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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
INDO-PACIFIC ENERGY LTD.
(Exact name of registrant as specific in its charter)
British Columbia, Canada Not Applicable
(State of Incorporation) (I.R.S. Employer
Identification No.)
1200-1090 West Pender Street
Vancouver, British Columbia Canada V6E 2N7
(Address of executive offices.) (Postal Code)
Registrant's telephone number: (604) 682-6496
Copies to: G. A. MacDonald
Indo-Pacific Energy Ltd.
1200-1090 West Pender Street
Vancouver, British Columbia
Canada V6E 2N7
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. BUSINESS
GENERAL
Indo-Pacific Energy Ltd. (the "Registrant") is an oil and
gas exploration company based in Vancouver, British Columbia, Canada
which has interests in the Asia-Pacific region in hydrocarbon
properties described in Item 3. The Registrant is to a lesser
extent involved in the development and production of
hydrocarbons. The majority of the Registrant's properties are in the
exploration stage. Total production revenue for the nine months ended
September 30, 1997 was CDN$500,267. The Registrant's focus is on the
acquisition, exploration and development of properties in the
Asia-Pacific region, with the objective of establishing a solid
cash flow base, and participating in high potential exploration blocks
in under-explored countries with attractive fiscal regimes.
All monetary amounts contained in this Statement are, unless
otherwise indicated, expressed in Canadian dollars. On September
29, 1997 the buying rate for Canadian dollars was US$1.00 for
CDN$1.3837. Rates of exchange are obtained from the Bank of
Canada and believed by the Registrant to approximate closely the rates
certified for customs purposes by the Federal Reserve Bank in New
York. See Item 2. Financial Information - Exchange Rates.
General Development of the Business
The Registrant was incorporated on July 31, 1979 under the
name Pryme Energy Resources Ltd. by the registration of
memorandum and articles under the Company Act (British Columbia, Canada).
On March 21, 1980 the Registrant became a reporting or distributing
company in British Columbia with the issuance of a receipt for
its initial prospectus offering. The business of the Registrant was
not successful and the Registrant was reorganized. On August 23, 1985
the name was changed to Newjay Resources Ltd. and a consolidation of
its common shares on a 2.5 old for one new basis occurred. The
business of the Registrant was the exploration for hydrocarbons in
Alberta, California and Texas. The business of the Registrant was not
successful and the Registrant was again reorganized. The
Registrant applied for and was deemed inactive by the Vancouver Stock
Exchange on February 26, 1993 and subsequently completed a reorganization
satisfactory to the Vancouver Stock Exchange and was removed from
inactive status on April 25, 1994. On August 25, 1993 the name
of the Registrant was changed to Consolidated Newjay Resources Ltd.
and a consolidation of its common shares on a 3.5 old for one new
basis occurred. The Registrant did not commence any business after
these events until 1996.
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In April 1995, control of the Registrant was acquired by Mr.
Alex Guidi, who is currently a member of the board of directors,
chairman and the promoter of the Registrant, and the current
business of the Registrant began to be organized. See "ITEM 7.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." On May 9, 1995
the name of the Registrant was changed to its current name. A
stock subdivision of its common shares on a 1.5 new for one old
basis occurred on April 15, 1996 and a further subdivision of its
common shares on a two new for one old basis on May 31, 1996
occurred. The Registrant began to acquire its current
hydrocarbon assets in 1996. See "ITEM 3. PROPERTIES."
The common shares of the Registrant commenced trading in
January 1996 on the Bulletin Board operated by the National
Association of Securities Dealers, Inc. (the "Bulletin Board")
and trades under the symbol "INDX." Trading in the common shares of
the Registrant was halted by the Vancouver Stock Exchange on
September 12, 1996 and the Registrant was voluntarily delisted
from the Vancouver Stock Exchange on September 13, 1996.
On September 25, 1997 the Registrant was continued from
being a corporation subsisting under the Company Act (British Columbia)
to a corporation subsisting under the Business Corporations Act
(Yukon). The Registrant maintains its head office in Vancouver,
British Columbia and an exploration office in Wellington, New
Zealand.
In 1996 and the first nine months of 1997, the Registrant
acquired interests in petroleum exploration licenses in New
Zealand, Australia and Papua New Guinea. The Registrant also
acquired the outstanding shares of Minora Energy (New Zealand )
Ltd. and entered into a joint study agreement with China National
Oil and Gas Exploration and Development Corporation for the study
of the Nanling and Wuwei basins, Anhui province, China. The
exploration of certain of the petroleum interests commenced in
1996. The Registrant continued to acquire and explore petroleum
interests.
The Registrant's operations are conducted through its
wholly-owned subsidiaries, as described below:
The Registrant - 100%
Indo-Pacific Energy (NZ) Limited Indo-Pacific Energy (PNG)
Pty. Ltd.
100% Indo Overseas Indo-Pacific Energy
Exploration Ltd. (B.C.) Pty. Ltd. (Aust.)
Ngatoro Energy Limited (N.Z.)
100%
PEP 38716
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Unless the context indicates otherwise, the "Registrant" will
refer to Indo-Pacific Energy Ltd. and its subsidiaries.
The Registrant has financed the revival and conduct of its
business by the issuance of common shares and other securities by
way of private placements.
DISCUSSION OF DEVELOPMENT OF BUSINESS
Development of Business
The following is a discussion of the development of the
business of the Registrant between January 1, 1996 and September
30, 1997. For a discussion of intended operations to September
30, 1998. See "ITEM 1. BUSINESS - PLAN OF OPERATIONS." All
references to percentage of ownership are working interests.
New Zealand, East Coast Basin, North Island
Petroleum Prospecting License PPL 38312 (10.5%)
PPL 38312 was granted on August 26, 1996 to Asia Pacific Oil
Co. Ltd. In August 1997, the Registrant earned a participating
interest of 10.5% in the license by funding 10.5% of the costs of
drilling the Waitaria-1 well. The other participants are Asia
Pacific Oil Co. Ltd. (64.5%%), Arthur Oil Ltd. (2.5%), Everest
Oil Co. Ltd. (12.5%) and Trans-Orient Petroleum Ltd. (10.0%). Asia
Pacific Oil Co. Ltd. is the operator. The permit expires in
November 1998, but is renewable for a further five years over 50%
of the permit area. Any production permits granted will be for a
term of up to 40 years from the date of issue. The Crown in
right of New Zealand has reserved a royalty of five percent of net
sales revenue from the sale of petroleum products.
The conditions of the permit require the participants by
October 1997, to re-enter and complete the drilling of Waitaria-1
well to 1600 meters unless geological or engineering constraints
make this unreasonable and before November 15, 1997 to assess the
well and if appropriate apply for an extension of the duration of
the license in order to undertake a further work program.
In the third quarter of 1997, the participants drilled the
Waitaria-1 well which encountered gas bearing formations, but was
abandoned due to engineering problems encountered while drilling
before the target Tunani sandstones were reached.
The participants intend to collect seismic data in the first
half of 1998 to define additional drilling targets and to apply
for a renewal of PPL 38312 in 1998.
