1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarterly Period Ended December 31, 1996
or
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________to__________
Commission file number 0-21591
MASON OIL COMPANY, INC.
(Name of small business issuer as specified in its charter)
Utah 87-1099747
(State of Incorporation) (I.R.S. Employer Identification No.)
6337 Ravenwood Drive
Sarasota, Florida 34243
(Address of principal executive offices)
(941) 351-3102
(IssuerOs telephone number)
Check whether the issuer (1) filed all reports required to be filled
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Not applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:
February 15, 1997
There were 9,225,454 shares of the Issuers common stock at a par value of
$.01 per share, outstanding as of February 15, 1997
MASON OIL COMPANY, INC.
Balance Sheet
<TABLE>
<CAPTION>
December 31, June 30 ,
1996 1996
<S> <C> <C>
Assets
Current Assets
Cash 6,288 12,277
Accounts Receivable 47 47
Total Current Assets 6,335 12,324
Unapproved oil and gas
Properties - full cost of method 178,891 176,460
Other noncurrent assets
Organization costs 1,406 1,406
Deposits 23,700 23,700
25,106 25,106
Total Other Assets
Total 210,332 213,890
Liabilities and Stockholders'
(Deficit)
Current Liabilities
Accounts Payable 18,600 6,249
Total Current 18,600 6,249
Liabilities
Notes and advances payable to 242,641 207,988
stockholders
Stockholders' equity
Common Stock, $.001 par value,
50,000,000 shares authorized;
9,225,454 shares issued and 9,225 -
outstanding at December 31, 1996
Common stock, $1 par value, 50,000
shares authorized; 100 issued and
outstanding at September 30, 1996 - 100
Additional paid-in capital 2,500 900
Accumulated deficit (62,096) (1,116)
Foreign currency translation (538) (231)
adjustment
Total Stockholders' (50,909) (347)
equity
Total liabilities and stockholders' 210,332 213,890
deficit
</TABLE>
See notes to financial statements.
- 2 -
MASON OIL COMPANY, INC.
Condensed Statements of Operations
For the Three Months and Six Month Periods
Ended December 31, 1996
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
Dec. 31, 1996 Dec. 31, 1996
<S> <C> <C>
Costs and expenses
Selling, general and $ 44,679 $ 44,735
administrative
Total operating costs and 44,679 44,735
expenses
Other (income) expense
Interest income (19) (99)
Interest expense 4,159 5,546
Net income (loss) (48,819) (50,182)
Weighted average number of shares 9,225,454 9,225,454
outstanding
</TABLE>
See notes to financial statements.
- 3 -
MASON OIL COMPANY, INC.
Statement of Cash Flows
For the Three Month and Six Month Periods Ended December 31, 1996
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
Dec. 31, Dec. 31,
1996 1996
<S> <C> <C>
Cash flows used for operating activities
Net loss (48,819) (50,182)
Adjustments to reconcile net loss to net cash
used in operating activities
Accrued interest to related parties 4,159 5,546
Accounts payable 17,848 12,351
Net cash used for operating activities (26,812) (32,285)
Cash flows used by investing activities
Oil and gas exploration expenses - (2,431)
Net used for investing activities - (2,431)
Cash flows from financing activities
Advances from stockholders 29,107 29,107
Net cash flows from financing 29,107 29,107
Net effect of currency fluctuations on cash (299) (380)
Net increase (decrease) in cash 1,996 (5,589)
Beginning cash balances 4,292 12,277
Ending cash balances 6,288 6,288
</TABLE>
Supplemental non-cash flow disclosures
During the quarter ended December 31, 1996, a shareholder of the
Company forgave a note in the amount of $2,500 which was
recorded as additional paid-in-capital.
During the quarter ended December 31, 1996, IAN Holdings Limited
exchanged all 100 shares issued and outstanding for 6,000,000
newly issued unregistered shares of Mason Oil Company.
See notes to financial statements.
- 4 -
MASON OIL COMPANY, INC.
Notes to Financial Statements
Note 1 - Summary of Accounting Policies
The summary of the Company's significant accounting policies are
incorporated by reference to the Company's June 30, 1996 financial
statements filed with Form 8-K/A dated October 14, 1996.
The accompanying unaudited condensed financial statements reflect
all adjustments which, in the opinion of management, are necessary
for a fair presentation of the results of operations, financial
position and cash flows. The results of the interim period are not
necessarily indicative of the results for the full year.
Item 2 - Management's Discussion and Analysis or Plan of Operations
The Company: An Introduction
The Company is a Utah corporation, formed in 1980. Since 1981 and
until recently, the Company was dormant with no significant assets
or liabilities. Controlling interest was acquired in September 1996
by Paul B. Ingram and John L. Naylor. The Ingram-Naylor partnership
has sold its 100% working interest in two South Australian oil and
gas exploration licenses, known as Petroleum Exploration Licenses 61
and 63 ("PELs 61 and 63"), to the Company, subject to a 3% royalty
interest retained by the Ingram-Naylor partnership, in exchange for
six million shares of the Company's common stock. The PELs are held
by Hemley Exploration Pty. Ltd., an Australian corporation and
wholly-owned subsidiary of the Company.
The area covered by the PELs is roughly described as a portion of
the Eastern Officer Basin, consisting of 17,188 square kilometers
(4.2 million acres), situated approximately 200 miles south of Alice
Springs and approximately 700 miles north of Adelaide. Although the
location is remote from populated areas, a modern railway and a year-
round, sealed highway service the site, and provide access from the
site to a refinery at Alice Springs to the north, and a refinery and
deep water port at Port Augusta and Adelaide to the south. The
terrain is relatively flat, making access to rail and highway
uncomplicated. Due to the remoteness of the site, it is anticipated
that there will be minimal disturbance to human population, flora or
fauna. Climatic conditions typically allow operations 350 days of
the year.
Business History and Current Business Plan
Exploration Background
More than 2000 line kilometers of seismic surveys and 20 core drill
holes have been completed to date within the geographical area
covered by the licenses. Nineteen of the core holes were drilled by
COMALCO Aluminum Co. during exploration for the evaporite mineral
"trona". None of this drilling was done is an effort to discover
petroleum; however, nine of these holes encountered significant oil
bleeds and shows at depths within the Cambrian and Proterozoic aged
carbonate and sandstone formations.
The most recent phase of exploration commenced in 1993, when the
Australian Geologic Survey undertook the recording of 500 plus line
kilometers of six-fold, dynamite sourced seismic. This work was
followed in 1994 by a seismic survey, funded and managed by the
Ministry for Mines and Energy of South Australia, of 378 kilometers
of 120-fold, vibroseis sourced seismic data. This later survey
demonstrated the extent of overthrusting near the eastern margin of
the basin, and confirmed that a number of thrust fronts extend for
up to 100 kilometers, striking northeast-southwest. In addition to
the seismic data, an Aeromagnetic Survey was funded by the South
Australian government in 1993. The resulting data was made available
and considered in the Petroconsultants' Report, which is discussed
below.
The Petroconsultants Report
In April 1996, Paul Ingram and John Naylor engaged the firm of
Petroconsultants Australasia, Ltd. ("Petroconsultants") to compile a
report combining all of the known geologic and seismic data on the
area within the PELs (the "Report"). A copy of the Report may be
obtained from the Company upon request. The purpose of this Report
was to cross-check and upgrade the data in order to select highly
prospective drilling targets. Based on their analysis of the
existing data, Petroconsultants identified and mapped fourteen
structurally closed prospects within the area of the PELs. Three of
these prospects were classified as highly prospective and each is
located close to the highway and railroad. The Report described one
of these prospects, in part, as follows:
Prospect A:
"IN CENTRAL PART OF PEL 63, LOCATED ON STUART HIGHWAY,
LARGE, RELATIVELY SIMPLE ANTICLINAL STRUCTURE FORMING AN
ELONGATED TRAP (AT LEAST 30 SQ KM OR 7500 ACRES).
REJUVENATED OLDER STRUCTURE CAPABLE OF ENTRAPPING
HYDROCARBONS GENERATED VERY EARLY (IN THE PROTEROZOIC
PERIOD) OR LATER IN THE PALEAOZOIC: CONTAINS BOTH EARLY
PALEOZOIC AND LATE PROTEROZOIC SEDIMENTS WITH POTENTIAL
SOURCE ROCKS AND RESERVOIRS IN BOTH OF THESE SEQUENCES.
LARGE POTENTIAL `KITCHEN' AREAS IN ADJACENT TROUGHS ON
BOTH FLANKS TO GENERATE SIGNIFICANT QUANTITIES OF
HYDROCARBONS. RELATIVELY EASY MIGRATION PATHS FROM
`KITCHEN' AREAS TO RESERVOIRS IN THE STRUCTURAL TRAP_."
Proposed Exploration Program
Initial Program:
Based on the existing data, together with Petroconsultants Report,
management has determined that, subject to the receipt of adequate
financing, the Company's initial exploration program should
encompass three stratigraphic wells - on PEL 61 and two on PEL 63.
The depth of these wells is projected to be 1600 meters (5,280
feet), with an 8 1/2" wellbore. Coring will be undertaken in the
potential reservoir and source formations.
Management currently plans to drill a surface hole using a 12 1/4" bit
to a depth of up to 330 meters (1,000 feet) and to set 9 5/8" K-55
casing. The remainder of the hole would be drilled using a 8 1/2" bit
and a string of 7" casing would be run and cemented to total depth
(T.D), provided that significant petroleum shows are encountered.
Mobilization of drilling equipment and materials would occur from
the port city of Darwin and Adelaide to the first drilling location
in PEL 63. Assuming that adequate financing is obtained, and that
the Company successfully completes negotiation of the proposed
contract with the Philippines National Oil Company (discussed below)
and obtains all required permits and approvals, drilling of the
initial well could be completed within 6 weeks of such financing.
Commencement of the other two wells could follow 90 days thereafter,
provided no unanticipated logistical, operational or other
difficulties are encountered.
It is expected that these exploratory wells will yield information
regarding the reservoir and source potential of the following
formations:
The shallow Cambrian Aged Observatory Hill;
The Ouldbarra carbonates;
The Relief Sandstone;
The Murnaroo formation; and
The Alinya formation and Pindyin Sandstone.
Ability of Company to Continue
The Company has had no revenues from operations in either of the
last two fiscal years. The Company will require additional capital
within the next fiscal quarter in order to continue as a going
concern and accomplish the objectives set forth in its business
plan. The Company is exploring the possibility of a private
placement of its common stock in the future which could yield an
estimated minimum funding amount of approximately $2,210,000. The
Company is also currently considering other methods of equity
financing. Of course, there can be no assurance that the Company
will be able to obtain sufficient financing.
Expected Significant Contracts
The Company is presently negotiating an agreement with the
Philippine National Oil Company (the "PNOC") pursuant to which the
PNOC would be engaged to perform all necessary drilling and
completion operations as an independent contractor based on fixed
rates covering materials, labor, equipment, subsistence,
transportation and on-site supervision. It is intended that the
PNOC would be responsible for all labor, equipment, materials,
supplies and services necessary to the proper operation and
maintenance of the drilling rig furnished by the PNOC. Other
materials, equipment, special tools, supplies and services would be
the responsibility of the Company. The Company would bear the risk
of any damage to in-hole equipment or underground damage, except
where such damage is caused by the gross negligence of the PNOC, and
would be responsible for other unanticipated costs arising in
connection with the drilling program. The proposed drilling
services are projected to commence in late February to early March
1997, subject to availability of necessary funding, permits and
approvals.
Forward-Looking Statements
The foregoing and subsequent discussion contains certain forward-
looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, which are intended to be covered by the safe harbors
created thereby. These forward-looking statements include the plans
and objectives of management for future and possible further
capitalization of the Company. The forward-looking statements
contained herein are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to such
current expectations involve judgments with respect to, among other
things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible
to predict accurately and many of which are beyond and control of
the Company. Although the Company believes that the assumptions
could be inaccurate and therefore there can be no assurance that the
forward-looking statements included in this Form 10-QSB will prove
to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation of the
Company or any other person that the objectives and plans of the
Company will be achieved.
Results of Operations
The Company is currently in the exploration stage. During the
quarterly period ended December 31, 1996, the Company received
interest income of $19. Expenses during this period totaled $48,835
and the Company sustained a net loss during this period of $48,816.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults upon Senior Securities.
None; not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders.
(a) Approval of IAN Holdings Limited and Mason Oil Company, Inc.
Stock purchase and sale agreement
(b) Approval of legal merger between IAN Holdings Limited and Mason
Oil Company Inc. and
(c) Approal of change in fiscal year end to June 30.
Item 5. Other information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
*Exhibit 2.1: Stock Purchase Agreement, dated
September 10, 1996, by and between Craig Carpenter,
Mason Oil Company, Inc., Paul B. Ingram and John L.
Naylor.
*Exhibit 2.2: Stock Purchase and Sale Agreement,
dated October 14, 1996, between Mason Oil Company,
Inc., Paul B. Ingram and John L. Naylor.
0Exhibit 2.3: Petroleum Exploration License (PEL) No. 61 and
PEL agreement.
0Exhibit 2.4: Petroleum Exploration License No. 63 and PEL
agreement.
0Exhibit 2.5: Access Agreement between Anangu
Pitjantjatjara and John Leonard Naylor and Paul Bryan
Ingram.
0Exhibit 27: Financial Data Schedule
* Previously filed.
0 Filed herewith.
(b) Forms 8-Ka filed during the last quarter.
On February 14, 1997 the Company filed Form 8-Ka incorporating by
reference the June 30, 1996 audited financial statements of IAN
Holdings Limited and the related pro forma financial statements.
Pursuant to the requirement of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MASON OIL COMPANY
Date: 2/20/97 /s/ Paul B. Ingram
Director and President/Treasurer
MEMORANDUM
PETROLEUM EXPLORATION LICENCE NO 61
1 This Licence granted on 23 May, 1996 is hereby entered on the
Petroleum Register.
2. A security in the sum of $15,000 has been lodged with respect to
this licence.
3. Interests in the licence are:-
Hemley Exploration Pty Ltd 100%
A.J.Andrewjewskis
Chief Executive Officer
DEPARTMENT OF MINES AND ENERGY
Delegate of the Minister for Mines and Energy
PETROLEUM ACT 1940
PETROLEUM EXPLORATION LICENCE NO 61
I, ANDREW JOSEPH ANDREJEWSKIS, Chief Executive Officer, Department of
Mines and Energy (CEO) in the State of South Australia pursuant to
the provisions of the Petroleum Act, 1940 and all other enabling
powers, for and on behalf of, Stephen John Baker, Minister for Mines
and Energy (Minister), pursuant to delegation dated 14 June 1995,
(refer Government Gazette dated 15 June 1995 page 2845), HEREBY GRANT
to HEMLEY EXPLORATION PTY LTD (ACN 073 039 059) of C/- Pannell Kerr
Forster, 191 Flinders Street, Adelaide SA 5000 (hereinafter referred
to as the Licensee) a Petroleum Exploration Licence in respect of the
area set out below, to have effect for a period of five years and to
expire on May 2001
DESCRIPTION OF AREA
The land comprised in this licence is that part of the State of South
Australia described in the Schedule hereto.
