MASTER SERVICE CONTRACT for RET
MASTER
SERVICE CONTRACT for RET
THIS AGREEMENT (this “Contract”), made
and entered into and shall be effective as of this 5th day of December, 2008, by
and between the parties herein designated as “Company” and
“Contractor”.
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Company:
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Resource
Energy Technologies, LLC (“RET”)
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Address:
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Contractor:
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Blast
Energy Services, Inc., its subsidiaries, divisions and other affiliates
(“Blast”)
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Address:
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WITNESSETH:
THAT,
WHEREAS, Company in the course
of such operations regularly and customarily enters into contracts with
independent contractors for the performance of service relating thereto;
and
WHEREAS, Company desires, as a
matter of company policy, to establish and maintain an approved list of
Contractors and to offer work or contracts only to those Contractors who are
included on such approved list; and
WHEREAS, Contractor represents
that it has adequate equipment in good working order and fully trained personnel
capable of efficiently operating such equipment and performing services for
Company.
NOW THEREFORE IN CONSIDERATION
of the mutual promises, conditions and agreements herein contained, the
sufficiency of which is hereby acknowledged, and the specifications and special
provisions set forth in the exhibits attached hereto and made a part hereof, the
parties mutually agree as follows:
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1.0
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AGREEMENT
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Upon
execution of this Contract, Company agrees that the name of Contractor shall be
added to the Company’s approved list of Contractors and this Contract shall
remain in force and effect until canceled by either party by giving the other
party ten (10) days prior written notice at the respective address of either
party. If current work extends past such ten-day period, then
cancellation shall not be effective until work is completed. This
Contract shall control and govern all work performed by Contractor for Company,
under subsequent verbal and/or written work orders. Agreement or
stipulations in any such work order, delivery ticket, or other instrument, used
by Contractor not in conformity with the terms and provisions hereof shall be
null and void. No waiver by Company of any of the terms, provisions
or conditions hereof shall be effective unless said waiver shall be in writing
and signed by an authorized officer of Company and specifically referencing this
Contract.
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2.0
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LABOR, WARRANTY, EQUIPMENT,
MATERIALS, SUPPLIES AND SERVICES
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2.1
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When
notified by Company by written work order of the services and/or equipment
desired and upon acceptance of same, Contractor shall commence furnishing
same at the agreed upon time, and continue such operations diligently and
without delay, in strict conformity with the specifications and
requirements contained herein and such work
orders.
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2.2
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Contractor
shall not employ in any work for Company any employee whose employment
violates any labor, employment or other applicable
laws. Contractor shall not employ in any work for Company any
employee who is a minor.
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2.3
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All
work or services rendered or performed by Contractor shall be done with
due diligence in a good and workmanlike manner, using skilled, competent
and experienced workmen and supervisors, and in accordance with good
oilfield servicing practices.
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(a)
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NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE TERMS OF THIS PARAGRAPH
APPLY TO ANY SERVICES AND TO ANY EQUIPMENT RENTED OR LEASED WITH OR
WITHOUT AN OPERATOR. Contractor uses its best efforts to ensure
that all service personnel furnished are competent and rental equipment is
in good condition. Contractor personnel will attempt to perform
the work requested; however, because of the nature of the work to be
accomplished and unpredictable conditions, the results of such services
cannot be and are not guaranteed. Contractor warrants the
services provided hereunder for a period of thirty (30)
days. NO WARRANTY IS GIVEN WITH RESPECT TO ENGINEERING AND
TECHNICAL INFORMATION FURNISHED BY CONTRACTOR OR WITH RESPECT TO THE
RESULTS OF THE SERVICES PROVIDED BY CONTRACTOR. CONTRACTOR
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE DESIGN,
OPERATION, OR QUALITY OF THE MATERIAL OR WORKMANSHIP OF RENTAL EQUIPMENT
USED TO SUPPLY THE SERVICES PROVIDED TO COMPANY HEREUNDER, AND CONTRACTOR
MAKES NO WARRANTY OF MERCHANTABILITY OR FITNESS OF THE EQUIPMENT FOR ANY
PARTICULAR PURPOSE OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER.
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(b)
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Contractor
shall have no responsibility for any materials furnished and/or
specified-by Company.