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Petroleum Exploration Permit PEP 38328 (40.0%)
PEP 38328 was granted on July 1, 1996. The Registrant
assigned a 10% working interest to Trans-Orient Petroleum Ltd. in
consideration that Trans-Orient pay for 20% of the dry hole costs
of drilling the Kereru-1 well. By an agreement dated November 1,
1996, and subsequent arrangements, Boral Energy Resources Limited
acquired a 37.5% participating interest in PEP 38328 from the
Registrant and other parties, by funding a disproportionate share
of costs associated with the drilling of the Kereru-1 well, up to
and including the plugging and abandonment of the well. By an
agreement dated September 15, 1997 the Registrant paid the costs
of Trans-Orient in consideration that Trans-Orient issue to the
Registrant 233,510 common shares at $1.3918 (US$1.00) per share.
The other participants in the license are Trans-Orient
Petroleum Ltd. (22.5%) and Boral Energy Resources Limited
(37.5%). The Registrant is the operator. The permit area is 785,000 acres
(1,226 square miles). The permit is for five years, renewable
for a further five years over 50% of the license area. Any
production permits granted will be for a term of up to 40 years from the
date of issue. The Crown in right of New Zealand reserved a royalty
of five percent of net sales revenue from the sale of petroleum
products.
The conditions of the permit require that before July 1,
1997 the participants reprocess existing seismic data over the Kereru
Prospect, collect, process and interpret at least eight km of new
seismic data and drill one exploration well to a minimum depth of
1,500 meters to test the Pliocene section of the Kereru Prospect.
Before July 1, 1998 the participants are required to collect and
process 240 km of new seismic data and reprocess 300 km of
existing seismic data. By July 1, 1999 the participants are required to
conduct geologic field studies and complete a permit review
report. By July 1, 2000 the participants are required to collect such
other data as is necessary to make a drilling decision and, subject to
their commitment to do so, by July 1, 2001 to drill an
exploration well to a depth of at least 1,500 meters.
In the fourth quarter of 1996, the Kereru-l exploration well
was drilled to a depth of 1,938 meters (6,391 feet). Several
thin and separated potential pay reservoir sandstones were
encountered, but the Registrant and the other participants decided that
the results did not justify the expense of flow testing the well.
The well was plugged. In the first half of 1997, a 120 mile seismic
survey costing approximately $1,000,000 was completed. Data was
exchanged with adjacent permit holders and indicated a previously
unidentified structure in the northern part of the permit area.
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At September 30, 1997 further exploration was to be
determined after processing and interpretation of new and existing seismic
data.
Petroleum Exploration Permit PEP 38330 (34%)
PEP 38330 was granted on July 1, 1996. The other participants
are Mosaic Oil NL (33%) and Moondance Energy Property Ltd. (33%).
The Registrant is the operator. The permit area is 1,077,000
acres (1,683 square miles). The permit term is for five years,
renewable for a further five years over 50% of the permit area. Any
production permits granted will be for a term of up to 40 years
from the date of issue. The Crown in right of New Zealand has
reserved a royalty of five percent of net sales revenue from the
sale of petroleum products.
The conditions of the permit require the participants by July
1, 1997 to review all existing data, undertake field sampling,
reprocess a minimum of 80 km of existing seismic data and undertake
certain test for seismic planning purposes. By July 1, 1998 the
participants are required to collect, process and interpret a
minimum of 12 km of seismic data and undertake a structural review
of the permit area. By July 1, 1999 the participants are required
either to collect, process and interpret a minimum of 60 km of
seismic data, and either commit to drill an exploration well before
July 1, 2001 or to collect, process and interpret a further 25 km
of seismic data before July 1, 2001. Subject to their commitment
to do so, the participants are required to drill an exploration
well before July 1, 2001 and submit a further program of
exploration for approval.
At September 30, 1997 a 25 km regional seismic line had been
completed over the main structural features in the license area,
including the Matanui and Pauariki anticlines, both of which may be
drilling targets. Data is being processed before a decision on
further exploration is made. Also, the Waingoromia-1 well, which
produced in the 1880's, was relocated and found to be leaking
hydrocarbons.
Petroleum Exploration Permit PEP 38332 (42.5%)
PPL 38332 was granted on August 25, 1997. The other
participants are Boral Energy Resources Limited. (37.5%) and Trans
New Zealand Oil Company Ltd. (20%). The Registrant is the
operator. The permit area is situated immediately south of PEP
38328 and is 1,012,000 acres (1,581 square miles) in area. The
permit term is for five years, renewable for a further five years
over 50% of the license area. Any production permits granted will
be for a term of up to 40 years from the date of issue. The Crown
in right of New Zealand has reserved a royalty of five percent of
net sales revenue from the sale of petroleum products.
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By December 24, 1998, the participants are required to
reprocess 100 km of existing seismic data, collect 25 km of new
seismic data, undertake photogeologic and field geological mapping,
complete an evaluation of the exploration potential of the permit
area and make a further work commitment or relinquish the permit.
By December 24, 1999, the participants are required to collect 50
km of seismic data, complete an evaluation of the exploration
potential of the permit area and make a further work commitment or
relinquish the permit. By June 24, 2000, the participants are
required to drill one exploration well and submit a further program
of work for approval.
At September 30, 1997 a regional seismic program had been
completed over the northern part of the permit area. This and
earlier data are being processed before a decision on further
exploration is made.
Petroleum Exploration Permit PEP 38723 (40%)
PEP 38723 was granted on October 30, 1997. The other
participants are Trans-Orient Petroleum Ltd. (40.0) and Trans New
Zealand Oil Company (20.0%). The Registrant is the operator. The
permit area is 19,783 acres (30.9 square miles) in area. The
permit term is for five years, renewable for a further five years
over 50% of the license area. Any production permits granted will
be for a term of up to 40 years from the date of issue. The Crown
in right of New Zealand has reserved a royalty of five percent of
net sales revenue from the sale of petroleum products.
By January 31, 1999, the participants must reprocess a minimum
of 50 km of seismic data, re-evaluate prospects and leads, review
relevant existing wells to identify a potential Mount Messenger
sand play and develop a sand distribution model in conjunction with
the seismic interpretation, identify and high grade leads for
further seismic acquisition and either make a firm commitment to
continue the work program or surrender the permit. By April 30,
2000 the participants must collect a minimum of six square km of 3D
seismic data, or 2D swathe coverage of equivalent detail, interpret
the new data and identify and consider drilling targets. If the
participants continue, by October 30, 2000 they must drill an
exploration well to a minimum depth of 1600 meters unless
geological or engineering constraints encountered while drilling
make this unreasonable and either submit a satisfactory work
program for the remainder of the permit term or surrender the
permit.
In 1996 and 1997, previous holders of PEP 38723 reprocessed
seismic data and the Registrant is involved in a seismic
reprocessing program in the area. Completion of this work is
required to be able to identify prospects. Before January 31, 1999
the participants intend to carry out the first phase of the
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required work at an estimated cost of US$75,000 and, if results
warrant, proceed to the second stage of the work program at an
estimated cost of US$420,000.
New Zealand, Onshore Canterbury Basin, South Island
Petroleum Exploration Permit 38256 (35%)
PEP 38256 was granted on August 25, 1997 to the Registrant and
to Trans-Orient Petroleum Ltd. The Registrant and Trans-Orient
Petroleum Ltd. assigned an interest of 20% to Trans New Zealand Oil
Company and an interest of 10% to Gondwana Energy Ltd., leaving
each of the Registrant and Trans-Orient Petroleum Ltd. with an
interest of 35%. The Registrant is the operator. The permit area
is situated in the area surrounding Christchurch, South Island and
is 2,760,120 acres (4,312.69 square miles) in area. The permit
term is for five years, but at the end of the third year of the
permit the participants must relinquish at least 50% of the permit
area. Any production permits granted will be for a term of up to
40 years from the date of issue. The Crown in right of New Zealand
has reserved a royalty of five percent of net sales revenue from
the sale of petroleum products.
By November 25, 1998 the participants are required to locate
and analyze petroleum seeps within the permit area, model existing
gravity data and acquire new gravity data, collect and interpret a
minimum of ten magnetotelluric stations, process existing seismic
data and complete surface geological work. If the permit is not
surrendered, the participants are required by August 25, 1999 to
collect, process and interpret 80 kilometers of new seismic data.
If the permit is not surrendered, by February 25, 2000 the
participants are required to acquire, process and interpret 120
kilometers of new seismic data. If the permit is not surrendered,
the participants are required by August 25, 2000 to drill an
exploration well to the lesser of 1200 meters or the economic
basement.
At September 30, 1997 the participants were planning the first
phase of required work in order to determine the geologic structure
of the sedimentary basin. If the interpretation of the geologic
structure indicates the possible existence of hydrocarbons, the
participants will conduct further seismic surveys in order to
determine the location of possible drill targets.
New Zealand, Onshore Taranaki Basin, North Island
Petroleum Mining Permit PMP 38148 (5.0%)
Effective September 1, 1996 the Registrant bought the
outstanding shares of Minora Energy (New Zealand) Limited for
AUS$575,000 (CDN$478,755, US$348,790). The name of the company
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was changed to Ngatoro Energy Limited. Ngatoro Energy Limited owns
a five percent participating interest and revenue interest in
petroleum mining permit 38148, which has four producing oil wells
and two shut-in gas wells. The permit expires on December 23,
2010. Production is from turbidite sandstones of the Mount
Messenger Formation at depths of 1,500 meters to 2,000 meters. The
other participants are New Zealand Oil & Gas Ltd. (35.43%) and
Fletcher Challenge Energy Taranaki Ltd. (59.57%). New Zealand Oil
& Gas Ltd. is the operator. The Crown in right of New Zealand has
reserved a royalty of five percent of net sales revenue from the
sale of petroleum products.
In the nine months ended September 30, 1997, the Registrant
received revenues of $500,267. Production from the four oil wells
remained steady at between 1,400 and 1,500 barrels per day. A flow
test was done on one of the shut-in gas wells flowed gas at
sustained rates in excess of four million cubic feet per day,
establishing a new gas field in the permit area. At September 30,
1997 the participants planned to rework the producing wells,
develop the gas well, and drill two additional wells. Negotiations
are progressing to sell flare gas and booked gas reserves from the
existing wells to a contract total of ten billion cubic feet.
Petroleum Prospecting License PPL 38706 (7.75%)
PPL 38706 is in the last year of its ten year term and will
expire on August 1, 1998. Before that date, the participants are
required to drill one exploration well. Two well locations are
under consideration for drilling in the second quarter of 1998.
Should a discovery be made, the participants may apply for a
petroleum mining permit over the extent of the discovery for a term
of up to 40 years. The license is operated by Fletcher Challenge
Energy Taranaki Ltd. which holds the remaining 92.25% working
interest in the license. The Crown in right of New Zealand has
reserved a royalty of five percent of net sales revenue from the
sale of petroleum products.
Petroleum Exploration Permit PEP 38716 (24.8%)
A participating interest of 38.4% in PEP 38716 was acquired by
the Registrant on January 30, 1996. On application, the effective
date was changed to April 10, 1996. A participating interest of
six percent was assigned to Durum Energy Corp. By agreement
effective July 1, 1997 with Australian Worldwide Exploration NL,
the participants assigned a 25% participating interest to
Australian Worldwide in consideration that Australian Worldwide pay
50% of the dry hole costs of drilling an exploration well to earn
a 25% interest. After giving effect to this assignment, the other
participants are Durum Energy Corp. (4.0%), Marabella Enterprises
Ltd. (39.6%), Euro-Pacific Energy
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Pty. Ltd. (6.6%) and Australian Worldwide Exploration NL (25.0%).
Marabella Enterprises Limited, a subsidiary of Bligh Oil &
Minerals NL, is the operator.
The permit is about 67,000 acres (104 square miles) in area.
The permit term is for five years, renewable for a further five
years over 50% of the license area. Any production permits granted
will be for a term of up to 40 years from the date of issue. The
Crown in right of New Zealand has reserved a royalty of five
percent of net sales revenue from the sale of petroleum products.
The conditions of the permit require the participants within
18 months of the commencement date to reinterpret 250 km of
existing seismic data, acquire, process and interpret 30 km of new
seismic data, collect gravity data and commit to a second phase of
work. The second phase of work requires the participants to drill
an exploration well to a depth of 2,500 meters or another approved
depth before August 1, 1998. In the second quarter of 1996, a
program of aeromagnetic survey and reprocessing of existing seismic
data was undertaken. In the first quarter of 1997 a total of 60 km
of new seismic data was acquired to assist in defining a drill
location on the Crown Prospect in the northern part of the permit
area. The program confirmed the presence of the Crown Prospect at
the Tikorangi Limestones and deeper levels and also detailed the
shallower Oru Prospect. Drilling of an exploration well is
scheduled for the second quarter of 1998.
Petroleum Exploration Permit PEP 38720 (50.0%)
A participating interest of 50% in PEP 38720 was acquired by
the Registrant on September 2, 1996. The other participant is
Trans-Orient Petroleum Ltd. The Registrant is the operator.
The permit is approximately 6,322 acres (9.8 square miles) in
area and the term of the permit is five years, renewable for a
further five years over 50% of the permit area. Any production
permits granted will be for a term of up to 40 years from the date
of issue. The Crown in right of New Zealand reserved a royalty of
five percent of net sales revenue from the sale of petroleum
products.
Before September 2, 1997, the participants are obligated to
reprocess a minimum of 100 miles of existing seismic data,
undertake modeling of the seismic data to investigate reservoir
distribution, undertake a reservoir engineering review of flow-tested
off-set wells to investigate likely productivity potential
within the permit area and either commit to drill one exploration
well before September 2, 1998 or commit to collect, process and
interpret a minimum of 15 km of new seismic data before March 31,
1999. If an exploration well is drilled, a program for further
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exploration must then be submitted for approval. If further
seismic work is done, the participants must commit by March 31,
1999 to drill an exploration well before September 2, 1999 or
relinquish the permit.
In the first half of 1997, the participants completed 38 km of
seismic survey. At September 30, 1997 the data had been processed
and confirmed the Waitoriki Prospect as a sizable gas-condensate
drilling target within the Kapuni formation at depths below 3,500
meters. Sandstones of the Mount Messenger Formation are also oil
discovery objectives at depths between 1,500 and 2,000 meters. The
participants are planning to drill an exploration well at an
estimated cost of US$1,200,000 when a drilling rig becomes
available in 1998. The Registrant's portion of budgeted costs is
US$600,000.
Papua New Guinea
Petroleum Prospecting License PPL 192 (40.0%)
A participating interest of 80% in PPL 192 was acquired by the
Registrant in January 1997. The Registrant assigned a 20%
participating interest to each of Trans-Orient Petroleum Ltd. and
Durum Energy Corp. The remaining participant is Mosaic Oil Niugini
Pty. Ltd. (20%). The Registrant is the operator.
PPL 192 grants the exclusive right to explore for petroleum
for an initial six year term commencing January 28, 1997,
extendable for a further five year term over 50% of the original
area, and the exclusive right to enter into a production agreement
upon a discovery. A production agreement provides the right to
produce any oil and gas discovered for a period of up to 30 years
from discovery, subject to a maximum 22.5% participating interest
that can be acquired by the Government of Papua New Guinea and a
two percent participating interest that can be acquired by local
landowners.
PPL 192 comprises some 1,200,000 acres (1,875 square miles)
located in the foreland of the Papuan Basin, immediately south of
the Highlands fold belt. Previous seismic work by Shell US
(Pecten) identified a number of exploration targets and drilled the
Langia-1 gas discovery well. However, the license has in general
been only lightly explored. The main areas of interest are the
Kamu Prospect, the Mamboi Prospect and the area surrounding the
Langia gas discovery. The license requires the participants to
reprocess seismic and other data in the first year of the license
at a cost of US$100,000 and in the second year of the license to
spend US$100,000 on an area review and an analysis of gas
development in a "Kamu" type gas discovery. If work proceeds in
the license area, 50 km of seismic work are required in the third
year of the license and drilling of an exploration well is required
in the fourth year of the license.
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At September 30, 1997, the Registrant was examining existing
data before designing an exploration program.
Australia
Offshore Petroleum Exploration Permit Ashmore Cartier
AC/P19, Timor Sea (65.0%)
A participating interest of 65.0% was acquired by the
Registrant in AC/P19 in May 1997. The other participant is
Mosaic Oil NL (35.0%). The Registrant is the operator.
The permit comprises some 364,500 acres (570 square miles) and
encompasses the Cartier Trough and parts of the Ashmore Platform.
The permit has a term of six years. In the first three years of
the permit, the participants are required to carry out a program of
seismic reprocessing and acquisition, including the collection of
400 km of seismic data, with an estimated cost of AUS$900,000. At
September 30, 1997, the Registrant was planning the initial
exploration program.
Offshore Gippsland Basin, Bass Strait Permit VIC/P-39
(33.33%)
A participating interest of 33.33% was acquired by the
Registrant in VIC/P-39 in June 1997. The other participants are
Mosaic Oil NL (33.33%) and Moondance Energy Pty. Ltd (33.33%).
Mosaic Oil NL is the operator.
The permit comprises some 541,250 acres (845 square miles).
The permit has a term of six years. The permit provides for
certain minimum work requirements. In the first year, the
participants must reprocess certain seismic data. In the second
year, a 500 km seismic survey must be completed. In the third
year, an exploration well must be drilled. The work requirements
for the balance of the permit are not mandatory. The estimated
cost for the first three years is AUS$7,500,000. Further seismic
interpretation, seismic data collection and drilling is
prescribed.
Offshore Exploration Permit WA-199-P, Western Australia
(5.0%)
Pursuant to an agreement dated September 15, 1997 with Boral
Energy Resources Limited, a participating interest of five percent
is to be acquired by the Registrant in WA-199-P in consideration
that the Registrant pay the lesser of ten percent of the dry hole
costs of drilling the Kittiwake-1 well or AUS$850,000 (US$636,000).
The other participants are Boral Energy Resources Limited
(24.869%), which is the operator, Petroz NL (11.392%), TAP Oil NL
(10.0%), Asisun Pty. Ltd. (10.027%) and Santos (BOL) Pty Ltd.
(38.712%)
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The permit requires the participants to complete geological
and geophysical studies with an estimated cost of AUS$100,000
(US$75,000) by December 31, 1997 and to drill two exploration wells
by December 31, 1998 with an estimated cost of AUS$12,700,000
(US$9,500,000).
China
China-Joint Study Agreement of March 18, 1996 (50%)
A Joint Technical Study Agreement of March 18, 1996 between
China National Oil and Gas Exploration and Development Corporation
and the Registrant and Moondance Energy Limited provides for the
preparation of a comprehensive study report of the Nanling and
Wuwei Basins, Anhui Province, China. The area involved is about
2,500,000 acres (3,906 square miles). Operatorship is vested in
the person of the chief executive officer of the Registrant. The
Registrant and Moondance Energy Limited are required to bear all
costs. A Geophysical Study Agreement or a Production Sharing
Contract may be negotiated before March 1998.
At September 30, 1997 the Registrant was reprocessing about
600 miles of seismic data in its evaluation of the basins.
Conceptual planning and costing of exploration wells on the
Hongzhuang Prospect in the Nanling Basin and on the Longtangwon
Prospect in the Wuwei Basin and an assessment of the cost of
additional seismic work were being completed and the negotiation of
a Production Sharing Agreement China National Oil and Gas
Exploration and Development Corporation was underway.
PLAN OF OPERATIONS
The plan of operations for the remainder of fiscal 1997 and
the first nine months of fiscal 1998 is as follows:
New Zealand, East Coast Basin, North Island
Petroleum Exploration Permit PEP 38312 (10.5%)
The Registrant intends to collect, process and interpret
seismic data at an estimated cost of US$285,000. The
Registrant's portion of the budgeted cost is US$30,000.
Petroleum Exploration Permit PEP 38328 (40.0%)
The Registrant intends to continue to collect, process and
interpret seismic data at an estimated cost of US$600,000. The
Registrant's portion of the budgeted cost is US$240,000.
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Petroleum Exploration Permit PEP 38330 (34%)
The Registrant intends to continue the processing and
interpretation of seismic data at an estimated cost of
US$200,000. The Registrant's portion of the budgeted cost is
US$68,000.
Petroleum Prospecting License PPL 38332 (42.5%)
The Registrant intends to continue the collection, processing
and interpretation of seismic data at an estimated cost of
US$250,000. The Registrant's portion of the budgeted cost is
US$106,000.
The Registrant intends to apply for the acquisition of further
petroleum exploration rights in the East Coast Basin, New Zealand,
covering a renewal of the area currently held as PPL 38312.
New Zealand, Onshore Canterbury Basin, South Island
Petroleum Exploration Permit 38256 (35%)
To November 1999, the Registrant intends to locate and analyze
petroleum seeps within the permit area, model existing gravity data
and acquire new gravity data, collect and interpret a minimum of
ten magnetotelluric stations, process existing seismic data and
complete surface geological work at an estimated cost of
US$545,000. The Registrant's portion of the budgeted costs is
US$191,000.
New Zealand, Taranaki Basin, North Island
Petroleum Mining Permit PMP 38148 (5.0%)
The participants intend to workover the producing Ngatoro-1
well in the last quarter of 1997 and to enhance the production
levels in the other producing wells. After this, a development
well is planned to be drilled in the Ngatoro-2 pool and an
exploration well is planned to be drilled to test an undrilled
structure in the PMP 38148 area. The estimated cost of the
workover program is US$380,000 and of the drilling of the two wells
is US$2,067,000. The Registrant's portion of the budgeted cost
is US$122,000.
Petroleum Prospecting License 38706 (7.75%)
The participants propose to drill either one or two
exploration wells at an estimated cost of US$3,000,000. The
locations of the wells have not been finalized. The Registrant's
portion of the budgeted cost is US$233,000.
<PAGE> 15
Petroleum Exploration Permit PEP 38716 (24.8%)
On PEP 38716, the participants intend to drill, and if
successful complete, the Crown-1 well and complete geological
studies at an estimated cost of US$4,000,000. The Registrant's
portion of the budgeted cost is US$684,000.
Petroleum Exploration Permit PEP 38720 (50.0%)
On PEP 38720, the participants intend to drill an exploration
well to test the Mount Messenger Formation at an estimated cost
of US$1,000,000. The Registrant's portion of the budgeted cost is
US$500,000.
Petroleum Exploration Permit PEP 38723 (40%)
Before January 31, 1999 the participants intend to carry out
the first phase of the required work at an estimated cost of
US$75,000 and, if results warrant, proceed to the second stage of
the work program at an estimated cost of US$420,000. The
Registrant's portion of budgeted costs is US$198,000.
Papua New Guinea
Petroleum Prospecting License PPL 192 (40.0%)
The participants intend to carry out a geological work
program, license administration and a seismic data collection,
processing and interpretation program at an estimated cost of
US$1,600,000. The Registrant's portion of the budgeted cost is
US$640,000.
The Registrant is in the process of applying for further
interests in Papua New Guinea.
Australia
Offshore Petroleum Exploration Permit Ashmore Cartier
AC/P19, Timor Sea (65.0%)
The participants intend to carry out a geological program and
a seismic collection, processing and interpretation program at an
estimated cost of US$600,000. The Registrant's portion of the
budgeted cost is US$390,000.
The Registrant is in the process of applying for further
offshore interests in the Timor Sea.
<PAGE> 16
Offshore Gippsland Basin, Bass Strait Permit VIC/P-39
(33.33%)
The participants intend to carry out a program of seismic
collection, processing and interpretation at an estimated cost of
US$600,000. The Registrant's portion of the budgeted cost is
US$200,000.
Offshore Exploration Permit WA-199-P, Western Australia
(5.0%)
The participants intend to drill an exploration well in the
first quarter of 1998 at an estimated cost of US$6,360,000. The
Registrant's portion of the budgeted costs is US$636,000 to earn
its five percent interest in the permit. After earning its
interest, the Registrant will, if it continues to participate, pay
five percent of the expenses incurred by the participants. A
second exploration well may be drilled in the last quarter of
1998.
China
China-Joint Study Agreement of March 18, 1996 (50%)
The Registrant and Minora Energy (New Zealand) Ltd. are
nearing the completion of the study of existing seismic data and
the preparation of the report on the Nanling and Wuwei basins. The
Registrant is in the process of negotiating a Production Sharing
Contract with China National Oil and Gas Exploration and
Development Corporation and, if successful, the participants intend
to carry out further seismic work in the first half of 1998. Along
with the costs of administration, the estimated costs are
US$1,105,000 of which the Registrant's portion is US$553,000.
If warranted, the participants intend to drill two exploration
wells in the first half of 1999.
ACQUISITION, EXPLORATION AND DEVELOPMENT EXPENDITURES
The Registrant has incurred expenditures of $1,610,539 to
December 31, 1996 and $1,577,211 in the first nine months of 1997
in the acquisition, exploration and development of petroleum
properties.
RISK FACTORS
The common shares of the Registrant must be considered a
speculative investment due to a number of factors. The purchase of
the common shares involves a number of significant risk factors.
Purchasers of common shares should consider the following:
<PAGE> 17
1. No History of Operations and Reliance on Expertise of
Certain Persons. The Registrant has no history of operations and
is dependent on the management by its president and, in the
acquisition, exploration and development of petroleum properties,
and on the advice of consulting geologists retained by the
Registrant from time to time. The current president of the
Registrant is experienced in the acquisition, exploration and
development of petroleum properties in New Zealand and other Asian
countries, particularly China, Papua New Guinea and Australia.
Should the current president leave the Registrant, the Registrant
may have difficulty in finding a person of comparable education and
experience to manage the business of the Registrant.
2. Limited Financial Resources. The Registrant has limited
financial resources and, if the business is not profitable, may not
be able to raise sufficient funds to sustain, continue or expand
its business. The Registrant currently has limited revenues and
relies principally on the issuance of common shares to raise funds
to finance the business of the Registrant. There is no assurance
that market conditions will continue to permit the Registrant to
raise funds if required.
3. Competition with Other Companies. Other companies with
greater financial resources or expertise are in competition with
the Registrant. The Registrant must compete with such companies in
bidding for the acquisition of petroleum interests from various
state authorities, in purchasing or leasing equipment necessary to
explore for, develop and produce hydrocarbons and in obtaining the
services of personnel in the exploration for, and development and
production of, hydrocarbons. While the Registrant has acquired
various rights to explore, there is no assurance that personnel and
equipment will be available to carry out the programs planned by
the Registrant.
4. Failure to Locate Commercial Quantities of Hydrocarbons
and Geological Risks. There is no assurance that commercial
quantities of hydrocarbons will be discovered and prices for
hydrocarbons may vary, rendering any deposit discovered uneconomic.
In addition, even if hydrocarbons are discovered, the costs of
extraction and delivering the hydrocarbons to market may render any
deposit found uneconomic. Geological conditions are variable and
unpredictable. Even if production is commenced from a well, the
production will inevitably decline and may be affected or
terminated by changes in geological conditions that cannot be
foreseen or remedied by the Registrant.
5. Governmental Laws and Local Conditions. Claims of
aboriginal peoples may adversely affect the rights or operations of
the Registrant and there is no assurance that governmental
regulation will not vary, including regulations relating to
prices, royalties, allowable production, environmental matters,
<PAGE> 18
import and export of hydrocarbons and protection of water resources
and agricultural lands. The Registrant is subject to numerous
foreign governmental regulations that relate directly and
indirectly to its operations including title to the petroleum
interests acquired by the Registrant, production, marketing and
sale of hydrocarbons, taxation, environmental matters, restriction
on the withdrawal of capital from a country in which the Registrant
is operating and other factors. There is no assurance that the
laws relating to the ownership of petroleum interests and the
operation of the business of the Registrant in the jurisdictions in
which it currently operates will not change in a manner that may
materially and adversely affect the business of the Registrant. In
particular, the Registrant is of the view that the laws of China
and to a lesser extent those of Papua New Guinea relating to the
business of the Registrant may be unable to be determined or may
change with little or no notice or the Registrant may be subject to
unofficial or local policies that materially and adversely affect
the business of the Registrant. There is, however, no assurance
that the laws of any jurisdiction in which the Registrant carries
on business may not change in a manner that materially and
adversely affects the business of the Registrant.
6. Environmental Risks. The Registrant is subject to laws
and regulations that control the discharge of materials into the
environment, require removal and cleanup in certain circumstances,
require the proper handling and disposal of waste materials or
otherwise relate to the protection of the environment. In
operating and owning petroleum interests, the Registrant may be
liable for damages and the costs of removing hydrocarbon spills for
which it is held responsible. Laws relating to the protection of
the environment have in many jurisdictions become more stringent in
recent years and may, in certain circumstances, impose strict
liability, rendering the Registrant liable for environmental damage
without regard to negligence of fault on the part of the
Registrant. Such laws and regulations may expose the Registrant to
liability for the conduct of, or conditions caused by, others or
for acts of the Registrant that were in compliance with all
applicable law at the time such acts were performed. The
application of these requirements or the adoption of new
requirements could have a material adverse effect on the business
of the Registrant. The Registrant believes that it has conducted
its business in substantial compliance with all applicable
environmental laws and regulations.
7. Indemnities may be Unenforceable or Uncollectible. The
operating agreements with participants in a property provide for
the indemnification of the Registrant as operator. There is no
assurance that such indemnification will be enforceable or that a
participant will be financially able in all circumstances to
<PAGE> 19
comply with its indemnification obligations, or that the Registrant
will be able to obtain such indemnification agreements in the future.
8. Possible Lack of or Inadequacy of Insurance. The
Registrant maintains insurance against certain public liability,
operational and environmental risks, but there is no assurance that
an event causing loss will be covered by such insurance, that such
insurance will continue to be available to, or carried by, the
Registrant or, if available and carried, that such insurance will
be adequate to cover the Registrant's liability.
9. No Assurance of Earnings or Dividends and Taxation of
Dividends. The Registrant has no history of earnings and there is
no assurance that the business of the Company will be profitable
and, even if the business of the Registrant is profitable, there is
no assurance the board of directors will declare dividends on
common shares. The register of members of the Registrant discloses
that the majority of the shares of the Registrant are held of
record by persons resident in the United States of America. If the
Registrant should declare a dividend, a withholding tax of five
percent is payable in Canada on payment of a dividend to a
corporate resident of the United States of America holding more
than ten percent of the shares of the Registrant and 15% to all
other residents of the United States.
10. Marketing of Petroleum Products. The availability of
products sold, or to be sold, by the Registrant may be restricted
or rendered unavailable due to factors beyond the control of the
Registrant, such as change in laws in the jurisdictions in which
the properties of the Registrant are located, changes in the source
of supply in foreign countries, prohibition on use due to testing
and licensing requirements and in certain areas of the world civil
disorder or governmental confiscation without compensation.
11. Activities of Management. The management of the
Registrant and the growth of the Registrant's business depends on
certain key individuals who may not be easily replaced if they
should leave the Registrant; and persons in management have other
business interests which may result in them devoting, from time to
time, some of their time to such other interests.
12. Inadequacy of Public Market. There is no assurance
that the public market for the common shares of the Registrant will be
maintained or that the holder of common shares will be able in
all circumstances to sell such shares in the quantity and at the
price desired by such holder.
<PAGE> 20
13. Restrictions in Applicable Securities Laws. Applicable
securities laws may restrict the transfer of common shares and if
an exemption is not available to a holder wishing to sell, the
shares may not be transferred.
14. Dilution. The Registrant may issue more common shares at
prices determined by the board of directors, possibly resulting in
dilution of the value of common shares, and, given there is no
preemptive right to purchase common shares, if a member does not
purchase additional common shares, the percentage share ownership
of the member in the Registrant will be reduced.
15. Loss of Investment. An investment in common shares of
the Registrant should only be made by persons who can afford a
complete loss of their investment and there is no assurance that
the common shares of the Registrant will increase in value from the
amount at which a member acquired common shares of the Registrant.
16. Risk Inherent in Exploration. Most of the properties of
the Registrant are at the exploration stage and, except for
petroleum mining permit 38148, without known, commercial reserves
of oil or gas. Oil and gas exploration and development involves a
high degree of risk and few properties which are explored are
ultimately developed into producing and profitable properties.
17. Dealings With Associated Companies. The Registrant is
associated through common directors, common officers, a common
promoter and common shareholdings with four other companies. Mr.
Alex Guidi is the promoter, a member of the board of directors and
the chairman of the Registrant. Mr. Guidi is also the promoter of
Trans-Orient Petroleum Ltd. ("TOP"), Trans New Zealand Oil Company
("TNZ") and Gondwana Energy, Ltd. (Gondwana"). Dr. David Bennett
is the president, chief executive officer and a member of the board
of directors of the Registrant, TOP and Durum. Mr. John Holland is
a director of the Registrant, a director and officer of TNZ and a
director and officer of Gondwana. Messrs. Bernhard Zinkhofer and
Peter McKeown are members of the board of directors of TOP and
Durum. At September 30, 1997 Mr. Guidi beneficially held 5,904,076
common shares of the Registrant of a total outstanding of
28,262,328 common shares (20.89%) and held rights to acquire an
additional 994,000 common shares at various prices. At October 15,
1997 Mr. Guidi beneficially held 2,463,700 common shares of TOP of
a total outstanding of 9,063,520 common shares (27.18%) and held
warrants entitling him to purchase an additional 1,557,000 common
shares. At September 30, 1997 Mr. Guidi beneficially held
1,000,000 common shares of Durum of a total outstanding of
9,541,908 common shares (10.48%). At September 1997, Mr. Guidi
held 4,938,000 common shares of TNZ of a total outstanding of
9,000,000 common shares (54.87%). The percentage participation of
the Registrant and associated companies in a property is determined by the
<PAGE> 21
boards of directors of each company in accordance with applicable
law. Persons who are not willing to rely on the exercise of
judgment by the respective boards of directors in determining the
participation in properties should not consider an investment in
the shares of the Registrant or associated companies.
18. Defeasance of Title. The possibility exists that title
to one or more properties of the Registrant may be lost due to an
omission in the claim of title. The Registrant does not maintain
title insurance.
ITEM 2. FINANCIAL INFORMATION
Forward-Looking Statements
This Form 10, particularly the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" contains certain forward-looking statements within the
meaning of section 27A of the Securities Act of 1933, as amended
and section 21E of the Securities Exchange Act of 1934, as amended
that are not historical facts concerning, among other things,
market conditions, the demand for petroleum products, future
acquisitions, future financings, future capital expenditures and
future results of operations. Actual results may differ materially
from those included in the forward-looking statements, and no
assurance can be given that the Registrant's expectations will be
realized or achieved. Important factors and risks that could cause
actual results to differ from those referred to in forward-looking
statements are discussed under the heading Item 1. Business-Risk
Factors.
Introduction
The following is a discussion of the Registrant's financial
condition, results of operations, financial resources and working
capital. This discussion and analysis should be read in
conjunction with the Registrant's consolidated financial statements
contained in this Form 10 under Item 13.
Overview
The Registrant was not active in the acquisition, exploration
and development of petroleum properties in 1995. The interests
currently held by the Registrant began to be acquired in 1996. The
Registrant has directed its efforts to the acquisition of petroleum
interests of substantial acreage in under-explored areas that are
geologically favorable for the discovery of the hydrocarbons. The
risk inherent in the exploration for the discovery of hydrocarbons
has been reduced by the participation of other companies as working
interest participants. The Registrant has also established itself
<PAGE> 22
as the operator of programs on certain of the petroleum interests
held by the Registrant in order to better control and manage the
process of exploration and development of the petroleum interests.
Acquisition of Petroleum Interests, Exploration, Development and
Production
The acquisition, exploration and development of, and
production from, petroleum interests between January 1, 1996 and
September 30, 1997 is described under Item 1. Business.
Selected Financial Information
The following constitutes selected financial data for the
Registrant prepared in accordance with Canadian generally accepted
accounting principles for the last four completed financial years
and for the nine month period ended September 30, 1997. The
information, expressed in Canadian dollars unless otherwise
indicated, must be read in conjunction with the more detailed
financial information contained in the accompanying audited and
management financial statements.
<TABLE>
<CAPTION>
December 31 January 31
1996 1995 1995 1994 1993
--------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
Current Assets $13,154,012 $1,397,602 $ 809,435 $ 809,207 $ 11,649
Petroleum and Natural
Gas Properties 1,517,758 83,178 14,581 nil nil
Property and
Equipment 47,572 8,411 nil nil nil
Incorporation
Costs nil 971 971 971 971
Total Assets 14,719,342 1,490,162 824,987 810,178 12,620
Share Capital 19,275,707 5,861,540 5,087,160 4,936,024 4,126,024
Deficit (4,675,656) (4,462,173) (4,280,531)(4,208,889) (4,156,158)
Gross Revenue 580,715 53,352 36,407 2,985 2,496
Net Loss (213,483) (181,642) (71,642) (52,731) (128,840)
Net Loss
per Share (0.01) (0.01) (0.01) (0.00) (0.01)
September 30
1997 1996
-------------------------------
<S> <C> <C>
Current Assets $14,787,738 $13,966,611
Petroleum and Natural
Gas Properties 2,757,565 620,116
Property and
Equipment 190,174 43,188
Incorporation Costs nil 971
Total Assets 17,735,477 14,630,886
Share Capital 22,819,985 19,054,140
Deficit (5,108,470) (4,561,541)
Gross Revenue 807,385 247,604
Net Loss (432,814) (99,368)
Net Loss per Share (0.02) (0.00)
<PAGE> 23
UNDER U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
September 30 December 31
1997 1996 1996 1995
------------------- ----------------------
<S> <C> <C> <C> <C>
Current Assets $14,787,738 $13,966,611 $13,154,012 $1,397,602
Petroleum and Natural
Gas Properties 2,757,565 620,116 1,517,758 83,178
Property and
Equipment 190,174 43,188 47,572 8,411
Incorporation
Costs Nil 971 Nil 971
Total Assets 17,735,477 14,630,886 14,719,342 1,490,162
Share Capital 23,923,681 19,619,580 20,280,380 6,168,290
Deficit (6,212,166) (5,126,981) (5,680,329) (4,768,923)
Gross Revenue 807,385 247,604 580,715 53,352
Net Loss (531,837) (358,058) (911,406) (244,642)
Net Loss
per Share (0.02) (0.02) (0.04) (0.02)
</TABLE>
Certain transactions have occurred during the periods which
may cause the data between periods to be not comparable. For
fiscal 1996, refer to Item 1. Business - Development of Business,
for a description of the acquisition of the interest in the Ngatoro
Oil Field.
Exchange Rates
On September 29, 1997, the buying rate for Canadian dollars
was US$1.00: CDN $l.3837. The following table sets out the buying
rate for Canadian dollars for the period indicated. Rates of
exchange are obtained from the Bank of Canada and believed by the
Registrant to approximate closely the rates certified for customs
purposes by the Federal Reserve Bank in New York.
1992 1993 1994 1995 1996
Year End 1.2709 1.3217 1.4018 1.3640 1.3706
Average 1.2083 1.2898 1.3659 1.3726 1.3636
High [1] 1.2887 1.3446 1.4065 1.4243 1.3852
Low [1] 1.1420 1.2425 1.3109 1.3303 1.3290
[1] The high and low buying rate figures are selected from daily
high and low figures.
The following is a summary statement of the material
differences between Canadian and U.S. generally accepted accounting
principles relevant in the preparation of the Registrant's
financial statements:
1. Under U.S. GAAP, compensation expense is recognized when
the market value of stock options as at the grant date exceeds the
exercise price of the stock options. Under Canadian GAAP, no such
expense is recognized;
<PAGE> 24
2. Under U.S. GAAP, compensation expense is also recognized
when shares held in escrow are released and the market value at the
escrow release date exceeds the price of the escrow shares. Under
Canadian GAAP, no such expense is recognized;
3. Under U.S. GAAP, escrow shares are excluded from the
weighted average number of shares outstanding used in the
calculation of loss per share. Under Canadian GAAP, escrow shares
are included in the weighted average number of shares outstanding;
and
4. Under U.S. GAAP, the ceiling test limits capitalized
costs for petroleum and natural gas properties by the aggregate of
the estimated present value, discounted by 10%, of future net
revenues from proved reserves, based on current economic and
operating conditions, plus the lower of cost or fair market value
of unproven properties. Under Canadian GAAP, the ceiling test also
limits capitalized costs for petroleum and natural gas properties
but the aggregate of future net revenues from proved reserves are
not discounted.
For the effects of the above differences between Canadian and
U.S. GAAP, refer to note 13 of the December 31, 1996 audited
financial statements of the Registrant.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Registrant is in the exploration and evaluation stage on
its oil and gas properties and hence has not yet achieved
profitability or break even cash flow. The Registrant has
experienced losses in each fiscal period reported on. Its main
source of capital currently is the issuance of equity securities,
which has a dilative effect on the Registrant's shareholders.
Total losses incurred from incorporation to September 30, 1997 were
$5,108,470. The level of future operations may be limited by the
availability of capital resources, the sources of which are not
predictable. The results of operations should be largely measured
by the success of the extent and quality of oil and gas discovered
as a result of exploration programs. The sales value of any oil
and gas discovered by the Registrant will be largely dependent on
factors beyond the Registrant's control such as the market value of
the hydrocarbons produced.
The business of the Registrant was inactive during the 1995
fiscal year. The Registrant commenced the operation of its current
business in 1996. The efforts of management have been directed
towards the acquisition of petroleum interests and the commencement
of exploration programs on the interests acquired. The Registrant
is also the operator on certain of the interests acquired and to
that end has established an exploration office in
<PAGE> 25
Wellington, New Zealand. The acquisitions made by the Registrant
between January 1, 1996 and September 30, 1997 are described under
Item 1. Discussion of Development of Business.
Operating Revenue
Effective September 1, 1996 the Registrant bought the
outstanding shares of Minora Energy (New Zealand) Limited for
AUS$575,000 (CDN$478,755, US$348,790). The name of the company was
changed to Ngatoro Energy Limited. Ngatoro Energy Limited owns a
five percent participating interest and revenue interest in
petroleum mining permit PMP 38148, which has four producing oil
wells and two shut-in gas wells. In the year ended December 31,
1996 the Registrant received $222,501 from hydrocarbon sales and in
the nine months ended September 30, 1997, the Registrant received
revenues of $500,267. Production has remained relatively
constant.
Costs and Expenses
In the nine months ended September 30, 1997 the Registrant
incurred expenses in the acquisition, exploration and development
of petroleum interests of $1,577,211. The amount incurred in the
acquisition, exploration and development of petroleum interests for
the nine months ended September 30, 1996 was $536,938 and for the
year ended December 31, 1996 was $1,610,539. The increase
represents the acquisition of additional petroleum interests by the
Registrant and development and implementation exploration
programs.
Amortization and depletion expense for the nine months ended
September 30, 1997 was $365,252 and for the nine months ended
September 30, 1996 was $3,922. Depletion and amortization expense
for the year ended December 31, 1996 was $133,879. The increase
resulted from the acquisition of additional petroleum interests
between January 1, 1996 and September 30, 1997.
General and administrative expenses for the nine months ended
September 30, 1997 were $678,734 and for the nine months ended
September 30, 1996 were $343,050. General and administrative
expenses for the year ended December 31, 1996 were $556,716. The
increase resulted from services required to be provided in
connection with the acquisition of additional petroleum interests
between January 1, 1996 and September 30, 1997, the establishment
of an exploration office in Wellington, New Zealand and the
increased level of exploration activity of the Registrant.
<PAGE> 26
Interest Expense
The Registrant finances its business primarily from the
issuance of common shares and secondarily from the receipt of
petroleum revenues from its interest in the Ngatoro oil field, New
Zealand. The Registrant has not effected any borrowing and has
consequently not incurred any interest expense.
Interest Income
Interest income for the nine months ended September 30, 1997
was $307,118 and for the nine months ended September 30, 1996 was
$247,604. Interest income for the year ended December 31, 1996 was
$358,214. The increase was due to the receipt and deposit between
January 1, 1996 and September 30, 1997 of $16,958,445 from the
issuance of common shares.
Liquidity
The Registrant has maintained an appropriate liquidity level
to fund its expenditure programs in the past and has no reason to
conclude that this will not continue for fiscal 1997. The
Registrant is satisfied with its ability to access capital markets
through private placements, public offerings, and convertible
securities in order to preserve liquidity levels. The Registrant
will utilize joint venture arrangements to reduce its exposure on
exploration and development programs.
As of December 31, 1996 the Registrant had $13,034,721 in
working capital as compared with $1,306,807 as of December 31,
1995. As of September 30, 1997 the Registrant had working capital
of $14,763,776 compared with working capital at September 30, 1996
of $13,828,324.
During the fiscal year ended December 31, 1996, the Registrant
completed a Canadian private placement of units distributed to
British Columbia residents raising $3,030,000 through the issuance
of 1,000,000 units at a price of $3.03 per unit, each unit
consisting of one common share and one non-transferable share
purchase warrant to purchase an additional share before May 27,
1997 at $3.03 per share and between May 28, 1997 and May 27, 1998
at $3.485 per share. The Registrant issued additional common
shares to directors, senior officers and employees pursuant to the
exercise of incentive stock options for gross proceeds of
$10,384,167 (1,725,000 shares for $2.167 per share, 1,002,000
shares for $3.333 per share, 612,000 shares for $5.00 per share,
40,000 shares for $5.33 per share and 40,000 shares for $0.837
per share).
<PAGE> 27
During the fiscal period ended December 31, 1995, the
Registrant issued 7,494,000 shares for $0.103 per share for gross
proceeds of $774,380 pursuant to the exercise of share purchase
warrants. No incentive options were exercised during this
period.
During the fiscal year ended January 31, 1995, the Registrant
issued 1,406,250 shares for $0.003 per share held in escrow. The
Registrant issued 1,506,000 shares at a price of $0.103 per share
for gross proceeds of $155,620 pursuant to the exercise of share
purchase warrants. No incentive options were exercised during
this period.
Capital Resources
The Registrant's capital resources are comprised primarily
of private investors, including members of management, who are
either existing contacts of the Registrant's management or who come to
the attention of the Registrant through brokers, financial
institutions and other intermediaries. The Registrant's management is of the
view that conventional banking is unavailable to resource companies
which are in the exploration stage. The Registrant's access to
capital is always dependent upon general financial market
conditions, especially those which pertain to venture capital
situations such as oil and gas exploration companies. The
Registrant's capital resources have not changed in 1996 nor are
they anticipated to change materially in 1997.
It is management's intention to acquire, explore and develop
oil and gas properties in the Asia Pacific region. Material
capital commitments to September 30, 1998 are described in Item
1. Business - Plan of Operations. These commitments total
US$3,926,700 which the Registrant has on deposit.
The Registrant has no other anticipated capital expenditures
of a material amount. However, the Registrant intends to acquire
additional petroleum interests which may give rise to further
capital expenditures.
The Registrant has no agreements with management, investors,
shareholders or anyone else respecting additional financing at this
time. Because of the nature of the Registrant's business, there
are no trends in the nature of its capital resources which could be
considered predictable. To date, the Registrant's capital
resources have consisted solely of the issuance of common shares
pursuant to either public distributions, private placements or the
exercise of convertible securities.
<PAGE> 28
Results of Operations
The Registrant is an exploration company. The Registrant's
primary focus as of September 30, 1997 is the investigation and
acquisition of oil and gas properties. The Registrant's policy is
to acquire interests and where possible, minimize its risk exposure
by farming out or joint venturing these interests to other industry
participants.
The Registrant's current property focus is on the acquisition
and exploration of properties primarily in the Asia Pacific region
with the objective of establishing a solid cash flow base and
participating in high potential exploration blocks in under
explored countries with attractive fiscal regimes.
Revenues for the year ended December 31, 1996 were $580,715
compared with $53,352 for the period ended December 31, 1995. The
Registrant's expenses for the year ended December 31, 1996 were
$794,198 resulting in a per share book loss of $0.01 compared with
$234,994 resulting in a per share book loss of $0.01 for the period
ended December 31, 1995.
Effective September 1, 1996 the Registrant bought the
outstanding shares of Minora Energy (New Zealand) Limited for
AUS$575,000 (CDN$478,755, US$348,790). The name of the company was
changed to Ngatoro Energy Limited. This acquisition provided the
Registrant with oil and gas revenues of $222,501 for the year ended
December 31, 1996 and $500,267 for the nine months ended September
30, 1997. During the year ended December 31, 1996, interest income
increased to $358,214 compared to $53,352 for the period ended
December 31, 1995. This is due to the increase in cash of
$13,414,167 provided by the issuance of common shares through
private placements and exercise of stock options during the year
ended December 31, 1996.
Revenues for the period ended December 31, 1995 were
approximately $53,000 compared with $36,000 for the year ended
January 31, 1995. The Registrant's expenses for the period ended
December 31, 1995 were approximately $235,000 resulting in a per
share book loss of $0.01 compared with $108,000 resulting in a per
share book loss of $0.01 for the year ended January 31, 1995.
Revenues for the year ended January 31, 1995 were
approximately $36,000 compared with $3,000 for the year ended
January 31, 1994. The Registrant's expenses for the year ended
January 31, 1995 were approximately $108,000 resulting in a per
share book loss of $0.01 compared with $81,000 resulting in a per
share book loss of $0.00 for the year ended January 31, 1994.
<PAGE> 29
ITEM 3. PROPERTIES
The following is a brief description of the principal
properties held by the Registrant. The terms and conditions of the
permits and licenses under which the properties are held are
discussed in Item 1. Business - Discussion of Development of
Business.
ALTHOUGH THE REGISTRANT IS CURRENTLY RECEIVING SOME PRODUCTION
REVENUE, THE REGISTRANT DOES NOT REPRESENT THAT IT HOLDS MATERIAL
INTERESTS IN PROVEN PROPERTIES AS ALMOST ALL OF ITS PROPERTIES ARE
IN THE EXPLORATION STAGE. THE REGISTRANT SHOULD BE CONSIDERED AN
EXPLORATION AND DEVELOPMENT STAGE OIL AND GAS COMPANY.
For definitions of technical terms in the following
description of properties, see the Glossary of Terms.
GENERAL
The formation of geological conditions for the generation,
entrapment and location of hydrocarbons depends on a number of
unpredictable factors. First, any system of sedimentary strata
must contain a source of hydrocarbons. Secondly, the source rocks
must have been buried in order for conditions favorable to the
production of hydrocarbons to prevail and the hydrocarbons must
have been expelled from the source formations. With expulsion, the
hydrocarbons will migrate and strata into which the hydrocarbons
migrate must be conducive to both the collection of the
hydrocarbons in the strata and the sealing of the hydrocarbons
within the strata in which they collect. Geological conditions are
extremely varied and unpredictable. See Item 1. