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PALM VALLEY OPERATING AGREEMENT
1985
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇
Solicitors
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ OPERATING AGREEMENT
TABLE OF CONTENTS
Clause Heading Page
1. DEFINITIONS: INTERPRETATION 3
1.1 Definitions 3
1.2 Interpretation 7
1.3 Headings 7
2. APPLICATION AND OBJECTS OF AGREEMENT 7
2.1 Operating Agreement 7
2.2 Joint Venture of Parties 7
2.3 Duration of Joint Venture 7
2.4 Covenants by the Parties 8
3. OWNERSHIP OF CONCESSION AND OTHER INTERESTS 8
3.1 Ownership on Application of Agreement 8
3.2 Ownership Following Transfers 8
3.3 Liability for Royalties and CLC Agreement 8
4. OWNERSHIP OF PRODUCTION 9
4.1 Ownership 9
4.2 The First Pacific Entitlement 9
4.3 The Second Pacific Entitlement 9
5. OPERATOR 9
5.1 Initial Operator 9
5.2 Removal of Operator for Cause 9
5.3 Removal of Operator by Vote 10
5.4 Resignation of Operator 10
5.5 Appointment of New Operator 10
5.6 Transfer of Property on Change of Operator 11
5.7 Audit on Change of Operator 11
6. GENERAL DUTIES OF OPERATOR 11
6.1 Operator to Have Charge 11
6.2 Competitive Contracts: Use of Own Equipment 11
6.3 Contracts with Affiliates 11
6.4 Various Duties of Operator 12
6.5 Handling of Claims 13
6.6 Preparation of Reports 13
6.7 Standard of Care 13
6.8 Indemnification of Operator 13
Clause Heading Page
7. NON-OPERATORS RIGHTS TO ACCESS AND INFORMATION 13
7.1 General Right to Access and Information 13
7.2 Right of Access 14
7.3 Information from Surveys 14
7.4 Notices as to Well Drilling 14
7.5 Operator's Duties during Exploratory Drilling 15
7.6 Information During Drilling 15
7.7 Information After Completion of Drilling 16
7.8 Periodic Reports 16
7.9 Copies of Reports to Government 17
7.10 Non-Operator in Default 17
8. THE OPERATING COMMITTEE 17
8.1 Establishment of Operating Committee 17
8.2 Notification of Representatives 17
8.3 Powers of Operating Committee 18
8.4 Any Party May Submit Matters 18
9. MEETINGS AND VOTING OF OPERATING COMMITTEE 18
9.1 Times and Agenda for Meetings 18
9.2 When No Notice Necessary 18
9.3 Minutes of Meeting 19
9.4 Place for Meetings 19
9.5 Advisers May Attend 19
9.6 Rules Relating to Voting 19
9.7 Votes for Committee Decisions 19
9.8 Other Forms of Voting 20
9.9 Decisions Binding on All Parties 20
9.10 Quorum for Meetings 20
9.11 Rules for Meetings 21
10. PROGRAMMES AND BUDGETS 21
10.1 Operator to Prepare Programmes and Budgets 21
10.2 Times for Submission 21
10.3 Contents of Programmes and Budgets 21
10.4 Approval of Programmes and Budgets 21
10.5 Operator to Act in Absence of Approval 23
10.6 Notice of Excess Expenditures 23
10.7 Approved Programme to Continue Unless Modified 23
11. CHARGING OF COSTS 24
11.1 Authorised Costs and Expenses 24
11.2 Maintenance of Joint Account 24
11.3 Liability of Parties 24
11.4 Treatment of Any Subsidy or Contribution 24
Clause Heading Page
12. CONTRIBUTIONS BY THE PARTIES 24
12.1 Payment by Operator and Reimbursement 24
12.2 Call by Operator 24
12.3 Adjustment 25
12.4 Defaulting Party Liable for Interest 26
12.5 Banking and Investment of Funds 26
13. INSURANCE 26
13.1 Operator to Maintain Insurance 26
13.2 Advice to Non-Operators of Current Insurance 27
13.3 Party's Right to Increase Insurance 27
13.4 Cost of Insurance to Joint Account 27
14. INDEPENDENT OPERATIONS
GEOLOGICAL AND GEOPHYSICAL SURVEYS 27
14.1 Application of Part 27
14.2 Notice of Operations 28
14.3 Consent by Other Parties 28
14.4 Operator for Independent Operations 28
14.5 Non-Consenting Party 28
14.6 Right to Information on Well Drilling 28
14.7 Right to Information in Other Cases 29
15. INDEPENDENT OPERATIONS
DRILLING OF ▇▇▇▇▇ 29
15.1 Application of Part 29
15.2 Definition of Terms 29
15.3 Notice of Drilling 30
15.4 Notice of Participation 30
15.5 Unanimous Participation 30
15.6 Non-Desiring Party 30
15.7 Operator for Independent Drilling 30
15.8 Time for Commencement 31
15.9 Obligation of Desiring Parties 31
15.10 Conformity to Spacing Patterns 31
15.11 Penalties Payable by Non-Desiring Parties 32
15.12 Further Work on ▇▇▇▇▇ 33
16. DISPOSITION OF PRODUCTION 34
16.1 Separate Ownership of Petroleum 34
16.2 Right to Separate Facilities 34
16.3 Underlifting Procedure 34
16.4 Payments Direct to Each Party 35
16.5 Extra Expenditure 35
Clause Heading Page
17. DEFAULTS IN PAYMENT 35
17.1A Notice of Default 35
17.1B Payment by Operator 35
17.2 Defaulting Party May Be Sued 36
17.3 Non-Defaulting Parties to Contribute 36
17.4 Rights of Contributing Parties 36
17.5 Cross Charge 36
17.6 Suspension of Rights of Defaulting Party 37
17.7 Default of Operator in Payment 37
17.8 Application of Defaulting Party's Funds 37
17.9 Option to Purchase Defaulting Party's Interest 37
18. WITHDRAWAL 39
18.1 Any Party May Withdraw 39
18.2 Notice of Withdrawal 40
18.3 Other Parties May Accept Assignment 40
18.4 Prompt Execution of Documents 40
18.5 Withdrawing Party's Obligations 40
18.6 Costs of Assignment 41
18.7 Assignment to All Parties 41
19. ASSIGNMENT - MORTGAGES 41
19.1 Right to Assign 41
19.2 Assumption by Assignee 41
19.3 Assignment to a Crown Corporation 42
19.3A Consequences of Assignment 42
19.4 Charge of Working Interest 42
20. AUSTRALIANISATION 44
20.1 Australianisation 44
21. RELEASE OF INFORMATION 44
21.1 Information Confidential Subject to Exceptions 44
21.2 Disclosure to Listed Companies 45
21.3 Copy Notice to Other Parties 45
21.4 Joint Announcements 45
22. RELATIONSHIP OF PARTIES 45
22.1 Rights and Obligations Several 45
22.2 No Joint Liability 45
23. FORCE MAJEURE 46
23.1 Obligations Suspended by Force Majeure 46
23.2 Certain Actions Not Required 46
23.3 Meaning of Force Majeure 46
Clause Heading Page
24. LAWS AND REGULATIONS 46
24.1 Subject to Minister's Consent 46
24.2 Subject to Applicable Laws 46
24.3 Proper Law 46
24.4 Submission to Jurisdiction 47
25. ABORIGINAL LANDS 47
25.1 Aboriginal Lands 47
26. DEALINGS WITH THE GOVERNMENT AND LAND COUNCIL 47
26.1 Dealings by Concession Holder 47
26.2 Consultation with Operator 47
26.3 Operator May Attend Meetings 47
27. NOTICES 48
27.1 Addresses for Notices 48
27.2 How Notices Given 49
27.3 Australian Representative and Address 49
28. GENERAL 49
28.1 Remedies Not Exclusive 49
28.2 Mutual Indemnity 49
28.3 Limited Invalidity 49
28.4 Waiver 49
28.5 How Monies Paid 50
28.6 Successors Bound 50
28.7 Further Assurance 50
28.8 Entire Agreement 50
28.9 Amendment 50
28.10 No Partition 50
28.11 Counterparts 50
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THE FIRST SCHEDULE
The Working Interests of the Parties
ANNEXURE "A"
Accounting Procedure
ANNEXURE "B"
Clause 17 Cross Charge
ANNEXURE "C"
Form of Priority Deed
PALM VALLEY OPERATING AGREEMENT
THIS AGREEMENT made the 2nd day of April l985 between
MAGELLAN PETROLEUM (NT) PTY. LTD. a Company incorporated in the State of
Queensland and having its registered office in the Northern Territory at 5th
Floor, City Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called
"Magellan") of the First Part
C.D. RESOURCES PTY. LTD. a Company incorporated in the State of South Australia
and having its registered office in the Northern Territory at C/- Coopers &
▇▇▇▇▇▇▇, Civic Centre, ▇▇▇▇▇ ▇▇▇▇ Avenue, Darwin (hereinafter called "CDR") of
the Second Part
FARMOUT DRILLERS NL a Company incorporated in the State of New South Wales and
having its registered office in the Northern Territory at ▇/- ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter
called "Farmout") of the Third Part
CANSO RESOURCES LIMITED a Company incorporated in the State of New South Wales
and having its registered office in the Northern Territory at C/- ▇▇▇▇▇▇▇
Nominees Pty. Ltd., First Floor, 19 The Mall, Darwin (hereinafter called
"Canso") of the Fourth Part
INTERNATIONAL OIL PROPRIETARY an unlimited Company incorporated in the State of
Victoria and having its registered office in the Northern Territory at 5th
Floor, City Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called
"International") of the Fifth Part
PANCONTINENTAL PETROLEUM LIMITED a Company incorporated in the State of
Queensland and having its registered office in the Northern Territory at C/-
▇▇▇▇▇▇▇ Nominees Pty. Ltd., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called
"Pancontinental") of the Sixth Part
IEDC AUSTRALIA PTY. LIMITED a Company incorporated in the State of New South
Wales and having its registered office in the Northern Territory at C/- W. & B.
Pty. LTD., First Floor, The Vic, Lot ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter
called "IEDC") of the Seventh Part
and
AMADEUS OIL NL a Company incorporated in the State of Queensland and having its
registered office in the Northern Territory at 5th Floor, City Mutual Building,
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "Amadeus") of the Eighth Part
W H E R E A S:
A. On the 9th November, 1982 Petroleum Lease No. 3 (hereinafter called
"the Petroleum Lease") in respect of the area of land more fully
described therein (hereinafter called "the Lease Area") containing the
Palm Valley gas field was duly granted to Magellan pursuant to the
provisions of the Petroleum (Prospecting and Mining) Act 1954-82.
B. On the 21st December, 1982 Magellan transferred to Farmout and CDR
certain interests in the Petroleum Lease pursuant to its obligations in
respect thereof.
C. The whole of the Lease Area is part of lands vested in Aboriginal Land
Trusts pursuant to the Aboriginal Land Rights (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇) ▇▇▇
▇▇▇▇. In consequence thereof Magellan, Farmout and CDR on the 9th
November, 1982 executed an Agreement with the Central Land Council
(hereinafter called "the CLC Agreement") which was the Agreement which,
pursuant to Section 43(2) of the said Act, was a pre-requisite to the
grant of the Petroleum Lease.
D. On the 11th November, 1981 Magellan, Farmout and CDR in anticipation of
the grant of the Petroleum Lease entered into an Agreement with the
Northern Territory Electricity Commission (hereinafter called "the NTEC
(▇▇▇▇▇ Springs) Sales Agreement") for the sale to the Northern
Territory Electricity Commission of their respective shares of gas from
the Palm Valley gas field.
E. On the 24th December, 1982 Magellan transferred to Canso a portion of
its interest in the Petroleum Lease and in the NTEC (▇▇▇▇▇ Springs)
Sales Agreement.
F. On the 13th day of July, 1983 Canso transferred to International
Pancontinental IEDC and Amadeus respectively portions of its interest
in the Petroleum Lease and in the NTEC (▇▇▇▇▇ Springs) Sales Agreement.
G. Pursuant to an Agreement dated the 29th June, 1972 made by Magellan and
Farmout with Pacific Lighting Gas Development Company (hereinafter
called "Pacific") as amended by an Agreement dated 17th July, 1984
(which Agreements are hereinafter called "the First Pacific Entitlement
Agreements") Pacific is entitled to receive from certain of the
proceeds of production from the Palm Valley gas field the repayment of
loan moneys and the payment of interest in the manner set out therein.
The entitlement of Pacific pursuant to the First Pacific Entitlement
Agreements is hereinafter called "the First Pacific Entitlement".
H. Pursuant to an Agreement dated the 20th March, 1973 made by Freeport of
Australia, Incorporated (a predecessor in title of CDR) with Pacific as
amended by an Agreement made by CDR with Pacific dated the ____________
1984 (which Agreements are hereinafter called "the Second Pacific
Entitlement Agreements) Pacific is entitled to receive from certain of
the proceeds of production from the Palm Valley gas field the repayment
of loan moneys and the payment of interest in the manner set out
therein. The entitlement of Pacific pursuant to the Second Pacific
Entitlement Agreements is hereinafter called "the Second Pacific
Entitlement".
I. Set forth in Part A of the First Schedule are the percentage interests
to which the Parties are presently entitled in the Concession and the
Joint Facilities as hereinafter defined. Set forth in Part B of the
First Schedule are the royalties to which holders of the Petroleum
Lease are subject.
J. The Parties have hitherto held their interests in the Concession and
the Joint Facilities subject to an Operating Agreement between
Magellan, Farmout and Freeport of Australia, Incorporated dated the
Twenty-fourth day of August, 1965 and the Parties have agreed that this
Operating Agreement shall replace the said earlier Operating Agreement
and that their said interests in the Concession and the Joint
Facilities shall henceforward be held subject to this Operating
Agreement.
NOW THEREFORE THE PARTIES AGREE as follows:-
1. DEFINITIONS: INTERPRETATION
1.1 Definitions. The following terms used in this Agreement have the
following meanings assigned to them:-
(i) "Accounting Procedure" shall mean the Accounting Procedure
which is annexed hereto marked "A".
(ii) "Affiliate" in relation to a corporation shall mean a
corporation which is related to that corporation within the
meaning of the Companies Act as in force at the date hereof of
the Northern Territory of Australia.
(iii) "Agreement" shall mean this Operating Agreement, its annexures
and its schedules as any of the same may from time to time be
amended.
(iv) "CLC Agreement" shall mean the Agreement referred to in
Recital C hereof as the same may from time to time be amended.
(v) "Concession" shall mean the Petroleum Lease and the Lease Area
and shall include all permits leases or other instruments
conferring rights to the exploration for or production of
Petroleum from the Lease Area or any extensions or renewals
therefor or any such instruments issued in substitution
therefor which may from time to time be granted pursuant to
the Petroleum Act or otherwise to the extent that such permits
leases or other instruments are in respect of the Lease Area
or any part thereof.
(vi) "Concession Year" shall mean a year which commences on the
date or the anniversary date of the commencement of the
Concession, or such other date as the Operating Committee may
determine.
(vii) "Default Interest Rate" shall mean the rate of interest five
per cent (5%) in excess of the rate from time to time charged
by the Operator's principal bankers in Australia from time to
time on overdrafts below ONE HUNDRED THOUSAND DOLLARS
($100,000.00) as certified by the manager of the Bank at which
the Operator's principal account is maintained, or such other
rate as the Operating Committee may determine by the unanimous
vote of representatives of the Parties present and entitled to
vote.
(viii) "Delivery Point" shall mean the point or points determined by
the Operating Committee from time to time as the point or
points at which the Parties shall take delivery of their
respective shares of Petroleum produced from the Concession
being a point or points within the Concession or not more than
5 kilometres from the external boundaries of the Concession.
(ix) "First Pacific Entitlement" shall mean the entitlement which
is described in Recital G hereof.
(x) "Joint Account" shall mean the account and records maintained
by the Operator to cover and record the expenditure and other
accounting transactions of the Joint Venture (including
receipts and debits for Work) and "for the Joint Account"
shall mean for the benefit, interest, ownership, risk, cost,
expense and obligation of the Parties in proportion to their
respective Working Interests.
(xi) "Joint Venture" shall mean the Joint Venture governed by this
Agreement.
(xii) "Joint Venture Documents' shall mean:
(a) the Concession;
(b) this Operating Agreement;
(c) any Deeds of Cross Charge executed pursuant to Clause
17 hereof;
(d) the CLC Agreement;
(e) the royalty Agreements in respect of the Concession,
namely: -
A. the Royalty Agreement dated the 28th day
of September, 1984 made with the Minister
for Mines and Energy;
B. the Royalty in favour of M.M. & ▇.▇. ▇▇▇▇▇▇
for a 1.5625% royalty pursuant to an
Overriding Royalty Deed dated the 28th day
of December, 1961;
C. the Royalty in favour of Jarl Pty. Ltd. for
a 3.25% royalty pursuant to an Overriding
Royalty Deed dated the 25th day of
September, 1964;
D. a 1.5% Royalty in favour of the Central Land
Council pursuant to the CLC Agreement;
(f) the First Pacific Entitlement Agreements namely the
Agreement dated 29th June 1972 made by Magellan and
Farmout with Pacific Lighting Gas Development Company
and the amending Agreement dated 17th July 1984;
(g) the Second Pacific Entitlement Agreements namely the
Agreement dated 20th March 1973 made by Freeport of
Australia, Incorporated and Pacific Lighting Gas
Development Company and the amending Agreement dated
1984;
(h) any Deed of Assumption executed pursuant to Clause
19.2 hereof;
(i) any other document unanimously agreed by the
Operating Committee to be a Joint Venture Document;
For the purposes of Clause 19 hereof only the Joint Venture
Documents shall also include the NTEC (▇▇▇▇▇ Springs) Sales
Agreement and any other Agreement for the sale by a Party of
its share of any Petroleum produced from the Concession.
Copies of the Joint Venture Documents numbered (a) to (g) of
this paragraph and the NTEC (▇▇▇▇▇ Springs) Sales Agreement
are exhibited hereto and marked "X".
(xiii) "Joint Facilities" shall mean all equipment, machinery, plant
and other facilities and all other property real or personal
(including contractual rights) now or hereafter held or
acquired by or on behalf of the Parties for the Joint Account.
Notwithstanding the foregoing, Joint Facilities shall not
include the Concession the NTEC (▇▇▇▇▇ Springs) Sales
Agreement or any other agreement for the sale of Petroleum
produced from the Concession.
(xiv) "Lease Area" shall mean the area for the time being the
subject of the Concession.
(xv) "Non-Operator" shall mean any Party excluding the Operator in
its capacity as Operator but including the Operator in its
capacity as the holder of a Working Interest.
(xvi) "The NTEC (▇▇▇▇▇ Springs) Sales Agreement" shall mean the
Sales Agreement referred to in Recital D hereof as the same
may from time to time be amended.
(xvii) "Operator" shall mean the Party from time to time appointed as
such under this Agreement.
(xviii) "Operating Committee" shall mean the Operating Committee
established under this Agreement.
(xix) "Parties" means the Parties hereto and their respective
successors and assigns which become bound by the terms of this
Agreement.
(xx) "Petroleum" shall mean naturally occurring hydrocarbons in a
free state whether gaseous liquid or solid but does not
include coal, shale or a substance which may be extracted from
coal, shale or other rock by the application of heat or by a
chemical process.
(xxi) "Petroleum Act" shall mean the Petroleum (Prospecting and
Mining) Act l954-1982 of the Northern Territory of Australia
and any regulations or rules made thereunder and any statutory
amendment or replacement thereof.
(xxii) "Petroleum Lease" shall mean the Petroleum Lease referred to
in Recital A hereof and includes any renewals or extensions
thereof.
(xxiii) "Second Pacific Entitlement" shall mean the entitlement which
is described in Recital H hereof.
(xxiv) "Sole Risk Operator" shall mean the Sole Risk Operator
appointed under Clauses 14.4 or 15.7 hereof.
(xxv) "Work" shall mean all exploration, development, processing,
reporting, analysing, studying or any other operations or
actions of whatsoever kind which are appropriate to the
exploration of the Concession, the assessing of the Petroleum
content of the Concession, the investigation of the
feasibility of carrying out Petroleum production operations on
the Concession and the carrying out of Petroleum production
operations on the Concession and all other undertakings
activities and operations whatsoever undertaken under this
Agreement for the Joint Account.
(xxvi) "Working Interest" shall mean a Non-Operator's interest from
time to time as tenant-in-common in the Concession and in the
Joint Facilities and its rights and obligations under this
Agreement and the other Joint Venture Documents.