CONDITIONS
1. The Licensee shall at all times comply with:-
a) the provisions of the Petroleum Act, 1940 and of any regulations
for the time being and from time to time in force under the Act,
b) all directions given to it under the Act or the regulations for
the time being and from time to time in force under that Act; and
c) the terms and conditions of an Access Agreement dated 5 March
1996 between Anangu Pitjantjatjara and John Leonard Naylor and Paul
Bryan Ingram.
2. During the term of the licence, the Licensee shall carry out or
cause to be carried out exploratory operations on the area comprised
in the licence in accordance with such work programmes as are
approved by the Minister from time to time. These exploratory
operations shall include but not necessary be limited to:-
a) In the first year of the term of the licence, the drilling of
one stratigraphic well, technical evaluation and review of available
data and program management at a total estimated cost of $1,250,000
(one million, two hundred and fifty thousand dollars).
b) In the second year of the term of the licence, the drilling of
one stratigraphic well, 250 line kilometers of seismic, technical
evaluation and review of available data and program management at a
total estimated cost of $2,000,000 (two million dollars).
c) In the third year of the term of the licence, the drilling of
one well, 250 line kilometers of seismic, technical evaluation and
review of available data and program management at a total estimated
cost of $2,450,000 (two million, four hundred and fifty thousand
dollars).
d) In the fourth year of the term of the licence, the drilling of
two wells, technical evaluation and review of available data and
program management at a total estimated cost of $3,950,000 (three
million, nine hundred and fifty thousand dollars).
e) In the fifth year of the term of the licence, review of data and
subject to satisfactory results from wells 1-5, the drilling of 4
appraisal wells and program management at a total estimated cost of
$4,975,000 (four million, nine hundred and seventy five thousand
dollars).
3. Within sixty days after the end of each year (being the period
of twelve calendar months ending on the anniversary of the date upon
which this licence comes into force), the Licensee shall submit to
the Minister a full and complete written statement of expenditure
actually made or caused to be made by the Licensee during that year
upon approved exploratory operations. This statement of
expenditures shall be accompanied by a written opinion on the
veracity of the statement from an auditor whose qualifications and
independence from the Licensee are acceptable to the Minister.
4. In the event that the Licensee during any year of the term of
this licence (a year being the period of twelve calendar months
ending on the anniversary of the date upon which the licence comes
into force) fails to comply with the exploratory operations
requirements of this licence, it is an express term of this licence
that the Minister then may at his discretion either cancel this
licence or authorize such variation to these requirements as the
Minister thinks fit.
5. An application to drill a well within the area comprised in the
licence shall include written proposals of the Licensee, in relation
to the bringing under control of the well, in the event that
effective control of the well is lost, and to the clean-up of oil
spills, including financial proposals such as well control insurance,
public liability insurance or other means to cover the costs involved
in such operations.
6. Not less than thirty days before the commencement of each year
(being the period of twelve calendar months ending on the anniversary
of the date upon which this licence comes into force), the Licensees
must arrange to meet, in person, with the CEO or his representative
to review the progress of the programme of exploration for the
current licence year, and to present a proposal for the programme of
exploration for the forthcoming year.
7. If at any time the work being carried out or intended to be
carried out by, or at the cause of, the Licensee is in the opinion of
the CEO not in accordance with the sound principles and practices of
petroleum exploration, he may give the Licensee written directions as
to the work carried out or intended to be carried out, and the
Licensee shall comply with those directions.
8. In addition to the reports specified in the Petroleum
Regulations, 1989, the Licensee shall promptly prepare and submit to
the CEO in a form acceptable to him, detailed reports on all
exploratory operations done or caused to be done by or on behalf of
the Licensee within and in relation to the licence area.
Signed by the CFHEF EXECUTIVE OFFICER, DEPARTMENT OF MINES AND ENERGY
at ADELAIDE
this 23 day of May, 1996
CHIEF EXECUTIVE OFFICER
Delegate of the Minister for Mines and Energy
Signed sealed and delivered by the said LICENSEE at Adelaide
this 15th day of May, 1996
The Common Seal of HENLEY EXPLORATION PTY LTD was hereto affixed by
PETROLEUM EXPLORATION LICENCE NO 61
THE SCHEDULE
Description of Area
All that part of the State of South Australia, bounded as follows:
Commencing at a point being the intersection of latitude 27 00'S and
longitude 133 00'E, thence east to the eastern boundary of the
Pitjantjatjara Lands, thence generally southerly and westerly along
the boundary of the said Lands to longitude 133'00'E, and north to
the point of commencement, all the within latitudes and longitudes
being geodetic and expressed in terms of the Australian Geodetic
Datum as defined on p. 4984 of Commonwealth Gazette number 84 dated
October 6, 1966.
AREA: 6,258 square kilometers approximately.
MEMORANDUM
PETROLEUM EXPLORATION LICENCE NO. 63
1. This Licence granted on 23 May 1996 is hereby entered on the
Petroleum Registry
2. A security in the sum of $15,000 has been pledged with respect
to this licence.
3. Interests in the licence are:
Hemley Exploration Pty Ltd 100%
A.J. Andrejewskis
Chief Executive Officer
DEPARTMENT OF MINES AND ENERGY
Delegate of the Minister for Mines and Energy
23/5/96
PETROLEUM ACT 1940
PETROLEUM EXPLORATION LICENCE NO 63
I, ANDREW JOSEPH ANDREJEWSKIS, Chief Executive Officer, Department of
Mines and Energy (CEO) in the State of South Australia pursuant to
the provisions of the Petroleum Act, 1940 and all other enabling
powers, for and on behalf of Stephen John Baker, Minister for Mines
and Energy (Minister), pursuant to delegation dated 14 June 1995,
(refer Government Gazette dated 15 June 1995 page 2845), HEREBY GRANT
to HEMLEY EXPLORATION PTY LTD (ACN 073 039 059) of C/- Pannell Kerr
Forster, 191 Flinders Street, Adelaide SA 5000 (hereinafter referred
to as the Licensee) a Petroleum Exploration Licence in respect of the
area set out below, to have effect for a period of five years and to
expire oti,-22@ -Aa& 2001 but carrying the rights of renewal under
the Petroleum Act 1940.
DESCRIPTION OF AREA
The land comprised in this licence is that part of the State of South
Australia described in the Schedule hereto being:
a) land that now is or was formerly the subject of a grant of a
freehold estate or of a perpetual Crown lease where such an estate or
lease was first granted before 31 December 1993
(b) land which is or was formerly subject to a lease under the
Pastoral Land Management and Conservation Act 1989 (or any preceding
legislation in relation to leases for pastoral purposes) except that
this licence does not authorize the undertaking of any act or
activity on such land that would be inconsistent with the rights of
Aborigines preserved or conferred by section 47 of that Act.
or
c) land (other than any reserve under the National Parks and
Wildlife Act 1972) which has been, before 31 December 1993, reserved
or dedicated for a public purpose and used before that date for that
purpose in a manner wholly inconsistent with the continuing existence
of common law native title rights.
CONDITIONS
1. The Licensee shall at all times comply with:-
a) the provisions of the Petroleum Act, 1940 and of any regulations
for the time being and from time to time in force under the Act; and
b) all directions given to it under the Act or the regulations for
the time being and from time to time in force under that Act.
2.During the ten-n of the licence, the Licensee shall carry out or
cause to be carried out exploratory operations on the area
comprised in the licence in accordance with such work programmes
as are approved by the Minister from time to time. These
exploratory operations shall include but not necessary be limited
to:-
a) in the first year of the term of the licence, Aerial Geological-
Geomorphic mapping program, review all data available and the
drilling of one stratigraphic well to a minimum depth of 1,800 metres
at a total estimated cost of $645,000 (six hundred and forty five
thousand dollars).
b) in the second year of the term of the licence, plan detailed
seismic survey, record a minimum of 70kml of seismic and
interpretation of seismic data and contour mapping at a total
estimated cost of $340,000 (three hundred and forty thousand
dollars).
c) in the third year of the term of the licence, evaluate the
stratigraphic well data, prepare an environmental impact report
prepare a drilling site by constructing an access road, the drilling
of one exploration well and evaluation of results at a total
estimated cost of $1,700,000 (one million, seven hundred thousand
dollars).
d) in the fourth year of the term of the licence, plan a drilling
program for drilling a second well, prepare an environmental impact
report, prepare a drilling site by constructing an access road, the
drilling of an exploration well to an anticipated depth of 2,500
metres at a total estimated cost of $1,770,000 (one million seven
hundred and seventy thousand dollars).
e) in the fifth year of the term of the licence, review all data,
prepare a study on the potential of the petroleum reservoir zones
encountered and tested in both wells at a total estimated cost of
$300,000 (three hundred thousand dollars).
3. Within sixty days after the end of each year (being the period
of twelve calendar months ending on the anniversary of the date upon
which this licence comes into force), the Licensee shall submit to
the Minister a full and complete written statement of expenditure
actually made or caused to be made by the Licensee during due year
upon approved exploratory operations. This statement of
expenditures shall be accompanied by a written opinion on the
veracity of the statement from an auditor whose qualifications and
independence from the Licensee are acceptable to the Minister.
4. In the event that the Licensee during any year of the term of
this licence (a year being the period of twelve calendar months
ending on the anniversary of the date upon which the licence comes
into force) fails to comply with the exploratory operations
requirements of this licence, it is an express term of this licence
that the Minister then may at his discretion either cancel this
licence or authorize such variation to these requirements as the
Minister thinks fit.
5. An application to drill a well within the area comprised in the
licence shall include written proposals of the Licensee, in relation
to the bringing under control of the well, in the event that
effective control of the well is lost, and to the clean-up of oil
spills, including financial proposals such as well control insurance,
public liability insurance or other means to cover the costs involved
in such operations.
6.Not less than thirty days before the commencement of each year
(being the period of twelve calendar months ending on the
anniversary of the date upon which this licence comes into force),
the Licensees must arrange to meet, in person, with the CEO or his
representative to review the progress of the programme of
exploration for the current licence year, and to present a
proposal for the programme of exploration for the forthcoming
year.
7. If at any time the work being carried out or intended to be
carried out by, or at the cause of, the Licensee is in the opinion of
the CEO not in accordance with the sound principles and practices of
petroleum exploration, he may give the Licensee written directions as
to the work carried out or intended to be carried out, and the
Licensee shall comply with those directions.
8. In addition to the reports specified in the Petroleum
Regulations, 1989, the Licensee shall promptly prepare and submit to
the CEO in a form acceptable to him, detailed reports on all
exploratory operations done or caused to be done by or on behalf of
the Licensee within and in relation to the licence area.
Signed by the Chief Executive Officer,
Department of Mines and Energy at Adelaide
this 23 day of May 1996
Chief Executive Officer
Department of Mines and Energy
Delegate of the Minister for
Mines and Energy
Signed sealed and delivered
by the said LICENSEE at Adelaide
this 15th day of May 1996
The Common Seal of HEMLEY EXPLORATION PTY LTD
was hereto affixed by
PETROLEUM EXPLORATION LICENCE NO. 63
THE SCHEDULE
Description of Area
All that part of the State of South Australia, bounded as follows:
Commencing at a point being the intersection of latitude 27 00'S and
longitude 134 IO'E, thence south to latitude 28 IO'S, west to
longitude 133 3 I'E, south to latitude 28135'S, west to longitude
133'00'E, north to the southern boundary of the Pitjantjatjara Lands,
thence generally northeasterly along the boundary of the said Lands
to latitude 27 1 OO'S, and east to the point of commencement, all the
within latitudes and longitudes being geodetic and expressed in terms
of the Australian Geodetic Datum as defined on p. 4984 of
Commonwealth Gazette number 84 dated October 6, 1966.
AREA: 10,930 square kilometres approximately.
I hereby certify this is a
true and correct copy of the original
of the document to which it purports
to be a copy.
DATED March 5, 1996
M.W. McDONALD
A Commissioner for taking
Affidavits in the Supreme
Court of South Australia
ACCESS AGREEMENT
BETWEEN
ANANGU PITJANTJATJARA
-AND-
JOHN LEONARD NAYLOR
-and-
PAUL BRYAN INGRAM
prepared by:
McDONALD & CO.
LAWYERS
262 - 266 Pirie Street
PO Box 3216, Rundle Mall
ADELAIDE, SA 5000
Phone: (08) 223 5088
Fax: (08) 223 5290
CONTENTS
CLAUSE HEADING
1. Definitions 2
2. Interpretation and Other Matters 5
3. Consent 7
4. Condition Precedent 7
5. Initial survey of Licence Area By Explorers 8
6. Consideration given by the Explorers 8
7. Notification of Operations 9
8. Land Entry and Occupation 11
9. Identification 11
10. Petroleum Operations 12
11. Scouting Team 13
12. Screening and Clearance 13
13. Effect of Operations on Environment 17
14. Advisory Committee 18
15. Control of Liquor 20
16. Removal of Employees 20
17. Instruction in Aboriginal Culture 21
18. Inspection 22
19. Exchange of Information 23
20. Explorers Covenants 23
21. AP Covenants 24
22. Rights of Traditional Owners 25
23. Rights of Explorers 25
24. Reversion of Infrastructure 26
25. Indemnity 26
26. Field Development and Production 27
27. Petroleum Production Licence 27
28. Force Majeure 28
29. Assignment 29
30. Operations 29
31. Confidential Information 30
32. Termination 31
33. Termination of Activities 31
34. Consequences of Termination 33
35. Costs and Payments 33
36. Disputes 34
37. Term 34
38. Variation 34
39. Further Assurance 35
40. Notices 35
41. Approval and Notification 35
Schedule 1
Description of AP Land Pursuant to the Act
Schedule 2
Description of the Licence Area
Schedule 3
Scouting Team Conditions and Payment
Schedule 4
Payments to AP pursuant to Clause 6.1.4
Schedule 5
Payments to AP pursuant to Clause 6.1.5
Schedule 6
Principles for Agreement re PPL
THIS AGREEMENT is made the 5th day of March, 1996
BETWEEN:
ANANGU PITJANTJATJARA a body corporate constituted under the name by
the
Pitjantjatjara Land Rights Act 1981 of South Australia and having its
principal office at 37 Bath
Street Alice Springs in the Northern Territory of Australia
(hereinafter referred to as "AP") of
the one part
- -AND-
JOHN LEONARD NAYLOR and PAUL BRYAN INGRAM both care of McDonald & Co.
