtained for the sale of Petroleum
produced from the Areas at the point of sale, to a
non-Affiliated Company, or else as an arms length
transaction at a price
which shall never be less than the Market Price, as
agreed by the Joint Venture and Gross Revenue
Interest Parties or subject to determination by a
third party expert acceptable to the Farmor and the
Farmee, to be ascertained and funded in accordance
with the same procedure provided for in Clause 4.1;
"HSE/DTI" - are the two governmental organisations responsible
for granting operational consents and having
control over petroleum reservoir matters (the
Health and Safety Executive's Offshore Safety
Division, and the Department of Trade & Industry's
Oil and Gas Division);
"Joint Operating - is an agreement controlling the conduct of
Agreement" the Joint Venture and joint operations on the
(JOA) Farmin Areas, the principles of which are given
in Schedule 7 and the Accounting Procedure in
Schedule 8 hereto;
"Joint Venture" - means the joint venture between the Parties
pursuant to the Joint Operating Agreement;
"Joint Venture - a bank account holding all monies of the Joint
Account" Venture;
"Letter Agreement" - is the letter of the 27th August 1998, from the
Farmor to DIG, signed by Mr W E Xxxxx for the
Farmor, and countersigned by Xx Xxxx Xxxxxx for the
Farmee, and included as Schedule 10 hereto;
"LIBOR" - means the rate announced from time to time as the
London Inter-Bank Offering Rate by the main branch
of the Licence Operator's principal bank in London,
England;
"Licence" - means either or both a Farmin Licence or Option
Licence as the context requires;
"Licence Areas" - the areas subject to the UK Landward Petroleum
licences held by the Farmor and Altwood at the
effective date of this Agreement, as described in
Schedule 1 hereto;
"Licence Operator" - is the licensee approved by the Department of Trade
& Industry (DTI) to operate the Licence Areas,
subject to change under the rules of the Joint
Operating Agreement and with the approval of the
DTI;
"Market Price" - means the price at which Petroleum is sold or
deemed to have been sold which is not unreasonable,
having regard to all market conditions applicable
to similar kinds, quantities and quality of
Petroleum in arm's length transactions at the time
of the sale or deemed sale of such Petroleum;
"Natural Gas" - means Petroleum other than Crude Oil and
Condensate;
"Operate" - or any derivative of the word "Operate" means to
carry out functions and duties of the operator
pursuant to the Joint Operating Agreement, together
with duties imposed by this Agreement;
"Operating Costs" - means all direct and indirect costs and expenses
incurred in or incidental to Operating a Well,
exclusive of Drilling Costs, Completion Costs and
Equipping Costs pursuant to this Agreement and the
Joint Operating Agreement;
"Option Areas" - mean the Areas covered by the option rights of the
Farmee and Buy-in Party, such Areas being detailed
in Schedule 4 hereto, and Clause 11.1(b) hereof;
"Option Licences" - means the UK Landward Petroleum Licences of the
Farmor containing the Option Areas, as set forth in
Schedule 4, and Clause 11.1(b) hereof;
"Option Well" - means a Well Drilled by the Farmee on an Option
Area;
"Option Work - means all work performed by the Farmee in the
Programme" Drilling, Capping and Suspension or Abandoning,
as the case may be, on all Option Xxxxx on any of
the Option Areas;
"Option Work - means the costs and expenses of executing
Programme Costs" the Option Work Programme;
"Party" - means a Party to this Agreement and "Parties"
means all of them;
"Paying Interest" - means, for each operation, a Party's proportionate
share (expressed as a percentage) of all the costs
and expenses incurred or payable in respect to the
applicable operation as set forth in Clause 7.1;
"Payout" - means:
a) in respect to the Farmin Works, that the
Farmee has received out of its share of the
Gross Revenue from the Xxxxxx Xxxxx all Xxxxxx
Works Costs, and Operating Costs incurred in
respect of all Xxxxxx Xxxxx up to that time,
and;
b) in respect to the Option Work Programme, that
the Farmee has received out of its share of
the Gross Revenue from the Option Xxxxx, the
Option Work Programme Costs and Operating
Costs incurred in respect to such Option Work
Programme up to that time;
"Payout Date" - the date of the full Payout from the Gross Revenue
from one or more Petroleum discoveries made within
the Farmin Areas, or the Option Areas, as the case
may be.
"Permitted - means:
Encumbrances"
a) liens for taxes, assessments or governmental
charges which are not due or delinquent;
b) liens incurred or created in the ordinary course
of business as security in favour of any other
person who is conducting the development or
operation of the property to which such liens
relate for the party's share of the costs and
expenses of such development or operation which
are not due or delinquent;
c) mechanics', builders' or materialmen's liens in
respect of services rendered or goods supplied
for which payment is not due;
d) easements, rights of way, servitude's or other
similar rights in land (including, without
limitation, rights of way and servitude's for
railways, sewers; drains; gas and oil pipelines;
gas and water mains; and electric light, power,
telephone, telegraph and cable television
conduits, poles, wires and cables);
e) the right reserved to or vested in any
municipality or governmental or other public
authority by terms of any lease, licence,
franchise, grant or permit or by any statutory
provision, to terminate any such lease, licence,
franchise, grant or permit or to require annual
or other periodic payments as a condition of the
continuance thereof;
f) governmental requirements of general
application, including, without limitation,
those respecting production rates or other
operational matters;
g) the terms and conditions of the Licences;
"Petroleum" - shall have the meaning set out in the 1934
Petroleum (Production) Act;
"Regulations" - means all statutes, laws, rules, orders,
regulations or directives in effect from time to
time and made by any governmental authority having
jurisdiction over the Parties, the Licenses, the
surface rights, and the operations to be conducted
thereon;
"Replacement Farmin - has the meaning attributed to it in Clause 10;
Well"
"Secretary" - means the Secretary of State for Trade and Industry
of the United Kingdom;
"Spud" - means that a drilling rig of adequate capacity to
drill the Farmin Well or Option
Well to Contract Depth, as the case may be, is
rigged upon the well site and a drilling bit has
penetrated the surface;
"Substitute Farmin - has the meaning attributed to it in Clause 2.2;
Well"
"Well" - means the well or xxxxx Drilled or to be Drilled by
Farmee pursuant to the provisions of this
Agreement; and ;
"Wilful Default" - has the meaning given in Clause xiv(b) of Schedule
7; and
"Working Interest" - means a Party's interest, expressed as a
percentage, in the Licences, Areas and the
Petroleum produced from the applicable Xxxxx.