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(c)
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With
regard to materials or equipment furnished by third party vendors and/or
suppliers, Contractor’s liability therefor shall be limited to the
assignment of such third party vendor’s and/or supplier’s warranty to
Company, provided such warranties are
assignable.
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2.4
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Contractor
agrees to maintain his equipment in good operating condition at all times
and shall use all reasonable means to control and prevent fires and
blowouts, protect the hole, and protect Company’s equipment. Contractor’s
use of down-hole equipment as it pertains to Sections 2.5 and 2.6 is
limited to the following major
items:
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2
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(a)
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The
Blast down-hole deflection shoe and packers, the stainless steel tubing
and nozzles used to laterally jet into the hole, and the one inch coiled
tubing string all of which are estimated to have a value not exceeding
sixty thousand ( $60,000).
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2.5
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Notwithstanding
anything to the contrary contained herein, except when Contractor’s
equipment is lost or damaged as a result of the sole negligence of
Contractor, Company agrees to defend, indemnify and hold Contractor
harmless from the loss of or damage to Contractor’s tools or equipment
occurring in the hole, or in the drill string below the level of the
rotary table. Company will replace such tools/equipment or reimburse
Contractor with the current replacement cost new. Should
Company decide to replace lost or damaged tools/equipment, the replaced
items should be new and purchased or obtained from a reputable
manufacturer and should meet all original equipment manufacturer’s
specifications. Company agrees to reimburse Contractor for the
cost of repair to such tools and equipment that are damaged other than
from normal wear-and-tear during the contract period. However,
before any major repairs are made to damaged equipment, approval for such
repairs must be secured from an authorized representative of
Company. Company shall not be responsible if Contractor’s
tools/equipment is damaged as a result of Contractor’s negligent acts
and/or omissions.
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2.6
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Notwithstanding
anything to the contrary contained herein, it is expressly agreed and
understood that in the event Contractor’s equipment is leased or rented to
Company pursuant to the Contract and is not returned or is damaged beyond
repair, Company will replace such equipment or reimburse Contractor with
the current replacement cost new of such equipment. Should
Company decide to replace lost or damaged assets, the replaced items
should be new and purchased or obtained from a reputable manufacturer and
should meet all original equipment manufacturer’s
specifications. Company agrees to reimburse Contractor for the
cost of repair to such tools and equipment that are damaged other than
from normal wear-and-tear during the contract period. However,
before any major repairs are made to damaged equipment, approval for such
repairs must be secured from an authorized representative of
Company. Company shall not be responsible to the extent that
Contractor’s equipment is damaged as a result of Contractor’s negligent
acts and/or omissions.
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3.0 PAYMENT
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3.1
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The
Company shall pay Contractor based upon the rates and timing stipulated in
Section 18.1 and 18.2 provided for herein, subject to same being accepted
by Company as fully complying with all the terms, conditions,
specifications and requirements of this
Contract.
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3.2
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Company
shall have the right to audit Contractor’s books and records relating to
all invoices issued pursuant to this agreement. Contractor
agrees to maintain such books and records for a period of two (2) years
from the date such costs were incurred and to make such books and records
available to Company at any time or times within such two (2) year
period.
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3.3
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In
the event that Company’s account with Contractor becomes delinquent,
Contractor has the right to revoke any and all discounts previously
applied in arriving at the net invoice price, which are
unpaid. Upon revocation, the full invoice price without
discount will become immediately due and owing and subject to
collection. Notwithstanding anything herein to the contrary,
Contractor may file liens if Company fails to pay Contractor’s valid
charges as required by this Contract or any court
order.
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3
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4.0
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REPORTS
TO BE FURNISHED BY CONTRACTOR
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4.1
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The
quantity, description and condition of the materials and supplies and/or
services furnished shall be verified and checked by Contractor, and all
delivery tickets shall be properly certified as to receipt by Contractor’s
representative. Contractor must obtain approval of Company’s
representative on the well site of delivery tickets for materials and
supplies for which Contractor is to be reimbursed by
Company.
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4.2
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Contractor
shall immediately orally report to Company, as soon as practicable
followed by an appropriate written report, all accidents or occurrences
resulting in death or injuries to Contractor’s employees, agents or third
parties, or damage to property of Company or third parties arising out of
or during the course of work to be performed
hereunder. Contractor shall furnish Company with a copy (within
ten days) of all records made available by Contractor to Contractor’s
insurer or governmental authorities or to others of such accidents and
occurrences.
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5.0
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INDEPENDENT
COMPANY RELATIONSHIP
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In
the performance of any work by Contractor for Company, Contractor shall be
deemed to be an independent contractor, with the authority and right to
direct and control all of the details of the work, Company being
interested only in the results obtained. However, all work
contemplated shall meet the approval of Company and shall be subjected to
the general right of inspection. Company shall have no right or
authority to supervise or give instructions to the employees, agents, or
representative of Contractor, but such employees, agents or
representatives at all times shall be under the direct and sole
supervision and control of Contractor. Any suggestions or
directions given by Company or its employees shall be given only to the
superintendent or other person in charge of Contractor’s crew, provided
however, that in the event any employee of Company should give any order
or instructions to the employees of Contractor (which employee of Company
shall not in any event be authorized to do) and such order is not
countermanded by Contractor’s superintendent or other person in charge of
Contractor’s employees or crew, it shall be deemed that such orders or
instructions are the orders or instructions of Contractor. It
is the understanding and intention of the parties hereto that no
relationship of master and servant or principal and agent shall exist
between Company and the employees, agents, or representatives of
Contractor, and that all work or services covered hereby shall be
performed at the sole risk of
Contractor.
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6.0
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INDEMNITY
OBLIGATIONS
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6.1
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Definitions. The
following terms shall have the designated
definitions.
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(a)
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Company Group
includes, individually or in any combination, Company, its affiliates,
contractors (other than Contractor) and entities for which Company is
performing services and each of their respective directors, officers
agents, representatives, employees and
invitees.
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(b)
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Contractor
Group includes, individually or in any combination, Contractor, and
its affiliates and contractors, and each of their respective directors,
officers, agents, representatives, employees and
invitees.
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(c)
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Defend – the
obligation of the indemnitor (i) to defend the indemnitees at it’s sole
expense, or at the indemnitees’ election (ii) to reimburse the indemnitees
for the indemnitees’ reasonable expenses incurred in defending
themselves. Notwithstanding the indemnitee’s election of option
(i) above, the indemnitee shall be entitled to participate in its defense
at its sole cost.
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(d)
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Losses –
claims, demands, causes of action, losses, judgments, liabilities,
indemnity obligations, costs, damages or expenses of any kind and
character (including attorney’s fees and other legal
expenses).
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6.2
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Contractor. Contractor
shall release, defend, indemnify, and hold harmless Company Group from and
against any and all Losses arising out of bodily injury or death or
property damage or loss (including patent or license infringement
resulting from the use of the Contractor Group’s property) suffered by any
of the Contractor Group in connection with this Contract, REGARDLESS OF WHETHER CAUSED OR
CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY
AMOUNT), STRICT LIABILITY OR OTHER FAULT OF ANY MEMBER OF
COMPANY GROUP.
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6.3
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Company. Company
shall release, defend, indemnify, and hold harmless Contractor Group from
and against all Losses arising out of bodily injury or death or property
damage or loss (including patent or license infringement resulting from
the use of the Company Group’s property) suffered by any of the Company
Group in connection with this Contract, REGARDLESS OF WHETHER CAUSED OR
CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY
AMOUNT), STRICT LIABILITY OR OTHER FAULT OF ANY MEMBER OF
CONTRACTOR GROUP.
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6.4
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Insurance
Support/Limitation. The mutual indemnity obligations in
Sections 6.2 and 6.3 above shall be supported by insurance provided by the
parties hereto in the amounts and the types described in Exhibit
A.
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6.5
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NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, COMPANY HEREBY AGREES TO ASSUME
THE ENTIRE RESPONSIBILITY AND LIABILITY FOR, AND AGREES TO RELEASE,
DEFEND, INDEMNIFY AND HOLD CONTRACTOR HARMLESS FROM AND AGAINST ALL
CLAIMS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION
ATTORNEYS’ FEES, COURT COSTS, EXPERT WITNESS FEES AND ANY OTHER COST OF
DEFENSE) FOR AND ARISING OUT OF THE FOLLOWING SPECIFIED TYPES OF CLAIMS,
LOSSES OR EVENTS:
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1.
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LOSS
OR LIABILITY FOR DAMAGES OR AN EXPENSE ARISING FROM PROPERTY INJURY THAT
RESULTS FROM RESERVOIR OR UNDERGROUND DAMAGE, INCLUDING LOSS OF OIL, GAS,
OTHER MINERAL SUBSTANCE, OR WATER OR THE WELLBORE ITSELF;
OR
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5
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2.
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LOSS
OR LIABILITY FOR DAMAGES OR ANY EXPENSE ARISING FROM COST OF CONTROL OF
WILD WELL, UNDERGROUND OR ABOVE THE
SURFACE.
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THIS
OBLIGATION TO INDEMNIFY, DEFEND AND RELEASE APPLIES REGARDLESS OF WHETHER
OR NOT THE CLAIM OR LOSS IS OCCASIONED BY OR RESULTS FROM THE ACTUAL OR
ALLEGED NEGLIGENCE OF CONTRACTOR OR ANY OTHER PERSON, OR ENTITY, IN WHOLE
OR IN PART, WHETHER SOLE, JOINT, ACTIVE OR PASSIVE, EXCEPT TO THE EXTENT
THE CLAIM OR LOSS IS DUE TO CONTRACTOR’S SOLE NEGLIGENCE, GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.
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6.6.
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NOTWITHSTANDING
THE FOREGOING, CONTRACTOR SHALL HAVE SOLE RESPONSIBILITY AND LIABILITY FOR
THE CONTROL AND REMOVAL OF AND SHALL HOLD COMPANY HARMLESS FROM PROPERTY
LOSS OR DAMAGE, FINES AND/OR PENALTIES FROM SUCH POLLUTION OR
CONTAMINATION THAT RESULTS FROM SPILLS OF FUELS, LUBRICANT, MOTOR OILS,
PIPEDOPE, PAINTS, SOLVENTS, BALLAST, BILGE, METALLIC OBJECTS AND GARBAGE
IN CONTRACTOR’S SOLE POSSESSION AND CONTROL, REGARDLESS OF OWNERSHIP,
REGARDLESS OF WHETHER OR NOT OCCASIONED BY OR RESULTING FROM THE
NEGLIGENCE, STRICT LIABILITY, BREACH OF WARRANTY OR OTHER FAULT OF
COMPANY, IN WHOLE OR IN PART, WHETHER SOLE, JOINT, ACTIVE OR
PASSIVE. THE INITIATION OF CLEAN-UP OPERATIONS INCLUDING
CONTROL, RESPONSE AND REMOVAL, BY EITHER PARTY SHALL NOT BE AN ADMISSION
OF ASSUMPTION OF LIABILITY BY THE INITIATING PARTY OR
PARTIES.
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6.7
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Indirect or
Consequential Damages. The parties hereto waive and
release all claims against the other party for indirect, special, punitive
or consequential damages arising out of this Contract, REGARDLESS OF WHETHER CAUSED OR
CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (IN ANY
AMOUNT), STRICT LIABILITY OR OTHER FAULT OF ANY OF THE OTHER
PARTY. As used herein, “indirect or consequential damages” shall
include, but not be limited to, loss of revenue, profit or use of capital,
production delays, loss of product, reservoir loss or damage, losses
resulting from failure to meet other contractual commitments or deadlines
and downtime of facilities or
vessels.
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6.8
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No
Limit. Except as otherwise provided for herein, the
foregoing indemnity obligations shall not be limited to the amount of
insurance coverage maintained by the
parties.
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6.9
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The
provisions of this Section shall extend to and be enforceable by and for
the benefit of Contractor Group and Company
Group.
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6.10
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During the term of this
Contract, Contractor and its subcontractors or their officers, directors
and employees may have occasion to be upon or about property, platforms,
vessels, equipment or other premises belonging to or under the control of
or in the possession of or under contract to Company while performing
services for another company or while in transit between a vessel and
another location. In such event, Contractor’s and Company’s
indemnification rights and obligations under this Contract shall apply to
the same extent as if Contractor had been employed at the request of or
for the benefit or account of
Company.
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6
7.0 INSURANCE
Contractor
shall carry insurance (with reliable insurance companies that are satisfactory
to Company) in the amounts set forth in Exhibit A, such insurance to be
effective prior to the commencement of any work under this
Contract. In each such policy, to the extent of the liabilities
agreed to be assumed by Contractor, Contractor shall cause (i) all deductibles
to be for Contractor’s account, (ii) the insurer to waive all rights of
subrogation against Company Group, (iii) Company Group to be listed as
additional insureds, and (iv) such policy to be primary as to any other existing
valid and collectible insurance of Company Group or otherwise. Before
engaging in any work hereunder, Contractor shall furnish Company an executed
Certificate of Insurance (in form satisfactory to Company) evidencing the
foregoing insurance. Contractor shall cause each insurer to agree to
give Company at least thirty (30) days written notice of cancellation or
expiration of any such policies or of any other changes that would materially
reduce the limits of coverage of such policies. Notwithstanding any
provision herein to the contrary, failure to secure the insurance coverage, or
the failure to comply fully with any of the insurance provisions of this
Contract, or the failure to secure such endorsements on the policies as may be
necessary to carry out the terms and provisions of this Contract, (x) shall in
no way act to relieve Contractor from the obligations of this Contract, and (y)
shall constitute grounds for the immediate termination of this Contract by
Company (in addition to any other rights or remedies available to the
Company).
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8.0
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THIRD
PARTY BENEFICIARIES
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Except as
provided in Section 6.9 above with regard to Company Group and Contractor Group,
nothing herein shall be construed to confer any benefit on any third party not a
party to this Contract nor to provide any rights to such third parties to
enforce the provisions hereof.
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9.0
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TAXES
AND CLAIMS
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9.1
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Contractor
agrees to pay all taxes, licenses, and fees levied or assessed on
Contractor in connection with or incident to the performance of this
Contract by any governmental agency and unemployment compensation
insurance, old age benefits, social security, or any other taxes upon the
wages of Contractor, its agents, employees, and
representatives. Contractor agrees to require the same
agreements and be liable for any breach of such agreements by any of its
sub-Contractors.
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9.2
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Contractor
agrees to reimburse Company on demand for all such taxes or governmental
charges, State or Federal that Company may be required or deem it
necessary to pay on account of employees of Contractor or its
sub-Contractors. Contractor agrees to furnish Company with the
information required to enable it to make the necessary reports and pay
such taxes or charges. At its election, Company is authorized
to deduct all sums so paid for such taxes and governmental charges from
such amounts as may be or become due to Contractor
hereunder.
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9.3
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Contractor
agrees to pay all claims for labor, materials, services, and supplies
furnished to Contractor hereunder and agrees to allow no lien or charge to
be fixed upon the rig, the lease, the well, the land on which the well is
located, or other property of Company or the party for whom Company is
performing services with respect to such claims. Contractor
agrees to indemnify, protect, defend, and hold Company harmless from and
against all such claims, charges, and liens. If Contractor
shall fail or refuse to pay any claims or indebtedness incurred by
Contractor in connection with the services provided hereunder, it is
agreed that Company shall have the right to pay any such claims or
indebtedness out of any money due or to become due to Contractor
hereunder. Notwithstanding the foregoing, Company agrees that
it will not pay any such claim or indebtedness as long as same is being
actively contested by Contractor and Contractor has taken all actions
necessary (including the posting of a bond when appropriate) to protect
the property interests of Company or any other party affected by such
claim or indebtedness.
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9.4
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Before
payments are made by Company to Contractor, Company may require Contractor
to furnish proof that there are no unsatisfied claims for labor,
materials, equipment, and supplies or for injuries to persons or property
not covered by insurance.
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10.0
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LAWS,
RULES AND REGULATIONS
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10.1
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Company
and Contractor respectively agree to comply with all laws, rules, and
regulations which are now or may become applicable to operations covered
by this Contract or arising out of the performance of such
operations. If either party is required to pay any fine or
penalty resulting from the other party’s failure to comply with such laws,
rules, or regulations, the party failing to comply shall immediately
reimburse the other for any such
payment.
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10.2
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In
the event any provision of this Contract is inconsistent with or contrary
to any applicable law, rule, or regulation, said provision shall be deemed
to be modified to the extent required to comply with said law, rule, or
regulation, and this Contract as so modified, shall remain in full force
and effect.
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10.3
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This
Contract shall be governed, construed and interpreted in accordance with
the laws of Kentucky.
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11.0
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FORCE
MAJEURE
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Except
for the duty to make payments hereunder when due, and the indemnification
provisions under this Contract, neither Company nor Contractor shall be
responsible to the other for any delay, damage or failure caused by or
occasioned by a Force Majeure Event. As used in this Contract, “Force
Majeure Event” includes, but is not limited to: acts of God, action of the
elements, warlike action, insurrection, revolution or civil strife, piracy,
civil war or hostile action, strikes, differences with workers, acts of public
enemies, federal or state laws, rules and regulations of any governmental
authorities having jurisdiction in the premises or of any other group,
organization or informal association (whether or not formally recognized as a
government); inability to procure material, equipment or necessary labor in the
open market, acute and unusual labor or material or equipment shortages, or any
other causes (except financial) beyond the control of either
party. Delays due to the above causes, or any of them, shall not be
deemed to be a breach of or failure to perform under this
Contract. Neither Company nor Contractor shall be required against
its will to adjust any labor or similar disputes except in accordance with
applicable law.
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12.0
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PATENTS
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In
addition to all other indemnity provisions contained herein, Contractor
represents and warrants that the use or construction of any and all tools and
equipment furnished by Contractor and used in the work provided for herein does
not infringe on any license or patent issued or applied for, and Contractor
agrees to indemnify and hold Company harmless from any and all claims, demands,
and causes of action of every kind and character in favor of or made by an
patentee, licensee, or claimant of any rights or priority to such tool or
equipment, or the use or construction thereof, that may result from or arise out
of furnishing or use of any such tool or equipment by Contractor in connection
with the work.
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13.0
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ASSIGNMENTS
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Company
and Contractor agree that neither will assign nor delegate this Contract or any
of the work or services required hereunder, except for work normally performed
by Contractors, and not to assign any sum that may accrue to Contractor
hereunder, without prior written consent of the other party. If any
assignment by Company is made that significantly alters Contractor’s financial
burden, Contractor’s compensation shall be adjusted to give effect to any change
in Contractor’s operating costs.
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14.0
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TERMINATION
OF WORK
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14.1
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Company
may, with 30 days written notification, in its sole discretion, terminate
work covered by any work order, oral or written, issued hereunder, in
which event Contractor shall be paid at the applicable rates stipulated in
Contractor’s Rate Schedule or Bid for services rendered up to the date of
such termination. In no event shall Contractor be entitled to
be paid prospectively for work unperformed by reason of such termination,
nor shall Contractor be entitled to any other compensation or damages for
loss of anticipated profits or otherwise. On notice of such
termination, Contractor shall promptly remove its personnel, machinery,
and equipment from the location and shall further cooperate with Company
or its designee to ensure an orderly and expeditious transition and
completion of the work.
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14.2
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The
foregoing paragraph shall in no way limit (other than compensation for
goods and/or services already provided) Company’s right to terminate
Contractor without additional compensation in the event of Contractor’s
breach of this Contract.
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15.0
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GIFTS
AND GRATUITIES
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It is
considered to be in conflict with the Company’s interest for its employees or
any member of their immediate family to accept gifts, payments, extravagant
entertainment, services, or loans in any form from anyone soliciting business,
or who may already have established business relations with the Company. Gifts
of nominal value and entertainment, meals, and social invitations that are
customary and proper under the circumstances and do not place the recipient
under obligation are acceptable. If any employee of the Company
should solicit a gift or gratuity from the Contractor, Contractor hereby agrees
to notify an officer of the Company of such act. It is agreed that
the Company will hold such notification in confidence. It is further
understood that failure by the Contractor to comply with the Company’s policies
regarding gifts and gratuities may, at the Company’s option, result in the
termination of this Contract and may further preclude any future dealings
between the parties.
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16.0
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ILLEGAL
DRUGS, ALCOHOL, AND FIREARMS
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16.1
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To
help insure a safe, productive work environment, Company may establish a
program designed to prohibit the use, transportation and possession of
firearms, drugs and/or controlled substances, drug paraphernalia and
alcoholic beverages on drilling locations, or Company’s other
premises. Illegal drugs include marijuana, amphetamines,
barbiturates, opiates, cocaine, codeine, morphine, hallucinogenic
substances (LSD) and any similar drugs and/or chemicals synthetics deemed
hazardous by Company.
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16.2
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Such
programs, if established, upon notice shall apply to Contractor’s
employees, agents, servants and
Contractors.
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16.3
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Company
specifically reserves the right to carry our reasonable searches of
individuals, their personal effects, and vehicles when entering on and
leaving Company’s premises. The searches will be initiated by
Company without prior announcement. Individuals found in
violation will be removed from Company’s premises
immediately. Submission to such a search is strictly voluntary;
however, refusal may be cause for not allowing that individual on the
wellsite or Company’s other premises. It is Contractor’s
responsibility to notify its employees of this prohibition and its
enforcement.
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17.0
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GOVERNMENT
REGULATIONS
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The
following regulations, where required by law, are incorporated in the agreement
by reference as if fully set out.
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(1)
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The
Equal Opportunity Clause prescribed in 41CFR
60-1.4;
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|
(2)
|
The
Affirmative Action Clause prescribed in 41 CFR 60-250.4 regarding veterans
and veterans of the Vietnam era;
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(3)
|
The
Affirmative Action Clause for handicapped workers prescribed in 41 CFR
60-741.4;
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(4)
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The
Certification of Compliance with Environmental Laws prescribed in 40 CFR
15.20.
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18.0
|
SPECIAL
PROVISIONS
|
This
Contract sets forth the entire agreement between Company and Contractor with
respect to its subject matter. All prior negotiations and dealings
regarding the subject matter hereof are superseded by and merged into the
Contract, including any existing Master Service Contracts between Company
and Blast Energy Services, Inc. or any of its subsidiaries or
divisions. No modification of this Contract shall be effective unless
made in writing and signed by both parties.
This
contract shall be set forth and administered under the provisions of the first
two phases specified below:
10
18.1 Phase
I – Test Phase
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(1)
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Company
will define three (3) well locations to be prepared by Company for testing
on their lease acreage in the Park City area of
Kentucky.
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(2)
|
Company
and Contractor will agree upon a written work program to test the impact
of lateral jetting on the production of the Company ▇▇▇▇▇. Such program
will identify the number of zones in each well, their vertical depths, and
the number of laterals required for each zone as well as the geographical
orientation that the Company desires. (See Exhibit
B)
|
|
(3)
|
Contractor
will carry the cost of building the 4 and ½ inch deflection shoes and
other down-hole equipment for the program at their sole
cost.
|
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(4)
|
Contractor
will carry the cost of mobilizing and demobilizing the jetting equipment
and the living costs of operating personnel while on the road and while
resident in Kentucky for the term of this phase of the
contract.
|
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(5)
|
Company
agrees to reimburse Contractor with fifty thousand dollars ($50,000) paid
ratably over a period not to exceed one hundred and twenty (120) days from
the end of Phase I.
|
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(6)
|
Company
and Contractor will jointly document and sign off on the production
results of Phase I, both before and after the service is provided, from
each well activity contemplated by the work program. (See Exhibit
C)
|
18.2 Phase
II – Maximum 100 Well Program
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(1)
|
Contractor
hereby grants to Company a sixty (60) day option to enter into an
exclusive well program to stimulate up to one hundred (100) ▇▇▇▇▇ on the
Company’s lease acreage in the Park City area of Kentucky. The option
expires sixty (60) days from the completion of Phase I. (See Exhibit
D)
|
|
(2)
|
Company
will exercise said option in writing at its sole discretion based upon
their satisfaction with the documented results of the Test
Phase. If exercised, such program is scheduled to begin in the
spring of 2009 after the rainy season has ended and will be subject to the
same documentary requirements defined in Exhibits B and
C.
|
|
(3)
|
If
Company exercises its option to begin Phase II, Contractor will provide
the jetting service to Company at zero cost (save and except the cost of
mobilizing the rig to Kentucky from its previous location) in exchange for
a forty percent (40%) share in the net revenues from the increased
production of the 100 Well Program and the Company shall retain the
remaining sixty percent (60%).
|
18.3 Phase
III – Joint Venture for the State of Kentucky
|
(1)
|
No
terms and conditions have been agreed to for Phase
III.
|
|
(2)
|
Any
terms or conditions that might be negotiated for Phase III will be
separately documented in a new independent
agreement.
|
11
|
19.0
|
NOTICES
|
|
Company:
|
Resource
Energy Technologies, LLC
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
|
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Office:
▇▇▇-▇▇▇-▇▇▇▇
|
|
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
|
Cell:
▇▇▇-▇▇▇-▇▇▇▇
|
|
Contractor:
|
▇▇▇▇
▇’▇▇▇▇▇
|
|
Blast
Energy Services Inc.
|
|
|
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Office:
▇▇▇-▇▇▇-▇▇▇▇
|
|
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
|
Cell:
▇▇▇-▇▇▇-▇▇▇▇
|
20.0 ACCEPTANCE
OF CONTRACT
IN
WITNESS WHEREOF, the parties hereto have executed this Contract upon the date
above shown in several counterparts, each of which shall be considered as an
original.
|
COMPANY
|
|||
|
By:
|
/s/
▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
Title:
|
CEO
|
||
|
Date:
|
December
5, 2008
|
||
|
CONTRACTOR
|
|||
|
By:
|
/s/
▇▇▇▇ ▇’▇▇▇▇▇
|
||
|
Title:
|
CEO
|
||
|
Date:
|
December
5, 2008
|
||
12
INSURANCE
Exhibit
A
Contractor
shall carry insurance (with reliable insurance companies that are satisfactory
to Company) in the minimum amounts set forth below, such insurance to be
effective prior to the commencement of any work under this
Contract. In each such policy, to the extent of the liabilities
agreed to be assumed by Contractor, Contractor shall cause (i) all deductibles
to be for Contractor’s account, (ii) the insurer to waive all rights of
subrogation against Company Group, (iii) Company Group to be listed as
additional insureds, and (iv) such policy to be primary as to any other existing
valid and collectible insurance of Company Group or otherwise. Before
engaging in any work hereunder, Contractor shall furnish Company an executed
Certificate of Insurance (in form satisfactory to Company) evidencing the
foregoing insurance. Contractor shall cause each insurer to agree to
give Company at least thirty days written notice of cancellation or expiration
of any such policies or of any other changes that would materially reduce the
limits of coverage of such policies. Notwithstanding any provision
herein to the contrary, failure to secure the insurance coverage, or the failure
to comply fully with any of the insurance provisions of this Contract, or the
failure to secure such endorsements on the policy as may be necessary to
carry out the terms and provisions of this contract, (x) shall in no
way act to relieve Contractor from the obligations of this Contract, and (y)
shall constitute grounds for the immediate termination of this Contract by
Company (in addition to any other rights or remedies available to the
Company).
|
1.
|
Workers’
Compensation insurance to the full extent required by all laws applicable
in any jurisdiction in which the Work is to be performed or the contracts
of employment for Contractor’s employees are made or expressed to be
made. The Employer’s Liability Insurance shall not be less than
$1,000,000.
|
|
2.
|
Comprehensive
or Commercial General Liability insurance for any incidents or series of
incidents covering the operations of the Contractor in the performance of
the contract, in an amount of not less than
$1,000,000.
|
|
3.
|
Automobile
Bodily Injury and Property Damage Liability Insurance extending to owned,
non-owned, and hired automobiles used by Contractor in the performance of
this Contract in the amount of not less than
$1,000,000.
|
|
4.
|
Excess
Liability Insurance over and above the coverages listed above in the
amount of not less than $2,000,000.
|
13
PHASE I WORK
PROGRAM
Exhibit
B
Depth # of
Laterals Orientation
Well #1
▇▇▇▇
▇
▇▇▇▇
▇
▇▇▇▇ #▇
▇▇▇▇
▇
▇▇▇▇
2
Well #1
▇▇▇▇
▇
▇▇▇▇
▇
▇▇
▇▇▇▇▇ I PRODUCTION
RESULTS
Exhibit
C
Well
Name Location Pre
Contract Post
Contract
Production Production
(mcf/d)(mcf/d)
15
PHASE II OPTION
EXERCISE
Exhibit
D
Contractor
hereby grants Resource Energy Technologies, LLC the exclusive option to enter
into a one hundred (100) well lateral jetting stimulation program for their
lease acreage in the Park City area of Kentucky, on the terms and conditions
defined in Section 18.2 of this Agreement. This option expires thirty (60) days
from the completion of Phase I.
We
hereby agree to exercise this option and abide by the terms and conditions
stipulated in Section 18.2 of this Agreement:
Signed: ________________________
By: ___________________________
On behalf
of Resource Energy Technologies, LLC
Dated: _________________________