EXHIBIT 10.3
FARMOUT AGREEMENT
FARMOUT AGREEMENT
BETWEEN
DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED
a wholly-owned subsidiary of
TANGANYIKA OIL COMPANY LTD.
and
▇▇▇▇▇▇▇ PETROLEUM INC.
a wholly-owned subsidiary of
▇▇▇▇▇▇▇ INDUSTRIES LTD.
I N D E X
Article Number Heading Page
1.1_ Definitions 2
2.0 Obligations of the Parties 3
3.0 Representations and Warranties 4
4.0 Relationship of the Parties 6
5.0 Information 6
6.0 Applicable Law & Resolution of Disputes 7
7.0 Miscellaneous 7
Annexure "A" Concession Agreement
Annexure "B" Deed of Assignment
FARMOUT AGREEMENT
THIS AGREEMENT is made and entered into as of the 28th day of April 1998, by and
between:
DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED, a company organised and
existing under the laws of the Republic of Ireland ("Dublin") and
wholly-owned subsidiary of TANGANYIKA OIL COMPANY LTD., a company
organised and existing under the laws of Canada ("Tanganyika") and;
▇▇▇▇▇▇▇ PETROLEUM INC., a company organised and existing under the laws
of the British Virgin Islands ("▇▇▇▇▇▇▇") and wholly-owned subsidiary
of ▇▇▇▇▇▇▇ INDUSTRIES LTD., a company organised and existing under the
laws of the United States.
WITNESSETH WHEREAS:
1. On November 17, 1997, Dublin was notified of the acceptance by the
Exploration Offers Committee of the Egyptian General Petroleum
Corporation (EGPC) of Dublin=s application in a concession covering an
area of approximately 2,320 square kilometres known as Block H, West
Gharib, Gulf of Suez, Egypt.
2. On December 1, 1997, Dublin and EGPC initiated a concession agreement
(the "CA") pursuant to which Dublin was granted the right to explore
for and exploit petroleum on the Contract Area (as hereinafter
defined). The CA is subject to ratification by the Government of the
Arab Republic of Egypt (the "Government").
3. On December 28, 1997, Dublin and EGPC signed a Pre-Effective Date
Expenditure Agreement pursuant to which Dublin's Concession
expenditures would be recoverable under the CA prior to the effective
date of the CA.
4. On ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇ was notified by EGPC that Law No. 15 for 1998
concerning the CA was issued.
5. Subject to the approvals of the Government and EGPC, Dublin is willing
to transfer and assign to ▇▇▇▇▇▇▇ an undivided twenty percent (20%)
Participating Interest in the CA, together with all rights and
obligations pertaining thereto; and
6. ▇▇▇▇▇▇▇ is desirous of acquiring the said twenty percent (20%)
Participating Interest on the basis of the terms and conditions set
forth herein.
NOW THEREFORE in consideration of the mutual promises, agreements and covenants
hereinafter set forth, the parties hereto agree as follows:
1.1_ DEFINITIONS
1.01 The terms defined in the recitals hereof or at other instances herein shall
have the meanings attributed to them thereby. In addition, the following words
and expressions shall, for the purpose of this Agreement, bear the meanings
respectively set opposite them:
"Acquired Interest" means a twenty (20%) undivided Participating Interest
free and clear of all encumbrances to be transferred
and assigned as contemplated herein by Dublin to
▇▇▇▇▇▇▇;
"Affiliate" means in relation to each Party, any company,
corporation or other entity
1. which is directly or indirectly controlled by
such Party; or
2. which directly or indirectly controls such
Party; or
3. which is directly or indirectly controlled by
a company, corporation or other entity that
also directly or indirectly controls such
Party.
To this effect, control is conclusive by fact of owning
directly or indirectly shares in the company
representing more than fifty percent (50%) of the vote
in general meeting.
"Agreement" means this Farmout Agreement;
"Contract Area" means the area described in the Concession Agreement
(CA);
"Contract Depth" means at depth of 200 feet into the ▇▇▇▇▇ Formation or
9,000 feet whichever is shallower.