1.2 Interpretations
a) References to documents in the form of those contained in Schedules 5 and 6
shall be construed as references to such documents subject to such
amendments as may be requested by the Secretary and as are approved by the
Parties, such approval not to be unreasonably withheld.
b) Except as the context otherwise requires, references in this Agreement to
Clauses, sub-Clauses, Recitals or Schedules are to clauses, sub-clauses,
recitals or the Schedules to this Agreement.
c) The headings in this Agreement are for convenience only and shall not affect
the construction, interpretation or validity of this Agreement.
d) Reference to the singular includes a reference to the plural and vice versa.
1.3 The following Schedules are attached to and made part of this Agreement:
Schedule 1 UK Landward Area Licence Interests of Independent Energy UK
Limited
Schedule 2 Carve-out Areas for the Farmin Areas
Schedule 3 Xxxxxx Xxxxx - The Well Depths and Bottom Hole Geological
Formations
Schedule 4 Carve-out Areas for the Exploration Leads of the Seismic
Option Areas
Schedule 5 Deed of Assignment of the Licence
Schedule 6 Assignment of Percentage Interest
Schedule 7 Principles of Joint Operating Agreement
Schedule 8 Accounting Procedure
Schedule 9 Deed of Cross Indemnity
Schedule 10 Letter Agreement of 27th August 1998
Schedule 11 Assignment Agreement
(DIG to Archean/ISO)
Schedule 12 Farmin Procedure
Schedule 13 Farmor's Existing and Planned Production Projects
1.4 Precedence
(a) If a term or provision contained in the Body of this Agreement conflicts
with a term or provision contained in any Schedule, the term or provision
in the Body of this Agreement shall prevail. Schedules 10 and 11 are for
information purposes only and shall not affect the construction,
interpretation or validity of this Agreement.
(b) If a term or provision contained in the Licences conflicts with a term or
provision of this Agreement, the term or provision in the Licenses shall
prevail.
1.5 No Partnership
Nothing herein contained shall be construed as creating a partnership or
association of any similar kind or as imposing upon any Party any
partnership duty, obligation or liability to any other Party.
1.6 Currency
All reference to monetary amounts in this Agreement shall be in the lawful
currency of England and Wales unless specified otherwise.
1.7 Computation of Time
Except where expressly provided otherwise herein, the reference in this
Agreement to a period of time from a specific day to a later specific or
defined day shall not count the day on which such period commenced and
shall include up to 4:00pm on the day on which such period ends, provided
that, if any such period would otherwise end on a day which is not a
Business Day, then such period shall be extended to 4:00pm on the first
Business Day after the day on which such period would have otherwise ended.
1.8 References to Time
Except where expressly provided otherwise herein, all references to any
time of day shall refer to local time in LONDON, ENGLAND.
1.9 Liability of Farmee
(a) Where the terms "Farmee", "ISO" and "Archean" are used in this Agreement,
the applicable obligations and liabilities shall be the several, and not
joint nor joint and several obligations and liabilities, of ISO and
Archean. ISO and Archean shall bear and assume all obligations of the
Farmee under this Agreement as to ninety (90) percent for ISO and ten (10)
percent for Archean.
(b) The Farmor shall be entitled to deal solely with Archean, as representative
of the Farmee, whose decisions will be binding on the Farmee, in respect of
all matters, operations or elections arising under this Agreement. The
Farmee may change the Party so nominated to ISO by written notice to the
Farmor and with the written consent of Farmor, which shall not be
unreasonably withheld, provided that, the Farmor shall not be obligated to
deal with more than one Party.
2 FARMEE'S OBLIGATIONS
2.1 The Farmee hereby undertakes to the Farmor, Altwood and the Buy-in Party,
that subject as hereinafter set forth, the Farmee shall conduct the Farmin
Works, and with the benefit of all funds deposited in the Farmin Account,
bear and hold harmless and indemnify the Farmor and the Buy-in Party.,
against one hundred percent (100%) of the Farmin Works Costs, to the extent
of the indemnity set forth in Clause 18;
2.2 If necessary, because of mechanical problems or bad hole conditions of
whatever kind with the Drilling, other than impenetrable geological
formations, the Farmee shall undertake the re-Spudding and re-Drilling of
any such Farmin Well ("Substitute Farmin Well").
3 EXECUTION OF THE FARMIN WORKS
3.1 The 150 km of 2D seismic programme shall be of mutually agreed suitable
technical specification for the requirements of each Option Area, and shall
commence as soon as practicable following:
(a) the execution of this Agreement and;
(b) the deposit by the Farmee of the second payment of nine hundred and
twenty two thousand five hundred and twenty eight pounds and forty one
xxxxx Xxxxxxxx (Pounds)922,528.41 into the Farmin Account, as set
forth in Clause 6.
3.2 The Xxxxxx Xxxxx drilling programme shall, unless otherwise agreed with the
Farmor, or as may be required by the Regulations, be conducted by the
Farmee as a continuous drilling programme. The Xxxxxx Xxxxx drilling
programme is based upon the Farmee using one (1) drilling rig and shall be
a continuous programme which shall commence with the three Weald Basin
xxxxx, and then progress from Fenwick in the East Midlands to the drilling
of the three Lancashire Plain Prospects as the last of the Xxxxxx Xxxxx.
The Farmee may elect to use more than one (1) drilling rig thereby
increasing the pace and changing the order of the drilling programme, as
long as the Mythop and Plumpton prospects on the Lancashire Plain are the
last of the Xxxxxx Xxxxx to be Drilled.