1.2 Interpretation. In this Agreement, unless the context requires
otherwise:-
(i) monetary references are references to Australian currency;
(ii) words importing the singular include the plural and vice versa
and any word or expression defined in the singular shall have
the corresponding meaning if used in the plural and vice
versa;
(iii) reference to a person includes a corporation and vice versa.
1.3 Headings. The headings to any clauses or sub-clauses do not affect the
interpretation thereof.
2. APPLICATION AND OBJECTS OF AGREEMENT
2.1 OPERATING AGREEMENT The Parties hereby agree that this Agreement is the
Operating Agreement which will apply to the Joint Venture as from the date
hereof in substitution for the Operating Agreement referred to in Recital J.
2.2 JOINT VENTURE OF PARTIES Pursuant to this Agreement the Parties are
associated in an unincorporated Joint Venture (not being a partnership) to:-
(i) produce and treat Petroleum from the Concession in sufficient
quantities to enable the Parties to satisfy their respective
obligations pursuant to the NTEC (▇▇▇▇▇ Springs) Sales
Agreement and pursuant to any other agreements for the sale of
such Petroleum;
(ii) deliver such Petroleum to the Parties at the Delivery Point;
and
(iii) explore for and/or to develop further reserves of Petroleum
from the Concession; and
(iv) maintain apply for and renew all appropriate titles necessary
or desirable for the purposes of Work under this Agreement.
2.3 DURATION OF JOINT VENTURE The Joint Venture shall continue until the
Parties cease to hold the Concession or any part thereof (and the Parties have
unanimously agreed not to renew the Concession) or until one Party only remains
as the sole holder of the Concession whichever shall first occur and thereafter
until there has been a final accounting between the Parties.
2.4 COVENANTS BY THE PARTIES Each of the Parties covenant with each of the
other Parties as follows:-
(a) to do all things on its part necessary to ensure that: -
(i) the obligations under the Concession are diligently
observed and performed;
(ii) the Concession is kept in good standing and the
Joint Facilities in a safe and operable condition;
(iii) sufficient Petroleum is produced from the Concession
to enable the Parties to meet their respective
obligations for the sale of their respective shares
thereof;
(iv) the Concession and all other titles necessary for
Work are duly renewed unless the Parties shall
unanimously agree otherwise;
(b) to be just and faithful to each other Party in all things
relating to this Agreement and except as provided hereunder
not to undertake any action as a Party to this Agreement which
might cause detriment to any other Party;
(c) not to engage (either alone or in association with others) in
any activity in relation to the Concession or the Joint
Facilities other than in accordance with this Agreement.
3. OWNERSHIP OF CONCESSION AND OTHER INTERESTS
3.1 OWNERSHIP ON APPLICATION OF AGREEMENT The Concession the Joint
Facilities and the benefit of Work shall as at the commencement of application
(pursuant to Clause 2.1 hereof) of this Operating Agreement belong to and be
owned by the Parties as tenants-in-common in the respective percentages set
forth in the First Schedule hereto.
3.2 OWNERSHIP FOLLOWING TRANSFERS From and after the commencement of this
Operating Agreement the Concession the Joint Facilities and the benefit of all
Work shall continue to be owned by the Parties as aforesaid subject to such
transfers or other changes in Working Interest as may from time to time be made
pursuant to the provisions of this Operating Agreement.
3.3 LIABILITY FOR ROYALTIES AND CLC AGREEMENT The Parties shall have the
obligation to, and shall, bear and pay or otherwise satisfy in proportion to
their respective Working Interests the royalties described in the Joint Venture
Documents exhibited hereto and marked "X" (being pursuant to the royalty
agreements referred to in paragraph (e) of the definition of Joint Venture
Documents in Clause 1.l(xi) hereof) and in like proportions shall satisfy their
other obligations pursuant to the CLC Agreement.
4. OWNERSHIP OF PRODUCTION
4.1 OWNERSHIP All Petroleum produced for the Joint Account from the
Concession and delivered to the Parties in accordance with Clause 16 hereof
shall belong separately to the Parties in proportion to their respective Working
Interests from time to time.
4.2 THE FIRST PACIFIC ENTITLEMENT Out of the proceeds of sale of their
respective shares of Petroleum produced from the Concession, Magellan, Farmout,
Canso, International, Pancontinental, IEDC and Amadeus or their respective
assigns shall pay and discharge the First Pacific Entitlement in accordance with
the requirements of the First Pacific Entitlement Agreements in the proportions
in which each such Party's Working Interest bears to the aggregate of their
Working Interests until such time as the First Pacific Entitlement is fully
discharged.
4.3 THE SECOND PACIFIC ENTITLEMENT Out of the proceeds of sale of its share
of Petroleum produced from the Concession, CDR or its assigns shall pay and
discharge the Second Pacific Entitlement in accordance with the requirements of
the Second Pacific Entitlement Agreements until such time as the Second Pacific
Entitlement is fully discharged.
5. OPERATOR
5.1 INITIAL OPERATOR The Operator at the date of commencement of this
Operating Agreement is Magellan.
5.2 REMOVAL OF OPERATOR FOR CAUSE
(i) The Operator shall be removed immediately and another Operator
appointed pursuant to Clause 5.5 in any of the following
circumstances:
(a) If the Operator passes a resolution that it be wound
up or commits or suffers any act of bankruptcy or
insolvency, or enters into a scheme of arrangement
with its creditors or any class thereof, or goes into
liquidation (other than for the purpose of
reconstruction previously approved by the Operating
Committee) or has a receiver appointed of the whole
or any part of its undertaking or assets;
(b) If the Operator assigns or purports or attempts to
assign its powers and responsibilities as Operator
hereunder.
(ii) The Operator may be removed by a simple majority vote of the
Operating Committee and another Operator appointed pursuant to
Clause 5.5, in any one of the following circumstances:
(a) If the Operator in its capacity as a Non-Operator
ceases to hold at least a ten percent (10%) Working
Interest;
(b) If the Operator in its capacity as Operator or
Non-Operator defaults in its duties or obligations or
any of them hereunder and does not as soon as
reasonably practicable and in any event within thirty
(30) days commence and diligently proceed to rectify
the default after written notice signed by Parties
whose Working Interests aggregate more than fifty
percent (50%) of the total Working Interests of the
Parties other than the Operator, specifying the
default and requiring the Operator to remedy the
same.
5.3 REMOVAL OF OPERATOR BY VOTE The Operator shall be removed upon a vote
of the Operating Committee for the removal of the Operator passed by the
affirmative vote of representatives of Parties whose Working Interests aggregate
not less than sixty-five percent (65%) of the total of all Working Interests.
Following such replacement another Operator shall be appointed pursuant to
Clause 5.5 hereof.
5.4 RESIGNATION OF OPERATOR The Operator may resign as Operator on giving
each of the Non-Operators at least six (6) months (or such lesser period as the
Operating Committee may determine) notice of its intention to do so.
5.5 APPOINTMENT OF NEW OPERATOR
(i) If an Operator resigns or is removed, a Party holding a
Working Interest of at least ten percent (l0%) (or such lesser
percentage as the Operating Committee shall unanimously
determine) shall be appointed Operator by a simple majority
vote of the Operating Committee in accordance with Clause
9.7(1) hereof.
(ii) No Party shall be appointed Operator hereunder unless it has
given its written consent to the appointment.
(iii) No provision of this Article shall be construed to re-appoint
as next-succeeding Operator an Operator who has been removed
under Clause 5.2 except with the unanimous approval of the
Parties.
(iv) Except as provided in subclause (i) of Clause 5.2 (in which
case the Operator shall be removed immediately), every removal
of Operator shall take effect at eight (8:00) o'clock a.m. on
the first (1) day of the calendar month following the
expiration of any period of notice effecting a change of
Operator, or otherwise as determined by the Operating
Committee.
5.6 TRANSFER OF PROPERTY ON CHANGE OF OPERATOR At the effective date of the
resignation or replacement of an Operator as hereinbefore provided, the Operator
being replaced ("the Retiring Operator") shall subject to the provisions of
Clause 15.7 hereof deliver to the successor Operator possession of the
Concession the Joint Facilities and all Work being conducted by the Operator and
all funds held for the Joint Account, together with all production, if any,
which has not previously been delivered in kind, and the books of account and
records kept for the Joint Account and all documents, agreements and other
papers relating to Work. The Retiring Operator shall, to the full extent to
which it is able so to do, assign to the New Operator all contracts entered into
by the Retiring Operator for the Joint Account. Upon delivery of the said
property, books and records, the Retiring Operator shall be released and
discharged as Operator except in respect of its liability for any antecedent
breach of this Agreement.
5.7 AUDIT ON CHANGE OF OPERATOR Upon every change of Operator and by not
later than sixty (60) days after the new Operator commences to act as Operator
the Parties shall cause an audit to be made up to the date of commencement of
the new Operator of the books of account and records kept for the Joint Account.
The cost of the audit shall be charged to the Joint Account.
6. GENERAL DUTIES OF OPERATOR
6.1 OPERATOR TO HAVE CHARGE Subject to the terms of this Agreement and to
the directions and control of the Operating Committee the Operator shall conduct
Work on behalf of the Parties in accordance with programmes and budgets approved
by the Operating Committee. The Operator shall have the custody charge
management and control of Work, including the right to acquire for the Joint
Account all properties, both real and personal, required for such purposes and
when acquired such items shall be included in the Joint Facilities. In carrying
out Work, the Operator shall act for and on behalf of the Parties in the
capacity of an independent contractor and shall have no authority to and shall
not represent itself as being the agent of any Party except with the prior
authority of the Operating Committee.
6.2 COMPETITIVE CONTRACTS: USE OF OWN EQUIPMENT Unless the Operating
Committee shall otherwise determine, all Work shall be carried out under
competitive contract unless carried out by the Operator itself. The Operator may
employ its or a Party's own tools and equipment in the conduct of Work but in
such event the charge therefor shall be on competitive contract basis. Such
tools and equipment shall be provided under such terms and conditions as are
customary and usual in contracts with independent contractors with similar
equipment doing work of a similar nature in similiar circumstances.
6.3 CONTRACTS WITH AFFILIATES Any contract entered into by the Operator
with either an Affiliate of the Operator or a party or an Affiliate of a Party
must be approved by the Operating Committee.
6.4 VARIOUS DUTIES OF OPERATOR Subject to the direction and control of the
Operating Committee, the Operator shall, except as herein elsewhere specifically
provided; for the Joint Account do all things necessary for the purpose of
implementing programmes and budgets approved by the Operating Committee
including but not limited to:-
(a) pay when due all costs and expenses authorised and chargeable
hereunder and all fixed payments, charges, levies, expenses
and other payments required by law or incurred or arising out
of Work and keep the Concession and the Joint Facilities free
from liens and encumbrances in respect thereof created by or
likely to be created by actions of the Operator while acting
as such;
(b) promptly commence and diligently prosecute all Work and make
all payments necessary to keep the Concession and the Joint
Facilities free from forfeiture or cancellation under the
Petroleum Act or otherwise;
(c) do all other acts and things necessary or advisable in the
Operator's judgment to comply with the terms and conditions of
the Concession in order to protect it from default and
forfeiture;
(d) provide, hire, direct and discharge all contractors,
consultants, staff and employees and furnish all materials,
supplies and equipment for Work, all the staff and employees
to be and remain the separate staff and employees of the
Operator and to be carried on its payroll and subject to its
sole direction;
(e) comply with all applicable laws and regulations of any
governmental authority having jurisdiction concerning the
Concession and with the terms of the CLC Agreement insofar as
it relates to the duties of Operator hereunder;
(f) keep an accurate record of all Work including a log of all
▇▇▇▇▇ drilled hereunder and accurate and itemised records of
all Petroleum produced from the Concession;
(g) keep the Joint Facilities in a safe and operable condition or
some better condition approved by the Operating Committee; and
(h) maintain the insurances to be taken out by the Operator in
accordance with this Agreement.
6.5 HANDLING OF CLAIMS Any claim or suit arising out of Work or touching
the subject matter of this Agreement (other than a claim or suit between the
Parties inter se) for any amount shall be promptly reported to the Parties by
the Operator. Any and all such claims and suits may be compromised and settled
or shall be defended by the Operator provided however that the Operator shall
not pay or agree to pay more than the equivalent of $25,000.00 in the settlement
of any claim or suit without first obtaining the approval of the Operating
Committee. For those claims and suits for an amount in excess of the equivalent
of $25,000.00 the Operator shall comply with any directions given by the
Operating Committee with respect hereto. Each Party shall have the right to be
represented by its own counsel and at its expense in the settlement, compromise
or defence of claims and suits in amounts in excess of the equivalent of
$25,000.00 or which, in the opinion of the Party in question, involve an issue
of principle and notwithstanding any provision to the contrary, each Party may,
to the extent of that part of the claim or suit for which it may be liable,
settle, compromise or defend such claim or suit.
6.6 PREPARATION OF REPORTS The Operator shall prepare for signature by the
required Parties or persons and lodging by the Operator with the proper
authorities all returns or reports required by the applicable laws and
regulations together with all related material required to be submitted.
6.7 STANDARD OF CARE The Operator shall conduct all Work in a good
workmanlike and efficient manner in accordance with good exploration and
oilfield practice and shall ensure that the terms and conditions of the
Concession are met. The Operator shall act in good faith in the performance of
its duties hereunder and where it acts as aforesaid shall not be liable for the
result of any error in judgment or for the loss of or damage to any property
held for the Joint Account occurring in the course of its operations or for any
loss occasioned by defects in equipment or for any other loss or damage except
in each case aforesaid such loss as may result from negligence wilful misconduct
or wilful failure or from the breach of the provisions of this Agreement by the
Operator.
6.8 INDEMNIFICATION OF OPERATOR The Operator shall not be liable to the
Non-Operators for any act or omission in the conduct of Work hereunder so long
as such act or omission is not due to negligence wilful misconduct or wilful
failure or from the breach of the provisions of this Agreement on the part of
the Operator. All liabilities incurred by the Operator in carrying out duly
authorised operations hereunder except those resulting from such negligence,
wilful misconduct or wilful failure or from the breach of the provisions of this
Agreement shall be charged to the Joint Account and borne by the Parties as
provided in Clause 11.2 hereof.
7. NON-OPERATORS RIGHTS TO ACCESS AND INFORMATION
7.1 GENERAL RIGHT TO ACCESS AND INFORMATION Unless and to the extent that
the provisions of this Clause 7 shall otherwise specifically provide, the
Operator shall:-
(a) give timely notice to each Non-Operator of all information
under the control of the Operator in its capacity as Operator
which in the reasonable opinion of the Operator is material to
the Joint Venture;
(b) give the fullest response available from information under the
control of the Operator in its capacity as Operator to any
question from a Non-Operator concerning any aspect of the
Joint Venture;
(c) supply to a Non-Operator upon request a copy of any document,
communication or other writing under the control of the
Operator in its capacity as Operator with respect to the Joint
Venture whether it is material or not; and
(d) permit a Non-Operator upon reasonable notice to inspect during
normal business hours any records of the Operator with respect
to the Joint Venture at the office or location where such
records are normally kept (being a place approved by the
Operating Committee) PROVIDED THAT such inspection shall be
carried out with a minimum of inconvenience to the Operator.
7.2 RIGHT OF ACCESS Each Non-Operator shall at the Non-Operator's sole risk
and expense at all times have the right through its authorised representatives
to have access to and to observe and inspect Work and all geological,
geophysical, drilling and production records and interpretations and otherwise
to be fully informed as to progress and results of all Work, provided that in
exercising such rights a Non-Operator shall not act in such a manner as to
hinder the progress of or jeopardise the safety of Work. Each Non-Operator shall
be entitled on request made prior to the taking of samples and cores from the
well concerned and subject to the availability to receive core and formation
samples from the intervals in each well drilled and to make copies of all
documents of any kind relating to Work or proposed Work hereunder.
7.3 INFORMATION FROM SURVEYS The Operator as a cost to the Joint Account
shall furnish to each Non-Operator requesting them both during and upon
conclusion of any geological geophysical or other survey conducted on the
Concession full and complete details of the survey and of the information, data
and results obtained therefrom. Such information shall include clear film
transparencies and all seismic profiles and other base data and maps and other
interpretative information and one copy of the final report of each seismic
programme. The Operator shall at the request and cost of a Non-Operator and at a
time which will not impede the conduct of Work make available to the
Non-Operator for copying the Operator's field records and magnetic tapes.
7.4 NOTICES AS TO WELL DRILLING The Operator shall promptly notify the
Non-Operators in writing of
(i) the date of intended commencement and the date of actual
commencement of the drilling of any well drilled hereunder;
and
(ii) the location of any well fixed by giving the distances and
directions thereof from at least two recognized geographical
locations or the location of the well in terms of latitude and
longitude and shall provide a copy of a location survey plan
for such well.
7.5 OPERATOR'S DUTIES DURING EXPLORATORY DRILLING In respect of the
drilling of each exploratory well drilled on the Concession the Operator shall -
(a) Save representative formation samples at approximately three
(3) metre intervals in the said test well and keep the
drilling mud or other drilling medium in appropriate condition
to bring representative samples to the surface.
(b) Have a suite of logs as approved by the Operating Committee
duly carried out.
(c) In a good and workmanlike manner core and test promptly all
prospective oil and/or gas formations which may be encountered
in the drilling of the exploratory well and to permit each
Non-Operator to inspect any cores so taken.
(d) In the event that any show of oil and/or gas is encountered
forthwith notify each Non-Operator to such effect.
(e) Upon the making of any drill stem test in the test well
immediately furnish each Non-Operator with details and results
of any such test.
(f) Permit the authorised representatives of each Non-Operator at
all times (subject to safety requirements) to have access to
the ▇▇▇▇▇▇▇ floor, the log books, the cores and samples and
any information about the well.
(g) At the request of any Non-Operator (and provided that in the
case of a well capable of being completed for production of
Petroleum there is no objection on the part of the Operator
and any other Non-Operator) at the sole cost risk and expense
of the Non-Operator conduct additional testing and/or logging
and/or coring and/or deepening of any test well before the
drilling rig and other equipment used to drill test and core
the said well has been removed from the location. The
provisions of Clause 15.12 hereof shall apply to such Work.
7.6 INFORMATION DURING DRILLING During the drilling of any well hereunder
the Operator shall as a cost to the Joint Account promptly furnish to each
Non-Operator requesting them the following reports, information and data:
(a) Daily drilling reports showing the nature of all work done and
depth and formations penetrated;
(b) One copy of drilling time record on a weekly basis;
(c) Two copies of any mechanical or electrical survey that is run
in the course of the well;
(d) One copy of the Lithologic Log on a weekly basis;
(e) One set of ditch samples;
(f) The results of any drill stem test carried out. Preliminary
reports of drill stem tests will be advised by telephone and
confirmed by telex or telegram.
7.7 INFORMATION AFTER COMPLETION OF DRILLING As soon as practicable after
completion of the drilling of any well hereunder the Operator at a cost to the
Joint Account shall deliver to each Non-Operator requesting them a clear film
transparency of all wireline surveys conducted and a copy of the final well
completion report. Each copy of the well completion report shall include the
following:
(a) a copy of all wireline surveys conducted;
(b) a copy of the mud logging survey;
(c) a copy of the velocity survey, if run;
(d) a copy of the well site geologist's description of the ditch
samples;
(e) a copy of the well site geologist's description of the
sidewall cores or conventional cores, if taken;
(f) a copy of the commercial core analyses (sidewall or
conventional) if cores are taken;
(g) a copy of the commercial analyses of the water, gas or oil, if
test and recovery are made;
(h) a copy of the analyses made in dating a sample radioactively
or palaentologically;
(i) a copy of the geological reports;
(j) a copy of the well location map;
(k) a copy of the well history;
(l) a copy of the well records;
(m) a copy of the drilling report;
(n) a copy of the mud record;
(o) a copy of the bit record;
(p) a copy of the formation test data, if test is made;
(q) a copy of all other data relative to the well.
7.8 PERIODIC REPORTS The Operator shall prepare and forward to each Non-
Operator a copy of the following periodic reports:-
(a) An annual report within two calendar months of the end of each
and every Concession Year during the term of this Agreement
setting out in reasonable detail work done, results achieved
and expenditure made during the preceding Concession Year.
(b) A quarterly report within one month after the end of each
quarter during a Concession Year during the term of this
Agreement during which exploration work is carried out in the
Concession setting out briefly work done results achieved and
an estimate of expenditures during the preceding quarter.