"Deed of Assignment" means the instrument of transfer to be submitted to
the Government and EGPC for the purpose of obtaining
all the necessary official consents to the assignment
of the Acquired Interest by Dublin to ▇▇▇▇▇▇▇, which
instrument will substantially be in the form set forth
in Annex "B" attached hereto;
"Effective Date" means the date of execution of this Agreement;
"Joint Operating means the Joint Operating Agreement to be entered into
Argeement" or "JOA" between the Parties;
"Participating Interest" means an undivided percentage interest in the CA and
the JOA and all rights and obligations pertaining
thereto;
"Party" means a party to this Agreement.
All other terms specifically defined in the CA and not defined herein shall have
the meanings assigned to them in the CA unless the context clearly requires
otherwise. A copy of the CA is attached hereto as Annexure AA@.
1.02 Unless the context otherwise requires, reference to any Article is to an
Article of this Agreement. In addition, where the context requires, the singular
shall include the plural and the plural shall include the singular.
2.0 OBLIGATIONS OF THE PARTIES
2.01 ▇▇▇▇▇▇▇ shall, within seven (7) days of the Effective Date, pay to
Dublin the following:
a. thirty-four thousand United States Dollars (US$34,000), being
twenty percent (20%) of all costs incurred prior to the
Effective Date;
b. three hundred thousand United States Dollars (US$300,000),
being forty percent (40%) of the Signature Bonus payable to
EGPC;
c. eight thousand United States Dollars (US$8,000), being twenty
percent (20%) of the CA administration costs payable to EGPC;
1. ten thousand United States Dollars (US$10,000), being twenty
percent (20%) of the annual training bonus payable to EGPC.
Payments shall be effected to Tanganyika=s bank account numbered ▇▇▇▇▇▇▇.202
with Cantrade ▇▇▇▇▇▇ ▇▇▇▇▇▇ Banque Privee S.A., ▇▇ ▇▇▇ ▇▇▇-▇▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇▇, ▇▇-▇▇▇▇, ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇.
2.02 From and after the Effective date, ▇▇▇▇▇▇▇ shall bear and pay twenty
percent (20%) of all costs and expenses including but not limited to the
Financial Obligations related to the CA.
2.03 ▇▇▇▇▇▇▇ shall bear and pay forty percent (40%) of the costs and expenses
associated with the drilling of an exploratory well to Contract Depth including
casing to total depth and subsequent testing or abandonment of said well in the
Initial Exploration Period. Notwithstanding the above, upon the earlier to occur
of (a) the drilling and testing of this exploratory well, or (b) total
cumulative costs incurred in drilling and completing or abandoning the said well
equal to one million five hundred thousand United States Dollars (US$1,500,000),
or a maximum cost to ▇▇▇▇▇▇▇ of six hundred thousand United States Dollars
(US$600,000); thereafter, ▇▇▇▇▇▇▇ shall pay twenty percent (20%) of all costs
and expenses with any further activity related to this well.
2.04 ▇▇▇▇▇▇▇ shall, within seven (7) days of the Effective Date, provide either
Dublin or Tanganyika (at Dublin=s option) with a bank guarantee from a bank
acceptable to Dublin equivalent to two million United States Dollars
(US$2,000,000), being forty percent (40%) of the Letter of Guarantee. Both
Dublin and Tanganyika shall immediately provide ▇▇▇▇▇▇▇ with a Trust Agreement
covering the 20% working interest of ▇▇▇▇▇▇▇ until a Deed of Assignment is
approved by EGPC and the Government.
2.05 Dublin shall, upon receipt of the sums set out in Article 2.01 and the bank
guarantee set out in Article 2.04, prepare, execute and submit the Deed of
Assignment to ▇▇▇▇▇▇▇ for execution by ▇▇▇▇▇▇▇.
2.06 Dublin shall, as soon as possible following the date of receiving the fully
executed Deed of Assignment, submit the same for approval by EGPC and the
Government and will use its best efforts to obtain said approvals.
2.07 Following the approval of the Deed of Assignment by EGPC and the
Government, the respective Participating Interests of the Parties shall be as
follows:
Dublin 50%
GHP 30%
▇▇▇▇▇▇▇ 20%
----
100%
2.08 ▇▇▇▇▇▇▇ agrees to assume its respective share of the rights and obligations
of Dublin arising from and under the CA with respect to the Acquired Interest
from and after the date of execution of the Deed of Assignment.
2.09 The Parties shall use reasonable efforts to execute the JOA, which shall
take effect as of the Effective Date, within thirty (30) days after execution of
this Agreement.