262 -
266 Pirie Street Adelaide in the State of South Australia
(hereinafter referred to as "the Explorers") of the other part)
Explorers") of the other part
WHEREAS:-
A. AP is the registered proprietor of the AP lands (as hereinafter
defined).
B. AP is entitled to occupation of the AP Lands, subject only to
the provisions of subsection 15 (3) of the Act (as hereinafter
defined).
C. AP has under the Act as its primary responsibility the
protection of the Pitjantjatjara ways of life, culture and tradition
and in particular Areas of Significance (as hereinafter defined).
D. AP is under the Act authorized to negotiate on behalf of the
Traditional Owners of the Land (as hereinafter defined) with the
Explorers for the use, occupation and access to the AP lands and has
agreed to such use, occupation and access upon the terms and
conditions set out herein.
E. The parties agree and acknowledge that compliance with the terms
and conditions set out hereunder is essential to the ongoing consent
by AP to the Explorers' use, occupation and access to the AP lands.
F. The explorers have lodged an application with the South
Australian Department of Mines and Energy for a petroleum exploration
licence over the License Area (as hereinafter defined).
G. The License Area is situated within the AP lands.
H. The Explorers have applied under the provisions of Section 20 of
the Act for permission to carry out Petroleum Operations upon the
License Area under the terms and conditions of the Petroleum Act.
I. AP has, in accordance with Section 20 of the Act and subject to
the condition precedent set out in Clause 4 herein, agreed to grant
its permission and consent to
942031'AA0016ASD
2 -
the Explorers carrying out Petroleum Operations on the License Area
on and subject to the terms and conditions hereinafter set forth.
NOW THIS AGREEMENT WITNESSES as follows:-
1. DEFINITIONS
In this Agreement unless the context, otherwise requires, the
following words and expressions shall have the following meanings:
the Act means the Pitjantjatjara Land Rights Act No. 20
of 1981 of South Australia as amended from time to time together with
any regulations made thereunder;
the Advisory
Committee means the Advisory Committee constituted under
Clause 14 hereof;
AP means Anangu Pitjantjatjara;
the AP lands means those lands described in the First Schedule
to the Act a copy of which is annexed hereto as Schedule 1;
Areas of
Significance means any site on the AP Lands that is identified
by the Scouting Team as being of cultural, social or spiritual
significance to the Traditional Owners of those areas and includes
any "Aboriginal site" as defined by the Aboriginal Heritage Act 1988
(South Australia) and any "significant Aboriginal areas" as defined
in the Aboriginal and Torres Strait Islander Protection Act 1984
(Cwth);
the Explorers means the party of the second part and includes
the successors and assigns of each of them PROVIDED that if the
Explorers shall incorporate a company under the Corporations Law at
any time after the execution of this Agreement, and PROVIDING that
the shares in that company are held exclusively by the Explorers, the
Explorers may so notify AP in writing and upon such notification the
term "Explorers" shall be deemed to include reference to the company
so incorporated;
942031\AA0016.ASD
3 -
Licence means, as the context requires, the petroleum
exploration licence for which the Explorers have applied to the South
Australian Department of Mines and Energy covering the area described
in Schedule 2 hereto and any petroleum production licence or pipeline
licence issuing therefrom and any renewals and extensions of the
same;
Licence Area means at the date of this Agreement and thereafter
until the grant of the petroleum exploration licence for which the
Explorers have jointly applied to the South Australian Department of
Mines and Energy, the area more particularly described in Schedule 2
hereto, and subsequent to the grant of the petroleum exploration
licence, the area for the time being the subject of the Licence as
defined herein;
Licence Year means each twelve calendar month period commencing
on the date of grant of a PPL and thereafter on each subsequent
anniversary of the date of such grant;
the Minister means the Minister of Mines and Energy for the
State of South Australia, or his successor;
the Operator means the party of the second part or any
additional or substituted operator approved by AP under Clause 30
hereof;
Operational Area means any part of the Licence Area upon which from
time to time under the terms of this Agreement the Explorers propose
to carry out or carry out Petroleum Operations;
PEL means the petroleum exploration licence for which the Explorers
have applied to the South Australian Department of Mines and Energy
covering the area described in Schedule 2 hereto and any renewals and
extensions of the same;
PPL means any one or more petroleum production licence or pipeline
licence for which the Explorers may apply and be granted covering an
area within the area described in Schedule 2 hereto and any renewals
and extensions of the same
Petroleum has the same meaning assigned to that expression
in the Petroleum Act. Where the term "Petroleum" is used herein it
shall include each and all constituents thereof;
942031 \AAOC I 6.AS D
4 -
the Petroleum
Act means the Petroleum Act 1940 of South Australia as amended or
any enactment substituted therefor together with any regulations and
subordinate legislation made thereunder;
Petroleum
Operations means operations carried out pursuant to, or for
the purpose of giving effect to, the Licence and, without limiting
the foregoing shall include, drilling, geological, geophysical and
other exploration activities, and the development, production,
gathering, separating, pressure maintenance, dehydrating,
heating, treating, processing, handling, transportation,
fractionation, storage and marketing of Petroleum produced or to be
produced from the Licence Area, including but not limited to, the
design, capacity, installation, operation, maintenance, repair and
replacement of all facilities required;
Pitjantjatjara has the same meaning as in the Act;
Scouting Team means the persons referred to in Clause 11 hereof;
Seismic Lines/
access road
corridor means a corridor of 1 00 metres on either side of
a proposed or existing seismic line or access road which has been
screened and cleared in accordance with Clause 12 hereof;
to transfer means to sell, assign, transfer, convey or
otherwise dispose of; and
"transfer", "transferred" and "transferring" have
corresponding meanings;
Traditional Owner in relation to the Operational Area means an
Aboriginal person who has, in accordance with Aboriginal tradition,
social, economic and spiritual affiliations with and responsibilities
for, the Operational Area or any part of it;
Work Site means any camp site or other living area, air
strip, water bore site or drill site in the Licence Area which the
Explorers pursuant to the terms of this Agreement propose to locate
or locate in an Operational Area and includes any other area in the
942031\AA0016.ASD
5 -
Licence Area (other than the proposed or actual location of a seismic
line or access road) in which the Explorers pursuant thereto proposes
to carry out or carry out Petroleum Operations.
2. INTERPRETATION AND OTHER MATTERS
2.1 Unless the contrary intention appears in this Agreement-
2.1.1 monetary references are references to Australian currency;
2.1.2 a reference to an act or regulation includes any amendments
to that act or regulation for the time being in force and also to any
act or regulation passed in substitution therefor;
2.1.3 the singular includes the plural and vice versa and words
importing the masculine gender include the feminine or neuter gender;
2.1.4 a reference to a person includes a firm, company,
corporation, authority or body whether incorporated or not;
2.1.5 reference to a Minister, Department, authority, body or
person includes the Minister, Department, authority, body or person
for the time being performing the functions of such Minister,
Department, authority, body or person at the date of this Agreement;
and
2.1.6 a reference to the Explorers includes the employees,
servants, agents, contractors and sub-contractors of the Explorers
engaged for the purposes of the Petroleum Operations and their
permitted invitees and any obligation or duty imposed upon the
Explorers shall, where the Explorers have engaged an agent,
contractor or sub-contractor to undertake any activity which the
Explorers are required or authorized to undertake under this
Agreement, be construed as an obligation or duty upon the Explorers
to procure that its agent, contractor or subcontractor performs that
obligation or duty.
942'031\AA0016.ASD
6 -
2.2 The headings in this Agreement shall not be deemed to be a part
of this Agreement and shall not be used in its interpretation or
construction.
2.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of South Australia and each party hereby
submits to the jurisdiction of the appropriate courts of that State
and the Commonwealth and any Courts competent to hear appeals
therefrom.
2.4 The Clauses in this Agreement shall prevail over any
inconsistent provisions in any Appendix or Schedule to this
Agreement.
2.5 No modification, variation or amendment to this Agreement shall
be of any force unless in writing and executed by each party.
2.6 No waiver by a party of any of the provisions of this Agreement
shall be binding unless made in writing and any such waiver shall
relate only to the specific matter, non-compliance or breach in
respect of which it is given and shall not apply to any subsequent or
other matter, non-compliance or breach.
2.7 This Agreement shall be binding upon and enure to the benefit of
the parties and their respective successors and permitted assigns.
2.8 Each party agrees to execute such deeds and documents and do
such further acts and things as shall be necessary to give effect to
this Agreement.
2.9 In this Agreement, covenants, conditions or agreements on the
part of the Explorers apply to them jointly and severally.
2.10 If any court or other competent authority declares, or if any
statute or regulation renders any part of this Agreement ineffective,
void, voidable, illegal or unenforceable or if by reason of a
declaration by any Court or other competent authority or any statute
or regulation this Agreement would, if any part hereof were not
omitted herefrom, be ineffective, void, voidable, illegal or
unenforceable then:
7 -
2.10.1 that part shall, without in any way affecting the
effectiveness, validity,
legality or enforceability of the remainder of this Agreement, be
severable herefrom and this Agreement shall be read and construed and
take effect for all purposes as if that part were not contained
herein; and
2.10.2 the parties shall attempt to renegotiate, in good faith,
that part.
3. CONSENT
Subject to the provisions of this Agreement and in particular Clause
4 hereof, AP hereby grants its permission pursuant to Section 20 of
the Act to the Explorers carrying out Petroleum Operations under and
in accordance with this Agreement upon that part of the AP Lands
situate in the Licence Area.
4. CONDITION PRECEDENT
4.1 Subject to Clause 4.2 hereof this Agreement:
4.1.1 is conditional upon the grant by the Minister of the PEL to
the Explorers within six months after the date of this Agreement or
such later date as the parties agree in writing; and
4.1.2 has no force and effect if the condition referred to in
Clause 4.1.1 is not
satisfied.
4.2 Notwithstanding Clause 4.1, this Clause and Clauses 29 and 31
shall be operative upon and from the date of this Agreement.
4.3 If the condition referred to in Clause 4.1.1 is not satisfied
AP's consent to the grant of the PEL shall be deemed to have been
withdrawn and never to have been given.
942031\AA0016.ASD
8 -
5. INITIAL SURVEY OF LICENCE AREA BY EXPLORERS
5.1 It is acknowledged between the parties that at the date of
execution of this Agreement the Explorers have not been afforded an
opportunity to enter upon AP Lands for the purposes of undertaking an
initial survey ("the Survey") of the Licence Area.
5.2 Notwithstanding the provisions of this Agreement relating to
screening and clearing of Operational Areas, AP acknowledges that, in
order to efficiently carry out the purposes of this Agreement, it
will be necessary for the Explorers to enter onto the AP Lands to
undertake a detailed Survey of the Licence Area and the parties agree
that the conditions contained in Clause 12 hereof do not apply to the
Survey.
5.3 Within twenty one days of the acceptance by the Explorers of the
grant of the PEL, the Explorers shall, pursuant to this Clause 5,
provide AP with sufficient details of the proposed Survey to allow AP
to determine whether a Scouting Team or Liaison Officer will be
required in order for the Explorers to carry out any part or parts of
the Survey.
6. CONSIDERATION GIVEN BY THE EXPLORERS
6.1 In consideration for the permission hereby granted by AP in
respect of the carrying out of Petroleum Operations in the Licence
Area, the Explorers hereby covenant that:
6.1.1 in the event of an offer being made by the Minister to
grant a PEL over the Licence Area subject to reasonable conditions,
acceptable to the Explorers, they will accept such offer and take up
and hold such PEL; and subject thereto;
6.1.2 the Explorers shall grant to AP such rights and privileges
as set out in this Agreement; and
942031\AA0016.ASD
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6.1.3 subject to compliance on the part of AP with its obligations
hereunder,
the Explorers will comply with the terms and conditions on their part
herein contained and shall make payments to AP of the amounts to
which AP is entitled from time to time as provided in this Agreement;
6.1.4 subject to Clause 6.1.3 the Explorers shall make payments to
AP in relation to Petroleum Operations carried out pursuant to the
PEL in accordance with Schedule 4 hereto;
6.1.5 subject to Clause 6.1.3 where a PPL is applied for and
granted under Clause 26 herein, the Explorers shall make payments to
AP in relation to Petroleum Operations carried out pursuant to the
PPL in accordance with Schedule 5 hereto.
7. NOTIFICATION OF OPERATIONS
7.1 Subject to the provisions of Clause 12. 1 0 hereof, the Explorers
shall provide AP at least one month in advance of Petroleum
Operations being conducted in the Operational Area particulars in
writing of the following parts of the proposed operational program,
namely:-
7.1.1 the proposed location of seismic lines and access roads;
7.1.2 the proposed approximate location of Work Sites;
7.1.3 the proposed method of seismic operations and other
consequential operations, including exploration drilling and testing
and the proposed use of seismic lines and access roads in such
operations;
7.1.4 the major items of equipment proposed to be used;
7.1.5 the proposed method of disposal of any waste material arising
out of
Petroleum Operations;
942031\AA0016.ASD
10-
7.1.6 the proposed method of minimising environmental disturbance
or pollution, including oil spills and blowouts;
7.1.7 the proposed site and nature of any buildings or structures
(including pipelines and associated facilities); and
7.1.8 any other aspect of the operational program which is likely
to have adverse impact upon or cause substantial disturbance to any
part of the AP Lands or the Pitjantjatjara people or their way of
life.
7.2 If AP is not reasonably satisfied with the particulars of the
Petroleum Operations given pursuant to Clause 7.1 hereof, AP may,
prior to the proposed commencement of Petroleum Operations request
the Explorers to provide, and the Explorers shall provide, further
particulars of such proposed operations insofar as the particulars
relate to the impact upon or disturbance to any part of the AP Lands
or the Pitjantjatjara people or their ways of life.
7.3 The Explorers shall also give notice to AP if the Explorers at
any time propose to implement a
substantial change in the existing method of Petroleum Operations.
7.4 In the event that AP has a specific objection to any part of the
particulars of the Petroleum Operations supplied by the Explorers
under clause 7.1, or to any substantial change therein of which
notice has been given under Clause 7.3, AP shall refer such objection
to the Advisory Committee within thirty days of being supplied with
such particulars or given such notice, and that part of the existing,
intensified or changed operational program to which objection is
taken shall not commence until the Advisory Committee has reached
unanimous agreement. Objection may only be taken where the matter
objected to is likely to have an adverse impact upon or cause
substantial disturbance to any part of the AP Lands or the
Pitjantjatjara people or their ways of life. If no such specific
objection is raised within the said thirty day period, AP shall be
deemed to have consented to the proposed Petroleum Operations,
subject to Clause 12 and other relevant provisions of this Agreement.
942031\AA0016.ASD
8. LAND ENTRY AND OCCUPATION
8.1 Upon the granting to the Explorers of a PEL in respect to the
Licence Area, and until the termination of this Agreement or,
(subject to Clause 24 hereof earlier cessation or completion of
Petroleum Operations, the Explorers, their contractors, sub-
contractors, employees, agents and visitors shall be permitted in
accordance with the terms and conditions of this Agreement to:
8.1.1 enter upon that part of the AP Lands situate in the Licence
Area at all times and commence and proceed with Petroleum Operations
necessary to enable them to carry out their duties in a satisfactory
and efficient manner;
8.1.2 construct necessary access roads across AP Lands adjacent to
the Licence Area so as to gain access to the Licence Area; and
8.1.3 use and draw water from agreed sources and failing
agreement, as determined by the Advisory Committee pursuant to Clause
14.
8.2 AP or any member or any authorized agent of AP possessing
written authority for such purposes from AP may specify in writing,
upon reasonable grounds, that a person or class of persons may not be
permitted access to the Licence Area and the Explorers shall ensure
that, as far as is possible within their power, such person or
persons shall not enter upon the Licence Area.
9. IDENTIFICATION
9.1 The Explorers shall cause the Explorers, their contractors,
employees, agents and visitors to be issued with an identification
card or permit in a form approved by AP which approval will not be
withheld unreasonably, containing such reasonable conditions as are
specified by AP. It will be the duty of the Explorers to ensure that
all people who are engaged directly or indirectly by it and involved
in work in the Licence Area obtain and carry such an identification
card or permit.
942031\AA0016.ASD
12 -
9.2 AP, or any member or any authorized member of AP possessing
written authority for such purposes from AP, shall be entitled to
request any person found upon AP Lands to produce the approved
identification card or permit.
9.3 If a person is not able to produce the approved identification
card or permit or is otherwise unable to satisfy AP or a duly
authorized member of AP as to the legality of his or her presence on
the AP Lands, AP shall be entitled to cause such person to be removed
therefrom.
9.4 The Explorers shall inform all of their contractors, employees,
agents and visitors, of the obligation upon them to remain within
seismic line access corridors or Work Sites which have been screened
and cleared in accordance with clause 12 of this Agreement and to
comply with those conditions consistent with this Agreement and set
out on the identification cards or permits.
9.5 The Explorers shall supply to AP weekly or at such other
intervals as the parties may agree a list of all persons who have
been issued with identification cards or permits, or have had their
identification cards or permits canceled and other details agreed
from time to time.
10. PETROLEUM OPERATIONS
The Explorers shall at all times upon the Licence Area:
10.1 comply with the provisions of the Petroleum Act and the
licences granted to them thereunder;
10.2 conduct themselves in accordance with good and accepted oil
field practice;
10.3 ensure that their Petroleum Operations cause minimum
disturbance to the AP Lands, the Pitjantjatjara people and their ways
of life;
10.4 use good and accepted oil field practice to avoid oil spills
or blowouts.
942031\AA0016.ASD
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11. SCOUTING TEAM
AP, in consultation with the Explorers, shall arrange for the
formation of one or more Scouting Teams which shall be constituted
and remunerated in accordance with the provisions set out in Schedule
3 hereof and shall undertake the duties of screening and clearance as
set out in Clause 12 hereof.
12. SCREENING AND CLEARANCE
12.1 The parties acknowledge that this Agreement is made for the
purpose, inter alia, of providing a workable and effective
arrangement to avoid disputes and differences in relation to Areas of
Significance.
12.2 In order to protect Areas of Significance, the Explorers
shall with the particulars supplied or in the notice given under
Clause 7 hereof, request clearance from AP before proceeding with any
land based Petroleum Operations in an Operational Area or part
thereof which has not already been screened and cleared by AP
pursuant to this Agreement or pursuant to any prior agreement entered
into between AP and a third party.
12.3 Subject to Clause 12.4, upon receipt of the aforesaid
particulars or notice, AP shall, in conjunction with the Explorers
undertake at the expense of the Explorers and in accordance with this
Agreement, the Organization and implementation of a screening program
by the Scouting Team of the Operational Area or part thereof referred
to in the aforesaid particulars or notice ("the Area to be
Screened").
12.4 Where AP receives a request for clearance pursuant to Clause
7 or this Clause 12 in respect of an Operational Area or part thereof
and the Operational Area or part thereof has been the subject of
prior screening and clearance in accordance with the terms and
conditions of any prior agreement entered into between AP and a third
party pursuant to section 20 of the Petroleum Act or in accordance
with the terms and conditions of the Agreement dated 19 December 1992
between AP and the Minister of Mineral Resources, the AP shall by
notice
942031\AA0016.ASD
14 -
in writing, within two (2) weeks of the request so notify the
Explorers and such Operational Area or part thereof shall be deemed
to have been screened and cleared in accordance with the requirements
of this Agreement.
12.5 Subject to religious and/or ceremonial obligations of members of
AP, the tasks of the Scouting Team shall be to:
12.5.1 determine whether proposed seismic lines, access roads or
Work Sites are likely to be in Areas of Significance;
12.5.2 give advance warning to the Explorers' representative
attached to the Scouting Team to enable any representative of the
Explorers to relocate parts of seismic lines, access roads, or Work
Sites in order to avoid Areas of Significance;
12.5.3 show reasonable diligence in preparing for and carrying out
such work, while the Explorers meet their obligations pursuant to
this Agreement;
12.5.4 make every reasonable endeavor to proceed with its work at
a rate that will avoid any standby of the line clearing and seismic
operations.
12.6 The representative of the Explorers attached to the Scouting
Team shall be responsible for marking the track of the proposed
seismic lines, access roads and Work Sites and for relocating these
where there is a likelihood of Areas of Significance being disturbed
by the Petroleum Operations. The male anthropologist appointed by AP
shall be responsible for co-ordination of the Scouting Team
operations.
12.7 AP shall ensure that any Traditional Owners accompanying the
Scouting Team shall have knowledge of the Area to be Screened and
shall have sole responsibility on behalf of AP in determining whether
there are any Areas of Significance within the Area to be Screened
and the Explorers shall ensure that the Area to be Screened is
appropriately flagged, including the track of seismic line or access
road and the perimeter of a Work Site.
94;!031\AA0016.ASD
15 -
12.8 The Scouting Team and the Explorers will discuss the methods by
which the
Explorers may proceed with Petroleum Operations without entering any
Areas of Significance.
12.9 In the event that it is necessary to deviate any proposed
seismic line or access road, such deviation shall be made as small as
possible and any deviated line or road will be returned to the
original planned line or road as soon as practicable, bearing in mind
the proximity of any Areas of Significance and the need to minimize
unduly sharp line deflections. In the event that relocation of a
proposed drill site for an exploration appraisal or development well
is being considered, any movement of the proposed drill site shall be
minimized so far as possible.
12.10 In the event that the Explorers wish to make minor
modifications or additions to any part of the program of Petroleum
Operations an existing cleared seismic line or access road, or to use
any existing water source, the Explorers shall immediately notify AP
accordingly and request that the Scouting Team screens such proposed
modifications, additions, Work Site or water source in accordance
with the provisions of this Agreement. In such case AP shall as soon
as possible and in any event not later than seven days after receipt
of such request, either notify the Explorers in writing of its
consent to such modifications, additions, Work Site or water source,
or ensure the commencement by the Scouting Team of the screening of
those areas as requested by the Explorers, or refer such notification
to the Advisory Committee for its determination and advice.
12.11 The Explorers shall follow the flagged seismic lines and
access roads as closely as practicable but in any event shall remain
within the Seismic line/access road corridors. Any deviation beyond
the Seismic line/ access road corridor shall require a further
scouting exercise.
12.12 Upon screening and clearance of an Operational Area or any
part thereof by the Scouting Team, the Explorers shall be entitled to
commence Petroleum Operations without being required to obtain any
further clearance except as
94',!031\AA0016.ASD
16 -
otherwise provided in Clauses 12.10. Where an Operational Area or any
part thereof has been screened and cleared subject to compliance with
conditions (if any) specified by the Scouting Team, the Explorers
shall conduct Petroleum Operations thereon only in accordance with
such conditions.
12.13 A representative of the Explorers shall accompany the Scouting
Team at all times during its scouting tours and within seven days of
the completion of each scouting tour, AP will notify the Explorers in
writing of the Scouting Team's decisions concerning the acceptability
of proposed locations of the Explorers' seismic lines, access roads
and Work Sites. Such notification will specify the proposed
locations which have been screened and cleared for use by the
Explorers and the conditions (if any) attached to that use.
12.14 The Explorers shall be absolutely entitled to rely on
clearances notified by AP pursuant to Clause 12.13 and Petroleum
Operations conducted in accordance with such clearances as notified
by AP shall foreclose any future claims that such operations
interfered with any Area of Significance.
12.15 Neither AP nor any member of the Scouting Team or Teams shall
be required to disclose to the Explorers or the Operator the location
of, or any cultural information in relation to any area of
significance.
12.16 During the term of this Agreement and while Petroleum
Operations are conducted within the Licence Area, the Explorers shall
engage the services of a Liaison Officer as needed to be nominated by
AP whose duties and functions shall include:
12.16.1 lialising between AP and the Traditional Owners and
the Explorers with respect to such matters as the parties may from
time to time, agree;
12.16.2 coordinating those Traditional Owners from time to
time forming part of the Scouting Team; and
94,?031\AA0016.ASD
17 -
12.16.3 liaising with the Explorers during tours by the Scouting
Team.
12.17 The costs and expenses of employment of the Liaison Officer
and the reasonable expenses incurred by him or her in carrying out
his or her duties shall be at the expense of the Explorers.
12.18 The parties acknowledge that there is no contractual
relationship of any sort whatsoever as between the Explorers and any
person employed or engaged by AP to form part of any Scouting Team,
and that nothing contained in this Agreement will be interpreted or
deemed to constitute any employment or contractual relationship as
between such persons and the Explorers. AP will ensure compliance
with the Workers Rehabilitation and Compensation Act 1986, the
Occupational Health, Safety and Welfare Act 1986, the Income Tax
Assessment Act 1936 (Cwth) and any other legislation relevant to the
terms or basis upon which AP engages or retains any person pursuant
to this Agreement.
13. EFFECT OF OPERATIONS ON THE ENVIRONMENT
13.1 The parties acknowledge that a further purpose of this
Agreement is to:
13.1.1 provide a workable and effective arrangement to minimize the
physical, ecological and social effects of Petroleum Operations
conducted by the Explorers in Operational Areas from time to time;
13.1.2 provide that all reasonable steps are taken to ensure the
most effective regeneration of the Operational Areas and any other
parts of the AP Land affected by Petroleum Operations; and
13.1.3 ensure observance of all governmental requirements in
relation to the environment.
94:2031\AA0016.ASD
18 -
13.2 In order to achieve the objects stated in Clause 13.1 the
Explorers undertake to comply with the requirements of the Petroleum
Act and in particular to comply with Regulation 16 of the regulations
made thereunder.
14. ADVISORY COMMITTEE
14.1 In order to provide for the smooth working of this Agreement
and the continuous co-operation of the parties hereto, the parties
agree to form an Advisory Committee, consisting of two members
appointed by the Explorers and two members appointed by AP. Each
member shall have the right to appoint a proxy to attend on his or
her behalf and to invite a reasonable number of nonmembers to attend
committee meetings having regard to the matters under discussion.
14.2 The Advisory Committee shall meet on a regular basis and in
any event whenever any member of either party requests a Committee
meeting on twenty one days notice (or such other period as the
members may agree) to be given, together with details of agenda to
the members of the Committee.
14.3 The Committee shall meet at such place and in accordance
with such procedure as the Committee shall determine from time to
time and shall keep minutes which shall be supplied to the Explorers
and AP.
14.4 Unless otherwise specified, the majority decision of the
Advisory Committee shall be the determination of the Committee. In
the event of a deadlock the matter will be resolved as a dispute in
accordance with Clause 36 and the decision of the arbitrator pursuant
to Clause 36 shall become the determination of the Advisory
Committee.
14.5 The Explorers shall observe and act in accordance with the
decisions of the
Advisory Committee determined in accordance with this Clause 14.
94:2031\AA0016.ASD
19 -
14.6 Costs and expenses incurred by the parties relating to the
attendance of their
respective members at meetings of the Committee shall be borne
equally between the parties unless otherwise determined by the
Committee.
14.7 The functions of the Advisory Committee shall include:-
14.7.1 maintaining liaison between the Explorers and the local
Pitjantjatjara people;
14.7.2 reviewing the working of this Agreement and the progress
of Petroleum Operations hereunder;
14.7.3 making determinations under Clause 12. 1 0 hereof;
14.7.4 receiving and hearing any specific objection or complaint
relating to any part of the Petroleum Operations;
14.7.5 making recommendations to the Explorers in relation to the
employment and appropriate training of Pitjantjatjara people and
other people entering the Operational Areas for the purposes of the
Petroleum Operations, and in particular, using its best endeavors to
ensure that no incidents occur which degrade, prejudice or besmirch
the customs, lifestyle, race or character of the Pitjantjatjara
people.
14.8 The parties agree that they will at all times use their best
endeavors to carry
out the provisions of this Agreement so that Petroleum Operations may
be conducted efficiently and with adequate regard to the aspirations
and welfare of the Pitjantjatjara people affected by the Petroleum
Operations.
14.9 The Explorers shall use their best endeavors in consultation
with AP to promote the training referred to in Clause 14.7.5 and to
utilize the services of Pitjantjatjara people in connection with the
Petroleum Operations.
94:2031\AA0016.ASD
20 -
15. CONTROL OF LIQUOR
15.1 The Explorers note that it is an offense for any person
while on any part of the AP Lands to bring, be in possession of or
consume any liquor or to give, sell or otherwise provide or supply
any liquor to any other person.
15.2 The Explorers shall take all steps practicable in the
circumstances to bring the above mentioned prohibition to the
attention of all their contractors, employees, agents and visitors.
16. REMOVAL OF EMPLOYEES
16.1 Unless AP otherwise agrees, the Explorers shall take all
reasonable steps to ensure immediate removal from the Licence Area or
other AP Lands of any contractor, employee, agent, or visitor of any
of the Explorers, who:
16.1.1 has recklessly or willfully trespassed on or in any way
interfered with any Area of Significance;
16.1.2 has recklessly or willfully moved outside any Seismic
line/access road corridor or Work Site;
16.1.3 has violated any of the conditions set out on the
contractors employee's, agent's or visitors identification card or
permit;
16.1.4 has brought onto or been in possession of or consumed liquor
on the AP Lands, has acted in a drunken or disorderly manner on the
AP Lands, or has, on or outside the AP Lands, supplied liquor to
residents of the AP Lands otherwise than for consumption on licensed
premises outside the AP Lands;
16.1.5 has behaved in a manner demonstrating disrespect for
Pitjantjatjara culture and tradition or in a manner offensive to the
Pitjantjatjara people,
942031\AA0016.ASD
21
in circumstances in which the person knew or ought reasonably to have
known such behavior to be disrespectful or offensive.
16.2 In the event of a dispute between AP and the Explorers as to
whether a person
has acted in a manner justifying removal from the Licence Area the
matter shall be referred to the Advisory Committee for determination.
17. INSTRUCTION IN ABORIGINAL CULTURE
17.1 The Explorers shall promote among non-Aborigines employed in
Petroleum
Operations, a knowledge, understanding and respect for the tradition,
language and culture of the Pitjantjatjara people.
17.2 The Explorers shall ensure that:
17.2.1 all non-Aboriginal employees and personnel are given
appropriate instruction on aspects of Pitjantjatjara traditions,
history and culture by way of background and orientation;
17.2.2 all "on-site" supervisory staff are given an initial course
and periodic refresher courses of a more comprehensive and advanced
nature than the instructions envisaged in Clause 17.2.1 above.
17.3 The Explorers shall consult and have regard to the views of AP
in relation to the formulation and presentation of the instruction
and courses referred to in Clause 17.2 hereof. AP shall, whenever
requested by the Explorers to do so, give all reasonable assistance
to the Explorers in attaining the objectives of this Clause 17 and
shall be reimbursed by the Explorers for all reasonable expenses
incurred by it in so doing.
942031\AA0016.ASD
18. INSPECTION
18.1 The Explorers shall, subject to AP giving reasonable prior
notice to the Explorers, permit AP or its agents at reasonable times
to inspect any aspect of the Petroleum Operations which affect an
Operational Area or any part of it, and take all such steps as are
reasonably necessary in order to establish whether such operations
are being carried out in accordance with the Agreement PROVIDED THAT
AP or its agents shall observe all reasonable directions of the
Explorers with respect to health and safety whilst in the Licence
Area.
18.2 All information obtained by AP pursuant to this Clause shall,
unless disclosed with the consent of the Explorers, be confidential
while the Licence Area or any part thereof to which it relates
remains under the PEL held by the Explorers and then for a period of
two years following the cessation of Petroleum Operations or for so
long as the Explorers are entitled to enter upon or occupy any part
of the Licence Area, whether pursuant to this Agreement, the PEL or
any subsequent PPL, whichever is the later.
18.3 Subject to prior notice being given by AP where the Explorers
are required to make any payments to AP under this Agreement the
Explorers shall permit an independent auditor appointed by AP at all
reasonable times and places to inspect and take extracts and copies
from the books, accounts, financial and other records of the
Explorers relating to the payments and the basis thereof. All costs
in respect of such audit shall, subject to certain provisions
contained in Schedule 5 hereto, be to the account of AP. The parties
shall take all reasonable steps to ensure that any information
obtained by an auditor under this Clause 18.3, shall remain
confidential.
942031\AA0016.ASD
23 -
19. EXCHANGE OF INFORMATION
19.1 The Explorers shall provide AP with copies of such
information, data, reports and applications to any governmental
authority or authorization received from any governmental authority
in relation to the Petroleum Operations, as may affect the
Traditional Owners or as may be required by AP to property fulfill
its obligations under this Agreement subject to Clause 27 and
Schedule 6 herein. Provided that the Explorers shall not be required
to provide AP with geological, geophysical and engineering data
generated in respect of the Petroleum Operations.
19.2 AP shall provide the Explorers with such information, data
and reports relating to the existence and position of Operational
Areas or part thereof that have been screened and cleared pursuant to
any prior agreement with any third party.
19.3 The information referred to in this Clause, unless disclosed
with the consent of the Explorers or AP as the case may be, shall be
confidential while the Licence Area or any part thereof to which such
information relates remains under the PEL or subsequent PPL held by
the Explorers and then for a period of two years following the
cessation of Petroleum Operations or for so long as the Explorers are
entitled to enter upon or occupy any part of the Licence Area,
whether pursuant to this Agreement, the PEL or any subsequent PPL,
whichever is the later.
20. EXPLORERS COVENANTS
The Explorers covenant with AP that in connection with the conduct of
Petroleum Operations by them on the Licence Area they shall:
20.1 keep each Work Site to the minimum area considered necessary to
conduct efficient Petroleum Operations;
20.2 take all proper precautions to reduce fire risk on the Licence
Area;
942031\AA0016.ASD
24 -
20.3 not make any break in any of AP's fences without either promptly
installing an
adequate gate or making good the break;
20.4 ensure all well sites are capped or sufficiently fenced off
after drilling so as to
prevent injury to persons or stock.
21. AP COVENANTS
21.1 AP covenants with the Explorers and each of them that AP
shall:
21.1.1
notinterferewiththeconductofPetroleum0perationsupontheLicence Area
except in accordance with this Agreement or any other agreement
between the parties;
21.1.2 not lodge or make any objections to the granting to the
Explorers of the PEL for which the Explorers have applied under the
Petroleum Act in respect of the Licence Area, or, subject to the
Explorers complying with this Agreement, to the granting to them of
any renewal or extension thereof or of a PPL.
21.2 AP further covenants that it has made a full and proper search
for the Traditional Owners of the Licence Area and that in
negotiating and entering into this Agreement it has complied fully
with its obligations under the Act to act in the interests and on
behalf of all the Traditional Owners of the Licence Area and
acknowledges that the Explorers have entered into this Agreement on
that basis and hereby indemnifies and keeps indemnified the Explorers
in respect of any loss, damage or delay occasioned by any future
claim made, pursuant to the Native Titles Act 1993 (Cwth), and/or the
Native Title (South Australia) Act 1994 by a third party or third
parties in respect of the Licence Area.
942031\AA0016.ASD
25 -
22. RIGHTS OF TRADITIONAL OWNERS
22.1 The Explorers acknowledge that the members of AP have the right
except
where their presence may cause danger to health and safety, or where
their presence may interfere with the conduct of efficient Petroleum
Operations:
22.1.1 to move freely throughout the Operational Areas including
all roads thereon;
22.1.2 to establish residence within reasonable proximity to other
residences in any place in the Operational Areas where other people
reside;
22.1.3 to pursue customary and traditional activities in the
Operational Areas.
22.2 AP, its members and agents shall be permitted the use of all
roads constructed for the purpose of Petroleum Operations provided
such use does not interfere with the conduct of efficient Petroleum
Operations.
22.3 The use of roads in accordance with this clause shall be subject
to reasonable control by the Explorers for the purpose of safety and
to priority of use by the Explorers for the purposes of Petroleum
Operations.
23. RIGHTS OF EXPLORERS
Subject to this Agreement the Explorers shall have the right to
conduct Petroleum Operations in the Licence Area in accordance with
the terms of this Agreement freely and in an efficient manner without
disturbance or interruption from AP, in order to discharge their
legal obligations and duties in respect thereof, in particular under
the Petroleum Act and the Licence and any other legislative or
administrative requirements relating to the carrying out of Petroleum
Operations.
942031\AA0016.ASD
26 -
24. REVERSION OF INFRASTRUCTURE
24.1 Within the period of twelve calendar months, or such other time
as may be agreed between the parties, after of the Explorers cease to
have any right to conduct operations pursuant to the PEL under the
Petroleum Act in the Licence Area, and they hold no other tenements
under the Petroleum Act in the Licence Area the Explorers shall
remove from the Licence Area all infrastructure or facilities
constructed for the purposes of Petroleum Operations, which are
capable of removal other than those which AP agrees may remain
thereon.
24.2 In the event that AP agrees that any or all of the
infrastructure or facilities are to remain, the Explorers shall not
be liable for any state or condition of repair for such
infrastructure or facilities not removed from the Licence Area and AP
hereby waives and releases the Explorers from any claim demands costs
or expenses made or incurred by AP in respect of such infrastructure
or facilities and will indemnify the Explorers against any claims
demands suits or proceedings of any third party arising out of the
state or condition of repair of such infrastructure or facilities.
24.3 Any infrastructure or facilities AP does not agree should remain
and are not removed by the Explorers within the period of twelve
calendar months as aforesaid shall become the property of AP without
any payment or assumption of any mortgage, lien or charge thereof on
the part of AP or any other Pitjantjatjara person association or
body.
24.4 Upon acquisition by AP of such infrastructure or facilities, AP
shall become responsible for the maintenance thereof and shall
maintain where necessary, repair and renovate such facilities as
required. AP may charge persons using facilities a rental for the
use thereof.
25. INDEMNITY
Subject to Clause 12.17 herein, AP and its employees, agents and
contractors shall be indemnified by the Explorers in respect of all
actions, suits, claims, demands, or
94@2031\AA0016.ASD
27 -
costs of third parties arising out of or in connection with any work
carried out by or on behalf of the Explorers pursuant to this
Agreement or relating to AP's activities except where such action,
suit, claim, demand or cost arises out of the negligence or willful
act or omission of AP, its employees, agents or contractors.
26. FIELD DEVELOPMENT AND PRODUCTION
The parties acknowledge that at any time during or after completion
of the Petroleum Operations carried out pursuant to a PEL, the
Explorers may wish to apply for a PPL under the Petroleum Act in
respect of the whole or any part of the Licence Area. In the event
of the Explorers so applying, and a PPL being granted by the
Minister, unless the parties otherwise agree, the provisions of this
Agreement including the Principles of Agreement contained in Schedule
6 shall apply in relation to the conduct of Petroleum Operations on
the PPL so granted.
27. PETROLEUM PRODUCTION LICENCE
27.1 Where the Explorers intend to make application for a PPL within
the Licence Area pursuant to the Petroleum Act, the Explorers shall
notify AP of their intention to lodge such application, at least 30
days prior to lodgment with the Minister and shall at that time
provide to AP technical and financial data as set out in Schedule 6
herein.
27.2 Where notification is received by AP pursuant to Clause 27.1
herein AP shall, subject to the terms and conditions set out in
Schedule 6 herein and in particular upon the payment of past
exploration expenditure as provided for in that Schedule 6, be
entitled to elect to take up to a maximum 10% participatory interest
in any Joint Venture in respect of the PEL PROVIDED HOWEVER THAT if
AP elects to take up any participatory interest, that participatory
interest must be not less than 1%.
27.3 Where the Explorers make application for the grant of a PPL
pursuant to the Petroleum Act they shall forward a copy of that
application and all relevant supporting documentation to AP and AP
shall, to the extent required by the Act
942031\AA0016.ASD
28 -
consent to the grant of the PPL where the application is in
accordance with the terms contemplated in this Agreement.
27.4 Where the Minister grants to the Explorers a PPL the provisions
of this Agreement mutatis mutandis shall apply in respect of any work
or activities conducted by the Explorers within the Licence Area for
so long as the PPL shall exist and any obligations on the parties
pursuant to the Act shall be deemed to have been met.
28. FORCE MAJEURE
28.1 In the event that the performance of this Agreement by either
party is prevented or delayed in whole or in part by acts of God,
flood, fire or damage caused by lightning, storm or tempest,
unseasonable rains, strikes, lockouts or other industrial
disturbances, dots, blowouts, laws, rules, regulations, or directions
of a governing body having jurisdiction over the Licence Area,
religious or other ceremonial activities of members of AP, inability
to obtain equipment or material or any other causes which by the
exercise of due diligence that party is unable to prevent or overcome
("force majeure"), this Agreement shall nevertheless continue and
remain in force and effect but that party shall not be in default
hereunder for as long as it continues to be prevented or delayed as
aforesaid by such force majeure and the time within which such party
is required to perform any work to satisfy any obligation hereunder
shall be extended by a period equivalent to that during which such
prevention or delay continues provided that:
28.1.1 the cause of the force majeure as far as possible shall be
remedied with all reasonable dispatch by such party;
28.1.2 neither party shall be required to settle any strike,
lockout, or other industrial disturbance on terms that it does not
regard as satisfactory.
942031\AA0016.ASD
29 -
28.2 The party affected by any event of force majeure as aforesaid
shall forthwith
give notice in writing thereof to the other party of the occurrence
of such event and the cessation thereof.
29, ASSIGNMENT
29.1 Except as otherwise provided in this Clause 29, the Explorers
shall not transfer the whole or any part of its interests, rights or
obligations under this Agreement.
29.2 The Explorers may transfer the whole or any part of their
interests, rights or obligations under this Agreement subject to the
conditions hereinafter specified, to any financially responsible
person or persons or corporation (having regard to the extent of the
financial obligations to be assumed by the proposed transferee)
selected by the Explorers. The conditions of such transfer are:
29.2.1 AP has given its consent in writing to such transfer, which
consent shall not be unreasonably withheld, and if there are no
grounds for reasonably withholding such consent, then such consent
shall be given as expeditiously as possible and in any event not more
than 30 days from the date of notification of the proposed transfer.
If AP withholds its consent, such withholding must be accompanied by
a written notice stating in detail the reasons therefor and such
notice shall be given as expeditiously as possible and in any event
not more than 30 days from the date of notification of the proposed
transfer;
29.2.2 the proposed transferee shall execute in favour of AP an
agreement of covenant undertaking to observe and comply with all the
obligations of the Explorer to this agreement.
30. OPERATIONS
30.1 For the purposes of fulfilling their obligations under the
Licence, the Explorers may exercise all their rights and perform all
their obligations under this Agreement through an Operator. The
Explorers may from time to time request
94@2031\kAO016.ASD
30 -
the approval of AP to the appointment of an Operator and such
approval shall not be unreasonably withheld. AP shall notify its
approval or disapproval of such an Operator within 28 days of receipt
of such request (and no such appointment shall take place until such
approval is given). AP shall be entitled to deal with the Operator
as though AP were dealing with the Explorers.
30.2 AP shall be entitled to select and engage all such
employees, agents and independent contractors as are necessary and
desirable for the carrying out of any or all of its obligations under
this Agreement
31. CONFIDENTIAL INFORMATION
31.1 Neither AP nor the Explorers shall advertise, publish or
release to anyone other than a party any information concerning this
Agreement or any matter or thing done or required to be done pursuant
thereto. All information supplied pursuant to this Agreement by one
party to this Agreement to the other party to this Agreement
(including all information relating to Areas of Significance) shall
be confidential and shall not be released by either party without the
other party's written consent PROVIDED HOWEVER THAT:
31. 1.1 the Explorers shall be free to make -such reports as may be
required either by the rules of any Stock Exchange in Australia or
elsewhere on which the shares of such Explorer are listed or by the
laws and regulations of any government or governmental agency having
jurisdiction over such matter or Explorer;
31.1.2 the Explorers may disclose such information except
information identifying Areas of Significance to a third party in
connection with bona fide discussions regarding a proposed sale of
all or part of such Explorers' interest in the Licence to that third
party or when necessary in connection with efforts to obtain funds to
carry out such Explorers' responsibilities hereunder but all such
disclosures shall be made on a confidential basis; and
942031\AA0016.ASD
31 -
31.1.3 AP or the Explorers may disclose such information to any of
its bona fide consultants subject to their agreeing to be bound by
the provisions of this Clause 31.
32. TERMINATION
32.1 AP may terminate this Agreement by giving to the Explorers
three months notice in writing only on the following conditions:
32.1.1 in the event that the Explorers fail to pay any monies due
to AP and such default continues for more than 30 days after receipt
of notice of failure to pay, except in the case where a bona fide
dispute as to the liability or amount of monies payable has arisen;
32.1.2 if the Explorers are in breach of any term or condition of
this Agreement and, if such breach is capable of being remedied, fail
to remedy or commence to remedy such breach within 30 days after
receipt of notice given by AP in writing of such breach.
32.2 It is specifically agreed and understood that this Agreement
shall not terminate
because of any change or reduction of AP,s entitlements to payment
under any PEL or PPL covering the Licence Area or any part thereof,
so long as the Explorers are in compliance with the terms hereof.
33. TERMINATION OF ACTIVITIES
33.1 The Explorers shall notify the AP one month prior to any
surrender of the PEL (or PPL) pursuant to the Petroleum Act.
33.2 A surrender under Clause 33.1 is effective on and from the date
the PEL (or PPL) is effectively surrendered pursuant to the Petroleum
Act.
942031\AA0016.ASD
32 -
33.3 In the event of such surrender by the Explorers, the consent of
AP to the grant of the PEL (or PPL) shall be deemed to be withdrawn
and to be of no effect as of the effective date of surrender.
33.4 The Explorers shall cease Petroleum Operations immediately the
PEL (or PPL) expires or is surrendered, withdrawn, revoked or
canceled.
33.5 Upon the surrender withdrawal revocation or cancellation of the
PEL (or the PPL) as the case may be:
33.5.1 the Explorers shall pay to AP all monies then payable or
accrued which are due to it pursuant to this Agreement;
33.5.2 except to the extent that entry or occupation is required
for the purposes of Clause 24 the Explorers, their employees,
servants, agents contractors and/or sub-contractors shall immediately
and permanently leave the Licence Area; and
33.5.3 each party shall remain liable to the other party in
respect of any liability it has to the other as a consequence of any
prior breach of this Agreement;
33.5.4 nothing in this Agreement shall be construed as imposing
an obligation on the Explorers to carry out or complete the Petroleum
Operations;
33.5.5 except as provided in Clause 34 this Agreement shall
terminate when the parties have complied with Clause 33, the PEL (or
PPL) has terminated or has been surrendered, withdrawn, revoked,
canceled, as the case may be, whichever occurs earlier;
33.5.6 the parties obligations under Clauses 13.2, 18.2, 19.3
shall to the extent referred to therein survive any termination of
this Agreement.
94,?031\AA0016.ASD
33 -
34. CONSEQUENCES OF TERMINATION
Upon termination of this Agreement pursuant to Clause 33 hereof:
34.1 the rights of the Explorers hereunder, unless otherwise
provided in this Agreement, shall thereupon cease without prejudice
to any liability in respect of any antecedent breach or default under
this Agreement;
34.2 the Explorers shall, without prejudice to their obligations
under Clauses 13 and
24.1 hereof, be relieved of all obligations under this Agreement
except those obligations which arose prior to the date of such
termination.
35. COSTS AND PAYMENTS
35.1 The Explorers shall not be liable to pay the wages and expenses
of persons employed by AP, to the extent that such wages and expenses
are already funded by a State or Commonwealth Government.
35.2 AP shall prepare and provide to the Explorers on a monthly basis
or at such other times as may be agreed between the parties, detailed
accounts in respect of scouting activities undertaken by the Scouting
Team at the request of the Explorers in accordance with the schedule
of fees set out in Schedule 3 hereto and, in the absence of any
dispute as the amount so claimed by AP, the Explorers shall within
thirty days of receipt of such invoice, pay to AP the amount claimed.
35.3 The Explorers shall make payment to AP of amounts in respect of:
35.3.1 Exploration payments in accordance with the
provisions of Schedule 4 herein;
35.3.2 Compensation payments in accordance with the
provisions of Schedule 5 herein;
942031\AA0016.ASD
34 -
35.3.3 Annual advance payments and/or dividends payments in
accordance with the provisions of Schedule 6 herein.
35.4 In the event of a dispute as to the amount or amounts
claimed or payable pursuant to Clauses 35.2 and 35.3 herein, the
matter shall be referred to the Advisory Committee for resolution and
in the absence of agreement the matter shall be referred for
arbitration in accordance with Clause 36 hereof.
36. DISPUTES
36.1 Subject to the Act, if any dispute or difference arises
between the Explorers and AP in connection with this Agreement, or
the rights, duties or obligations of any party hereunder, the parties
shall meet to discuss the dispute or difference and endeavor to
amicably resolve such dispute or difference by themselves.
36.2 If after discussions the parties are unable to resolve such
dispute or difference, the matter shall be referred to arbitration.
The arbitrator shall be agreed upon between the parties hereto and
failing agreement within one month of one party giving notice of
intention to arbitrate to the other, shall be nominated by the
President for the time being of the Law Society of South Australia.
37. TERM
This Agreement shall commence on the date first appearing herein and
shall continue for the duration of any PEL held by the Explorers in
respect of the Licence Area or, in the event of application by the
Explorers for, and grant to the Explorers of, a PPL or PPLS, for the
duration of the PPL, PPLs or until terminated in accordance with
Clauses 32 and 33 herein.
38. VARIATION
The parties may from time to time by agreement in writing add to,
substitute for, cancel or vary any of the provisions of this
Agreement for the purpose of more efficiently or satisfactorily
implementing or facilitating any of the objects of this Agreement.
94:2031\AA0016.ASD
35 -
39. FURTHER ASSURANCE
Each of the parties hereto will sign, execute, make and do all such
assurances, documents, acts and things as may be necessary for
effectually carrying out the terms of this Agreement.
40. NOTICES
Any notice, request or other demand or writing required or permitted
to be given hereunder may be duly served or at the option of the
party giving the notice may be validly and sufficiently given if sent
by telex, telegram, facsimile or post addressed to:
40.1 In the Case of the Explorers to: Messrs. Naylor & Ingram
c/- McDonald & Co
262-266 Pirie Street
PO Box 3216 Rundle Mall
ADELAIDE SA 5000
Fax (08) 223 5290
40.2 In the case of AP to:
Anangu Pitjantjatjara
PO Box 2584
ALICE SPRINGS NT 5750
Fax: (089) 526 371
41. APPROVAL AND NOTIFICATION
The parties agree to notify the Minister of the terms and conditions
of this Agreement forthwith.
WITNESS WHEREOF the parties hereto have set their hands and seals the
day and year first hereinbefore written.
36 -
THE COMMON SEAL of
ANANGU PITJANTJATJARA
was hereunto affixed with the
authority of the executive Board in the presence of five members
thereof, who hereby certify that this act is done in conformity with
a resolution of Anangu Pitiantjatjara and the provisions of the
Pitjantjatjara Land Rights
Act 1981:
SIGNED by the said
JOHN LEONARD NAYLOR
and PAUL BRYAN INGRAM
in the presence of:
/s/ John Leonard Naylor
/s/ Paul Bryan Ingram
Witness
37
Schedule I
Description of the AP Lands as contained in the First Schedule to the
Act:
(a) The North West Reserve, blocks 915, 948, 953, 964, 1018, 1019,
1031, 1032 and 1217, Out of Hundreds;
(b) Section 462, Out of Hundreds;
(c) Pastoral blocks 1033, 1058, 1060 and 1074 and Section 1280, Out
of Hundreds;
(d) Pastoral blocks 863, 900, 907, 908 and 1165, Out of Hundreds;
(e) Pastoral blocks 1034 and 1202, Out of Hundreds;
(f) Pastoral blocks 1036, 1037, 1038 and 1077, Out of Hundreds;
(g) The land in respect of which partial surrender No. 4603197 and
partial surrender No. 4603198 were registered in the Register of
Crown Leases.
38
Schedule 2
Description of Licence Area
All that part of the State of South Australia bounded as follows -
Commencing at a point being the intersection of latitude 27000'S and
longitude 133000'E thence east to the eastern boundary of the
Pitjantjatjara Lands, thence generally southerly and westerly along
the boundary of the said Lands to longitude 133000'E, and north to
the point of commencement, all the within latitudes and longitudes
being geodetic and expressed in terms of the Australian Geodetic
Datum as defined on page 4984 of Commonwealth Gazette No. 84 dated
October 6, 1966.
AIREA: 6258 square kilometers approximately.
39
Schedule 3
1. AP will provide a Scouting Team or Teams to undertake screening
and clearing of Petroleum Operations within the Licence Area if and
when the requirement arises in accordance with Clause 7 of this
Agreement. The composition of the Scouting Team or Teams may vary
from time to time as determined by AP in consultation with the
Explorers provided that the Scouting Team or Teams will at no time
comprise more than four male and four female members of AP.
2. AP will ensure that both a male and/or a female anthropologist
are available to join the Scouting Team depending on the part of the
Licence Area under consideration at any given time and the Area or
Areas of Significance that may be therein.
3. The male anthropologist appointed by AP will coordinate the
Scouting Teams provided for in Clause 11 of the Agreement and will be
responsible for conveying the results of the Scouting Team's
determinations and assessments of the Explorers Petroleum Operations
under the terms of this Agreement.
4. Subject to this Agreement, AP will ensure that the Scouting Team
is available to undertake additional anthropological assessment in
respect of campsites and bore sites as and when such sites are
required by the Explorers in the course of carrying out the Petroleum
Operations. Where such additional anthropological assessment is
required, AP will ensure that the Scouting Team operates on a regular
work schedule that coincides with the work schedule of the Explorers.
5. AP will arrange suitable camping facilities for the Scouting
Team.
6. AP will ensure that a Traditional Owner or Owners (but in any
event not exceeding three persons) with first hand knowledge of Areas
of Significance in the particular Operational Area, together with the
appropriate support equipment, are available for Scouting purposes.
942031\AA0017.ASD
40
7. AP will provide an all terrain four-wheel drive vehicle for use
by the Scouting Team while it is undertaking the anthropological
assessment and thereafter for use by the Liaison Officer in carrying
out his or her duties pursuant to this Agreement. Provided however
that in the event that the Scouting Team and the Liaison Officer are
both doing work associated with the Scouting Operations at the same
time, they will share the use of the vehicle.
8. The said vehicle will be insured by AP and equipped by AP with
sufficient spare parts.
9. AP will cause a log-book to be kept and will ensure that the
following information is recorded in the log book in relation to the
use of the 4 WD vehicle:
(a) date;
(b) place of departure;
(c) destination;
(d) reason for the journey;
(e) name of driver; and number of kilometres traveled in respect of
each occasion that the 4 WD vehicle is used for or incidental to the
carrying our of the Scouting Operations and will make the log-book
available to the Explorers upon request.
10. The Explorers will reimburse AP for its costs in:
(a) employing the services of the persons comprising the Scouting
Team;
(b) providing food to the Scouting Team; and
(c) providing a 4 Wheel drive vehicle for use by the Scouting Team in
accordance with the scale set out in paragraph 12 herein.
11. In the event that there are at any time more than three
Traditional Owners forming part of the Scouting Team the Explorers
shall not be responsible for the expense of the additional persons in
such group, unless otherwise agreed between the parties.
942031\AA0017.ASD
41
12. Remuneration
12.1 Scouting Team Members:
12.1.1 Consultant fully qualified anthropologists - Duty
rate$320.00 per day
12.1.2 AP Member (max. four male and four female at any one time)
Duty rate $135.00 per day
12.2 Food for Scouting Team:
The Explorers will pay AP the sum of $30.00 Per day by way of food
allowance in respect of each member of the Scouting Team for each day
that such member is on duty in the Licence Area or traveling to or
from the Licence Area.
12.3 Four Wheel Drive Vehicle:
The Explorers will pay to AP the sum of 55 cents per kilometer in
respect of the total number of kilometers recorded in the log-book as
having been traveled by the 4 wheel drive vehicle where the vehicle
was being used by the Scouting Team or the Liaison Officer for or
incidental to the carrying out of the Petroleum Operations, provided
that the Explorers will not be required to pay the abovementioned
rate per kilometer in respect of kilometers recorded in the log-book
unless the information referred to in paragraph 9 hereof has been
recorded to the satisfaction of the Explorers.
942031\AA0017.ASD
42 -
Schedule 4
Payments to AP pursuant to Clause 6.1.4 of the Agreement in respect
of
Petroleum Operations under the PEL
1. The Explorers agree to pay to AP an amount equal to the following
percentages of Annual Exploration Expenditure (as hereinafter
defined) ("AEE");
1.1 2.5% of such amount of AEE which is less than or equal to
$500,000.00 per annum; and
1.2 1.5% of such amount of AEE which exceeds $500,000.00 per annum.
"Annual Exploration Expenditure" means:
all expenses incurred in any one year in respect of exploration
carried out on the Licence Area as are required to be reported to the
Minister pursuant to Subsections 18(d) and (e) of the Petroleum Act,
save and excluding such expenses as may reasonably be defined as
administrative or managerial in nature; legal, accounting and/or
consultants fees; off-site traveling costs together with any other
expenses which may reasonably be characterised as off-site expenses
whether or not such costs may be, or may be required to be, included
in any report of exploration expenditure provided to the Minister.
2. Notwithstanding the above provision, the Explorers will make a
guaranteed minimum payment of $20,000.00 in respect of a calendar
year in which on-site Petroleum Operations are carried out pursuant
to the PEL.
3. Subject to the terms and conditions set out in the Agreement,
the Explorers shall:
3.1 within ninety days of receipt of notification from the Minister
that the PEL is to be granted, and thereafter annually for the
duration of each term of the PEL, make payment to AP of the amount
set out in paragraph 2 herein;
942031\AA0017.ASD
43 -
3.2 within ninety days of the end of each calendar year make payment
to AP of the amount or amounts set out in paragraph 1 herein less an
amount in respect of any minimum payment pursuant to paragraph 2
herein already made.
If the report pursuant to Sections 18(d) and 18(e) has not been
forwarded to the Minister for Mines & Energy within ninety (90) days
of the end of each calendar year, the Explorers are to make their
best estimate of AEE and make any payment due on the basis of that
estimate, adjustments shall be made within one month after the final
report to the Minister is submitted.
4. For the purposes of this Schedule each calendar year shall be
deemed to commence as at the date of grant of the PEL and
subsequently on the anniversary of the date of such grant.
942031\AA0017.ASD
44 -
Schedule 6
Payments to AP pursuant to Clause 6.1.5 of the Agreement in respect
of
Petroleum Operations under the PPL
1. Application of Schedule 5
Save as otherwise provided in the Agreement and in particular as
provided in Schedule 6 hereto, this Schedule shall apply to payments
to AP in the event that AP elects not to exercise or is deemed not to
have exercised its rights pursuant to Clause 27.1 of the Agreement.
2. Compensation Payments
Subject to paragraph 4 the Explorers shall pay to AP in respect of
the production of all Petroleum, the following amounts by way of
compensation:
2.1 in respect of production up to and including 8,000,000 barrels
of oil (or barrels of oil equivalent), 1% of the value at the well
head of Petroleum produced and sold;
2.2 in respect of production from 8,000,001 to 14,000,000 barrels of
oil (or barrels of oil equivalent), 1.5% of the value at the well
head of Petroleum produced and sold;
2.3 in respect of production from 14,000,001 to 20,000,000 barrels
of oil (or barrels of oil equivalent), 2% of the value at the well
head of Petroleum produced and sold;
2.4 in respect of production from 20,000,001 to 30,000,000 barrels
of oil (or barrels of oil equivalent), 2.5% of the value at the well
head of Petroleum produced and sold;
942031\AA0017.ASD
45 -
2.5 in respect of production in excess of 30,000,001 barrels of oil
(or barrels of oil equivalent), 3% of the value at the well head of
Petroleum produced and sold.
3. Calculation of Payments
The payments referred to in paragraph 2 herein are to be calculated
as follows:
3.1 Value at the well head of Petroleum produced and sold is to be
calculated in the same way that "value at the well head of Petroleum"
is calculated pursuant to section 35,(6) of the Petroleum Act where
the sale price is bona fide and to an arms length purchaser PROVIDED
that the "Guidelines for Payment of Royalty and Provision of
Information" issued by the Department of Mines and Energy of South
Australia, a copy of which is annexed to this Schedule 5, shall be
applied mutatis mutandis as if the reference to the royalty rate of
10% therein in were a reference to the relevant percentage rate of
compensation referred to in paragraph 2 herein;
3.2 subject only to paragraphs 3.3 and 3.4 herein, the minimum sale
price of oil shall be deemed to be $24.00 per barrel (the "floor
price");
3.3 in the event of an increase in the sale price of oil per barrel
of $2.00 or more above the floor price, which increase remains
constant for a minimum period of 30 consecutive days, then for each
such increase of $2.00 the percentage production payments set out in
paragraph 2 herein shall increase correspondingly by an amount of
0.125%;
3.4 subject to paragraph 3.2 herein, where the sale price of oil per
barrel decreases by $2.00 or more, which decrease remains constant
for a minimum period of thirty consecutive days then, for each such
decrease of $2.00 the percentage production payments set out in
paragraph 2 herein shall decrease correspondingly by an amount of
0.125%;
942031\AA0017.ASD
46 -
3.5 a ceiling sale price of $45.00 per barrel of oil shall apply to
the percentage increases referred to in paragraph 3.3 herein and no
percentage increase shall apply to sale price increases in excess of
$45.00 per barrel.
4. Conversion rates from Oil to other Petroleum products
For the purposes of the determination of the barrels of oil
equivalent as referred to in paragraph 2 herein, the following
conversion table shall apply:
<TABLE>
<CAPTION>
Petroleum Product Volume Equivalent to
<S> <C> <C> <C>
Crude Oil 1 barrel 1 B.O.E.
Sales gas 1 Petajoule 171.937 B.O.E.* 103
Condensate/Naphtha 1 Barrel 0.935 B.O.E.
LPG 1 tonne 8.458 B.O.E.
</TABLE>
5. Identification of Field Size
5.1 The Explorers shall within a reasonable time period and in any
event within 5 years from the date of grant of the PPL, prepare a
reserves assessment report of the producible field, subject of the
PPL and shall provide to AP a copy of the report.
5.2 AP shall, within a period of six months from the date of receipt
of the report referred to in paragraph 5.1 herein, be entitled to
dispute the finding made therein.
942031\AA0017.ASD
47 -
5.3 In the event that AP disputes the assessment in accordance with
paragraph
5.2 herein, it shall provide to the Explorers a notice of
dispute in writing setting out detailed reasons for such dispute
within the said six month period.
5.4 Where AP does not notify the Explorers in accordance with
paragraph 5.3 herein, AP shall be deemed to have accepted the
Explorers report and the Explorers shall be entitled to base their
calculations in respect of adjustment of compensation payments set
out in paragraph 6 herein on that assessment.
5.5 Where AP notifies the Explorers pursuant to paragraph 5.2 herein
and an agreement as to the volume of reserves assessed in respect of
the relevant producible field cannot be reached, the matter shall be
resolved by reference to an independent expert appointed by the
parties who shall determine the extent of reserves and whose opinion
shall be final and
binding on the parties. Costs in respect of the appointment of the
independent expert shall become equally as between the parties.
6. Adjustment of Compensation Payments - Field Decline
6.1 If in the Operates opinion the relevant field has gone or is to
go into decline, the Operator shall give AP notice to that effect,
and:
6.1.1 the parties shall meet and negotiate and use their best
endeavors to agree upon the date on and as from which the relevant
field has gone or is to go into decline (the "Relevant Date").
6.1.2 the Relevant Date shall be determined on the basis of the
field reserves assessment report referred to in paragraph 5.1 herein
which shall set out the estimated remaining reserves as a percentage
of the total estimated field and shall further set out the
942031'AA0017.ASD
48
point at which the field shall be deemed to have gone or is to go
into decline as a percentage of the total estimated field (the
"Relevant Percentage") PROVIDED HOWEVER that the Relevant Percentage
shall be no less than 50% and no more than 70% of the total estimated
field;
6.1.3 if within 60 days from the giving of the notice referred to
in paragraph 6.1 herein, the parties are unable to agree, the Chief
Executive Officer of Mines & Energy South Australia shall nominate
and appoint an independent qualified reservoir engineer who shall
carry out a study to determine the Relevant Date on and as from which
the relevant field has gone or is to go into decline and who in so
doing shall act as an expert and whose opinion and study shall be
final and binding on the parties.
6.2 On and as from the Relevant Date, compensation payments to AP as
set out in paragraph 2 herein shall be reduced by an amount of 0.5%
of the value at the well head of petroleum produced and sold for each
additional 10% of the total estimated field produced in excess of the
Relevant Percentage, PROVIDED HOWEVER that the minimum percentage of
compensation payable to AP pursuant to this paragraph shall be 1.5%
of the value at the well head of petroleum produced and sold.
7. Time for Payment
Payments due to AP as calculated in accordance with paragraphs 2 and
3 herein shall be made by the Explorers and/or the Operator within 30
days after the last day of each calendar month in which the Petroleum
in respect of which such compensation applies was sold, or within 30
days after the last day of the calendar month in which payment is
actually received by the party selling the Petroleum or Other
Product, whichever is the earlier date.
942031\AA0017.ASD
49 -
8. Adjustment of Compensation payments
8.1 The Explorers shall at the Explorers' expense provide to AP,
within 90 days after the end of each Licence Year commencing with the
Licence Year in which production of Petroleum first occurs from the
Licence Area, a report setting out the amount of Petroleum produced
and sold during the preceding Licence Year, calculations of the
proceeds attributable to AP in accordance with this Schedule 5 for
such year, and providing such other information as AP shall
reasonably request.
8.2 If any such report indicates that payments actually made to AP
were less than the amount reflected as being payable, the amount of
the difference plus interest at 2 percentage points above the then
prevailing interest rate as charged by the ANZ bank for loans less
than $100,000.00 shall be promptly adjusted by an appropriate
balancing payment to AP.
8.3 If any such report indicates that payments actually made to AP
were greater than the amount reflected as being payable, the amount
of the difference shall be promptly adjusted by an appropriate
deduction from the first month or months, as appropriate, payment to
AP of its due entitlements pursuant to this Schedule 5.
9. Auditing
9.1 The Explorers shall cause to be kept and maintained complete
books and records in respect of AP's entitlements pursuant to this
Schedule 5 and shall retain such books and records for at least five
years.
9.2 AP, upon at least thirty days advance written notice to the
Explorers and/or any interested third party or third parties (the
"Third Party"), shall have the right, at its sole expense to audit
the books and related records for any
942031\AA0017.ASD
50 -
Licence Year or proportion thereof within the 12 month period
following the end of the Licence Year to which they relate.
9.3 All bills and statements rendered to AP by the Explorers and/or
the Third Party during any Licence Year shall conclusively be
presumed to be true and correct after 12 months following the end of
any such Licence Year unless within the said 12 month period AP takes
written exception thereto and make claim for adjustment.
9.4 the conducting of an audit shall not extend the time for the
taking of written exception to and the adjustment of accounts as
provided above.
9.5 If any such audit demonstrates that amounts owing to AP have
been underpaid by more than 10% then, provided AP protests within six
months from the close of the calendar year being audited, in addition
to promptly making a balancing payment with interest to AP, the
Explorers and/or the Third Party, shall in accordance with their
respective participation interests reimburse AP for the expense of
the audit.
942031\AA0017.ASD
PPL
GUI]DELINES FOR PAYMIENT OF ROYALTY
AND PROVISION OF INFORMATION
(1) Payment of Royalty
The Licensees shall pay royalty in respect of all petroleum recovered
from
Petroleum Production Licence other than petroleum described in
Section 35(2) of the Petroleum Act, 1940 (The Act').
(2) Calculation of Royalty
The Licensees shall pay royalty at a rate of ten (10) percentum of
the value at the wellhead of the petroleum, which shall be an amount
calculated by taking the amount the petroleum might reasonably be
expected to obtain upon sale to a bonafide purchaser ("bona @ sales
value") (as defined in clause (3)(a)(i) and subtracting therefrom all
expenses actually incurred or to be incurred by the licensees in
treating, processing or refining the petroleum prior to delivery or
in conveying the petroleum to the point of delivery to the purchaser,
which expenses shall be the following sums:
(a) a sum calculated by writing off on a straight line basis
together with interest on the written down value at the rate provided
in clause (3Xc), over a period of ten (10) years commencing from the
month the expense was incurred (or such lesser period as may be
determined as being the life of the field) the actual capital
expenditure incurred by the licensees or some one or more of them in
respect of all plant used for the purposes of treating, processing or
refining of the petroleum prior to delivery (but not upstream of the
wellhead) or in conveying the petroleum to the point of delivery to
the purchaser provided however that if any item of such plant is sold
prior to being fully depreciated, the amount obtained upon such sale
shall be deducted from the written down value of such item for the
purposes of calculating the deduction, but not so as to reduce the
written down value below zero;
(b) a sum being expenditure actually incurred by the Operator in
respect of
persons not employed on site in Petroleum Production Licence but
whose employment functions directly relate to treating, processing or
refining of the petroleum prior to delivery (but not upstream of the
wellhead) or in conveying the petroleum to the point of delivery to
the purchaser,
(c) a sum being expenditure (other than expenditure upstream of the
wellhead) actually incurred by the Licences or some one or more of
them in respect of operating costs related to treating, processing or
refining of the petroleum prior to delivery or in conveying the
petroleum to the point of delivery to the purchaser, including but
not limited to the amount of any licence fees payable in respect of
any pipeline licence, provided however that:
(i) the amount of such deduction will be reduced by the amount
obtained upon the sale of any item of plant which has not been
depreciated or which has been fully depreciated, but not so as to
reduce the deduction below zero,
2
(ii) if any such expenditure is incurred pursuant to any
agreement which is not bona @ or arms length, such expenditure (or
part thereof) shall not be deducted and
(iii) any expenditure allowed as a deduction under clause 2(c)
shall not include any expenditure provided for in clause (2Xa) or
(2Xb)
or (2Xd),
(d) a sum being expenditure (other than expenditure upstream of the
wellhead) actually incurred by the Licences or some one or more of
them pursuant to a bona fide arms length agreement to lease any plant
used for the purposes of treating, processing or refining of the
petroleum prior to delivery or in conveying the petroleum to the
point of delivery to the purchaser provided however that any such
expenditure in any one calendar year which is in excess of.--
(A) in the calendar year 199 - the sum of $ thousand; or
(B) in all subsequent calendar years, the sum of $
thousand increased by the same percentage as the percentage increase
in the Consumer Price Index (AU Groups) for the City of Adelaide
('CPI") from the CPI in the calendar year 199 to the CPI in the
relevant year
shall not be deductible,
(e) a sum being the actual expenditure (other than expenditure
upstream of
the wellhead) incurred by the Lice or some one or more of them in
rehabilitating the ground surface and site of plant and the actual
expenditure incurred in dismantling removing or abandoning of such
plant less any salvage obtained thereon where such plant is used for
the purposes of treating processing or refining of the petroleum
prior to delivery or in conveying the petroleum to the point of
delivery to the purchaser and the actual expenditure incurred in
rehabilitating the ground surface and site of a well of the type de
in clause (3)(b) and the actual expenditure incurred in abandoning
such well but not including any costs incurred as a result of the
loss of control of any well
(3) Further provisions regarding calculation of Royalty
(a) For the purposes of clause (2):-
(i) in each month the bona fide sales value of the petroleum
means the value of the actual sales in respect of the petroleum
described in clause (1) in that month provided however that if any
petroleum is not supplied to a bona fide sales value arms length
purchaser, not sold for full market value, or returned to the POOL
destroy4 dissipated or used by the licensees not in accordance with
Section 3b(2) of the Act, the gross sales value of such petroleum
shall be the amount which would have been received in respect of such
petroleum from a bona fide arms length purchaser for full market
value;
F02761
3
(ii) the term 'plant" includes but is not limited to:
(A) any machinery, equipment, vehicle, Implement tool,
article, vessel, pit, building, structure, improvement or other such
property used in, or in connection with, treating processing or
refining of the petroleum prior to the delivery or in conveying the
petroleum to the point of delivery to the purchaser; or
(B) any pipeline;
and
(iii) "wellhead" means the casing head and includes any casing
hanger or spool, or tubing hanger, and any flow control equipment up
to and including the wing valves.
(b) Non Producing Wells
The capital expenditure referred to in clause (2Xa) may include the
actual capital expenditure incurred by the Licensees or some one or
more of them in respect of wells used solely for the purpose of
assisting or enhancing the recovery of the petroleum from other wells
or for the purposes of storing the petroleum or for the recovery or
disposal of water used in connection with treating processing or
refining of the petroleum prior to delivery or for any similar
purpose other than the production of the petroleum and may also
include the actual capital expenditure incurred by the Licensees or
some one or more of them in converting a well used for the production
of the petroleum to a well used for such other purposes.
(c) Interest Rate
For the purpose of clause (2Xa) the interest rate shall be one half
of the long term Australian Government Bond Rate for bonds of a 10
year term as published at the end of the month in which the capital
expenditure was made. If no such rate is in existence or published
at the end of such period then the interest rate for the purposes of
clause (2Xa) shall be one half of the average of the long term
Australian Government Bond Rate for bonds of a 10 year term
prevailing during the period of 5 years preceding the date on which
such rate ceased to exist or be published.
(d) Apportionment of Expenses
Where an item of plant is used partly for the purposes of treating,
processing or refining of petroleum prior to delivery or in conveying
petroleum to the point of delivery to the purchaser, and partly for
some other purpose, the amount of the deduction (whether for capital
or operating expenditure) which shall be allowed shall not include
the proportion of the actual capital or operating expenditure
applicable to that other purpose.
F02'751
4
(e) Sale of Plant
Notwithstanding the provisions of clause (2), if an item of plant is
sold by a Licensee ("the second Licensee") to another Licensee, or to
a company that becomes a successor or assign of the @t Licensee ("the
second Licensee"), the second Licensee may only depreciate the plant
to the extent to which the first Licensee was, immediately before the
time of sale, entitled to depreciate the plant.
(f) Take or Pay
For the purposes of this clause and of calculating the gross sales
value of the petroleum, where the Licensees or any one or more of
them enter into an agreement commonly known as a take or pay
agreement, any payment received by the Licensees or any one or more
of them in respect of petroleum which has been paid for but not been
taken shall be treated as part of the gross sales value of the
petroleum at the time of receipt of payment by such Licensee or
licensees and not at any other time.
(g) Tolling
(i) If the Licensees or any one or more of them receive any revenue
from the use of any plant downstream of the wellhead used for
treating processing or refining petroleum sourced from anywhere
within the area from time to time comprised in Petroleum
Exploration Licences or any Petroleum Production Licence
issued from an area which was comprised in Petroleum Exploration
Licences immediately prior to the time such Petroleum Production
Licence was issued, or in conveying such petroleum to the point of
delivery to the purchaser such revenue shall be deemed to be part of
the bona fide sales value of the petroleum to the intent that royalty
shall be payable thereon.
(ii) Any sums, being sums deemed under clause (3XgXi) to be part
of the bona @ value of the petroleum, paid by the Licensee or any one
or more of them in respect of the use of such plant for treating
processing or refining such petroleum or in conveying such petroleum
to the point of delivery to the purchaser shall be deemed to be an
expense under clause (2Xc).
(iii) If any such plant is used for treating processing or
refining of petroleum sourced from outside of the areas referred to
in clause (3XgXi) or in conveying such petroleum to the point of
delivery to the purchaser any amounts which may be claimed as
deductions under this clause (whether such deductions be by way of
operating expenditure or capital expenditure) in respect of such
plant shall be reduced by the proportion which would be obtained by
the method of apportioning costs used by the Licensees to ascertain
the tolling fee, but any revenue received by the Licensees or any one
or more of them for the use of such plant for the treating processing
or refining of such petroleum prior to delivery or in conveying the
petroleum to the point of delivery to the purchaser shall not be
deemed to be part of the gross sales value of the petroleum
F'02761
5
(4) Royalty Returns
(a) Not later than thirty (30) days after the conclusion of each
calendar month the party appointed from time to time as Operator will
calculate and notify to the after the royalty, calculated by taking
the bona fide sales value of the petroleum sold in that month, and
deducting therefrom the most recent estimated monthly expenditure
provided under clause (4Xc), payable by each Licensee. The Operator
shall with each such notification provide the Minister with a
statement, in a form approved by the Minister, advising of the
quantity of the petroleum sold and the amount realized upon such sale
during the last preceding month, together with such other information
as the Minister may require.
(b) The Licensees shall not later than thirty (30) days after the
conclusion of each calendar month pay to the Minister the amount of
royalty specified in the notice referred to in clause (4Xa) as
payable.
(c) On or before each 15th April (in respect of the next succeeding
twelve (12) month period commencing 1st July), the Operator shall
bona fide estimate the bona fide sales value of the petroleum, the
allowable deductions and hence calculate the estimated royalty
payable for the next succeeding twelve (12) month period and shall
provide the after with such estimates, together with the
apportionment thereof on a monthly basis.
(d) Not later than thirty (30) days after the completion of each
twelve month period concluding on each 30th June the Operator shall
reconcile the estimated expenditure with the actual expenditure and
reconcile all calculations of royalties and shall provide the
Minister within the said period of 30 days with copies of such
reconciliations, together with a notice advising the Minister of any
additional royalty calculated in accordance with the reconciliations
as payable by each Licensee. If any such reconciliation
shows that the total of the amounts of royalty paid during the last
preceding 12 months was in excess of the amount of royalty which
should have been paid for that period, the difference may be set off
against royalty payable in the next succeeding months provided
however that any expenditure allowed as a deduction under clause
(2Xb) to clause (2Xe) inclusive shall not be carried forward for a
period of greater than 12 months from the month of expenditure. 'Me
Operator shall provide such reconciliation in respect of the period
concluding 30th June 199 on or before 30th July 199 .
(e) Each Licensee shall not later than thirty (30) days after the
completion of each twelve month period concluding on each 30th June
pay to the Minister the additional royalty calculated in accordance
with the reconciliation referred to in. clause 4(d) as payable by the
Licensee.
(f) The Licensees shall at their co6t cause the royalty calculation
reconciliations submitted by the Operator to be audited by the
auditor appointed by the Operator to audit its own accounts (provided
that such auditor must be a duly registered auditor in Australia) and
the Operator shall forward a copy of the auditor's report in respect
of a particular reconciliation within 3 months of the receipt of such
reconciliation by the Minister, such report to be accompanied by a
certificate by the auditor that the reconciliation is in accordance
with these guidelines.
F'02751
6
(g) The Minister shall annually determine the value at the wellhead
of the petroleum produced by the Licensees and may require the
Licensees to pay within 30 days of the date of notice of such
determination the additional royalty determined by the Minister as
payable.
F02751
51 -
Schedule 6
Principles for Agreement on the grant of a Petroleum Production
Licence
1. Definitions
Unless otherwise defined in this Schedule, the Definitions of Clause
1 of the Principal Agreement apply to this schedule.
1.1 "Principal Agreement" means the Agreement signed by AP and
the Explorers on ____ day of 1996;
1.2 "Petroleum Operations" means I the operations for the
exploration and recovery of Petroleum, by the Explorers on the
Licence Area and any production therefrom;
1.3 "Petroleum Operations Area" means the area of land required for
the purpose of the Petroleum Operations, including any access roads
and airstrips on AP Lands;
1.4 "Joint Venture Agreement" means any agreement entered into by
the Explorers and a third party or third parties and/or AP in respect
of joint exploration and/or production within the Licence Area (the
"JVA");
1.5 "Joint Venture Participants" means all parties (excluding
AP) to the JVA (the "JV Participants").
942031\AA0017.ASD
52
2. Principles of Agreement
2.1 Subject to the Act and the terms and conditions of the Principal
Agreement the parties wish to record certain principles of agreement
setting out terms and conditions as to payments and other terms and
conditions for the purposes of Clause 26 of the Principal Agreement.
2.2 It is acknowledged that at the date these principles have been
agreed the location, quantity of reserves and characteristics of any
Petroleum deposits which may be discovered are entirely unknown and
that, between the date hereof and the dates of an application for and
the grant of a PPL, economic conditions (including government levies
and taxes) affecting the development of Petroleum wells and the sale
of Petroleum products may alter considerably.
2.3 The parties have agreed that any agreement entered into by the
parties pursuant to Clause 26 of the Principal Agreement shall
contain terms and conditions incorporating the principles set out in
this Schedule and where the matter is not specifically dealt with in
this Schedule, as agreed.
3. option to Take up Participatory Interest
The election right afforded to AP in Clause 27 of the Principal
Agreement shall be exercised as follows:
3.1 The Explorers shall by notice in writing advise AP 30 days prior
to lodging an application for grant of a PPL within the Licence Area
with the Minister, of their intention to lodge such application ("the
Date of Notification").
3.2. The notification referred to in paragraph 3.1 herein shall
include such technical and financial information as necessary to
enable AP to make an informed decision whether or not to take up its
participatory interest pursuant
942031\AA0017.ASD
53 -
to Clause 27 of the Principal Agreement and in particular such
information shall include details of past exploration expenditure, a
copy of the PPL application, and an assessment of anticipated future
expenditure in relation to the PEL and PPL.
3.3 AP may, within 30 days of the date the Date of Notification, by
notice given in writing to the Explorers and/or the JV Participants
(as the case may be), make a once only election to take up a
participatory interest of up to 10% but in any event no less than 1 %
in the JVA and failure to so notify the Explorers and/or the JV
Participants within the said time period shall be deemed to be a
forfeiture on the part of AP of its election rights pursuant to
Clause 27.1 of the Principal Agreement.
In the event that at the time of the election there is no JVA
applicable in respect of the Licence Area, the Explorers and the AP
agree to enter into an agreement with each other for the conduct of
Petroleum Operations within the Licence Area and such agreement shall
be deemed a JVA as that term is defined in this Schedule 6.
3.4 AP's election to take up its participatory interest shall be
conditional upon AP entering into an undertaking to bear 100% of the
costs and obligation of its participatory interest and AP shall
within 30 days of the Date of Notification, pay to the Explorers and
or the JV Participants an amount in respect of past exploration
expenditure proportional to AP's elected participatory interest and
failure to make such payment within the said time period shall be
deemed to be a forfeiture on the part of AP of lst election rights
pursuant to Clause 27 of the Principal Agreement, notwithstanding any
notice which may have been given pursuant to paragraph 3.4 herein.
For the purposes of this paragraph 3.4 "past exploration expenditure"
shall include all costs charges and expenses related to the
operation,
942031\AA0017.ASD
54 -
administration and management of the PEL up to the date of election
by AP as provided for in Clause 27 of the Principal Agreement.
3.5 Subject to paragraphs 3.3 and 3.4 herein, AP shall be entitled
to take up its participatory interest in any existing or subsequent
JVA in respect of the Licence Area and the Explorers covenant that,
in the event that the Explorers enter into a JVA with a third party
or third parties prior to the Date of Notification, the terms of such
agreement will be such as to protect the possible future
participatory interest of AP and will provide an appropriate
mechanism whereby AP is guaranteed the opportunity to elect to take
up an interest in such JVA of up to 10%;
3.6 3.6.1 Where a JVA applies in respect of the whole of the Licence
Area,
AP's election right relates only to the first PPL applied for within
the Licence Area and once exercised or forfeited cannot subsequently
be exercised in respect of additional PPLs applied for or granted
within the Licence Area.
3.6.2 However, should the Licence Areas be divided into sub-
blocks or sub-areas then AP shall have an election right in respect
of the first PPL applied for within each relevant sub-area or sub-
block. Once exercised or forfeited in respect of any particular sub-
block or sub-area the election right cannot subsequently be exercised
in respect of additional PPLs applied for or granted within that
particular sub-area or sub-block but may be exercised in respect of
the first PPL applied for within any other sub-area or sub-block in
respect of which the election right has not been exercised or
forfeited.
3.7 Subject to the anticipated production from the PPL being
sustainable at the rate of 2500 barrels of oil (or oil equivalent)
per day which decision shall be made by the Explorers and where AP
elects to take up its participatory interest, the Explorers and/or
the JV Participants shall cause to be made to
942031\AA0017.ASD
55 -
AP, upon commencement of actual production following the grant of a
PPL an annual advance payment of the following sums to be deducted
from compensation payments payable to AP in any one production year:
3.7.1 where annual production is less than or equal to 10,000,000
barrels
of oil (or barrels of oil equivalent), the sum of $100,000.00;
3.7.2 where annual production is greater than 1 0,000,000 but less
than or equal to 20,000,000 barrels of oil (or barrels of oil
equivalent), the sum of $150,000.00;
3.7.3 where annual production is greater than 20,000,000 barrels
of oil (or barrels of oil equivalent), the sum of $200,000.00.
3.8 AP agrees to comply with all of its obligations under the JVA
and in particular agrees:
3.8.1 to satisfy any shortfall between annual advance payments and
obligations in respect of its participatory interest (the
"shortfall") from predicted production compensation payments; and
3.8.2 where compensation payments are insufficient to meet the
shortfall, from any dividend payable to AP in respect of its
participatory interest in any one Licence Year.
4. Application of Schedules 4 and 5 to these Principles of
Agreement
Whether or not AP elects to take up its participatory interest (or
fails to exercise its right to do so), compensation payments to AP
shall be made in accordance with the terms of payment set out in
Schedule 4 of the Principal Agreement, and where AP elects to take up
its participatory interest, the payments referred to in Schedules 4
and 5 of the Principal Agreement shall be in addition to any dividend
to which AP may be entitled in respect of its participatory interest
in the JVA.
942031\AA0017.ASD
- - 57
9. Arbitration
In the event that the parties cannot agree on the terms and
conditions of a renewal of the JVA then either the Explorers or AP
may serve notice upon the other requiring that they or it submit to
arbitration to determine the terms and conditions for a renewal of
the JVA and the arbitrator's decision will be binding on the parties.
10. Additional Terms and Conditions
In addition to the foregoing, the JVA shall contain such terms and
conditions as may reasonably relate to the Production Operations and
to the use and occupation of AP Lands, including terms and conditions
dealing with matters specifically dealt with in the Principal
Agreement which may be applied mutatis mutandis or otherwise amended
to fit the circumstances of the JVA.
942031\AA0017.ASD
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<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996
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<RECEIVABLES> 47 47
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