(c) A monthly report within fourteen (14) days after the end of
each month during which commercial production of Petroleum
takes place in the Concession setting out the quantity of
Petroleum produced from the Concession and such information as
comes into the possession of the Operator concerning the
quantity of such Petroleum sold and the price obtained
therefor and an estimate of the expenses of such production
and sale of Petroleum during the preceding month.
7.9 COPIES OF REPORTS TO GOVERNMENT The Operator shall promptly forward to
each Non-Operator a copy of each report notice or other communication which the
Operator shall at any time be required or may elect to give or deliver to or may
receive from any Government with respect to the Concession the Joint Facilities
or Work.
7.10 NON-OPERATOR IN DEFAULT A Non-Operator in default in payment pursuant
to Part 17 hereof shall not be entitled to any information, access copies of
reports or documents or any other material or information pursuant to this Part.
8. THE OPERATING COMMITTEE
8.1 ESTABLISHMENT OF OPERATING COMMITTEE
(a) There shall be an Operating Committee with the functions and powers set
out in Clause 8.3 hereof;
(b) The Operating Committee shall consist of:
(i) one representative of each Party whose Working Interest for
the time being is not less than 2 1/2%;
(ii) one representative of each group of two or more Parties (none
of which is otherwise represented) whose Working Interest for
the time being aggregates not less than 2 1/2% and which
elect to appoint a representative to represent them jointly
and vote uniformly on their behalf.
Notwithstanding the foregoing, each of IEDC and Amadeus shall be
entitled to appoint its own representative to the Operating Committee
for so long as its Working Interest is not less than 1.248%.
(c) The representative of the Operator shall, if present, be Chairman of
meetings of the Operating Committee.
8.2 NOTIFICATION OF REPRESENTATIVES Each Party shall notify the others of
the name and address of its representative to the Operating Committee and from
time to time by notice to the others each Party may replace its representative
and/or may designate an alternative representative to act in the absence of its
representative.
8.3 POWERS OF OPERATING COMMITTEE The function of the Operating Committee
shall be, and it is hereby empowered, to supervise the Operator and to make all
policy decisions binding on all Parties in relation to matters within the scope
of the Joint Venture including without limiting the generality of the foregoing,
the following:-
(a) the Work necessary to satisfy the work and expenditure obligations of
the Concession and any other requirements necessary to maintain the
Concession in good standing and the Joint Facilities in a safe and
operable condition;
(b) the production of Petroleum from the Concession to enable the Parties
to meet their respective obligations for the sale of the respective
shares thereof;
(c) any other Work which is unanimously approved by the Operating
Committee;
(d) the review adoption and revision of detailed programmes and budgets to
give effect to decisions made pursuant to the preceding paragraphs (a)
(b) and (c) of this Clause;
(e) the establishing of policies from time to time governing or relating to
all Work or the conduct thereof.
(f) applications for the renewal of the Concession and for other titles
necessary for the purposes of the Joint Venture.
8.4 ANY PARTY MAY SUBMIT MATTERS Any of the Parties including the Operator
may submit to the Operating Committee for its consideration any matters
pertaining to Work or the Joint Venture.
9. MEETINGS AND VOTING OF OPERATING COMMITTEE
9.1 TIMES AND AGENDA FOR MEETINGS The Operating Committee shall meet
whenever requested by any Non-Operator or the Operator by the giving to all
Parties (whether separately represented on the Operating Committee or not) of at
least fourteen (14) days notice (or such shorter reasonable period of notice as
may be agreed by all Parties entitled to appoint a representative to the
Operating Committee). The said notice shall specify the matter or matters to be
considered at the meeting provided that the agenda may be furnished by telex or
cable up to but not less than five (5) clear working days prior to such meeting.
9.2 WHEN NO NOTICE NECESSARY No notice of meeting shall be necessary when
persons representing all Parties to the Operating Committee are present and
agree upon the meeting being held and the agenda for such meeting. A matter not
included in the agenda for a meeting shall not be voted upon at any such meeting
except by the unanimous agreement of the representatives entitled to vote on
that matter.
9.3 MINUTES OF MEETING The Operator shall provide such secretarial services
as are required for each meeting of the Operating Committee and shall keep a
record of decisions made at each meeting of the Operating Committee and shall
distribute copies thereof to each Party (whether represented on the Operating
Committee or not) as soon as practicable following each meeting of the Operating
Committee for endorsement by the representative of such Party as a true record
of decisions made at such meeting of the Operating Committee. Each Party shall
be bound by the minutes so received unless such Party makes an objection thereto
within thirty (30) days of the receipt thereof. Any such objection shall be
resolved by the next meeting of the Operating Committee.
9.4 PLACE FOR MEETINGS All meetings of the Operating Committee shall be
held at the principal office of the Operator in Brisbane or at such other place
within Australia as is agreed by the Operating Committee.
9.5 ADVISERS MAY ATTEND Each representative shall be entitled to have
present at any Operating Committee meeting such reasonable number of advisers as
he or they may desire and which are appropriate to the matters under
consideration.
9.6 RULES RELATING TO VOTING
(a) A Party which is in default for a period of fourteen (14) days or more
in the making of a payment due under this Agreement or any of the other
Joint Venture Documents shall not (except as provided in Clause 9.7(3)
hereof) be entitled to attend or vote at a meeting of the Operating
Committee. A decision made by the Operating Committee in the absence of
such a Party shall be binding on that Party.
(b) Upon a vote of the Operating Committee each representative shall have
the number of votes equal to the Working Interest or Working Interests
of the Party or Parties which he represents.
(c) In the event of an equality of votes the decision shall be in the
negative.
9.7 VOTES FOR COMMITTEE DECISIONS
(1) Decisions of the Operating Committee in respect of:-
(a) the Work necessary to satisfy the work and expenditure obligations of
the Concession and any other requirements necessary to maintain the
Concession in good standing and the Joint Facilities in a safe and
operable condition;
(b) the production of Petroleum from the Concession to enable the Parties
to meet their respective obligations for the sale of the respective
shares thereof;
(c) the review adoption and revision of detailed programmes and budgets to
give effect to decisions made pursuant to the preceding paragraphs (a)
and (b) of this Clause;
(d) applications for or for the renewal of the Concession and for any other
title necessary for the purposes of the Joint Venture;
(e) the supervision of and the giving of instructions to the Operator;
(f) dealings with all Governmental authorities in relation to the Joint
Venture;
(g) dealings with the Central Land Council in relation to the CLC Agreement
or the Joint Venture;
(h) all matters referred to in this Agreement as being the subject of
decision or determination by the Operating Committee other than matters
in respect of which unanimity or a particular majority is specified;
(i) all other matters necessarily incidental to any of the foregoing
matters shall be made by a simple majority vote of the representatives
of the Parties present and voting which majority shall comprise the
representatives of not less than two Parties.
(2) Decisions of the Operating Committee as to the replacement and
appointment of the Operator shall be made by the majorities provided
for in Clause 5 of this Agreement.
(3) All other decisions of the Operating Committee shall be made by a
unanimous vote of all representatives for the time being appointed to
the Operating Committee, including the representatives of a Party which
has failed to make a payment under this Agreement or any of the Joint
Venture Documents.
9.8 OTHER FORMS OF VOTING Decisions as to matters under consideration at
any meeting may as appropriate be made at that meeting or may be made subsequent
to the meeting by each representative entitled to vote submitting his vote in
writing to the other representatives and to the Operator. Decisions requiring a
simple majority vote in accordance with Clause 9.7(1) hereof may in the absence
of a meeting be made by affirmative vote by telex cable or telegram by
representatives of Parties holding an aggregate of at least 90 percent of the
Working Interests. Decisions made pursuant to this Clause shall be minuted
pursuant to Clause 9.3 hereof as if made at a meeting of the Operating
Committee.
9.9 DECISIONS BINDING ON ALL PARTIES Decisions of the Operating Committee
made pursuant to the preceding paragraphs 9.7 and 9.8 shall be binding on all
Parties including the Operator.
9.10 QUORUM FOR MEETINGS A quorum for meetings of the Operating Committee
shall be representatives of Parties entitled to vote with Working Interests
aggregating not less than seventy-five (75) percent of the Working Interests of
all Parties entitled to vote. If such a quorum is not present within two hours
of the time and at the place for which the meeting in question is called such
meeting shall be adjourned for a period of seven (7) days to the same place and
time of day (and notice of such adjourned meeting shall be given to all Parties
by the Operator no later than the day following the day on which such meeting
was adjourned) and at such adjourned meeting the business of the meeting shall
proceed with whatever numbers are present even if they do not constitute a
quorum as required by this Clause.
9.11 RULES FOR MEETINGS Subject to the provisions of the Agreement the
Operating Committee may make such rules as it thinks fit for the regulation of
its meetings.
10. PROGRAMMES AND BUDGETS
10.1 OPERATOR TO PREPARE PROGRAMMES AND BUDGETS The Operator shall prepare
and submit to the Operating Committee from time to time programmes and budgets:-
(a) necessary to keep the Concession free from any forfeiture or
cancellation under the Petroleum Act and to maintain the Joint
Facilities in a safe and operable condition;
(b) necessary to produce sufficient Petroleum from the Concession
to enable the Parties to meet their respective obligations for
the sale of their respective shares thereof; and
(c) in respect of any other Work approved by the Operating
Committee in accordance with the provisions of this Agreement.
10.2 TIMES FOR SUBMISSION The Operator shall prepare and submit to the
Operating Committee a programme and budget for the Work required pursuant to
Clauses 10.1(a) or (b) hereof at least two (2) calendar months before the
commencement of each Concession Year, and shall when requested by the Operating
Committee prepare and submit programmes and budgets pursuant to Clause 10.1(c)
from time to time. The programme and budget for a Concession Year shall be
divided into four segments each of three calendar months each. Each such segment
is hereinafter referred to as a Quarterly Segment.
10.3 CONTENTS OF PROGRAMMES AND BUDGETS Each programme and the related
budget recommended by the Operator shall contain details and descriptions of
objectives, cost estimates and estimated period of time required to perform each
item of Work, itemised equipment or property to be purchased and the costs
thereof and such other details as the Operating Committee may require. Where a
programme and budget is prepared for a Concession Year, then it shall contain
detailed cost estimates and descriptions of Work to be performed for the first
Quarterly Segment thereof at least, and shall contain at least general estimates
of costs and general descriptions of Work to be performed in following Quarterly
Segments. A programme and budget may include estimates for Quarterly Segments
other than those in the Concession Year to which it is intended to relate.
10.4 APPROVAL OF PROGRAMMES AND BUDGETS
(a) The Parties shall use their best endeavours to ensure that the
Operating Committee adopts a programme and budget for each
Quarterly Segment prior to the commencement of each such
Quarterly Segment.
(b) The Operating Committee may at any subsequent meeting review
and revise any programme and budget for a Concession Year or
any Quarterly Segment thereof which has previously been
adopted by the Operating Committee, by the same majority which
was required for its adoption.
(c) The Operating Committee may approve any programme and budget
or revised programme and budget (whether for a Concession Year
or Quarterly Segment or Quarterly Segments) subject to the
provision by the Operator to the Non-Operators in respect of
any item (such as the drilling of a well or a geological or
geophysical survey) contained in such programme of a Detailed
Estimate of Expenditure (hereinafter called "Detailed Estimate
of Expenditure") in respect of that item and the satisfaction
of the provisions of this Clause 10.4.
(d) Any Non-Operator ("the Notifying Party") may within fourteen
(14) days of the receipt of such Detailed Estimate of
Expenditure from the Operator give to the Operator a notice
requiring the Operator to call a meeting of the Operating
Committee to consider the variation of the Detailed Estimate
of Expenditure in the respects particularised in such notice.
(e) Upon receipt of such notice the Operator shall forthwith call
a meeting of the Operating Committee and give to all other
Non-Operators a copy of the Notifying Party's notice. At such
meeting of the Operating Committee such Detailed Estimate of
Expenditure shall be approved in such form or amended form as
shall be resolved by the same majority as was necessary for
the approval of the programme in which such item was
contained.
(f) A Detailed Estimate of Expenditure shall become binding on all
Parties required to contribute to the cost thereof in the form
given by the Operator if within fourteen (14) days after
receipt thereof no Non-Operator shall have given the Operator
a notice pursuant to Sub-Clause (d) hereof or in the form or
amended form approved by the Operating Committee upon the
approval made pursuant to Sub-Clause (e) hereof.
(g) The approval of the Operating Committee to a programme and
budget and the satisfaction of the provisions of this Clause
10.4 in respect of such Detailed Estimates of Expenditure as
are required pursuant to Sub-Clause (b) hereof shall
constitute approval for the Operator to carry out that
programme and incur expenditures as approved and the Operator
shall not be required to obtain any other approvals to require
the Parties to reimburse the Operator for their respective
shares of such expenditures pursuant to Clause 12.1 hereof or
to pay a call made by the Operator pursuant to Clause 12.2
hereof.
10.5 OPERATOR TO ACT IN ABSENCE OF APPROVAL
(a) If the Operating Committee is unable to adopt a programme and budget
for a Concession year by the commencement of that Concession year then
the Operator may for the Joint Account carry out such Work and make
such payments as is necessary to keep the Concession in good standing
and free from forfeiture or cancellation under the Petroleum Act and to
maintain the Joint Facilities in a safe and operable condition and to
produce sufficient Petroleum from the Concession to enable the Parties
to meet the respective obligations for the sale of their respective
shares thereof. The Operator shall carry out such Work and make such
payments if it has pursuant to Clause 12.2 hereof called the costs
thereof and such calls have been paid or satisfied.
(b) The Operator shall not commence such Work any earlier than is
reasonably necessary and in the event that at any time during the
Concession Year the Operating Committee adopts a programme and budget
for the balance of the Concession Year the Operator shall carry out
such programme and budget.
10.6 NOTICE OF EXCESS EXPENDITURES If while carrying out an approved
programme it becomes apparent either that expenditures on such programme will or
are likely to exceed the budget or the Detailed Estimate of Expenditure approved
or deemed approved therefor by more than FIFTEEN PERCENT (15%) of such budget or
that expenditures on any item in such approved programme will or are likely to
exceed the budget or the Detailed Estimate of Expenditure approved or deemed
approved for such item by more than FIFTEEN PERCENT (15%) thereof the Operator
shall forthwith notify all Non-Operators giving as much details as possible of
the Work and activities and the costs thereof which will or are likely to cause
such excess expenditure.
10.7 APPROVED PROGRAMME TO CONTINUE UNLESS MODIFIED Notwithstanding the
giving of a notice by the Operator pursuant to Clause 10.6 hereof the Operator
shall continue with the conduct of the programme approved unless and until the
Operating Committee modifies the approved programme so as to avoid or reduce
such excess expenditure. The Operator shall be entitled to recover any
expenditures duly incurred by it under Clause 10.6 hereof or this Clause 10.7
(including without limiting the generality thereof amounts payable by the
Operator to third Parties as the result of modification or termination of a
previously approved programme under this Clause 10.7 hereof) from the Parties as
though such excess expenditures had been approved by the Operating Committee.
11. CHARGING OF COSTS
11.1 AUTHORISED COSTS AND EXPENSES Except as specified herein, all costs and
expenses liabilities and charges of the Joint Venture pursuant to this Agreement
including those specified in the Accounting Procedure and whether in contract or
in tort or incurred or to be incurred by the Operator in conducting Work
hereunder in accordance with the terms of this Agreement shall be deemed
"authorised" or "properly authorised" costs expenses and liabilities as those
terms are used herein.
11.2 MAINTENANCE OF JOINT ACCOUNT The Operator shall set up and maintain
adequate accounting records for the Joint Account. All properly authorised costs
and expenses shall be charged to the Joint Account in accordance with the
principles (where applicable) set out in the Accounting Procedure. In the event
of there being any conflict between the provisions of the Accounting Procedure
and this Agreement the provisions of this Agreement shall prevail.
11.3 LIABILITY OF PARTIES All authorised costs expenses and liabilities
which have been charged to the Joint Account shall be borne and paid by the
Parties in proportion to their respective Working Interests at the time at which
the invoice or call was sent by or made by the Operator.
11.4 TREATMENT OF ANY SUBSIDY OR CONTRIBUTION In the event that any subsidy,
rebate or other contribution is paid to the Operator or to any of the other
Parties as a result of Work all such sums shall be credited to the Joint
Account.
12. CONTRIBUTIONS BY THE PARTIES
12.1 PAYMENT BY OPERATOR AND REIMBURSEMENT The Operator shall initially pay
all properly authorised costs expenses and liabilities incurred by it in
connection with Work and shall debit the Parties for their respective shares of
all such authorised costs. Unless the Operator shall have received advances for
such purposes as hereinafter provided each Non-Operator shall forthwith
reimburse the Operator for its share of such costs and expenses in accordance
with the provisions hereof and the Operator shall forthwith contribute its share
of such costs and expenses.
12.2 CALL BY OPERATOR The Operator shall have the option of requiring the
Non-Operators to advance their respective proportions of costs and expenses for
a period of three (3) calendar months consisting of a Quarterly Segment or parts
of two Quarterly Segments but in the case of Operating Costs for the
transportation of Petroleum from the Concession and Operating Costs for Work
carried on outside the Concession for a period of one (I) calendar month instead
of three (3) calendar months (and whether or not a Detailed Estimate of
Expenditure is binding on the Parties with respect thereto) in accordance with
the following: -
(a) On or before the last day of any calendar month during the
term hereof, the Operator may debit the Parties for their
estimated respective shares of the authorised costs and
expenses anticipated for the ensuing three (3) calendar months
or one (1) calendar month (as the case may be) period and in
making such debit the Operator shall show a credit for any
amounts previously called relating to anticipated costs for
any part of the three (3) calendar months or one (1) calendar
month (as the case may be) period concerned.
(b) Before the Operator shall be obliged to execute any contract
or undertake any commitment for the carrying out of Work or
the acquisition of any property (whether real or personal) for
the Joint Account the Operator may debit the Parties for their
respective shares of the liability estimated to be incurred
pursuant to any such contract or commitment notwithstanding
that the Work or liability concerned may extend beyond the
period of the three (3) calendar months or one (1) calendar
month (as the case may be) referred to in sub-clause (a) of
this Clause 12.2.
(c) Each Non-Operator shall pay to the Operator such estimated
shares of such authorised costs and expenses referred to in
the preceding sub-clauses (a) and (b) within fifteen (15) days
after the receipt of the debit note or invoice, and the
Operator shall contribute its share of such authorised costs
and expenses within the same time.
(d) Notwithstanding any provision in this Agreement to the
contrary the Operator shall not be obliged to execute any
contract or undertake any commitment referred to in the
preceding sub-clause (b) until the Operator has received
payment of all the amounts debited to the Non-Operators
pursuant to such sub-clause.
(e) Notwithstanding that the Parties are obliged to make payment
of a call by the Operator as aforesaid relating to a period
for which a Detailed Cost Estimate is not then binding on the
Parties, the Operator shall not be entitled to expend funds
paid in respect thereof until a Detailed Cost Estimate with
respect thereto is binding on the Parties or the Operator is
otherwise authorised to do so.
12.3 ADJUSTMENT Adjustments between estimated and actual authorised costs
and expenses for any month shall be made by the Operator within forty-five (45)
days of the end of that month and the accounts of the Parties shall be adjusted
accordingly and any excess amount advanced by a Party shall be at the request of
that Party refunded or credited against its future liabilities hereunder.
12.4 DEFAULTING PARTY LIABLE FOR INTEREST Should any Party fail or refuse to
pay or contribute its said estimated share of such authorised costs and expenses
within the said fifteen (15) day period or fail or refuse to pay or contribute
on its due date any other moneys payable under this Agreement the same shall
bear interest at the Default Interest Rate from the due date of payment until
paid. Such interest shall accrue to the Joint Account.
12.5 (1) BANKING AND INVESTMENT OF FUNDS All funds received by the
Operator under the provisions of this Agreement (other than Clause 12.1 hereof)
shall be lodged by the Operator in a separate bank account in Australia
maintained by the Operator and styled "Palm Valley Trust Account". The Operator
shall deposit to such account its own share of such funds as are due by it
within the same time limits within which the Non-Operators are required to pay
their shares to the Operator. Pending the expenditure thereof the funds advanced
by any Party shall be held by the Operator in trust for that Party, subject to
the terms hereof.
(2) Each Party hereby authorises the Operator to invest its funds
deposited to such account from time to time in interest bearing deposits with
such bank or with the prior unanimous approval of the Operating Committee in
such other forms of investment as are from time to time approved by the
unanimous resolution of the representatives on the Operating Committee. Each
Party shall be entitled to receive or be credited with the interest earned upon
the investment of its funds.
(3) The Operator is hereby authorised to withdraw funds from such
bank account or interest bearing term deposit as they are required by the
Operator to pay authorised costs and expenses hereunder.
13. INSURANCE
13.1 OPERATOR TO MAINTAIN INSURANCE
(a) The Operator shall at all times while conducting Work purchase and
maintain as a cost to the Joint Account for the protection and
indemnification of the Parties:-
(i) All such insurances as are required by terms of the
Concession;
(ii) Workmen's compensation (including unlimited common law risk)
employer's liability and other insurance of a similar or
dissimilar nature as may be required by law;
(iii) Public Liability Insurance for such amount as the Operating
Committee may from time to time determine;
(iv) Industrial Special Risks Insurance in respect of all plant for
such amount as the Operating Committee may from time to time
determine; and
(v) Such other insurances or indemnities as the Operating
Committee may from time to time determine.
(b) The Operating Committee may from time to time on such conditions, if
any, as the Operating Committee thinks fit excuse any Party from
participation in any such insurance or indemnity for the Joint Account
during such time as such Party provides evidence to the reasonable
satisfaction of the Operating Committee that it maintains for itself
cover in respect of that insurance or indemnity at least equivalent in
all respects to that determined to be maintained by the Operating
Committee on behalf of the other Parties.
13.2 ADVICE TO NON-OPERATORS OF CURRENT INSURANCE The Operator will furnish
the Non-Operators with a list of all current insurances effected by the Operator
pursuant to this Agreement and having relation to operations hereunder or on the
Concession and shall advise the Non-Operators promptly of any additional
insurance effected or of any insurances cancelled or lapsed.
13.3 PARTY'S RIGHT TO INCREASE INSURANCE Any Party ("the requesting Party")
may at any time request the Operating Committee in writing to direct the
Operator to increase the amount of insurance actually carried in respect of any
occurrence or to effect insurance against any occurrence the risk or loss from
which is not covered by any insurance effected by the Operator. If the Operating
Committee resolves not to so direct the Operator the requesting Party shall then
be at liberty at the cost of such Party to effect or increase any such insurance
as the case may require so far as relates to the interest of such Party
hereunder.
13.4 COST OF INSURANCE TO JOINT ACCOUNT Subject to the provisions of Clause
13.3 hereof the actual costs of the insurance effected by the Operator shall be
Charged to the Joint Account and any liability loss damage claim or expense
suffered by or charged to the Joint Account and resulting from occurrences not
covered by or which are in excess of the insurance actually carried shall be
borne by the Parties in proportion to their working Interests at the time of the
loss PROVIDED HOWEVER that if the Operator shall not have exercised the degree
of care provided by Clause 6.6 hereof then the amount of such loss shall be
chargeable to the Operator and no part of it shall be borne by the
Non-Operators.
14. INDEPENDENT OPERATIONS
GEOLOGICAL AND GEOPHYSICAL SURVEYS
14.1 APPLICATION OF PART The provisions of this Part 14 relate to geological
and geophysical exploration operations on the Concession which are not, or which
are in excess of, operations necessary to satisfy the work and expenditure
obligations of the Concession and which are not agreed to by all Parties. Any
Party or Parties may carry out such operations upon complying with the
requirements of this Part.
14.2 NOTICE OF OPERATIONS A Party proposing to carry out operations pursuant
to this Part ("the Notifying Party") shall give to all other Parties not less
than thirty (30) days notice of such operations ("Notified Operations"). Such
notice shall contain a detailed statement of the Notified Operations including a
description of the area to be surveyed the type of survey to be conducted and
the estimated cost thereof.
14.3 CONSENT BY OTHER PARTIES Any Party ("a Consenting Party") may within
fifteen (15) days of the receipt of a notice pursuant to Clause 14.2 hereof give
notice to the Notifying Party of its consent to the Notified Operations. The
Notifying Party and all Consenting Parties shall be entitled to participate in
the Notified Operations in the proportions that their respective Working
Interests bear to the total of Working Interests of all Parties participating in
Notified Operations.
14.4 OPERATOR FOR INDEPENDENT OPERATIONS In the event that the Notifying
Party and the Consenting Parties do not include the Party who is the Operator
then the Notifying Party and the Consenting Parties voting in proportion to
their respective Working Interests may by majority vote elect a Party to be the
Operator for the purpose of the conduct of the Notified Operations. A Party
acting as Sole Risk Operator in respect of Notified Operations shall be bound by
all the provisions mutatis mutandis of this Agreement applying to the Operator
and shall co-operate with the Operator for the purpose of satisfying all
reporting and other obligations of the Concession in relation to the Notified
Operations.
14.5 NON-CONSENTING PARTY A Party not consenting to such operations (a
"Non-Consenting Party") shall not be entitled to receive any of the information
obtained in conducting operations pursuant to this Part except to the extent and
under the conditions hereinafter specified.
14.6 RIGHT TO INFORMATION ON WELL DRILLING In the event that after the
conduct of operations on the Concession pursuant to this Part the Notifying
Party or a Consenting Party shall bona fide propose the drilling of a well on
the Concession a Non-Consenting Party shall immediately have the right to
inspect and copy information obtained from operations pursuant to this Part
which were conducted in as large a contiguous area around the said proposed well
as a Non-Consenting Party may select provided that such Non-Consenting Party
must select a minimum area of forty (40) square kilometres around the said
proposed well location in the form of a square or rectangular figure whose
length does not exceed twice its width with the well location in the centre
thereof. Before receiving such information the Non-Consenting Party must pay to
the consenting Parties five (5) times what such Non-Consenting Party's share of
the cost of conducting the operations in the said selected area would have been
had such Non-Consenting Party participated therein as a Consenting Party.
14.7 RIGHT TO INFORMATION IN OTHER CASES Subject to Clause 14.6 hereof a
Non-Consenting Party in respect of geological and/or geophysical exploration
operations hereafter conducted on the Concession may at any time receive
information obtained in conducting all such operations in which it did not
participate by paying to the Party or Parties conducting such operations two
hundred percent (200%) of the proportionate part of the cost of conducting all
such operations in which it did not participate on the Concession (regardless of
whether all or a portion of the lands comprising the Concession have been
surrendered) which would have been charged to such Party had it participated in
all such operations theretofore conducted on the Concession.
15. INDEPENDENT OPERATIONS
DRILLING OF ▇▇▇▇▇
15.1 APPLICATION OF PART The provisions of this Part 15 relate to the
drilling or deepening of ▇▇▇▇▇ on the Concession which are not, or which are in
excess of, operations necessary to keep the Concession in good standing free
from forfeiture or cancellation under the Petroleum Act and which are not agreed
to by all Parties. Any Party or Parties nay carry out such operations upon
complying with the requirements of this Part.
15.2 DEFINITION OF TERMS In this Part 15 the following words shall have the
meanings hereinafter assigned: -
(i) "PRODUCER OF PETROLEUM IN PAYABLE QUANTITIES" means a well
which would considering the cost of production operations, the
probable life of the well, the available market for production
therefrom and the price, nature and quality of the petroleum
produced, commercially and economically warrants the continued
taking of production from such well.
(ii) "DEVELOPMENT WELL" means a well which at the time of spudding
in is located at a distance of less than eight (8) kilometres
from any well (whether located on the concession or not) being
or capable of being a Producer of Petroleum in Payable
Quantities from the same zone to which it is intended to drill
the proposed well or from any shallower zone whether or not
such other well is completed as a Producer of Petroleum in
Payable Quantities.
(iii) "EXPLORATORY WELL" means either -
(a) a well which at the time of spudding in is located at
a distance of eight (8) kilometres or more from any
other well (whether located on the Concession or not)
being or capable of being a Producer of Petroleum in
Payable Quantities from the same zone or from any
shallower zone than the zone to which it is intended
to drill the proposed well whether such other well is
a Producer of Petroleum in Payable Quantities or not;
or
(b) a well which at the time of spudding in is located at
a distance of less than eight (8) kilometres from
such other well but which it is proposed to drill to
a deeper formation than that from which the said
other well is Producing or is capable of Producing
Petroleum in payable quantities.
15.3 NOTICE OF DRILLING If any Party or Parties desire that a well be
drilled at any particular location on the Concession then such Party or Parties
(in this Part 15 together with any Party or Parties electing to participate
pursuant to Part 15 hereof referred to as "the Desiring Party or Parties") may
give to the other Parties written notice of the desire to drill such well
specifying the location the proposed depth or geological target and the
estimated cost thereof and whether the proposed well is an Exploratory Well or a
Development Well.
15.4 NOTICE OF PARTICIPATION The Parties receiving such notice shall have
thirty (30) clear days after the receipt of such notice within which to notify
the Desiring Party or Parties whether they elect to participate in the drilling
of the said well at the said location. Failure of any Party receiving such
notice to notify whether or not it elects to participate within the said period
of thirty (30) clear days shall be deemed a refusal on its part of its right to
participate in the drilling of the proposed well.
15.5 UNANIMOUS PARTICIPATION If all Parties receiving such notice elect to
participate in the said well and so advise the Desiring Party of such election
then the said well shall be drilled by the Operator under the terms of this
Agreement for the Joint Account.
15.6 NON-DESIRING PARTY If any Party receiving the aforesaid notice shall
refuse or shall be deemed to have refused to participate in the drilling of the
proposed well (any such Party being hereinafter referred to as a "Non-Desiring
Party") the provisions hereinafter provided shall apply.
15.7 OPERATOR FOR INDEPENDENT DRILLING In the event that the Desiring
Parties do not include the Party who is the Operator then the Desiring Parties
by simple majority voting in proportion to their respective Working Interests
may elect a Party to be the Sole Risk Operator for the purpose of the drilling
of the proposed well. A Party acting as the Sole Risk Operator in respect of the
drilling of the proposed well shall be bound by all the provisions mutatis
mutandis of this Agreement applying to an Operator and shall co-operate with the
Operator for the purpose of satisfying all reporting and other obligations of
the Concession in relation to such drilling.
15.8 TIME FOR COMMENCEMENT The Desiring Party or Parties shall have one
hundred and twenty (120) clear days after the end of the thirty (30) days period
referred to in Clause 15.4 in which to commence the drilling of the proposed
well at the location specified in the said notice and unless an extension of
this period is agreed to by the Non-Desiring Party or Parties if the actual
drilling of the well is not commenced within the said period or within any
extension thereof so agreed to, the right of the Desiring Party or Parties to
commence drilling will be lost and all rights flowing from the giving of the
notice and the election to participate in the drilling of the well shall be
terminated.
15.9 OBLIGATION OF DESIRING PARTIES If the Sole Risk Operator shall commence
the actual drilling of the proposed well at the location set out in the said
notice within the said period referred to in Clause 15.8 then:-
(i) it shall proceed with diligence to drill such well to the
depth or geological target specified in the notice (or such
lesser depth as may be dictated by operational hazard) in a
bona fide attempt to find and produce petroleum;
(ii) the entire cost and risk of the operations connected with the
drilling of the well shall be borne by the Desiring Party or
Parties (and if more than one then pro rata in the proportion
that their respective Working Interests bears to the aggregate
of their Working Interests) and the Desiring Party or Parties
shall keep the Concession free and clear of all liens and
encumbrances of every kind and character created by or
arising from the operations thereon of the Desiring Party or
Parties and the Desiring Party or Parties shall indemnify and
keep indemnified the Non-Desiring Party or Parties against
each and every liability arising from such operations;
(iii) in the event that such well is not completed as a Producer of
Petroleum in Payable Quantities after the Desiring Party or
Parties shall have terminated the well then the Desiring Party
or Parties shall plug and abandon the well pursuant to the
terms and provisions of all the applicable laws rules and
regulations and the environmental standards currently
prevailing in the region and shall restore the premises by
filling and levelling the rig cellar and all slush pits and by
removing all equipment material and debris placed thereon by
the Desiring Party or Parties; all being at the sole cost risk
and expense of the Desiring Party or Parties.
15.10 CONFORMITY TO SPACING PATTERNS Without the mutual consent of all
Parties no well shall be produced from a source of supply from which a well
located elsewhere on the Concession is producing or scheduled to produce unless
such well conforms to the then existing well spacing pattern laid down by a
governmental authority or by the Operating Committee for such source of supply.
15.11 PENALTIES PAYABLE BY NON-DESIRING PARTIES If pursuant to Clause 15.9
hereof any well is drilled and completed (whether or not as a Producer of
Petroleum in Payable Quantities) by the Desiring Party or Parties or if the said
well is plugged and abandoned then the following provisions shall apply:-
(i) The Desiring Party or Parties shall be entitled in proportion
to their Working Interests to receive as their own property
and to sell all of the Non-Desiring Party's or Parties' share
of production of such well and to retain the net proceeds of
sale thereof for the use of the Desiring Party or Parties pro
rata as hereinabove provided until such proceeds (after
deducting all royalties payable thereon all taxes on
production thereof (except income taxes) and all operating
expenses applicable to the Non-Desiring Party's or Parties'
interest in production) (all hereinafter called "deductible
expenses") shall equal:-
(a) 200% in the case of a Development Well; or
(b) 1000% in the case of an Exploratory Well;
of the amount which would have been the Non-Desiring Party's
or Parties' share of the cost of drilling testing completing
and equipping such well if such well had been carried out by
the Desiring Party or Parties for the Joint Account (which
share of costs is hereinafter in the whole of this clause
called "the Non-Desiring share of cost").
(ii) When the Desiring Party or Parties shall have received the
payments provided for in sub-paragraph (i) hereof all of the
production from such well shall thereafter be owned as other
jointly owned ▇▇▇▇▇ drilled pursuant to this Agreement and
shall thereafter be operated by the Operator constituted under
Clause 5 hereof in like manner as other jointly owned ▇▇▇▇▇
under this Agreement.
(iii) In determining the costs and expenses incurred by the Desiring
Party or Parties in the drilling testing completing and
equipping of the said well the said Annexure "A" shall be
followed.
(iv) Within one hundred and twenty (120) clear days after the said
well is completed as a producer of petroleum the Desiring
Party or Parties shall furnish to the Non-Desiring Party or
Parties complete and detailed statements setting out the cost
of drilling testing completing and equipping the said well
together with an inventory of the material and equipment in
and on the said well for use in connection therewith.
(v) During the time the Desiring Party or Parties are being
reimbursed as above provided the Desiring Party or Parties
shall render monthly statements to the Non-Desiring Party or
Parties reflecting for each calendar month the costs and
expenses incurred in operating the well the petroleum produced
and saved the proceeds derived from the sale thereof and the
quantity of petroleum in storage at the end of the said month.
Such statement covering the previous month's operating shall
be rendered within thirty (30) clear days following the close
of such calendar month.
(vi) The Non-Desiring Party or Parties shall have the right at all
reasonable times to inspect and audit the Desiring Party's or
Parties' books and records including run tickets meter charts
and invoices pertaining to any matter of account hereunder.
(vii) In the event that the Desiring Party or Parties are unable to
recover from the Non-Desiring Party or Parties its or their
share of cost the Desiring Party or Parties shall own pro rata
as hereinabove provided all the material equipment and
supplies placed or installed by the Desiring Party or Parties
on the said well or on the Concession in connection therewith
PROVIDED HOWEVER that if such material equipment and supplies
have a salvage value in excess of the unrecovered amounts to
which the Desiring Party and any such other participating
Party are entitled as hereinbefore provided such excess shall
be owned by the Parties hereto in proportion to their interest
in the ▇▇▇▇▇ drilled by mutual agreement on the Concession.
15.12 FURTHER WORK ON ▇▇▇▇▇ The prior provisions of this Clause 15 having
regard to a proposal to drill a well shall apply mutatis mutandis to a proposal
to deepen stimulate test or further test a well which has been drilled on the
Concession (as a dry hole or without encountering petroleum or which has failed
or ceased to produce Petroleum in Payable Quantities) except that:-
(a) (i) If the rig with which the well was drilled or any
other rig capable of carrying out the deepening
stimulation testing or further testing is on location
at the time a notice is given the time within which
the Party to which the notice is given by the
Desiring Party or Parties must agree to participate
in such further Work without being deemed a
Non-Desiring Party shall be reduced to forty-eight
(48) hours;
(ii) If the Desiring Party or Parties shall not commence
the actual deepening stimulation testing or further
testing of the said well within thirty (30) days of
the election of the Non-Desiring Party not to
participate in such further Work then the
consequences provided by Clause 15.8 shall follow as
if such further Work was a drilling operation dealt
with by that Clause;
(b) In the event that as a result of the further Work the
well is drilled and completed by the Desiring Party
or Parties as a Producer of Petroleum in Payable
Quantities then the provisions of Clause 15.11 are
subject to the modification that the Non-Desiring
share of cost defined in Clause 15.11(i) shall be
calculated with regard to the cost of the further
Work in respect of the said well and any testing
completing and equipping thereof.
16. DISPOSITION OF PRODUCTION
16.1 SEPARATE OWNERSHIP OF PETROLEUM Each Party shall have the right and
obligation to receive and take in kind as its own property at the Delivery Point
and separately dispose of its share of all Petroleum produced from the
Concession except such Petroleum as may be used in drilling, development,
testing, producing, processing, compression and other operations on the
Concession and in preparing, treating and transporting Petroleum for marketing
and except such Petroleum as may be unavoidable lost. A Non-Operator may confer
upon the Operator authority to deliver to the buyer thereof all or part of that
Non-Operator's share of Petroleum produced from the Concession.
16.2 RIGHT TO SEPARATE FACILITIES A Party shall have the right to construct,
maintain and operate within the Concession all necessary facilities for the
purpose of taking in kind and separately disposing of its share of Petroleum
produced from the Concession provided they are so constructed, maintained and
operated as not to interfere with other operations able to be carried out under
this Agreement. Any extra expenditure or costs incurred by the Operator by
reason of the delivery in kind of any portion of such Petroleum to such
facilities shall be borne by the owner of such portion.
16.3 UNDERLIFTING PROCEDURE If any Party fails to take in kind or separately
dispose of any and all of such Party's share of Petroleum produced from the
Concession, the Operator, subject to any restrictions imposed by law, may: -
(a) dispose of the quantity of Petroleum concerned by sale to the
purchasers of the share of the Petroleum produced from the
Concession of the other Parties and pro rata to such
purchasers in proportion to the quantity of such Petroleum
being purchased by them. Any such quantity of Petroleum
involved shall be so sold at the same point or points and at
the same arms length price or prices at which such other
Petroleum is being sold. Any such purchase or sale shall be
subject to revocation at will by the Party owning the share
involved (without however affecting any contract of sale
already entered into with respect to such Petroleum). Any
contract of sale relating to such share and entered into with
a third party or third Parties shall be for a term not
exceeding such reasonable period of time as is consistent with
the minimum needs of the industry under the circumstances but
in no event shall any such contract be for a term in excess of
one (1) year. The price or proceeds of sale of the Petroleum
concerned (less all costs and expenses of and incidental to
such sale not incurred for the Joint Account) shall promptly
be paid over to the owner of such Petroleum; or
(b) store such Petroleum on the Concession in existing storage
facilities or in storage facilities established for such
purpose and the cost of such storage and of establishing any
such storage facilities shall be borne by the Party owning the
Petroleum so stored;
or
(c) otherwise deal with such Petroleum as the Operating Committee
may determine.
16.4 PAYMENTS DIRECT TO EACH PARTY Subject to Clause 17 hereof, where a
Party enters into a contract of sale for all or part of its share of Petroleum
produced from the Concession, that Party shall be entitled to receive direct
from the purchaser thereof all sale proceeds due under such contract of sale.
Each Party shall pay or cause to be paid all royalties and other like payments
attributable to its interest or share of Petroleum produced.
16.5 EXTRA EXPENDITURE Any extra expenditure incurred by a Party in
receiving or separately disposing of its share of the Petroleum from the
Concession shall be borne by such Party.
17. DEFAULTS IN PAYMENT
▇▇.▇▇ NOTICE OF DEFAULT If any Party including the Operator (herein called
the "Defaulting Party") fails to make any payment as required by this Agreement
or by any of the other Joint Venture Documents on or before the due date
thereof, the Operator shall upon becoming aware of such failure give notice by
telex cable or telegram of such failure to the Defaulting Party. If at the
expiration of two (2) days after the receipt or deemed receipt of such notice by
the Defaulting Party payment of the amount due by the Defaulting Party remains
unpaid the Operator shall thereupon give a notice of the default to all Parties.
Such notice ("the Default Notice") shall contain a statement of the amount owing
by the Defaulting Party and for the purpose of this Clause 17 all Parties other
than the Defaulting Party are herein referred to as "the Non-Defaulting
Parties".
17.1B PAYMENT BY OPERATOR In the event that the payment which the Defaulting
Party has failed to make is a payment due under any of the Joint Venture
Documents to a person who is not a Party, the Operator shall if so directed by
the Operating Committee pay the same to such person. Any amount so paid shall
constitute a debt immediately due and payable by the Defaulting Party to the
Operator. Notwithstanding the foregoing, the Operator may make any such payment
without the prior approval of the Operating Committee where such action is
necessary to preserve the Concession or to save it from forfeiture.
17.2 DEFAULTING PARTY MAY BE SUED Without prejudice to any other remedy for
or consequence of default provided for in this Agreement, the Operator shall if
so directed by the Operating Committee in any Court of competent jurisdiction
▇▇▇ a Defaulting Party (including without limiting the generality of the
foregoing, any Party removed from the position of Operator for failing to pay or
contribute, its proportionate share of the costs and expenses herein mentioned)
for the recovery of any moneys payable to the Operator by that Defaulting Party
under any of the Joint Venture Documents remaining unpaid by the Defaulting
Party at the expiration of fourteen (14) days after the delivery of the Default
Notice to the Defaulting Party.
17.3 NON-DEFAULTING PARTIES TO CONTRIBUTE If at the end of the fourteen (14)
day period referred to in Clause 17.2 hereof the Operator shall not have
received from the Defaulting Party the amount due ("the Unpaid Amount") plus
interest at the Default Interest Rate the Operator may and shall if so directed
by the Operating Committee require the Non-Defaulting Parties to pay the
Operator the Unpaid Amount. The amount to be reimbursed by each Non-Defaulting
Party shall bear the same ratio to the Unpaid Amount as does such Non-Defaulting
Party's Working Interest bear to the aggregate of the Working Interests of all
the Non-Defaulting Parties. A Party which does not pay all amounts due by it
under Clause 17.3 hereof shall be regarded as a Defaulting Party and all the
provisions of this Clause 17 shall apply to such Party in respect of any amount
not so paid.
17.4 RIGHTS OF CONTRIBUTING PARTIES A Non-Defaulting Party (including the
Operator in its capacity as a Party) which pays to the Operator or bears any
amount payable by it under Clause 17.3 hereof is hereinafter called "a Paying
Party" and shall be deemed to have advanced such amount to the Defaulting Party
on the terms that it is immediately repayable and may ▇▇▇ the Defaulting Party
to recover the same but without prejudice to any other rights and remedies. The
amount owing by a Defaulting Party to a Paying Party shall bear interest at the
Default Interest Rate from the date the Paying Party made the payment under
Clause 17.3 to the date it has recovered the same in full.
17.5 CROSS CHARGE For the purposes of better securing the payment:-
(a) to the Operator of any amount due and payable to it pursuant
to any of the Joint Venture Documents;
(b) to each of the Paying Parties of any amount due and payable to
it pursuant to Clause 17.4 hereof;
each of the Parties shall forthwith execute and deliver a Deed in substantially
the form and to the effect of the form of Deed set out in Annexure "B" hereto
("Clause 17 Cross Charge") and shall obtain all necessary consents and approvals
in relation thereto and shall duly register the same and shall file or record
such other documents or notices relating thereto, in such jurisdictions as may
be required by law to perfect the security given thereby.
17.6 SUSPENSION OF RIGHTS OF DEFAULTING PARTY Subject to the provisions of
Clause 9.7(3) hereof a Defaulting Party shall not be entitled either to attend
or vote through its representative at any meeting of the Operating Committee or
the Parties or otherwise be consulted with respect to Work unless and until any
amount payable by that Defaulting Party in accordance with the terms of any of
the Joint Venture Documents shall have been received in full or the default is
otherwise rectified or waived.
17.7 DEFAULT OF OPERATOR IN PAYMENT In the event that the Operator is in
default in payment of any amount payable by it under any of the Joint Venture
Documents in its capacity as a Non-Operator and for any reason the Operator is
not removed from that position, then the rights prescribed for the Operator
under this Clause 17 and elsewhere herein shall be exercised for and on behalf
of the Non-Defaulting Parties by such person as the Operating Committee shall
determine and such person shall be deemed to be the Operator for such purpose.
17.8 APPLICATION OF DEFAULTING PARTY'S FUNDS Upon default by any Party in
the payment of any moneys payable under any of the Joint Venture Documents, the
Operator shall (notwithstanding anything contained herein or in any Clause 17
Cross Charge to the contrary, and without prejudice to other rights and
remedies), retain any moneys which may be held for such Defaulting Party or
which come to the hands of the Operator on behalf of such Defaulting Party, and
apply such moneys until the amount owed by such Defaulting Party as aforesaid
has been paid in full.
17.9 OPTION TO PURCHASE DEFAULTING PARTY'S INTEREST If at the end of sixty
(60) days from the due date on which moneys were to have been paid by a
Defaulting Party to the Operator or any Non-Defaulting Party such moneys and
interest thereon remain unpaid by such Defaulting Party, then each of the
Non-Defaulting Parties shall have the option and each Party which may become a
Defaulting Party hereby grants to each of the Non-Defaulting Parties the option
to purchase the Working Interest of the Defaulting Party at the date of the
exercise of the option (and if more than one Non-Defaulting Party exercise such
option) in the proportions which the respective Working Interests of the
Non-Defaulting Parties exercising the option bear to the total of their Working
Interests (or in such other proportions as such Non-Defaulting Parties shall
agree) upon and upon the following terms and conditions:-
(a) The option shall be exercisable for so long as a default
giving rise to the option has not been cured and may be
exercised by notice in writing to the Defaulting Party signed
by those Non-Defaulting Parties which wish to exercise the
option.
(b) The purchase price shall be a sum equal to eighty percent
(80%) of the value of the Working Interest of the Defaulting
Party at the date of the exercise of the option. Each Party
hereby agrees that the difference between the full value of
the Working Interest of the Defaulting Party and the selling
price under this Clause constitutes a pre-estimate of the
liquidated damages which will be sustained by the
Non-Defaulting Parties by reason of breach of this Agreement
by the Defaulting Party.
(c) If within thirty (30) days of the exercise of the option the
Defaulting Party and the purchasers have not agreed upon the
purchase price for the Working Interest of the Defaulting
Party, the value of the Working Interest of the Defaulting
Party at the date of the exercise of option shall be
determined by the nominee of the Chairman for the time being
of the Australian Petroleum Exploration Association Limited on
the application of either the Defaulting Party or the Non-
Defaulting Parties exercising the option. In making such
determination the said nominee shall be acting as an expert
and not an arbitrator and his decision shall be final and
binding upon all Parties. For the purposes hereof, the value
of the Defaulting Party's Working Interest shall be determined
on the basis that the Joint Venture is a going concern and the
price payable is that which would be paid by a willing but not
anxious buyer to a willing but not anxious seller dealing at
arm's length.
(d) The completion of the purchase shall be effected as soon as
reasonably practicable after the determination of the purchase
price pursuant to paragraphs (b) and (c) hereof. Upon such
completion the purchasers shall be at liberty to deduct from
the purchase price the amount required to discharge or satisfy
liabilities secured by any charge or encumbrance over the
Working Interest of the Defaulting Party and the several
liabilities at the date of completion of the Defaulting Party
under this Agreement or other Joint Venture Documents. Any of
the purchasers shall also be entitled to deduct from the
purchase price the amount of any stamp duty payable on any
transfer or other instrument arising from the exercise of
option.
(e) Upon and in exchange for the payment to it of the balance (if
any) of the purchase price pursuant to the preceding paragraph
(d) hereof, the Defaulting Party shall forthwith do all such
acts and things and execute and deliver to the purchasers all
such transfers deeds and other documents as are necessary to
give effect to and complete the sale pursuant to this Clause
17.9.
(f) If the Defaulting Party fails to act in the manner provided
for in the preceding paragraph (e), then a person nominated
for the purpose by the Non-Defaulting Parties exercising the
option shall be and be deemed to be the agent and attorney of
the Defaulting Party for all purposes necessary to give effect
to the sale pursuant to this Clause 17.9.
(g) In the event that a Court of competent jurisdiction shall
determine that the method of determination of the purchase
price pursuant to paragraph (b) of this Clause 17.9 would
constitute a penalty or for any other reason would have the
consequence of rendering void or voidable the option in this
Clause 17.9 contained then the purchase price, pursuant to
this Clause 17.9, shall be and be deemed to be the value of
the Working Interest of the Defaulting Party at the date of
the exercise of the option less the damages sustained by the
Non-Defaulting Parties by reason of the breach of contract by
the Defaulting Party such damages being such amount as shall
be agreed between the Defaulting Party and the Non-Defaulting
Parties or in the absence of agreement, as shall be determined
by a Court of competent jurisdiction.
(h) If the purchase price is determined pursuant to the preceding
paragraph (g) hereof and differs from the purchase price
determined pursuant to paragraphs (b) and (c) hereof and if
completion has already taken place, then the balance (if any)
of the purchase price payable to the Purchaser pursuant to
paragraphs (d) and (e) hereof shall be re-calculated and
appropriate adjustments (if any) of the amount payable
pursuant to paragraph (e) hereof as between the Defaulting
Party and the Purchasers shall be forthwith paid and received.
(i) Any sale pursuant to this Clause shall be subject to all
Governmental consents and approvals required by law. If any
such consent or approval is refused any contract constituted
by an exercise of option hereunder shall cease to have further
force or effect.
(j) For the purpose of this Clause 17.9 a Non-Defaulting Party
which has not notified the other Non-Defaulting Parties within
thirty (30) days after the option becoming exercisable that it
wishes to exercise the option shall not thereafter be entitled
to join in the exercise of the option without the consent of
the Non-Defaulting Party or Parties which have as aforesaid
indicated their wish to exercise the option.
18. WITHDRAWAL
18.1 ANY PARTY MAY WITHDRAW Any of the Parties hereto may withdraw from
the Joint Venture constituted hereby in accordance with the provisions of this
Part 18.
18.2 NOTICE OF WITHDRAWAL The Party desiring to withdraw (herein called "the
Withdrawing Party") shall give to the other Parties not less than one hundred
and eighty (180) days and not more than five hundred and fifty (550) days' prior
notice of its intention to withdraw. Such notice shall designate the effective
date of withdrawal which date shall be the last day of a Concession Year and
shall offer assignment for a consideration of ONE DOLLAR ($1.00) to the other
parties of the whole of the Withdrawing Party's Working Interest. Such
assignment shall be conditional on the other Parties' assumption subject to this
Part of the whole of the Withdrawing Party's Working Interest. The Notice of
Withdrawal shall not be revocable except with the unanimous consent of all other
Parties.
18.3 OTHER PARTIES MAY ACCEPT ASSIGNMENT The other Parties shall have sixty
(60) days from the date of receipt of such notice to notify the Withdrawing
Party whether they accept the offer and elect to receive the assignment provided
for in Clause 18.2 hereof in the proportion that their respective Working
Interests bear to the aggregate of their Working Interests. If some only of such
Parties accept such offer or if the acceptance of any accepting Party is limited
in percentage, then the interest of the Withdrawing Party or the portion of such
interest remaining after the allocation of any limited percentages accepted
shall be distributed amongst the other accepting Parties in the proportion that
their respective Working Interests bear to the aggregate of their Working
Interests of such Parties or in such other proportions as such Parties agree
between themselves.
18.4 PROMPT EXECUTION OF DOCUMENTS If some or all of the other Parties give
notice pursuant to Clause 18.3 hereof of acceptance and election to receive such
assignment all Parties concerned shall promptly execute and deliver all
documents and do and perform all acts and things necessary and appropriate to
validly effect such assignment.
18.5 WITHDRAWING PARTY'S OBLIGATIONS In the event of an assignment under
this Part the Withdrawing Party shall remain liable to meet its proportionate
share of:-
(i) all authorised costs, expenses and liabilities incurred or accrued by
the Operator on or before the effective date of the withdrawal;
(ii) all other liabilities of the Parties for anything done or omitted to be
done in the course of Work on or before the effective date of its
withdrawal; and
(iii) the royalties mentioned in Clause 3.3 hereof.
The Withdrawing Party shall remain responsible for such obligations
(including payments of amounts to the Operator) although the extent of such
obligations may not be ascertainable until after the date of withdrawal PROVIDED
THAT the Withdrawing Party shall not be liable for any obligation accruing after
the date of Notice given pursuant to Clause 18.2 in consequence of a decision by
the Operating Committee after such date to renew the Concession or any other
title of the Joint Venture.
18.6 COSTS OF ASSIGNMENT All costs incurred by a Party in connection with
any assignment under this Clause including stamp duty, registration fees and
legal fees shall be paid by the Withdrawing Party.
18.7 ASSIGNMENT TO ALL PARTIES In the event that by the expiration of sixty
(60) days after the notice from the Withdrawing Party pursuant to Clause 18.2
hereof the interest of the Withdrawing Party or any portion of such interest
remains unallocated or undistributed to other Parties pursuant to Clause 18.3
hereof then the Withdrawing Party shall assign its interest or the portion
thereof remaining unallocated or undistributed to all of the other Parties in
the proportions that their respective Working Interests bear to the total of
such Working Interests or to such of the other Parties and/or to such one or
more outside Parties and in such proportions as all of the other Parties shall
so direct.
19. ASSIGNMENT - MORTGAGES
19.1 RIGHT TO ASSIGN Subject to the provisions of this part any Party which
is not in default under any of the Joint Venture Documents may at any time sell
transfer or assign to any other Party or to an Affiliate or to any person or
entity not a party to this Agreement, its Working Interest in the whole or in
part PROVIDED HOWEVER THAT: -
(a) No assignment of a part of a Party's Working Interest shall be made
unless it is a uniform assignment of the whole of that part of the
Working Interest which is being assigned and unless it is also
effective to assign the equivalent part of the rights and obligations
of the assignor under the Joint Venture Documents.
(b) No assignment shall be made which would result in the Joint Venture
having more than twenty (20) members.
(c) No assignment shall be made if the effect thereof would be to increase
the level of foreign or non-Australian equity participation in the
Joint Venture beyond that permitted by any law or policy of the
Commonwealth or Northern Territory Governments unless such increase
shall have been approved in writing by the relevant authority of the
Government concerned; and
(d) No assignment of a Working Interest or part thereof shall be made to
any person or corporation which is bankrupt, insolvent or liable to be
wound up.
19.2 ASSUMPTION BY ASSIGNEE
(a) An assignment by a Party of the whole or any part of its Working
Interest or by any person exercising power of sale pursuant to any
mortgage or charge, shall be made expressly subject to the terms and
provisions of this Agreement and shall not be effective until the
happening of the last of the following events:
(i) the obtaining of all necessary consents and approvals to the
assignment;
(ii) the execution and delivery by the assignee to the Operator as
agent for the Parties of Deeds of Assumption or Covenant in
such form or forms as the Operating Committee shall approve
(which approval shall not be unreasonably withheld) whereby
the assignee assumes the obligations and is conferred with
the rights of a Party under the Joint Venture Documents to the
extent of the Working Interest assigned; and
(iii) subject to Clause 19.3 hereof, the execution and delivery by
the assignee to the Operator as agent for the Parties of a
Clause 17 Cross Charge (modified to constitute a charge from
the assignee only) and an undertaking in writing to comply
forthwith with Clause 17.3 hereof regarding the registration
or filing of such charge;
(b) The Deeds of Assumption or Covenant provided for in the preceding
paragraph (a)(ii) of this clause shall upon their delivery to the
Operator after execution by the assignee be promptly executed by the
Parties and an executed counterpart shall be delivered to the assignee
promptly thereafter.
19.3 ASSIGNMENT TO A CROWN CORPORATION Notwithstanding the provisions of
Clause 19.2 hereof an assignee being a subsidiary of Australian Industry
Development Corporation shall not be required to execute a Clause 17 Cross
Charge PROVIDED THAT in lieu of the Clause 17 Cross Charge Australian Industry
Development Corporation shall execute and deliver to the Operator as agent for
the Parties a guarantee in such form as the Operating Committee shall approve
(such approval not to be unreasonably withheld).
19.3A CONSEQUENCES OF ASSIGNMENT
(a) Upon an assignment of a Working Interest or part thereof becoming
effective as provided in Clause 19.2 hereof, without any further
agreement or act on the part of any Party, the assignee shall, to the
extent of the sale or assignment, become a Party in the place of the
Party whose Working Interest or part thereof has been sold or assigned
and such Party shall to such extent be relieved and discharged from all
further performance of its obligations and duties under any and all of
the Joint Venture Documents.
(b) Each Party shall, if requested by any such assignee, perform, execute,
acknowledge and deliver all such further acts, deeds and assurances in
relation to any and all of the Joint Venture Documents as may be
reasonably required to perfect the sale or assignment of a Working
Interest or part thereof to, or the assumption of rights or obligations
thereunder by, such assignee.
19.4 CHARGE OF WORKING INTEREST Without prejudice to its right to charge any
of its property or assets other than its Working Interest any Party (hereinafter
called the "Chargor") may, without the consent of the other Parties (but subject
to all other necessary consents and approvals), charge in favour of any
recognised financial institution or Affiliate thereof (hereinafter called "the
Chargee") the whole of its Working Interest PROVIDED THAT:
19.4.1 (a) any such charge made by the Chargor shall expressly be made
subject to the provisions of the Joint Venture Documents and
all of the rights and remedies of the other Parties under the
Joint Venture Documents; and
(b) contemporaneously with the execution of any such charge the
Chargee shall execute and deliver to each of the Parties
holding a Working Interest a Deed in substantially the form
and to the effect of the Deed set out in Annexure "C" hereto
and upon such execution and delivery each of such Parties
shall execute and deliver to the Chargee and each of the other
Parties the said Deed;
19.4.2 it shall be a term of any such charge:-
(a) that the person exercising or enforcing any power of sale
thereunder or conferred by law shall ensure that as a
condition of such sale the purchaser of the whole or part of
the Working Interest the subject of the charge: -
(i) shall execute and deliver the Deeds of Assumption or
Covenant and a Clause 17 Cross Charge required under
Clause 19.2 hereof; and
(ii) shall forthwith after the completion of such
assignment duly register or record the Clause 17
Cross Charge in those jurisdictions as may be
required by law to perfect the security thereby
given;
(b) that neither the Chargee nor any person claiming through or
under such Chargee shall seek to partition whether by order of
court or otherwise of either or both the Concession or the
Joint Facilities.
(c) that neither the Chargee nor any person claiming through or
under such Chargee shall without the prior consent of all
Parties (other than the Chargor) waive, release, surrender or
forfeit the whole or any fractional or constituent part of the
Working Interest so charged; and
(d) that such charge shall be and shall be expressed to be subject
to and shall rank for all purposes after any Clause 17 Cross
Charge given by the Chargor.
19.4.3 such charge shall be limited to a floating charge except that, as
regards the present and future interest of the Chargor in:-
(i) the Concession;
and
(ii) any single item of plant or equipment being Joint Facilities
the current replacement price thereof exceeds $50,000
such charge may be fixed.
19.4.4 references in this Clause 19.4 to "charge" shall include a reference to
mortgage, encumber or assign by way of charge and any such assignment
shall not be subject to the provisions of Clauses 19.1, 19.2 and 19.3
hereof and references in this Clause 19.4 to "charging" or "charged"
shall be read accordingly.
20. AUSTRALIANISATION
20.1 AUSTRALIANISATION In the event that the Australian or Northern
Territory Government requires an increase in the Australian equity participation
in the Joint Venture before any proposed activity of the Joint Venture is
permitted to proceed then it shall be the responsibility of those Parties who
are regarded by such Governments as having less than 100% Australian ownership
or equity to determine and carry out on an equitable basis such steps as may be
necessary to achieve the level of Australian ownership or equity required by
such Governments.
21. RELEASE OF INFORMATION
21.1 INFORMATION CONFIDENTIAL SUBJECT TO EXCEPTIONS Except with the prior
consent of all Parties each Party shall keep confidential any reports records
and data studies made opinions furnished and other information obtained in the
course of operations on the Concession (other than information already within
the public domain) and shall not disclose the same except:-
(i) To its respective employees and consultants for the purposes
of the operations on the Concession subject to each such Party
taking reasonable precautions to ensure that they keep such
records data studies opinions and other information
confidential.
(ii) As may be reasonably necessary for it to comply with any
statutory or regulatory obligation including but not limited
to disclosure obligations under the Companies Code or Stock
Exchange Listing Requirements.
(iii) As may in the opinion of any Solicitor or Counsel acting for
it or for any Affiliate be required by law or for the
reasonable protection of it or such Affiliate.
(iv) As may be necessary in connection with any bona fide proposal
to assign a Party's Working Interest or part thereof or to
raise funds.
21.2 DISCLOSURE TO LISTED COMPANIES To ensure compliance by any Party or
Affiliate of a Party which is a listed public company in Australia with the
listing regulations of the Australian Associated Stock Exchanges the Operator
shall disclose immediately to all Parties any significant discovery of
hydrocarbons or mineralisation within the Concession and if so required shall
give to those Parties a full report on that discovery and information necessary
to avoid establishment of a false market in the securities of such listed
companies. Any of such listed public companies shall have the right to make all
or part of that report available to the Home Exchange on which it is listed.
21.3 COPY NOTICE TO OTHER PARTIES Any Party required or wishing to make such
material public in accordance with Clauses 21.1 and 21.2 shall notify the other
Parties of the proposed announcement as far in advance as reasonably possible.
21.4 JOINT ANNOUNCEMENTS Notwithstanding the provisions of Clause 21.1 it is
the intent of the Parties hereto that public announcements of information
concerning operations on the Concession shall be made by the Operator on behalf
of the Parties.
22. RELATIONSHIP OF THE PARTIES
22.1 RIGHTS AND OBLIGATIONS SEVERAL The rights duties obligations and
liabilities of the Parties shall be several and not joint or joint and several.
It is the express purpose and intention of the Parties that their ownership of
the Concession and the Joint Facilities shall be as tenants-in-common. Nothing
contained in this Agreement or any of the Joint Venture Documents shall be
construed as creating a partnership between the Parties or any of them.
22.2 NO JOINT LIABILITY Whenever in this Agreement reference is made to
operations for the Joint Account or to charges or credits to the Joint Account
or whenever a similar language is used, the Parties use language merely as a
convenient method of referring to the accounting necessary between them and no
such phraseology shall ever be construed as creating any joint liability upon
the part of the parties for any obligation incurred under this Agreement.
23. FORCE MAJEURE
23.1 OBLIGATIONS SUSPENDED BY FORCE MAJEURE If any party is rendered unable
wholly or in part by force majeure to carry out its obligations under this
Agreement (other than any obligation to make money payments) that Party shall
give to all other Parties prompt written notice of the force majeure with
reasonably full particulars concerning it; thereupon the obligations of the
Party giving the notice so far as they are affected by the force majeure shall
be suspended during but not longer than the continuance of the force majeure.
The affected Party shall use all possible diligence to remove the force majeure
as quickly as possible.
23.2 CERTAIN ACTIONS NOT REQUIRED The requirement that any force majeure
shall be remedied with all reasonable dispatch shall not require the settlement
of strikes lockouts or other labor difficulty by the Party involved contrary to
its wishes. How all such difficulties shall be handled shall be entirely within
the discretion of the Party concerned unless such Party is the Operator in which
case the Operator shall comply with any direction given to it by the Operating
Committee with regard thereto.
23.3 MEANING OF FORCE MAJEURE The term "force majeure" as here employed
shall mean an act of God blowout strike lockout or other industrial disturbance
act of the public enemy war blockade public riot lightning fire storm flood
explosion governmental restraint unavailability of equipment and any other cause
whether of the kind specifically enumerated above or otherwise which is not
reasonably within the control of the Party claiming suspension.
24. LAWS AND REGULATIONS
24.1 SUBJECT TO MINISTER'S CONSENT This Agreement is subject to the consent
of the Minister for Mines and Energy pursuant to Section 72 of the Petroleum
Act. Each of the parties will use its best endeavours to procure the giving of
such consent.
24.2 SUBJECT TO APPLICABLE LAWS This Agreement and the respective rights and
obligations of the Parties hereto shall be subject to all valid and applicable
laws rules ordinances regulations and orders of the Northern Territory and the
Commonwealth of Australia, and in the event that this Agreement or any provision
thereof is or the operations contemplated hereunder are found to be inconsistent
with or contrary to any such law rule ordinance regulation or order the latter
shall be deemed to control the former and this Agreement shall be regarded as
modified accordingly and as so modified shall continue in full force and effect.
The Operator shall prepare and furnish to any duly constituted authority through
its proper agency or department any and all reports records statements and
information that may be furnished by the Operator.
24.3 PROPER LAW This Agreement shall be governed by and construed in
accordance with the laws of the Northern Territory of Australia.
24.4 SUBMISSION TO JURISDICTION Each of the Parties hereby submits
unconditionally but not exclusively to the jurisdictions of the Courts of the
Northern Territory and of the State of Queensland.
25. ABORIGINAL LANDS
25.1 ABORIGINAL LANDS The Operator and each of the Parties hereto hereby
agree that insofar as any exploration development or operating programme or any
other activities may be conducted on Aboriginal lands or affect Aboriginal
people within the Concession all Parties will use their best endeavours to
ensure that all operations comply with all lawful requirements in regard thereto
and pay due regard to the welfare of the traditional Aboriginal owners of any
lands affected by such operations and of any Aboriginal communities which may be
affected by such operations and accord proper respect to Aboriginal culture.
26. DEALINGS WITH THE GOVERNMENT AND LAND COUNCIL
26.1 DEALINGS BY CONCESSION HOLDER If at any time the Operator is not the
holder of a working Interest then the holder or holders of a Working Interest
nominated by the others of them ("the nominated Concession holder") shall be the
Party to deal with Governmental Authorities and the Central Land Council with
respect to the Concession and the maintenance and good standing thereof provided
that prior to any such dealing whether by meeting or in writing the nominated
Concession holder shall consult with the Operator to the intent that the
nominated Concession holder and the Operator shall agree on the conduct of such
dealings and such dealings shall be in conformity with any directions given by
the Operating Committee.
26.2 CONSULTATION WITH OPERATOR The nominated Concession holder and the
Operator may establish such consultative committees as they deem appropriate to
meet as required or on a regular basis for the discussion of matters relevant to
prospective dealings in relation to the Concession and the maintenance thereof.
The nominated Concession holder shall submit all reports and other information
required for the purpose of maintenance of the Concession.
26.3 OPERATOR MAY ATTEND MEETINGS The Operator shall have the right to
attend any meetings with the Government or the Central Land Council in respect
of the dealings referred to in this Part. All other matters incidental thereto
which are part of any activity carried out on the Concession shall be dealt with
by the Operator in accordance with this Agreement.
27. NOTICES
27.1 ADDRESSES FOR NOTICES Each Party shall keep the other Parties advised
of its current address in Australia to which any notice communication offer
request consent payment demand or information required to be given or furnished
under this Agreement is to be addressed. Until advised otherwise the addresses
of the respective Parties shall be as follows:-
MAGELLAN PETROLEUM (N.T.) PTY. LTD.
▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Telex: AA40392
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
C.D. RESOURCES PTY. LTD.
▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
FARMOUT DRILLERS NL
▇▇ ▇'▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
CANSO RESOURCES LIMITED
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Telex: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
INTERNATIONAL OIL PROPRIETARY
▇▇▇▇ ▇▇▇▇▇,
▇.▇.▇. ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Telex: AA32985
MELBOURNE, VICTORIA
AUSTRALIA Telephone: (▇▇) ▇▇▇▇▇▇▇
PANCONTINENTAL PETROLEUM LTD.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
IEDC AUSTRALIA PTY. LIMITED
▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telex: ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: ▇▇▇ ▇▇▇▇
AMADEUS OIL NL
▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇ Building,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Telex: AA43927
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Telephone: (▇▇) ▇▇▇ ▇▇▇▇
27.2 HOW NOTICES GIVEN All notices required or authorised to be given
hereunder shall be given in writing by airmail cablegram telex or telegram
postage or other charges prepaid and addressed to the Party at its notified
address. Any notice sent by telex or telegram shall have been deemed to have
been received on the next business day in the place where such notice is
intended to be received after the telex or telegram is sent whether or not the
telex or telegram is subsequently confirmed by letter and any notice sent by
airmail postage prepaid in registered or certified cover shall be deemed to have
been received on the expiration of five (5) days from the date of posting.
27.3 AUSTRALIAN REPRESENTATIVE AND ADDRESS Each Party hereto shall appoint
and keep appointed a representative who shall be resident in the Commonwealth of
Australia and whose address shall from time to time be advised in writing to the
other Parties hereto.
28. GENERAL
28.1 REMEDIES NOT EXCLUSIVE Each and every power and remedy hereby
specifically given to Non-Defaulting Parties shall be in addition to every other
power and remedy now or hereafter existing at law or in equity, and each and
every power and remedy may be exercised from time to time and simultaneously and
as often and in such order as may be deemed expedient. All such powers and
remedies shall be cumulative and the exercise of one shall not be deemed a
waiver of the right to exercise any other or others.
28.2 MUTUAL INDEMNITY Each Party will indemnify and keep indemnified each of
the other Parties from every claim demand action or liability or loss resulting
from each and every breach or default by the indemnifying Party of any of its
obligations under any of the Joint Venture Documents or otherwise in respect of
the Joint Venture.
28.3 LIMITED INVALIDITY If any term clause or provision of this Agreement
shall be or shall be deemed to be invalid for any reason whatsoever such
invalidity shall not affect the validity or operation of any other term clause
or provision of this Agreement except only so far as may be necessary to give
effect to such invalidity.
28.4 WAIVER No waiver by any Party of a right or a default hereunder or any
delay or omission in the exercise of any right remedy or power shall be deemed a
waiver by such Party of any subsequent right power remedy or default whether of
a like nature or otherwise.
28.5 HOW MONIES PAID Any sum of money paid or tendered by the Parties hereto
shall be validly and effectually paid or tendered if such payment is given
delivered or made in legal currency or by bank cheque or by the party's own
cheque after presentment and clearance. All references to currencies shall mean
Australian currency unless otherwise specifically indicated.
28.6 SUCCESSORS BOUND This Agreement shall enure for the benefit of and bind
the Parties and their assigns and successors in title.
28.7 FURTHER ASSURANCE Each Party agrees that it will perform, execute,
acknowledge and deliver all such further acts, deeds, assurances and instruments
as shall be reasonably required for the purposes of this Agreement or otherwise
to carry out the agreements made herein.
28.8 ENTIRE AGREEMENT This Agreement is the entire agreement between the
Parties hereto in relation to its subject matter and each Party convenants that
it has full right title and power to enter into this Agreement.
28.9 AMENDMENT This Agreement may not be amended except by one or more
written instruments executed by all the Parties hereto.
28.10 NO PARTITION No party shall institute any action or proceedings for
partition or sale in lieu of partition of either or both of the Concession or
the Joint Venture Facilities.
28.11 COUNTERPARTS This Agreement may be executed in any number of
counterparts each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
THE FIRST SCHEDULE
The Working Interests of the Parties
%
Magellan Petroleum (NT) Pty. Ltd. 56.875
C.D. Resources Pty. Ltd. 9.375
Farmout Drillers N.L. 9.375
Canso Resources Limited 15.375
International Oil Proprietary 3.504
Pancontinental Petroleum Limited 3.00
IEDC Australia Pty. Limited 1.248
Amadeus Oil NL 1.248
IN WITNESS WHEREOF the parties have executed this Operating
Agreement as at the date and year first herein set out.
THE COMMON SEAL of MAGELLAN )
PETROLEUM (N.T.) PTY. LTD. was )
hereunto affixed by authority )
of the Board of Directors in )
the presence of ▇▇▇ ▇▇▇▇▇▇▇▇ ) /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ a Director and HEDLEY ) Director
▇▇▇▇▇▇ the Secretary thereof )
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Secretary
EXECUTED by C.D. RESOURCES PTY. )
LTD. by being signed sealed and )
delivered by SIR ▇▇▇▇▇▇ ▇▇▇▇▇ )
its duly constituted Attorney )
in the presence of: )
/s/ Sir ▇▇▇▇▇▇ ▇▇▇▇▇
Attorney
/s/ ▇. ▇▇▇▇▇▇▇
EXECUTED by FARMOUT DRILLERS )
by being signed sealed and )
delivered by ▇▇▇▇▇▇ ▇▇▇▇▇ )
▇▇▇▇▇▇▇▇ its duly constituted Attorney )
in the presence of: )
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attorney
/s/ ▇. ▇▇▇▇▇▇▇
EXECUTED by CANSO RESOURCES )
LIMITED by being signed sealed )
and delivered by ▇▇▇▇▇▇ ▇▇▇▇▇ )
▇▇▇▇▇▇▇▇ its duly constituted )
Attorney in the presence of: )
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Attorney
/s/ ▇. ▇▇▇▇▇▇▇
EXECUTED by INTERNATIONAL OIL )
PROPRIETARY by being signed )
sealed and delivered by ▇▇▇▇▇ )
▇▇▇▇▇▇ ▇▇▇▇▇▇ its duly constituted )
Attorney in the presence of: )
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney
/s/ ▇. ▇▇▇▇▇▇▇
EXECUTED by PANCONTINENTAL )
PETROLEUM LTD. by being signed )
sealed and delivered by ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ )
its duly constituted Attorney )
in the presence of: )
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Attorney
/s/ _________________________
THE COMMON SEAL of IEDC )
AUSTRALIA PTY. LTD. was hereunto )
affixed by authority of )
the Board of Directors in the )
presence of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ )
and ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ two )
Officers authorised to affix )
the Seal )
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXECUTED by AMADEUS OIL NL by )
being signed sealed and )
delivered by ▇▇▇▇ SURREY BOGG )
its duly constituted Attorney )
in the presence of: )
/s/ ▇▇▇▇ ▇. ▇▇▇▇
Attorney
/s/ ▇. ▇▇▇▇▇▇▇
ANNEXURE "A"
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ACCOUNTING PROCEDURE
1. GENERAL PROVISIONS
1. DEFINITIONS
Any term used herein shall have the meaning assigned to it by the
Operating Agreement to which this Accounting Procedure is attached.
2. STATEMENTS AND ACCOUNTS
The Operator shall on or before the last day of a month debit each
Non-Operator for its proportionate share of costs and expenditures
during such preceding month and forward to each Non-Operator an
accounting statement showing the details of all charges and credits for
the Joint Account.
3. PAYMENTS BY NON-OPERATOR
Each Party shall pay its proportion of all such accounts within fifteen
(15) days after receipt of such accounting statement. If payment is not
made within such time the unpaid balance shall bear interest from the
end of the said period at the Default Interest Rate until paid.
4. ADJUSTMENTS
Payments of any such accounts shall not prejudice the right of any
Non-Operator to protest or question the correctness thereof. Subject to
the exception noted in Clause 5 of this Section 1 all statements
rendered to any Non-Operator by the Operator during any calendar year
shall conclusively be presumed to be true and correct after twenty-four
(24) months following the end of any such calendar year unless within
the said twenty-four (24) month period such Non-Operator takes written
exception thereto and makes a claim on the Operator for adjustment. The
failure on the part of such Non-Operator to make a claim on the
Operator for adjustment within such period shall establish the
correctness thereof and preclude it from filing objections thereto or
making claims for adjustment thereon. The provisions of this Clause
shall not prevent adjustments resulting from physical inventory of
property as provided for in Section 6 "Inventories" hereof.
5. AUDITS
(i) A Non-Operator upon not less than thirty (30) days notice in
writing to the Operator and all the other Non-Operators shall
have the right to audit the Operator's accounts and records
relating to the accounting hereunder for any calendar year
within the twenty-four (24) month period following the end of
such calendar year provided however that the Non-Operator must
take written exception to and make a claim upon the Operator
for all discrepancies disclosed by the said audit within the
said twenty-four (24) month period. Where there are two or
more Non-Operators the Non-Operators shall make every
reasonable effort to conduct joint or simultaneous audits in a
manner which will result in a minimum of inconvenience to the
Operator.
(ii) The Operator shall cause its external auditors to carry out an
audit of the accounts and records of the Joint Venture and
records relating to the accounting hereunder for each period
of twelve calendar months ending on each 30th June. Such audit
shall be carried out as soon as is reasonably possible and the
Operator shall forward a copy of the audit report given by
such auditors to each Non-Operator. The costs of such audit
shall be for the Joint Account.
2. OPERATING AND DEVELOPMENT CHARGES
Subject to limitations hereinafter prescribed the following items shall be
charges for the Joint Account to the extent that provision has been made
therefor in a programme or budget approved by the Operating Committee for the
Work or expenditure is otherwise authorised by the Operating Agreement.
1. RENTALS
Rentals and like payments for the Concession, the Joint Facilities or
the Joint Account.
2. LABOR
(a) Salaries and wages of the Operator's employees in Australia
and fees of the Operator's consultants in Australia engaged
for the benefit of the Concession or the Joint Facilities or
part thereof in the exploration development maintenance and
operation thereof including salaries or wages paid to
geologists and other employees in Australia who are
temporarily assigned to and directly employed for the benefit
of the Concession or the Joint Facilities or part thereof.
(b) Salaries and wages and fees of the Operator's employees and
consultants located outside Australia who are temporarily
assigned to and directly employed for the benefit of the
Concession or the Joint Facilities or part thereof when prior
approval of the use of such employee is given by the Operating
Committee.
(c) The Operator's cost of holidays vacation sickness disability
benefits living and housing allowances travel time bonuses and
other customary allowances applicable to the salaries and
wages chargeable under sub-clauses (a) and (b) of this Clause
and Clause 11 of this Section 2. Costs under this sub-clause
(c) may be charged on a "when and as paid" basis.
(d) Expenditures or contributions made pursuant to assessments
imposed by any Governmental authority which are applicable to
the Operator's labor cost of salaries and wages as provided
under sub-clauses (a) and (b) of this Clause and Clause 11 of
this Section 2.
(e) Termination payments made by the Operator to employees who
were directly engaged for the benefit of the Concession or the
Joint Facilities or part thereof but who are no longer
required for such purpose and as a result thereof whose
employment by the Operator is terminated.
(f) For the purpose of this Clause, the expression "Operator"
shall include an Affiliate of the Operator and the provisions
of this Clause 2 shall extend and apply to employees of such
Affiliate as though they were employees of the Operator.
(g) Where the Operator's employees geologists or consultants are
not engaged full time in the service of the Joint Venture
salaries wages or fees and any other costs in respect thereof
charged pursuant to this Clause shall be in proportion to the
time devoted to the service of the Joint Venture.
3. EMPLOYEE BENEFITS
The Operator's current cost of established plans for group life
insurance hospitalisation pension retirement stock purchase bonus and
other benefit plans of a like nature for its employees shall be
applicable to the Operator's labor cost provided that where an employee
is not engaged full time on the Concession or the Joint Facilities or
part thereof a pro-rata proportion thereof only shall be charged.
4. MATERIAL
The material equipment and supplies purchased or furnished by the
Operator for the Joint Account. So far as it is reasonably practical
and consistent with efficient and economical operation only such
material shall be purchased for or transferred to the Concession or the
Joint Facilities or part thereof as may be required for immediate use
and the accumulation of surplus stocks shall be avoided.
5. TRANSPORTATION
Transportation of employees consultants equipment material and supplies
necessary for Work subject to the following limitations:-
(a) If material is moved to the Concession or the Joint Facilities
or part thereof from the vendor's or from the Operator's
warehouse or other place no charge shall be made to the Joint
Account for a distance greater than the distance from the
nearest reliable supply store or railway receiving point where
such material is available except with the approval of the
Operating Committee.
(b) If surplus material is moved to the Operator's warehouse or
other storage point no charge shall be made to the Joint
Account for a distance greater than the distance from the
nearest reliable supply store or railway receiving point
except with the approval of the Operating Committee.
6. SERVICE
(a) Outside services:
The cost of contract services and utilities procured from
outside sources.
(b) Use of Operator's equipment and facilities as provided in
Clause 5 of Section 3 entitled "Operator's exclusively owned
facilities".
7. DAMAGES AND LOSSES TO CONCESSION AND EQUIPMENT
All costs or expenses necessary to replace or repair damages or losses
to any of the Joint Facilities not recovered by insurance or not borne
by the Operator or a Non-Operator pursuant to the Agreement. The
Operator shall furnish to the Non-Operators written notice of damages
or losses incurred as soon as practicable after report of the same has
been received by the Operator.
8. LITIGATION EXPENSE
All costs and expenses of litigation and arbitration or legal services
otherwise necessary or expedient for the protection of the Concession
and the Joint Facilities including legal fees and expenses as
hereinafter provided together with the amount of all judgments and
awards obtained against the parties or any of them on account of Work
and actual expenses incurred by any Party or Parties hereto in securing
evidence for the purpose of defending against any action or claim
prosecuted against the Parties or the subject matter of the Agreement.
(a) If all the Parties shall so agree actions or claims affecting
all the Parties may be handled by the legal staff of one or
more of the Parties; and a charge commensurate with cost of
providing and furnishing such services rendered may be
rendered for the Joint Account but no such charge may be made
until approved by the legal advisers for the respective
Parties.
(b) Fees and expenses of legal advisers not on the legal staff of
one or more of the Parties shall not be charged for the Joint
Account unless authorised by the Operating Committee which
authorisation shall not be unreasonably withheld.
9. TAXES
All taxes of every kind and nature (except taxes measured by the income
of the Parties and charges measured by a Party's share of Petroleum
produced from the Concession or Petroleum Products) assessed or levied
upon or in connection with the Concession or the Joint Facilities, the
production therefrom or the operation thereof, and which taxes have
been paid by the Operator for the benefit of the Parties.
10. INSURANCE AND CLAIMS
(a) Premiums paid for insurance required to be carried for the
benefit of the Parties together with all expenditures incurred
and paid in settlement of any and all losses claims damages
judgments and other expenses including legal services not
recovered from insurance carrier.
(b) If no insurance is required to be carried all the actual
expenditures incurred and paid by the Operator in settlement
of any and all losses claims damages judgments and any other
expenses including legal services shall be charged to the
Joint Account.
11. FIELD OFFICE CAMP EXPENSE
A pro rata portion of the salaries and expenses of the Operator's
supervisory personnel and other employees (serving the Concession or
the Joint Facilities and other properties in the same operating area)
whose time is not allocated directly to the Concession or the Joint
Facilities, and a pro rata portion of the cost of maintaining and
operating a field office and necessary sub-offices (if any) maintained
for the convenience of the above described office and all necessary
camps including housing facilities for employees (if required used in
the conduct of the operations on the Concession or the Joint Facilities
and other properties operated in the same locality). The expense of,
less any revenue from, these facilities shall be inclusive of
depreciation on the investment. Such charges shall be apportioned to
all properties served on some equitable basis consistent with the
Operator's accounting practice. If the facilities contemplated by this
Clause shall serve the Concession or the Joint Facilities only, then
all costs will be charged direct to the Joint Account.
12. ADMINISTRATIVE OVERHEAD
All indirect costs including management and administrative overhead
(whether in Australia or elsewhere) not included in provisions of
Section 2 hereof other than this Clause 12 shall be charged as a
percentage of costs in accordance with the following:-
(i) for each well drilled, 5% of the first One Million Dollars
expended thereon and 2% of all moneys thereafter expended
thereon;
(ii) for geological geophysical and other exploration or appraisal
or activity or operations (not being well drilling) 5% of all
moneys expended thereon;
(iii) for production facilities and pipelines:-
(a) with respective capital budgets not exceeding
$5,000,000.00 5% of the first One Million Dollars and
2% of all costs thereafter incurred while carrying
out an approved programme on such activities;
(b) with respective capital budgets in excess of
$5,000,000.00, such amounts or percentages of costs
as may be proposed by the Operator and approved by
the Operating Committee;
(iv) for all activity or operations for the production treatment
and delivery of petroleum 5% of all costs incurred therein;
(v) where the aggregate of the charges made pursuant to
sub-paragraphs (i) and (ii) hereof is less than $1,000.00 in
any month such additional amount as is necessary to bring the
aggregate charges for such month to $1,000.00.
The said amounts of $5,000,000.00 and $1,000.00 referred to in
sub-paragraphs (iii) and (v) hereof shall be increased for each year of
operations beginning with the year commencing on 1st January, 1986 in
proportion to the rise (if any) in the All Groups Consumer Price Index
for the City of Brisbane for the immediately preceding quarter ending
on the 31st day of December over the same index for the quarter ending
on the 31st day of December, 1984.
13. OPERATOR'S FULLY OWNED WAREHOUSE OPERATING AND MAINTENANCE EXPENSE
Any charges for the Operator's fully owned warehouse operating and
maintenance expenses are to be approved by the Operating Committee.
14. OTHER EXPENDITURES
Any expenditure, other than expenditures which are covered and dealt
with by the foregoing provisions of this Section 2, incurred by the
Operator for the necessary and proper development, maintenance, and
operation of the Concession.
3. BASIS OF CHARGES FOR THE JOINT ACCOUNT
1. PURCHASES
Material and equipment purchased and service procured shall be charged
at the price paid by the Operator after deduction of all subsidies
rebates commissions or discounts actually received.
2. MATERIAL FURNISHED BY THE OPERATOR
Material required for Work shall be purchased for direct charge for the
Joint Account whenever practicable, except that the Operator may
furnish such material from the Operator's stocks under the following
conditions:-
(a) New Material (Condition "A").
(i) New material transferred from the Operator's
warehouse or other properties shall be priced f.o.b.
the nearest reputable supply store or railway
receiving point, where such material is available, at
current replacement cost of the same kind of
material. This will include material such as tanks,
pumping units, sucker rods, engines, and other major
equipment. Tubular goods; two inch (2") and over,
shall be priced on car-load basis effective at date
of transfer and f.o.b. railway receiving point
nearest the Concession, regardless of quantity
transferred.
(ii) Other material shall be priced on basis of a
reputable supply company's preferential price list
effective at date of transfer and f.o.b. the store or
railway receiving point nearest the joint account
operation where such material is available.
(iii) Cash discount shall not be allowed.
(b) Used material (Conditions "B" and "C").
(i) Material which is in sound and serviceable condition
and is suitable for re-use without reconditioning
shall be classed as Condition "B" and priced at
seventy-five percent (75%) of new price.
(ii) Material which cannot be classified as Condition "B"
but which -
(a) after reconditioning will be further
serviceable for original function as good
secondhand material (Condition "B") or
(b) is serviceable for original function
but substantially not suitable for
reconditioning,
shall be classed as Condition "C" and priced at fifty
percent (50%) of new price.
(iii) Material which cannot be classified as Condition "B"
or Condition "C" shall be priced at a value
commensurate with its use.
(iv) Tanks, buildings, and other equipment involving
erection costs shall be charged at applicable
percentage of knocked down new price.
3. PREMIUM PRICES
Whenever materials and equipment are not readily obtainable at the
customary supply point and at prices specified in Clauses 1 and 2 of
this Section 3, because of national emergencies, strikes or other
unusual causes over which the Operator has no control the Operator may
charge the Parties for the required materials on the basis of the
Operator's direct cost and expense incurred in procuring such
materials, in making it suitable for use, and in moving it to the
location, provided, however, that notice in writing is furnished to the
Non-Operators of the proposed charge prior to debiting the
Non-Operators for the material and/or equipment acquired pursuant to
this provision, whereupon any Non-Operator shall have the right by so
electing and notifying the Operator within ten (10) days after
receiving notice from the Operator, to furnish in kind, or in tonnage
as the Parties may agree, at the location nearest railway receiving
point, or the Operator's storage point within a comparable distance,
all or part of his share of material and/or equipment suitable for use
and acceptable to the Operator.
Transportation costs on any such material furnished by the
Non-Operators, at any point other than at the location, shall be borne
by such Non-Operators. If, pursuant to the provision of this Clause,
and the Non-Operators furnish material and/or equipment in kind the
Operator shall make appropriate credits therefor to the account of the
said Non-Operators.
4. WARRANTY OF MATERIAL FURNISHED BY THE OPERATOR
The Operator does not warrant the material furnished beyond the
dealer's or the manufacturer's warranty or guarantee and the Operator
will hold the benefit of any such warranty or guarantee for the
Parties; and in case of defective material, credit shall not be passed
until adjustment has been received by the Operator from the
manufacturers or their agents.
5. THE OPERATOR'S EXCLUSIVELY OWNED FACILITIES
The following rates shall apply to service rendered by facilities owned
exclusively by the Operator:-
(a) Water, fuel, power, compressor and other auxiliary services at
rates commensurate with cost of providing and furnishing such
service to the Concession or the Joint Facilities but not
exceeding rates currently prevailing in the field where the
Concession or the Joint Facilities is or are located.
(b) Automotive equipment at rates commensurate with cost of
ownership and operation. Such rates should generally be in
line with the schedule of rates adopted by recognised
organisations as recommended uniform charges for the Joint
Account and revised from time to time. Automotive rates shall
include cost of oil, gas, repairs, insurance and other
operating expense and depreciation; and charges shall be based
on use in actual service on, or in connection with, operations
on the Concession or the Joint Facilities. Truck and tractor
rates may include wages and expenses of the driver.
(c) A fair rate shall be charged for the use of drilling and
cleaning out tools and any other items of the Operator's fully
owned machinery or equipment which shall be ample to cover
maintenance, repairs, depreciation, and the service furnished
the Concession or the Joint Facilities; provided that such
charges shall not exceed those currently prevailing in the
field where the Concession or the Joint Facilities is or are
located. Pulling units shall be charged at hourly rates
commensurate with the cost of ownership and operation, which
shall include repairs and maintenance, operating supplies,
insurance, depreciation and taxes. Pulling unit rates may
include wages and expenses of the Operator.
(d) A fair rate shall be charged for laboratory services performed
by the Operator for the benefit of the Parties, such as gas,
water core, and any other analyses and tests; provided such
charges shall not exceed those currently prevailing if
performed by outside service laboratories.
(e) Whenever requested, the Operator shall inform the Operating
Committee in advance of the rates it proposes to charge.
(f) Rates shall be revised and adjusted from time to time when
found to be either excessive or insufficient.
4. DISPOSAL OF LEASE EQUIPMENT AND MATERIAL
The operator shall be under no obligation to purchase the interest of the
Non-Operators in surplus new or secondhand material. The disposition of major
items of surplus material, such as derricks, tanks, engines, pumping units, and
tubular goods, shall be subject to approval of the Operating Committee; provided
the Operator shall have the right to dispose of normal accumulations of junk and
scrap material either by transfer or sale from the Concession or the Joint
Facilities. The nett proceeds of any disposal of items owned by the Joint
Account shall be credited to the Joint Account
1. MATERIAL PURCHASED BY THE OPERATOR OR THE NON-OPERATORS
Material purchased by either the Operator or any Non-Operator shall be
credited by the Operator to the Joint Account for the month in which
the material is removed by the purchaser.
2. DIVISION IN KIND
Division of material in kind, if made between the Operator and the
Non-Operators shall be in proportion to their respective interests in
such material. Each Party will thereupon be charged individually with
the value of the material received or receivable by each Party, and the
corresponding credits will be made by the Operator to the Joint
Account. Such credits shall appear in the monthly statement of
operations.
3. SALES TO OUTSIDERS
Sales to outsiders of material from the Concession or the Joint
Facilities shall be credited by the Operator to the Joint Account of
the net amount collected by the Operator from the purchaser. Any claims
by the purchaser for defective material or otherwise shall be charged
back for the Joint Account if and when paid by the Operator.
5. BASIS OF PRICING MATERIAL TRANSFERRED
Material purchased by either the Operator or any Non-Operator or divided in
kind, unless otherwise agreed, shall be valued on the following basis.
1. NEW PRICE DEFINED
New price as used in the following clauses shall have the same meaning
and application as that used above in Section 3 "Basis of charges for
the Joint Account."
2. NEW MATERIAL
New materials (Condition "A"), being new material procured for the
Joint Account but never used thereon at one hundred percent (100%) of
current new price (plus sales tax, if any).
3. GOOD USED MATERIAL
Good used material (Condition "B"), being used material in sound and
serviceable condition suitable for re-use without reconditioning:-
(a) At seventy-five percent (75%) of current new price if material
was charged for the Joint Account as new, or
(b) At sixty-five percent (65%) of current new price if material
was originally charged for the Joint Account as secondhand at
seventy-five percent (75%) of the new price.
4. OTHER USED MATERIAL
Used material (Condition "C") at fifty percent (50%) of current new
price, being used material which:-
(a) After reconditioning will be further serviceable for original
function as good secondhand material (Condition "B"), or
(b) Is serviceable for original function but substantially not
suitable for reconditioning.
5. BAD ORDER MATERIAL
Material and equipment (Condition "D") which is no longer usable for
its original purpose without excessive repair cost but is further
usable for some other purpose shall be priced on a basis comparable
with that of items normally used for that purpose.
6. JUNK
Junk (Condition "E"), being obsolete and scrap material at prevailing
prices.
7. TEMPORARILY USED MATERIAL
When the use of material is temporary and its service does not justify
the reduction in price as provided in Clause 3(b) above, such material
shall be priced on a basis that will leave a net charge for the Joint
Account consistent with the value of the service rendered.
6. INVENTORIES
1. PERIODIC INVENTORIES, NOTICE AND REPRESENTATION
At least annually all equipment plant machinery and supplies forming
part of the Joint Facilities inventories shall be taken by the
Operator, subject to the Agreement which shall include all such
material as is ordinarily considered controllable by Operators of oil
and gas properties. Written notice of intention to take inventory shall
be given by the Operator at least thirty (30) days before any inventory
is to begin so that the Non-Operators may be represented when any
inventory is taken.
Failure of any Non-Operator to be represented at an inventory shall
bind such Non-Operator to accept the inventory taken by the Operator,
who shall in that event furnish such Non-Operator with a copy thereof.
2. RECONCILIATION AND ADJUSTMENT OF INVENTORIES
A reconciliation of inventory shall be made by the Operator and
approved by the Operating Committee. Inventory adjustments shall be
made by the Operator for averages and shortages, but the Operator shall
be held accountable to the Non-Operators only for shortages due to
negligence on its part.
3. SPECIAL INVENTORIES
Special inventories may be taken at the expense of a Non-Operator
whenever there is any sale or change of interest in the Concession and
the Joint Facilities. In such cases, both the seller and the purchaser
shall be represented and shall be governed by the inventory so taken,
which shall be taken at the cost of the purchaser.
"B"
CLAUSE 17 CROSS CHARGE
(Clause 17.5)
THIS DEED is made the _____________ day of ______________ 198___ Between
MAGELLAN PETROLEUM (N.T.) PTY. LTD. a Company incorporated in the State of
Queensland and having its registered office in the Northern Territory at 5th
Floor, City Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ of the First Part
C.D. RESOURCES PTY. LTD. a Company incorporated in the State of South Australia
and having its registered office in the Northern Territory at C/- Coopers &
▇▇▇▇▇▇▇, Civic Centre, ▇▇▇▇▇ ▇▇▇▇ Avenue, Darwin aforesaid of the Second Part
FARM OUT DRILLERS NL a Company incorporated in the State of New South Wales and
having its registered office in the Northern Territory at ▇/- ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ aforesaid of the
Third Part
CANSO RESOURCES LIMITED a Company incorporated in the State of New South Wales
and having its registered office in the Northern Territory at C/- ▇▇▇▇▇▇▇
Nominees Pty. Ltd., First Floor, 19 The Mall, Darwin aforesaid of the Fourth
Part
INTERNATIONAL OIL PROPRIETARY an unlimited Company incorporated in the State of
Victoria and having its registered office in the Northern Territory at 5th
Floor, City Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ aforesaid of the Fifth
Part
PANCONTINENTAL PETROLEUM LTD a Company incorporated in the State of Queensland
and having its registered office in the Northern Territory at C/- ▇▇▇▇▇▇▇
Nominees Pty. Ltd., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ aforesaid of the Sixth Part
IEDC AUSTRALIA PTY. LIMITED a Company incorporated in the State of New South
Wales and having its registered office in the Northern Territory at C/- W. & B.
Pty. Ltd., First Floor, The Vic, Lot ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ aforesaid of the
Seventh Part
AMADEUS OIL NL a Company incorporated in the State of Queensland and having its
registered office in the Northern Territory at 5th Floor, City Mutual Building,
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ aforesaid of the Eighth Part.
AND
MAGELLAN PETROLEUM (N.T.) PTY. LTD. aforesaid in its capacity as Operator
under the Palm Valley Operating Agreement as hereinafter defined (hereinafter
called "the Operator") of the Ninth Part
W H E R E A S:
A. Pursuant to an agreement made the ______________ day of ______________
1985 between the Parties hereto (hereinafter called "the Palm Valley
Operating Agreement"), the Parties hereto provided for their respective
rights and obligations with respect to Petroleum Lease No. 3 granted
under the Petroleum (Prospecting & Mining) Act 1954-1982 of the
Northern Territory of Australia.
B. Certain payments are to be made from time to time by each of the
Participants pursuant to the Joint Venture Documents.
C. The Participants have agreed to enter into this Deed for the purpose of
securing their respective obligations to make the payments referred to
in Recital B hereof.
NOW THIS DEED WITNESSES that the Participants hereby covenant and agree as
follows:-
1. In this Deed, the following terms shall have the following meanings: -
1.1 "Concession" has the meaning given to it by Clause 1.1(v) of the Palm
Valley Operating Agreement.
1.2 "Defaulting Participant" means a Participant which is in default in
the payment of any Indebtedness.
1.3 "Due Date" means the date on which any sum becomes properly due and
payable by a Participant pursuant to the terms of any of the Joint
Venture Documents.
1.4 "Indebtedness" means a payment which a Participant is liable to make
under any of the Joint Venture Documents and which remains unpaid on
its Due Date.
1.5 "Joint Venture Documents" has the meaning given to it by Clause 1.1(xi)
of the Palm Valley Operating Agreement.
1.6 "Joint Facilities" has the meaning given to it by Clause 1.1(xii) of
the Palm Valley Operating Agreement.
1.7 "Operator" means any person from time to time holding the appointment
of Operator under the Palm Valley Operating Agreement.
1.8 "Participating Interest" with respect to a Participant means its
Working Interest, its share of Petroleum recovered from the Concession,
its interest in any present or future Sales Contracts and the proceeds
of sale thereunder.
1.9 "Participants" means the Parties to this Deed of the First to the
Eighth Parts (inclusive) and their respective successors and assigns
who execute the Deeds of Assumption or Covenant provided for in Clauses
19.2(b)(ii) or Clause 19.4.2.(a)(i) of the Palm Valley Operating
Agreement.
1.10 "Petroleum" has the meaning given to it in the Palm Valley Operating
Agreement.
1.11 "Sales Contracts" means any contract for the sale of products from the
Concession in which a Participant is the seller or one of the sellers
thereunder and whether or not executed before or after the Palm Valley
Operating Agreement or this Deed.
1.12 "Special Charge" means a charge held by any Special Chargee.
1.13 "Special Chargee" means any chargee who holds a charge from a
Participant over its Working Interest, which charge complies
substantially with Clause 19.4 of the Palm Valley Operating Agreement
and to the extent it charges the Working Interest of that Participant
ranks in point of security immediately after this Deed and who has
given notice of the creation of such charge to all other Participants
within 21 days of the date of this Deed or from the date of the
creation of such charge, whichever is the later.
1.14 In this Deed, unless the context otherwise requires, the singular
includes the plural and vice versa.
2. For the purpose of securing the rights of the Participants and Operator
with respect to the payment of the Indebtedness of a Defaulting Participant,
each Participant:-
(a) hereby covenants with each of the other Participants and the Operator
to pay all Indebtedness; and
(b) for the purposes of securing such covenant hereby by way of first
charge charges as beneficial owner its Participating Interest in favour
of each of the other Participants and the Operator jointly. Such charge
shall be a first floating charge except that as regards the present and
future interest of such Participant in:-
(i) the Concession;
(ii) any Sales Contracts to which it is a party;
(iii) any freehold and leasehold land included amongst the Joint
Facilities; and
(iv) any single item of plant or equipment included within the
Joint Facilities the current replacement cost whereof is in
excess of $50,000;
such charge shall be a first fixed charge. Such first floating charge
and first fixed charge shall rank ahead of and in priority to any and
all other mortgages, charges, security interests or other encumbrances
given, entered into or incurred by such Participant over or in respect
of its Participating Interest or any part thereof. Such Participant
hereby covenants with each of the other Participants and the Operator
that any such other mortgage, charge, security interest or other
encumbrance which may be given or entered into by it shall acknowledge
the priority of and be subject to the charge in favour of the other
Participants and the Operator hereby created and shall contain a
provision that any such other mortgage, charge, security interest or
other encumbrance is thereby postponed to the rights of each of the
other Participants and the Operator hereunder.
3. If any Indebtedness of a Defaulting Participant shall remain unpaid at
the expiration of:-
(a) fifteen (15) days from the Due Date of that Indebtedness; and
(b) twenty-one (21) days from the date written notice has been given by any
Non-Defaulting Participant or the Operator to any Special Chargee who
has the benefit of any outstanding Special Charges from the Defaulting
Participant notifying that Special Chargee of the Defaulting
Participant's Indebtedness,
then, unless and until such Indebtedness is paid in full, any non-defaulting
Participant, or the Operator as agent for the Non-Defaulting Participants, may
exercise each and every power and remedy provided herein to enforce the charge
herein granted by the Defaulting Participant and use and apply any moneys
realised from the exercise of any such power or remedy as hereinafter provided.
Notwithstanding the foregoing, the Operator shall not take any such
action unless, but shall take such action if, it is directed to do so by
Non-Defaulting Participants whose Working Interests aggregate a simple majority
of the total Working Interests of the Non-Defaulting Participants.
4. The floating charge created by this Deed shall not hinder any sale or
other dealings by any Participant or the Operator in the ordinary course of or
for the purpose of carrying on the business of the Joint Venture or with the
property and assets charged thereby prior to the commencement of proceedings to
enforce the charge. The property and assets charged by this Deed as a fixed
charge shall not be sold or otherwise disposed of prior to the commencement of
proceedings to enforce the charge except as permitted under the Palm Valley
Operating Agreement. None of the property or assets charged by this Deed,
whether by way of floating charge or fixed charge, shall be subject to any
charge mortgage pledge lien security interest or other encumbrance ranking
either in priority to or pari passu with the charge created by this Deed, except
as provided in Clause 6(b) of this Deed.
5. The Operator or any other Participant entitled pursuant to Clause 3
hereof to take action to enforce the said charge may at any time after its
entitlement to enforce the said charge arises appoint a Receiver or a Receiver
and Manager (hereinafter referred to as "the Receiver") of the property and
assets of the Defaulting Participant charged hereunder (hereinafter called "the
Charged Property") and may in like manner from time to time remove any Receiver
so appointed and appoint another in his stead. Any such appointment or removal
shall be in writing. A Receiver so appointed shall be deemed the agent of the
Defaulting Participant which shall be solely responsible for his acts and
defaults and for his remuneration.
6. The Receiver or Operator or any other party to this Deed entitled
pursuant to Clause 3 hereof to take action to enforce the said charge
(hereinafter referred to as "the Enforcing Party" which expression shall include
the Receiver) may exercise any or all of the following powers, authorities and
discretions (which shall be interpreted separately and not be reference to one
another) in addition to all other powers, authorities and discretions conferred
on him by law and subject always to the terms and conditions of the Palm Valley
Operating Agreement:-
(a) to take possession of, collect and get in the Charged Property and for
that purpose to take any proceedings in the name of the Defaulting
Participant or otherwise as seem expedient and to give effectual
receipts accordingly for the same;
(b) to cause the Defaulting Participant to continue to be associated with
the other Participants pursuant to the Palm Valley Operating Agreement
as a party thereto and to fulfil its several obligations thereunder or
under the Sales Contracts or concur in the continuance of the same and
for that purpose to use any of the funds of such Participant and for
that purpose to raise and use money on the Charged Property in priority
to this charge;
(c) to direct any buyer under a Sales Contract to which the Defaulting
Participant is a party to pay direct to the Enforcing Party any
proceeds of sale due to that Participant;
(d) to receive store and/or sell what otherwise would have been the
Defaulting Participant's share of products derived from or produced
from the Concession (provided such products are not the subject of a
Sales Contract) on terms and conditions similar to those which may have
been obtained by any other Participant and the exercise of such powers
by the Receiver shall not be prevented or hindered by the terms hereof;
(e) to let or lease any or all of the Charged Property;
(f) to sell or concur in selling the Charged Property or any part thereof
or any interest therein either at public auction or by private treaty
and either for a lump sum or a sum payable by instalments or for a sum
on account and a mortgage or charge for the balance, in each case after
giving to the Defaulting Participant and each Special Chargee at least
seven (7) days' notice of his intention to sell and to carry any such
sale into effect by conveying and transferring in the name and on
behalf of the Defaulting Participant or otherwise;
(g) to execute all such contracts, deeds, transfers and other assurances in
the name and on behalf of the Defaulting Participant for the purpose of
carrying into effect any of the powers and authorities conferred on the
Enforcing Party as he may see fit;
(h) to make any arrangement or compromise which he thinks expedient; and
(i) generally to do or cause to be done such acts and things with respect
to the Charged Property (without being responsible for any loss or
damage which happens thereby) as he may think necessary and which could
have been done or caused to be done by any Receiver if he had the
absolute ownership of the Charged Property.
Any person paying money to or otherwise dealing with the Enforcing Party shall
not be concerned to enquire whether any event has occurred to authorise the
Enforcing Party to act and the receipt of any such Enforcing Party for any
moneys arising under any of the powers aforesaid shall be a sufficient discharge
without obliging the persons paying the same to see to the application thereof.
7. The proceeds realised from the exercise of the powers referred to in
Clause 6 hereof for the sale thereof shall be applied:-
FIRSTLY: in payment of any obligations having priority to the charge
hereby created;
SECONDLY: in payment of all costs, charges and expenses of and
incidental to the appointment of the Receiver and the exercise
by the Enforcing Party of all or any of the powers aforesaid
including the reasonable remuneration of the Enforcing Party;
THIRDLY: to the Operator the amount of any Indebtedness to the extent
that the same has not been paid by other Participants in
accordance with the provisions of Clause 17.3 of the Palm
Valley Operating Agreement, and to the Participants who have
paid their full proportionate share of any Indebtedness on
behalf of the Defaulting Participant in accordance with the
provisions of Clause 17.3 of the Palm Valley Operating
Agreement such proportionate share of any Indebtedness so paid
and not otherwise recovered;
FOURTHLY: in payment of any outstanding obligation; or liability of the
Defaulting Participant under any of the Joint Venture
Documents; and then
FIFTHLY: all amounts (if any) recovered in excess of the sum required
to discharge the Indebtedness shall subject to proper claims
enforceable under other encumbrances be paid to the Defaulting
Participant.
Save as aforesaid neither the Non-Defaulting Participants nor the Operator
(unless it be a Participant in default) shall be under any liability to the
Enforcing Party for his remuneration costs, charges or expenses or otherwise.
8. Claims arising from the priority described within the paragraph
"THIRDLY" of Clause 7 hereof shall as between such claims rank pari passu with
the result that if the amount realised in any such action shall be insufficient
to discharge all Indebtedness described in such clause the amount available
therefor shall be apportioned among the claimants in proportion to their
respective claims.
9. The charge created by this Deed shall be deemed a running and
continuing security notwithstanding any settlement on account of particular
amounts or any other matter or thing whatsoever and shall remain in full force
until a final discharge thereof has been executed by the Operator and the
Non-Defaulting Participants.
10. Insofar as this charge pertains to the Participating Interest of the
Defaulting Participant enforcement hereof shall also be subject to the
provisions of Clauses 19.4.2(a), 19.4.2(b), 19.4.2(c), 18 and 28.10 of the Palm
Valley Operating Agreement and in the event of any conflict between this Deed
and a Deed in the form of Annexure "C" to the Palm Valley Operating Agreement on
the one hand and the said Clauses of the Palm Valley Operating Agreement on the
other hand the latter shall prevail.
11. Each Participant shall from time to time execute and deliver such
further charges and other documents (including without limiting the generality
of the foregoing, mortgages or charges collateral hereto of its interest in all
or some of the titles constituting the Concession in a form registrable as a
legal mortgage or charge under the laws pursuant to which such titles are
granted) as may be reasonably requested by any chargee in order to confirm or
effectuate the intent and purposes of this Deed. Each of the Parties granting a
charge hereunder shall forthwith duly register or record this Deed and shall
file or record such other notice or documents relating thereto in such
jurisdictions as may be required by law to perfect the security hereby given.
12. Each Participant and the Operator hereby covenants with each of the
other Participants that it has full power to enter into this Deed and to charge
the Charged Property as provided herein.
13. Each Participant hereby covenants with each of the other Participants
and the Operator to execute and deliver all such assurances, deeds and
instruments and do all such acts and things whatsoever as may be necessary to
release and discharge the charge hereby created to enable a Participant to sell
and transfer its Participating Interest where such sale and transfer is in
accordance with the Palm valley Operating Agreement and to duly register, file
or record all such notices or documents relating thereto in such jurisdictions
as may be required by law to perfect such release, discharge or substitution as
aforesaid.
14. Each and every power and remedy herein specifically given to a
non-defaulting Participant or the Operator shall be in addition to every other
power and remedy now or hereafter existing at law or in equity, and each and
every power and remedy may be exercised from time to time and simultaneously as
often and in such order as may be deemed expedient. All such powers and remedies
shall be cumulative, and the exercise of one shall not be deemed a waiver of the
right to exercise any other power or remedy and no renewal or extension of any
Indebtedness shall impair any such power or remedy or shall be construed to be a
waiver of any default or an acquiescence therein.
15. It is acknowledged and agreed that no covenant or charge is given or
created under Clause 2 of this Deed by any subsidiary of Australian Industry
Development Corporation which becomes a Participant, although such subsidiary on
becoming a Participant shall have the benefit of this Deed and as a
non-defaulting Participant shall be entitled to enforce the rights and remedies
of a Non-Defaulting Participant hereunder.
16. All notices required to be given by or pursuant to this Deed shall
unless otherwise provided in this Deed be given in accordance with the
provisions of Clause 27 of the Palm Valley Operating Agreement.
17. This Deed shall take effect as of the date first above set forth when
one or more counterparts thereof shall have been signed by each of the Parties
hereto and such signed counterparts shall have been delivered by each of such
Parties to each of the other such Parties. Upon termination of the Palm Valley
Operating Agreement each of the Parties to whom a charge is granted hereunder
shall promptly execute and deliver a release and discharge of such charge
provided that there be in fact no Indebtedness then owing under such charge.
18. This Deed shall be governed by and be construed in accordance with the
laws of the Northern Territory of Australia and for the purposes of this Deed
the Parties hereby consent and submit to the jurisdiction of the Courts of such
Territory.
"C"
FORM OF PRIORITY DEED
(Clause 19.4)
THIS DEED is made the _____________ day of ______________ 198___ between
MAGELLAN PETROLEUM (N.T.) PTY. LTD. a Company incorporated in the State of
Queensland and having its registered office in the Northern Territory at C/-
Veritatem Nominees (N.T.) Pty. Ltd., 5th Floor, City Mutual Building, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "Magellan") of the First Part
C.D. RESOURCES PTY. LTD. a Company incorporated in the State of South Australia
and having its registered office in the Northern Territory at C/- Coopers &
▇▇▇▇▇▇▇, Civic Centre, ▇▇▇▇▇ ▇▇▇▇ Avenue, Darwin aforesaid (hereinafter called
"CDR") of the Second Part
FARMOUT DRILLERS NL a Company incorporated in the Australian Capital Territory
and having its registered office in the Northern Territory at ▇/- ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
aforesaid (hereinafter called "Farmout") of the Third Part
CANSO RESOURCES LIMITED a Company incorporated in the State of New South Wales
and having its registered office in the Northern Territory at C/- ▇▇▇▇▇▇▇
Nominees Pty. Ltd., First Floor, 19 The Mall, Darwin aforesaid (hereinafter
called "Canso") of the Fourth Part
INTERNATIONAL OIL PROPRIETARY an unlimited Company incorporated in the State of
Victoria and having its registered office in the Northern Territory at 5th
Floor, City Mutual Building, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ aforesaid (hereinafter
called "International") of the Fifth Part
PANCONTINENTAL PETROLEUM LTD a Company incorporated in the State of Queensland
and having its registered office in the Northern Territory at C/- ▇▇▇▇▇▇▇
Nominees Pty. Ltd., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "Pancontinental") of
the Sixth Part
INTERNATIONAL ENERGY DEVELOPMENT CORPORATION OF AUSTRALIA PTY LTD a Company
incorporated in the State of New South Wales and having its registered office in
the Northern Territory at C/- W. & B. Pty. Ltd., First Floor, The Vic, Lot ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "IEDC") of the Seventh Part
and
AMADEUS OIL NL a Company incorporated in the State of Queensland and having its
registered office in the Northern Territory at 5th Floor, City Mutual Building,
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ (hereinafter called "Amadeus") of the Eighth Part
AND
[Here insert Chargee referred to in Clause 19.4 of Palm Valley Operating
Agreement] (hereinafter called "the Special Lender") of the Ninth Part
W H E R E A S:
A. Pursuant to an agreement made the _______________ day of ______________
1984 between the parties of the first to eighth parts inclusive
(hereinafter called "the Palm Valley Operating Agreement"), the parties
thereto provided for their respective rights and obligations with
respect to Petroleum Lease No. 3 granted under the Petroleum
(Prospecting & Mining) Act 1954-1982 of the Northern Territory of
Australia.
B. The Palm Valley Operating Agreement contains provisions relating to the
form and substance of any charge to be given by a Participant over its
Participating Interest and in particular specifies that such a charge
will be subject to a Clause 17 Cross Charge and requires that any
Chargee (referred to in Clause 19.4 of the Palm Valley Operating
Agreement) shall contemporaneously with the creation of any charge over
the Participating Interest of a Participant execute and deliver to each
of the Participants a Deed substantially in the form of this Deed.
C. Each of the parties of the first to eighth parts hereof have executed a
Clause 17 Cross Charge in favour of all of the other parties.
D. [Here insert Chargor referred to in Clause 19.4 of Palm Valley
Operating Agreement] (hereinafter referred to as "the Company")
proposes to charge in favour of the Special Lender the whole of its
Participating Interest.
NOW THIS DEED WITNESSES that the Parties hereby covenant and agree as follows:-
1. In this Deed the following terms shall have the following meanings:-
1.1 "Clause 17 Cross Charge" means any one or more of the charges to be
entered into by the parties to the Palm Valley Operating Agreement in
accordance with the provisions of Clause 17.5 thereof.
1.2 "Concession" has the meaning given to it by Clause 1.1(v) of the Palm
Valley Operating Agreement.
1.3 "Indebtedness" means any payment which the Company is liable to make
under any of the Joint Venture Documents (as defined in the Palm Valley
Operating Agreement) and which is not paid on the date on which it is
due.
1.4 "Joint Facilities" has the meaning given to it by Clause 1.1(xi) of the
Palm Valley Operating Agreement.
1.5 "Operator" has the meaning given to it by Clause 1.1(xiv) of the Palm
Valley Operating Agreement.
1.6 "Participant" means the parties hereto of the first to the eighth
parts.
1.7 "Participating Interest" shall mean the share or interest of the
Participant concerned in the Concession, the Joint Facilities, the
products derived from or produced from the Concession and whether or
not taken in kind, its rights and obligations under the Sales Contracts
(and any of them), and its rights and obligations under any other
agreements or instruments relative to or for the implementation of the
Palm Valley Operating Agreement.
1.8 "Project Charge" means any Clause 17 Cross Charge given by the Company.
1.9 "Project Chargee" means the Participants (including the Operator) from
time to time which have the benefit as Chargee under the Project
Charge.
1.10 "Sales Contracts" means any contract for the sale of products from the
Concession in which one or more of the Participants (including the
Operator) is a seller, and whether or not executed before or after the
Palm Valley Operating Agreement or this Deed.
1.11 "Special Charges" means [here insert details of charge referred to in
Clause 19.4 of the Palm Valley Operating Agreement] and any charge or
encumbrance granted by the Company to Special Lender over the whole or
any part of the Participating Interest of the Company as amended from
time to time and whether or not such charge or encumbrance also
includes any other property of the Company.
1.12 "Special Lender" means [here insert Chargee referred to in Clause 19.4
of the Palm Valley Operating Agreement] which includes its successors
and assigns.
1.13 In this Deed, unless the context otherwise requires, the singular shall
include the plural and vice versa.
2. The Special Lender hereby acknowledges to each of the Project Chargees
that as between the Project Chargees and the Special Lender:-
(a) the order of priorities in point of security shall be:-
First: the security constituted by the Project Charge; and
Secondly: the security constituted by the Special Charges,
and such priority shall extend at all times and for all purposes to
moneys expressed to be secured by such securities, whenever the
liability to pay such moneys arose and whether or not at any time such
liability was a present liability or a prospective liability (within
the meaning of those expressions for the purpose of the Companies ▇▇▇
▇▇▇▇ of the Northern Territory of Australia).
(b) the Special Charges shall be subject to all the rights and remedies of
the Project Chargees under the Palm Valley Operating Agreement and the
Project Charge.
NOTWITHSTANDING:
(i) the respective dates or order of execution or registration of
the Project Charge and the Special Charges;
(ii) anything contained in any of the Project Charge or the Special
Charges or the order in which any moneys secured by the said
documents or any of them are advanced or become payable; or
(iii) any other matter or thing whatsoever or any rule of law or
equity to the contrary.
3. As soon as it is aware of the same each Project Chargee shall give
written notice to the Special Lender of the incurrence of any Indebtedness by
the Company.
4. The Special Lender hereby covenants with each of the Project Chargees
that so long as the Company shall be a party to the Palm Valley Operating
Agreement:-
(a) the Special Charges are subject to all of the rights and remedies of
the Parties under the Palm Valley Operating Agreement and the Project
Charge;
(b) that a person exercising or enforcing any power of sale under the
Special Charge or conferred by law shall not sell a constituent part or
parts of the Company's Participating Interest but only the whole or a
fractional part of that Participating Interest, and that it shall be a
condition of that sale that the purchaser:-
(i) shall execute and deliver the Deeds of Assumption or Covenant
and a Clause 17 Cross Charge as required by Clause 19.2 of the
Palm valley Operating Agreement; and
(ii) shall forthwith after the completion of such assignment duly
register or record the Clause 17 Cross Charge in those
jurisdictions as may be required by law to perfect the
security thereby given;
(c) that neither the Special Lender nor any person claiming through or
under the Special Lender shall not seek to partition whether by order
of court or otherwise either of both of the Concession or the Joint
Facilities;
(d) that neither the Special Lender nor any person claiming through or
under the Special Lender shall not without the prior consent of all
Parties (other than the Company) waive, release, surrender or forfeit
the whole or any fractional or constituent part of the Participating
Interest so charged;
(e) that each of the Special Charges shall be subject to and shall rank for
all purposes after the Project Charge given by the Company.
5. The Special Lender hereby covenants with the Parties to execute and
deliver all such assurances, deeds and instruments and do all such acts and
things whatsoever as may be necessary to release and discharge or to substitute
by way of additional security (as appropriate) in respect to any fixed charge
created by any of the Special Charges over the present and future interest of
the Company in any items subject to a first fixed charge referred to in Clause
2(b) of each Clause 17 Cross Charge and to duly register, file or record all
such notices or documents relating thereto in such jurisdictions as may be
required by law to perfect such release, discharge or substitution as aforesaid.
6. Each of the Project Chargees covenants with the Special Lender that it
will not enforce or seek to enforce the Project Charge until twenty-one (21)
days after the Special Lender has received the notice referred to in Clause 3
thereof.
7. Each of the Project Chargees acknowledges that the Special Charges in
their form as at the date hereof comply with the Palm Valley Operating
Agreement.
8. The Special Lender covenants with the Project Chargees that it will not
assign or transfer or otherwise deal with any of its rights to the security
constituted by the Special Charges unless the assignment, transfer or dealing is
made expressly subject to the terms of this Deed and the assignee or transferee
binds itself to the satisfaction of each of the other Project Chargees and the
Special Lender in substantially the same manner as the assignor or transferor
under this Deed is bound.
9. Each of the Project Chargees covenants with each other and with the
Special Lender that it will not assign or transfer or otherwise deal with any of
its rights to the security constituted by the Project Charge unless the
assignment, transfer or dealing is made expressly subject to the terms of this
Deed and the assignee or transferee binds itself to the satisfaction of each of
the other Project Chargees and the Special Lender in substantially the same
manner as the assignor or transferor under this Deed is bound.
10. Each party hereby covenants with each of the other parties as a
separate covenant that for the purposes of this Deed it submits itself to the
jurisdiction of the courts of the Northern Territory of Australia.