2.10 The Parties agree that the Operator shall be Dublin. The Operator shall
conduct all operations in accordance with the provisions of the CA and the JOA.
3.0 REPRESENTATIONS AND WARRANTIES
3.01 Dublin hereby represents and warrants to ▇▇▇▇▇▇▇ that:
a. it is duly established and existing under the laws of the
Republic of Ireland and has the power and authority to own its
own assets and to conduct the business which it carries on;
b. it has the corporate power to enter into this Agreement, the
JOA and the Deed of Assignment and to carry out the
transactions provided for therein and has taken all necessary
corporate action to authorise the execution and delivery of
this Agreement, the Deed of Assignment and the JOA, which
agreements constitute legally binding obligations on it;
c. the CA is valid, approved by Majlis ▇▇ ▇▇▇▇▇ (Egyptian
Parliament) and in good standing and there has been no default
by Dublin under, or breach by Dublin of the CA; and
d. Law No. 15 for 1998 has been issued by the Government giving
the beneficial title to the Acquired Interest and such title
is free and clear of all charges and claims of all persons and
entities (and will be so assigned free and clear at the date
of assignment) other than those of the Government and EGPC,
whose charges and claims are fully set forth in the CA;
e. there is no pending of threatened litigation which would
materially affect the consumption of, and benefits under this
Agreement, the Deed of Assignment and/or the JOA; and
f. it shall, pursuant to Article 2, use its best efforts to
obtain all official consents to the Deed of Assignment.
3.02 ▇▇▇▇▇▇▇ hereby represents and warrants to Dublin that:
a. it is duly established and existing under the laws of the
British Virgin Islands;
b. it has the corporate power to enter into this Agreement, the
Deed of Assignment and the JOA, and to carry out the
transactions provided for therein and has taken all necessary
corporate action to authorise the execution and delivery of
this Agreement, the Deed of Assignment and the JOA which
agreements constitute legally binding obligations on it.
4.0 RELATIONSHIP OF THE PARTIES
4.01 The rights, duties, obligations and liabilities of the Parties herein shall
be several and not joint or collective; and nothing herein contained shall ever
be construed as creating a partnership of any kind, an association, or a trust,
or as imposing upon any or all of the Parties hereto any partnership duty,
obligation or liability. Each Party shall be individually responsible only for
its obligations as set out in this Agreement.
5.0 INFORMATION
5.01 On the Effective Date, Dublin will make available and furnish to ▇▇▇▇▇▇▇
all data and information related to the Contract Area and the CA.
5.02 Subject to the CA, the Parties hereto agree that the terms of this
Agreement shall be considered confidential and shall not be disclosed to any
third party, except to the extent provided by (d) below. Neither Party shall,
without the prior written consent of the other Party, disclose during the
currency of this Agreement to any third party any data or information acquired
or obtained by any of them under the CA, provided that any Party may disclose
any such information or data:
a. to the Government and EGPC;
b. to an Affiliate;
c. to any technical, financial or other professional consultant
retained by it or its Affiliate, which requires the
information or data to provide professional services to Dublin
or ▇▇▇▇▇▇▇;
d. to the extent required:
i. by law, or
ii. by the rules and regulations of any stock exchange
upon which the shares or other securities of any
Party or an Affiliate are listed or in connection
with an application to any stock exchange for listing
of any such shares or other securities;
e. to any third party with which bona fide negotiations for a
Participating Interest are conducted; or
f. to the extent that the information is in the public domain;
provided always that with the exception of disclosure under (a), (b), (d), and
(f) hereinabove, the recipient of any information agrees in writing to keep the
same strictly confidential.
6.0 APPLICABLE LAW AND RESOLUTION OF DISPUTES
6.01 This Agreement shall be governed by and construed in accordance with the
laws of Canada, excluding, however, any of its conflict of law rules which would
direct or refer to the laws of another jurisdiction. The Parties hereto
specifically attorn and submit themselves to the jurisdiction of the courts of
Canada. In addition, each Party irrevocably waives any objection which it may
now or hereafter have to laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in the courts of Canada, and
irrevocably waives any claim that any such suit, action or proceeding brought in
the courts of Canada has been brought in an inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit action
or proceeding brought in the courts of Canada, that such court does not have
jurisdiction over such Party.
7.0 MISCELLANEOUS
7.01 This Agreement is subject to regulatory body approval.
7.02 Any obligation of the Parties hereunder shall be suspended while they or
any of them is prevented or hindered from complying therewith by any cause of
force majeure as that term is defined in the Force Majeure Article of the CA.