3.3 The Spudding of the first of the Xxxxxx Xxxxx shall be within ninety (90)
days of the Effective Date of this the Buy-in Agreement, unless otherwise
agreed by the Farmor, or as may be required by the Regulations. If any of
the Farmin Works are delayed as may be required by the Regulations, the
Farmee's obligation to conduct the delayed portion of the Farmin Works
shall be suspended for such period of delay.
4 EARNING OF FARMIN PERCENTAGE
4.1 Upon a Farmin Well being Drilled to its Contract Depth and after Capping
and Suspension or Abandonment, the Farmor shall assign a thirty two percent
(32% of 100%) interest out of its Working Interest in the particular Farmin
Area to the Farmee ("the Farmin Percentages"). If a Farmin Well encounters
an impenetrable geological formation as agreed by the Farmor and Farmee,
the Farmee shall be deemed to
have drilled such Farmin Well to its Contract Depth. If the Farmor and
Farmee are unable to agree, then the presence of an impenetrable geological
formation shall be determined by an independent drilling engineering
consultant whose fees would be charged to the Joint Venture Account. If the
Parties are unable to agree upon the choice of such independent expert
within forty eight (48) hours, they shall forthwith request the President
of the Institute of Petroleum, London, to forthwith appoint the same, and
such appointment shall be binding upon the Parties.
4.2 If the Spudding or Drilling of a Substitute Farmin Well becomes necessary,
the Parties shall in good faith use their reasonable endeavours to agree
unanimously on a new location for the drilling thereof if impracticable
from the same surface site.
4.3 The obligations of the Farmee with respect to a Farmin Well shall apply
mutatis mutandis to any Substitute Farmin Well drilled in substitution
therefor including, without limitation, its obligations to contribute to
the Farmin Account for the Farmin Works Costs in accordance with Clause 2.1
above, and Clause 6.
5 ACTION BEFORE FINISHING DATE
Until the Finishing Date of each Farmin Well the Farmee shall use all
reasonable endeavours to ensure that the Farmor shall receive all technical
data and information relating to the Farmin Works on the Farmin Areas.
6 THE FARMIN ACCOUNT
The Farmee hereby consents to the setting up of the Farmin Account by the
Farmor and the Farmee, into which the Farmee has deposited the
(Pounds)202,471.59 initially held in trust by the Farmor's solicitors. The
Farmor has agreed to deposit (Pounds)2,250,000.00 in the Farmin Account
upon concluding the Buy-in Agreement. The Farmee shall make a further
deposit of (Pounds)922,528.41 into the Farmin Account. Such deposits shall
be made within four (4) Business Days of the Farmor notifying the Farmee of
the execution of the Buy-in Agreement. Such funds to be used for the
conduct of the Farmin Works, whether of a Drilling or seismic surveying
nature. Any withdrawals of monies from such account shall require the
approvals and signatures of the Farmee and the Farmor. The Farmee may use
any or all of the Farmin Account to carry out the Farmin Works, and shall
add to the Farmin Account whatever additional funds may be required for the
completion of the Farmin Works. Any funds remaining in the Farmin Account
after the satisfactory completion of the Farmin Works in accordance with
this
Agreement, shall be paid to the Farmee, and may be used for any purpose the
Farmee may determine, in its sole discretion.
7 FARMIN PERCENTAGES
7.1 The Farmee
In consideration of the Farmee fulfilling its obligations hereunder and
subject to the necessary consents and approvals of the Secretary, the
Farmor shall, as each Farmin Well is Capped and Suspended or Abandoned,
grant and assign to the Farmee the Farmin Percentage in the Farmin Area on
which the said Farmin Well was Drilled and solicit the consent and approval
of the Secretary to a Deed of Assignment of Licence for the appropriate
Licence in respect thereof, and shall grant and assign to the Farmee the
Farmin Percentages so that before and after the Payout Date the Paying and
Working Interests in the Farmin Area in and under the particular Licence
and the Joint Operating Agreement shall be:-
PARTY PERCENTAGE INTERESTS
---------------------------------------------------------------------------------------------------
BEFORE PAYOUT AFTER PAYOUT
---------------------------------------------------------------------------------------------------
PAYING WORKING GROSS PAYING WORKING
REVENUE
---------------------------------------------------------------------------------------------------
ISO 90.0 45.0 ) * - 28.8 28.8
Archean 10.0 5.0 ) 3.2 3.2
(less (Pounds)2.25M)
---------------------------------------------------------------------------------------------------
Buy-in Party (Pounds)2.25M 50.0* - 24.5 22.5
---------------------------------------------------------------------------------------------------
Farmor 0.0 0.0 13.0 43.5 41.5
---------------------------------------------------------------------------------------------------
Altwood 0.0 0.0 2.0 0.0 4.0
---------------------------------------------------------------------------------------------------
TOTALS 100.0 100.0 15.0 100.0 100.0
---------------------------------------------------------------------------------------------------
* Subject to one half of the 15% GRI.
7.2 The Buy-In Party
(a) Notwithstanding the provisions of Clause 21 below, the Farmee acknowledges
that the Farmor has designated the Buy-In Party as the person who will be
entitled to acquire an interest in the Licences and Areas by the payment of
(Pounds)2.25 million upon execution of the Buy-in Agreement. The Parties
agree that it shall be a condition to the assignment, transfer and
conveyance of the applicable interests in the Licences and the Areas that
the Buy-in Party become a party to the applicable Joint Operating
Agreements and to pay its Paying Interest share of operations after the
applicable Finishing Date. If the Buy-in Party opts not to acquire an
interest in any Option Area as provided herein, the interests allocated to
the Buy-in Party shall be made available to ISO and Archean on a 90%/10%
basis for the further earning of
those interests by ISO and Archean, in accordance with Clause 11.4(a).
(b) If the Buy-in Party fails to carry out its (Pounds)2.25 million payment
obligation as indicated in Clause 7.2 (a) above, for whatever reason, then
the Farmee shall have a ninety (90) day period to elect to take up the Buy-
in Party's interests and financial obligations. Such 90 day period to
commence from the date of the notice of such failure given by the Farmor to
the Farmee and the Buy-in Party. Farmee's obligation to conduct the Farmin
Works shall be suspended for such ninety (90) day period. If Farmee does
not elect to take up the Buy-in Party's interests and obligations, the
Farmee may withdraw from this Agreement, have returned to it any funds it
deposited into the Farmin Account and shall be released from all
liabilities and obligations in connection with this Agreement".
8 GROSS REVENUE INTERESTS AND PAYOUT
8.1 If Petroleum is produced from the Farmin Areas, the Farmee shall until
Payout of the Farmin Works Costs receive fifty percent (50%) of the Gross
Revenue thereof.
8.2 The Farmor and/or Altwood shall, at their option, continue to hold the
Gross Revenue Interests until the Payout Date, or until the end of the
production of Petroleum from the Farmin Areas.
8.3 The Farmor and Altwood shall, with respect to any Farmin Area, have the
option to continue on the basis of their Gross Revenue Interests or, in
accordance with the provisions of Clauses 8.4, 8.5 and 8.6 below, to
convert such Gross Revenue Interests to the after Payout Paying and Working
Interests, as set out in Clause 7.1.
8.4 The Gross Revenue Interests shall provide for the payments by the Farmee to
the Farmor and Altwood of six and a half (6.5) percent and one (1) percent
respectively of Gross Proceeds. Such payments shall be subject only to the
deduction from the Gross Proceeds attributable thereto, of the
transportation costs of the Petroleum and/or other substances produced.
8.5 The Farmor and Altwood shall each have the right to exercise such option to
convert to an after Payout Paying and Working Interest with
respect to each and any discovery made on the Farmin Areas. Such options
shall with respect to each Farmin Area be separately exercisable at any
time from the date of the decision pursuant to the relevant Joint Operating
Agreement to appraise and/or develop any discovery arising from the
execution of the Farmin Works until the Payout Date. If the Payout Date
precedes the date of the decision to appraise and/or develop any of the
Petroleum discoveries, then the date on which the said option may be
exercised shall be on or before the date of such decision.
8.6 Election by the Farmor and/or Altwood pursuant to Clause 8.5 to convert to
after Payout Paying and Working Interests at the Payout Date, shall cause
the Farmor to refund to the Farmee, within 30 Business Days after the date
of such election the proportionate part of its capital expenditure to
provide equipment and facilities for Petroleum production beyond those
provided by the Farmin Works as though the Farmor and/or Altwood had
elected to convert to a Working Interest at the time of the agreement to
appraise and/or develop that Petroleum discovery. Upon written request by
the Farmor the Farmee shall supply the Farmor with full details of such
capital expenditures prior to the Farmor making such election. If such
election takes place before the Payout Date, then the Farmor and Altwood
shall continue to receive only their Gross Revenue Interest payments until
the Payout Date.
9 ASSIGNMENT DOCUMENTATION AND JOINT OPERATING AGREEMENT
9.1 Promptly following the Finishing Date of each Farmin Well and subject only
to the necessary consent and approval of the Secretary, the relevant
Parties shall, in respect of the relevant Farmin Area, execute a Deed of
Assignment of the Licence, and an Assignment of Percentage Interest, each
substantially in the forms set out in Schedule 5 and 6 hereto respectively,
subject only to any amendments required by the Secretary.
9.2 Prior to the Spud of each Farmin Well the Parties shall be subject to and
execute a Joint Operating Agreement in a form providing, inter alia, for
the principles set out in Schedule 7 to provide for the conduct of joint
operations in respect of the relevant Farmin Area. If a Joint Operating
Agreement is not signed prior to the Spud Date of each Farmin Well, the
Farmees shall have the right to delay the Spud Date until the Joint
Operating Agreement is signed by the Parties, and the Farmee's obligation
to conduct the Farmin Works shall be suspended until such Joint Operating
Agreement is fully signed.
9.3 In the event of a conflict with respect to the matters herein provided
between the provisions of this Agreement and the Joint Operating Agreement
the provisions of this Agreement shall prevail.
10 REPLACEMENT XXXXX
If it is agreed by the Farmor and Farmee that extenuating circumstances
such as the failure to obtain planning consent even upon appeal or from an
alternate surface site prevent the Drilling of any of the Xxxxxx Xxxxx, a
Replacement Farmin Well may be proposed by the Farmee for the approval of
the Farmor, such approval not to be unreasonably withheld. Such
replacement well shall be selected from amongst the ten (10) Option Areas
or from any other exploration leads or prospects identified on the Licence
Areas as set forth in Clauses 11.1 and 11.2 below.
11 SEISMIC OPTION AND FURTHER OPTIONS
11.1 In consideration of the fulfilment by the Farmee of its obligations under
this Agreement the Farmor hereby grants to the Farmee the following option
rights and offers of participation:-
(a) an option to earn an interest in respect of each of the ten (10) areas
within the Option Areas under the farmout percentage terms provided in
Clauses 11.3 and 11.4; and
(b) the continuing option to earn into further areas located within the
remainder of the Farmor's current Licence Areas, with the exception of
the Farmor's existing producing and planned production projects, in
and under the Licences, as set out in Schedule 13. Such option shall
be exercised upon the same farmout percentage terms, provided in
Clauses 11.3 and 11.4. Such continuing option rights may be exercised
by the Farmee until the 31st December 2000. All Option Xxxxx that the
Farmee subsequently elects to drill hereunder and under Clause 11.1(a)
shall be spudded before 31st December 2001, unless otherwise agreed by
the Farmor, such agreement not to be unreasonably withheld, or as may
be delayed by the Regulations. The Farmee or Buy-in Party shall not be
required to drill any of the Option Areas of Clause 11.1(a) to
exercise its rights under this Clause 11.1(b).
(c) If the Farmor should offer any farmin or buy-in opportunity involving
its current or future production projects on lands excluded from this
Agreement, as listed and described in Schedule 13, then the Farmee
shall be granted the initial but non-exclusive opportunity to evaluate
and earn an interest in the same.
11.2 The Drilling of an Option Well upon any further option area under Clause
11.1(b) shall provide for the Farmee and Buy-in Party, having elected to
participate in such activity, an interest as provided in Clauses 11.3 and
11.4, in an area enclosing the maximum area of closure of the drillable
prospect or an area of twenty (20) square kilometres, whichever is the
larger. If in any Petroleum discovery made by such Drilling the field
limits, as defined in the field development plan application to the
Department of Trade and Industry, shall extend beyond the initial earned
area, then such area shall be extended to include the full field area as
defined by the Department, as long as such extended area is included in
Petroleum rights under licence to the Farmor.
11.3 The Farmee, and the Buy-in Party would have the right to participate
together in the Option Areas and Licence Areas on the same terms as set
forth in this Agreement. For the avoidance of doubt such funding shall be
on the part of the Buy-in Party the provision of no more than 50 percent
of the deemed cost of the Option Work Programme to acquire an after Payout
22.5 percent Working Interest and a 24.5 percent Paying Interest in the
applicable Option Areas and Licence Areas and on the part of the Farmee
the provision of the remainder of the required funding to finish the
Option Work Programme to earn an after Payout 32 percent Working Interest
and Paying Interest in the applicable Option Areas and Licence Areas. The
deemed cost of the Option Well programme shall be agreed by the Farmee and
Farmor. If the Parties cannot agree upon the deemed cost of the Option
Work Programme, such cost shall be determined by an independent drilling
engineer appointed by mutual agreement of the Parties, whose fees would be
charged to the Joint Venture Account. If the Parties are unable to agree
upon the choice of such drilling engineer by forty-five (45) days prior to
the date upon which the option is to be exercised, they shall forthwith
request the President of the Institute of Petroleum, London, to forthwith
appoint the same, and such appointment shall be binding upon the Parties.
11.4 In the event that the Buy-in Party or Farmee opts not to participate in
one or more of the Option Areas, then either of such Parties would have
the right to proceed alone by:-
a) the Farmee funding the full actual cost of the applicable Option Xxxxx
to earn an after Payout 56.5 percent Paying Interest and a 54.5
percent Working Interest in the applicable Option Areas; and
b) the Buy-in Party funding the full deemed cost of the applicable Option
Xxxxx to earn an after Payout 47 percent Paying Interest and a 45
percent Working Interest in the applicable Option
Areas, provided that the Farmor agrees to bear the risk of any actual
costs in excess of the deemed full cost of such Option Xxxxx.
11.5 The Farmor, using the seismic data acquired under the Farmin Works,
together with other previous seismic and well data, shall interpret the
same and make a proposal to the Farmee and the Buy-in Party of those
Option Areas worthy of Drilling by further Farmin and Buy-in Party
funding. The Farmor would subsequently make a further proposal or
proposals concerning Drilling under the further option rights of the
Farmee and Buy-in Party as under Clause 11.1(b). Any other such seismic
reprocessing and interpretational work carried out by the Farmee on its
own behalf, or jointly with the Buy-in Party, shall be for its own
account, and such work, its results and conclusions shall be supplied to
the Farmor as soon as it shall be available to the Farmee.
11.6 If the Farmee's obligation to conduct the Farmin Works or Option Work
Programme are suspended in accordance with the terms of this Agreement,
such period of suspension shall give an equal period of extension of the
final Option Well Spud date given in Clause 11.2(b), provided that such
extension period shall be no longer than twelve (12) months.
12 OPERATORSHIP
12.1 The Farmin Works, with the exception of those activities detailed in
Clause 12.2 below, shall be operated by Archean on behalf of the Farmees
the Buy-in Party and the Farmor, in accordance with the Farmin Procedure
of Schedule 12. Such performance by Archean shall be as a Contract
Operator on behalf of the Farmor, the Licence Operator. Archean shall
obtain and maintain in full force and effect throughout the Farmin Period
the appropriate insurance cover for the operation of the Farmin Works, to
be paid for out of the Farmin Account. Such Insurance to include without
limitation, third party liability and pollution clean-up insurance,
automobile liability, comprehensive general liability, aircraft liability
and well control insurance, as further detailed in Schedule 12.
12.2 During the Farmin Period, the Farmor shall continue to operate on behalf
of and with the approval of the Farmee, all geological, geophysical and
lands aspects of the Farmin Works including:-
a) wellsite geological control and reporting;
b) preparation of the after well report books;
c) geological/geophysical evaluation of the well results of the Farmin
Works and the consequences for further activities. This and items a)
and b) above to be for the Joint Venture Account, and paid in
accordance with the After Payout Paying Interests in Clause 7.1;
d) preparation for and the supervision of the 150 kms of mutually agreed
technically suitable 2D seismic survey work. In this the Farmor shall
solicit contractor's bids and select the contractor with the approval
of the Farmee, acting reasonably, so that possible cost savings may be
made consistent with obtaining seismic data of acceptable quality as
appropriate to the seismic acquisition problems of each survey area.
Such costs to be for the Farmin Account; and
e) lands/legal work in order to secure the planning consents and site
lease agreements with landowners for the Xxxxxx Xxxxx. Such activities
shall be for the sole cost and expense of the Farmor and shall include
the site lease costs to the Finishing Date of each Farmin Well.
Thereafter such reasonable costs shall be for the Joint Venture
Account.
12.3 Archean shall continue to carry out the function of Contract Operator
for any drilling activities on the Areas covering any Petroleum discovery
resulting from the Farmin Works. In addition, Archean shall be Contract
Operator for any Crude Oil production operations on such Areas.
12.4 The Farmor shall be the Operator for any Natural Gas and Condensate
production operations on the Areas.
13 Technical Data
The Farmor shall as soon as is reasonably practicable, provide the Farmee
with copies of all relevant well and seismic data covering the Farmin
Areas, Option Areas and Licence Areas in whatever form currently available
to the Farmor at the reproduction cost. The provision of such technical
data shall be for the Farmee's sole use in evaluation of the Farmin Areas,
Option Areas and Licence Areas, and shall not convey any proprietary
rights in such to the Farmee. Proprietary rights in technical data
acquired in the performance of the Farmin Works shall be held pro-rata to
the after Payout Working Interest percentage shown in the table set out in
Clause 7.1 above.
14 FARMOR'S REPRESENTATION AND WARRANTIES
14.1 The Farmor represents and warrants to the Farmee that, as at the date
hereof:-
(i) the Licences are valid and subsisting and in full force and effect;
(ii) subject to the provisions of the Licences, the Joint Operating
Agreement and this Agreement and any Permitted Encumbrances, the
Licences are not subject to any lien, charge or other subsisting
encumbrance;
(iii) all Licence work programmes have been fulfilled in a timely
fashion, or the consent of the Department of Trade & Industry has
been obtained for any delay in such fulfilment, and the Licences
are not subject to cancellation, reduction, relinquishment or
termination within the next 12 months, other than EXL 269, and EXL
288, which undergo the mandatory fifty (50) percent relinquishment
at the end of their first term as Petroleum Exploration and
Development Licences.
(iv) any royalty payments (or delivery of Petroleum in lieu of
royalties) and licence rentals which it is required to make to the
Secretary have been properly made;
(v) all returns required in respect of the Licences to be made to the
Secretary have been properly made;
(vi) it is not involved in, or aware of any threat of, any proceedings,
claims or arbitration or other matter which could lead to the
Licences being revoked;
(vii) it has all requisite corporate powers to execute this Agreement and
to perform its obligations hereunder and such execution and
performance has been duly authorised by all appropriate corporate
action and will not constitute a breach of any arrangement or
agreement to which it is a party;
(viii) it has obtained all relevant rights including Wellsite lease
agreements from owners or occupiers of land to Drill upon the
Wellsites for the conduct of the Farmin Works as provided
for herein, with the current exceptions of the Lingfield and
Preesall Wellsites still under ongoing negotiations with the
landowners;
(ix) it has obtained all relevant local authority planning consents to
permit the conduct of the Farmin Works as provided for herein;
(x) it has obtained all relevant approvals from environmental control
authorities to permit the conduct of the Farmin Works, and that to
the best of its knowledge and belief there is no administrative
action or procedure pending or planned to revoke or modify the
same. The Farmor is not aware of any material environmental
damage or non-compliance with environmental laws or regulations
related to the Areas.
(xi) It has good and marketable title to the Licences and the site
leases in respect of the Areas, except the site leases for the
Lingfield and Preesall Well sites for which it will make reasonable
efforts to obtain.
14.2 Altwood represents and warrants to the Farmee that, as at the date hereof,
it has all requisite corporate powers to execute this Agreement and to
perform its obligations hereunder and such execution and performance has
been duly authorised by all appropriate corporation action and will not
constitute a breach of any arrangement or agreement to which it is a
party.
15 FARMEE'S REPRESENTATION AND WARRANTIES
Each of ISO and Archean represents and warrants that, as at the date
hereof, with respect to itself only, it has all requisite corporate powers
to execute this Agreement and to perform its obligations hereunder and
such execution and performance has been duly authorised by all appropriate
corporate action and will not constitute a breach of any arrangement or
agreement to which it is a party.
16 PARENT COMPANY GUARANTEES
Each of the Farmor, ISO and Archean shall procure the issue by its parent
company of a guarantee ("Parent Company Guarantee") guaranteeing the due
performance of all their respective responsibilities and obligations under
this Agreement. Failure or inability of the Farmee or Farmor to provide
such Parent Company guarantee shall entitle the Farmor or Farmee as the
case may be to terminate this Agreement forthwith without prejudice to any
rights or remedies available to the Farmor or the Buy-in Party or Farmee
as the case may be arising as a result of such failure or inability by a
Party to provide such Parent Company Guarantee.
17 TITLE AND ENCUMBRANCES
Maintaining Title - Earning Phase
For the period from the Effective Date until the Farmee has earned an
interest in the Farmin Areas and/or the Option Areas pursuant to
the Agreement or its right to do so ceases or the Agreement is terminated,
whichever occurs first, the Farmor shall not grant any interests in the
Farmin Areas or Option Areas and shall do all things necessary to
maintain the relevant Licence, and not do or cause to be done any act or
omission whereby the same shall become encumbered, terminated or forfeited,
unless termination shall be according to the terms and conditions of the
relevant Licence.
18 LIABILITY AND INDEMNITY
18.1 Farmee Indemnity
The Farmee shall:
(a) be liable to the Farmor for all losses, costs, damages and expenses
whatsoever (whether contractual or tortious) which the Farmor may
suffer, sustain, pay or incur;
(b) indemnify and hold harmless the Farmor and its directors, officers,
agents and employees against all actions, causes of action,
proceedings, claims, demands, losses, costs, damages and expenses
whatsoever which may be brought against or suffered by the Farmor, its
directors, officers, agents and employees or which they may sustain,
pay or incur; and
insofar as such matters are either a direct result of any act or omission
of Wilful Default of the Farmee with respect to the Farmin Works or the
Option Works Programme, as the case may be, provided that, the Farmee shall
not be liable to, or be required to indemnify and hold harmless, the Farmor
and its directors, officers, agents and employees to the extent that the
particular act or omission was done or was omitted to be done in accordance
with the instructions of or the concurrence of the Farmor.
18.2 Farmor's Indemnity
Where the Farmor conducts operations or activities with respect to the
Areas, the provisions of Clause 18.1 shall apply mutatis mutandis for the
benefit of the Farmee.
18.3 Limitation
(a) No Party shall be liable hereunder for any indirect, consequential or
punitive damages or for any loss of profit, loss of product or loss of use
or other business interruption.
(b) Farmee shall have no liability hereunder for losses, costs, damages and
expenses that result from Farmor's failure to obtain and maintain all
relevant Licences, surface leases, planning consents and approvals that are
required to conduct the Farmin Works.
19 DEFAULT
19.1 Farmor's Remedies In The Event Of Default
(a) If the Farmee defaults in any of its obligations hereunder, subject
to Clause 18.3(b) and this Clause 19, the Farmor may give the Farmee
notice stating the nature of that default. If the Farmee fails to
commence to remedy that default within 30 days after receipt of such
notice or fails to continue to remedy that default with all due
diligence thereafter, the Farmor may, by notice to the Farmee,
terminate all or any interest of the Farmee acquired, pursuant to
this Agreement, in the Farm-in Area to which the default applies.
(b) If the Farmee fails to carry out the Farmin Works and such failure by
the Farmee is not caused by a breach of any provision of this
Agreement by the Farmor, then, subject to the same notice and remedy
provisions as those of Clause 19.1(a), the Farmee shall forfeit any
rights to any monies remaining in the Farmin Account and the Farmor
shall have a ninety (90) day period in which to elect to take up such
interest and obligations of the Farmee in any unDrilled Farmin Areas,
or to return any funds remaining in the Farmin Account to the Buy-in
Party.
(c) If the default is with respect to conditions subsequent to the Farmee
earning an interest in the Farm-in Areas, no such termination shall
apply to any portion of the applicable Farm-in Licences in which the
Farmee had earned an interest pursuant to the Agreement prior to the
default.
(d) Nothing in this Clause shall release the Farmee from any obligations
to indemnify or to be liable to the Farmor or the Buy-in Party
pursuant to the terms of this Agreement, to pay any amount owing to
the Farmor or the Buy-in Party to maintain information confidential
or, if applicable, to finish Abandoning any Farm-in Well.
(e) Nothing in this Clause shall release the Farmor from any obligations
to indemnify or to be liable to the Farmee pursuant to the terms of
this Agreement.
19.2 Clause Does Not Affect Rights At Law
The rights granted to the Farmor in this Clause 19 shall be in addition
to, and not in substitution for, any other right or remedy which the
Farmor may have hereunder and specifically, the existence or the exercise
of those rights shall not deprive the Farmor either wholly or partially of
any other right or remedy at law or in equity.
19.3 Right To Charge Interest For Financial Default
If a Party fails to pay or advance within the time period prescribed any
amount as provided hereunder, such Party shall pay to the applicable Party
interest with respect to that unpaid amount from the day such payment is
due until the day it is paid, at the rate of LIBOR plus 3.0%, regardless
of whether the payee Party has notified the payor Party in advance of its
intention to charge interest with respect to that unpaid amount. The
obligation to pay interest is to apply until such default is rectified and
shall not merge into a judgement for principal and interest, or either of
them. The parties waive the application of any Regulations to the
contrary, insofar as such waiver is permitted by the Regulations.
20 CONFIDENTIALITY AND ANNOUNCEMENTS
20.1 Confidentiality Requirement
Each Party entitled to information obtained hereunder may use such
information for its sole benefit. Such Parties shall take such measures
with respect to operations and internal security as appropriate in the
circumstances to keep confidential from and prevent disclosure to third
persons all such information, except information which the Parties have
expressly agreed among themselves to release, and information disclosed by
a Party:
(a) when and to the extent required by the Regulations and securities
laws applicable to such Party, provided that such Party shall invoke
any confidentiality protection permitted by such Regulations and
securities laws;
(b) to an Affiliate, provided that, such Party shall be deemed to have
required such Affiliate to maintain the confidential status of the
disclosed information and that such Affiliate shall be deemed to have
accepted such obligation and that such Party shall be liable for any
loss suffered by the other Parties, or any of them, because of the
failure of such Affiliate to maintain such information confidential;
(c) to a third person to which such Party has been permitted to assign a
portion of its interest hereunder, provided that a binding covenant
is obtained from such third person prior to disclosure which provides
that none of such information shall be disclosed by it to any other
third person; and
(d) to the legal, technical, financial or other professional consultants
of such Party which require such information to provide their
services to such Party or to a bank or other financial institution
from which such Party is attempting to obtain financing, provided
that a binding covenant is obtained from such consultant or
financier, as the case may be, prior to such disclosure, which
provides, inter alia, that none of such information shall be
disclosed by it to any other third person or used for the purposes
other than advising such Party or providing financing to such Party,
as the case may be.
The confidentiality and non-disclosure obligations in this Clause 20.1
shall not extend to information to the extent it is in the public domain,
provided that, specific items of information shall not be considered to be
in the public domain merely because such items are embraced by more
general information in the public domain.
20.2 Confidentiality Requirement To Continue
Any Party which otherwise ceases to be bound by the provisions of this
Agreement shall remain bound by the provisions of this Clause 20 with
respect to information obtained hereunder or under the Buy-in Agreement
until and to the extent that such information is in the public domain.
20.3 Announcements
This Agreement shall remain confidential and no Party shall make any
public announcement or statement with respect thereto without the consent
of the other Parties other than as may be required by law or
the Regulations or the rules of any recognised Stock Exchange on which
their respective shares are listed or to relevant government departments.
21 ASSIGNMENT
21.1 Except as provided in Clause 21.2 below, the respective rights and duties
of the Farmee hereunder shall not be assigned without the prior written
consent of the Farmor.
21.2 Should the Farmee or Farmor desire or elect to sell or assign all or any
part of its interests under this Agreement or its rights and interests in
the Licences or Areas, such Party shall promptly give written notice to
the other Party, with full information concerning its proposed sale or
assignment, which notice shall include the name and address of the
prospective purchaser or assignee (who must be ready, willing and able to
purchase), the purchase price and all other terms of the offer. The Party
receiving such notice shall then have an optional prior right for a period
of thirty (30) days after receipt of the notice, to purchase on the same
terms and conditions the interest which the Party providing such notice
proposes to sell; provided, however, Party receiving such notice shall
have no preferential right to purchase in those cases where the Party
providing such notice wishes to mortgage all or part of its interests or
create lien rights on all or part of its interests, or to dispose of all
or part of its interests by merger, reorganisation, consolidation or to
sell all or substantially all of its assets or to dispose of all or part
of its interest to a subsidiary, Affiliate or parent company or to a
subsidiary of a parent company, or to any company or entity in which the
Party providing such notice owns a minimum of a 25% economic interest. Any
such sale or assignment shall be subject to the provisions of this
agreement.
21.3 The provisions of this Agreement shall enure for the benefit of and be
binding on the successors in title and permitted assignees of the Parties.
22 FORCE MAJEURE
22.1 Definition of Force Majeure
In this Clause 22 "Force Majeure" means an occurrence beyond the
reasonable control of the Party claiming suspension of an obligation
hereunder, and includes, without limiting the generality of the foregoing,
an act of God, war, revolution, insurrection, blockade, riot, strike, a
lockout or other industrial disturbance, fire, lightning, unusually severe
weather, storms, floods, explosion, accident, shortage of labour or
materials or government restraint, action, delay or inaction.
22.2 Suspension of Obligations Due to Force Majeure
If any Party is prevented by Force Majeure from fulfilling any obligation
hereunder, the obligation so affected shall be suspended to the extent
that the Party is prevented from performing such obligation for so long as
the Force Majeure prevents the performance of such obligation and for such
time thereafter as that Party may reasonably require to commence to fulfil
such obligation. A Party prevented from fulfilling any obligation by Force
Majeure shall promptly give the other Parties
notice of the Force Majeure and the affected obligations, including
reasonably full particulars thereof.
22.3 Obligation to Remedy
The Party claiming suspension for an obligation by reason of Force Majeure
shall promptly use all reasonable efforts to remedy the cause and effect
of the applicable Force Majeure and such Party shall promptly give the
other Parties notice when the Force Majeure ceases to prevent the
performance of the applicable obligation. The term of settlement of any
strike, lockout or other industrial disturbance shall be wholly in the
discretion of that Party, and that Party shall not be required to accede
to the demands of its opponents in any strike, lockout or industrial
disturbance solely to remedy promptly the event of Force Majeure.
22.4 No Exception for Lack of Finances
Notwithstanding anything else in this Clause 22, lack of finances shall
not be considered an event of Force Majeure, nor shall any Force Majeure
suspend any obligation for the payment of money due hereunder.
22.5 Surface Access Difficulties
Notwithstanding any provision to the contrary contained herein, to the
extent that surface conditions do not enable the Farmee to have access to
the Farm-in Areas within the time period specified for the commencement
and/or completion of an operation thereon, the Farmee shall give notice of
same to the Farmor. If the Farmor consents, with such consent not
unreasonably withheld, that operation may be postponed until such time as
surface conditions permit access to the location of such operation, at
which time the Farmee shall move the requisite equipment thereto in a
timely manner.
23 MISCELLANEOUS
23.1 Further Acts and Documents
Each Party undertakes to do or procure to be done all such acts (including
the execution of any appropriate documents) as may be necessary to
consummate the transactions contemplated hereby or fully to give effect to
the intent and purpose of this Agreement.
23.2 Notices
Any notice pursuant to this Agreement shall be given in accordance with the
following provisions:
Notice to the Farmor shall be given to:
Independent Energy UK Limited
Second Xxxxx Xxxx Xxxxx
Xxxx Xxxxxx
Xxxxxxxxxx
Xxxxxxxxx
XX0 0XX
XX
Attention : Mr W E Xxxxx
Fax : 00000 000000
Notices to the Farmees shall be given to:
1. Archean Energy (U.K.) Limited
c/o Suite 1000
Home Oil Tower
000 - 0xx Xxxxxx X.X.,
Xxxxxxx
Xxxxxxx
X0X 0X0
Xxxxxx
Attention: Xx X X Xxxxx
Fax: 00 0 000 000 0000
2. ISO (U.K.) Limited
c/o Suite 1000
Home Oil Tower
000 - 0xx Xxxxxx X.X.,
Xxxxxxx
Xxxxxxx
X0X 0X0
Xxxxxx
Attention: Xx X X Xxxxx
Fax: 00 0 000 000 0000
Notices to Altwood shall be given to:
Altwood Petroleum Limited
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxxxx
XX0 0XX
XX
Attention: Mr W E Xxxxx
Fax: 00000 000000
23.3 Liability to Stamp Duty
It is agreed that in the event that any stamp duty becomes chargeable on
this Agreement or any implementation documentation executed pursuant to
and in performance of this Agreement it shall be dealt with in accordance
with the Stamp Duty Agreement of even date herewith.
23.4 Costs and Expenses
Each Party shall bear its own legal costs and expenses in connection with
the preparation and execution of this Agreement.
23.5 Entirety of Agreement and Prior Agreements
This Agreement and the instruments referred to herein constitute the
entire agreement and understanding of the Parties in relation to the
matters contained herein and supersedes any and all prior negotiations,
proposals, statements of intent, correspondence and representations made
by either or both of the Parties with respect thereto.
23.6 Amendment and Agreement
This agreement may only be altered, varied or amended by a written
instrument executed by the Parties.
24 GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with
the Law of England and Wales and each of the Parties hereby irrevocably
submit to the exclusive jurisdiction of the High Court of England and
Wales.
25 EFFECTIVE DATE
This Agreement shall take effect on the Effective Date.
IN WITNESS whereof this Agreement has been signed for and on behalf of the
Parties.
_______________________
SIGNED for and on behalf of
INDEPENDENT ENERGY UK LIMITED
_______________________
SIGNED for and on behalf of
ISO (U.K.) LIMITED
_______________________
SIGNED for and on behalf of
ARCHEAN ENERGY (U.K.) LIMITED
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SIGNED for and on behalf of
ALTWOOD PETROLEUM LIMITED