Any time limitations set forth in the Agreement shall be automatically extended
for the same period of time that the obligations are so suspended.
7.03 The terms, conditions, warranties and representations in this Agreement
shall survive the execution of the Deed of Assignment and the JOA.
7.04 This Agreement may be amended in any manner and at any time only by a
written instrument executed by the Parties hereto.
7.05 Whether or not the transactions contemplated herein shall be consummated,
each of the Parties shall (except as otherwise specifically provided herein) pay
his own expenses incidental to the preparation, execution and performance of
this Agreement.
7.06 Either of the Parties shall execute and deliver such other certificates,
agreements and other documents and take such other actions as may reasonably be
requested by the other Party in order to consummate or implement the
transactions contemplated by this Agreement.
7.07 All notices, requests, demands or other communications hereunder shall be
in writing, and shall be delivered by hand or sent by courier. Notices sent by
fax are deemed to be received on the working day of the recipient following
dispatch provided that the recipient acknowledge receipt by return fax.
a. If to DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED:
Suite ▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇ ▇▇▇▇
2. If to ▇▇▇▇▇▇▇ PETROLEUM INC.:
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The address of each Party hereto may be changed for any or all purposes of the
Agreement by five (5) days advance written notification from the Party changing
its address to the other Party.
7.08 This Agreement and all the provisions hereof shall be binding upon and
enure to the benefit of the Parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned, by operation of law or otherwise
consent of the other Parties, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, each Party shall be entitled, upon notification,
to assign to an Affiliate without the consent of the other Party.
7.09 This Agreement may be executed in one or more counterparts, all of which
will constitute one and the same instrument.
7.10 The section headings in this Agreement are for convenience and reference
only and shall not be deemed to alter or affect the meaning or interpretation of
any provision thereof.
7.11 This Agreement hereby supersedes any and all other agreements, oral or
written, and constitutes the entire agreement among the Parties hereto in
respect of the subject matter of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.
DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED
"▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇"
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ PETROLEUM INC.
"▇▇▇▇▇▇ ▇▇▇▇▇▇"
-----------------------------
Name:
Title:
ANNEXURE "A"
CONCESSION AGREEMENT
ANNEXURE "B"
DEED OF ASSIGNMENT
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made as of this day of April, 1998 between:
DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED, a company incorporated
under the laws of the Republic of Ireland ("Dublin"); and
▇▇▇▇▇▇▇ PETROLEUM INC., a company incorporated under the laws of the
British Virgin Islands ("▇▇▇▇▇▇▇").
WHEREAS:
A. On April $____, 1998 Dublin signed a Concession Agreement (the "CA") with the
Government of the Arab Republic of Egypt (the "Government") and the Egyptian
General Petroleum Corporation ("EGPC") pursuant to which Dublin was granted the
right to explore for and exploit petroleum from areas described in the CA;
B. Subject to the approval of the Government and EGPC, Dublin is willing to
transfer and assign to ▇▇▇▇▇▇▇ an undivided twenty percent (20%) participating
interest in the CA, together with all rights and obligations pertaining thereto;
and
▇. ▇▇▇▇▇▇▇ is desirous of acquiring the said thirty percent (20%) participating
interest on the basis of the terms and conditions set forth herein.
NOW THEREFORE, the Parties hereto agree as follows:
1. Dublin hereby assigns to ▇▇▇▇▇▇▇ an undivided twenty percent (20%)
participating interest in and to the CA and the ▇▇▇▇▇▇▇ hereby accepts such
assignment.
2. Dublin hereby expressly states that the rights and privileges of the
Government and EGPC under the CA shall not be prejudiced by the provisions of
this Agreement.
3. ▇▇▇▇▇▇▇ hereby expressly agrees to be bound by all the obligations provided
for under the CA.
4. For the purposes of the CA, ▇▇▇▇▇▇▇=s address is as follows:
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
5. This Assignment shall be effective upon obtaining the consent of the
Government and EGPC hereto in accordance with Article 21 of the CA.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.
DUBLIN INTERNATIONAL PETROLEUM (EGYPT) LIMITED
---------------------------------
Name:
Title:
▇▇▇▇▇▇▇ PETROLEUM INC.
---------------------------------
Name:
Title: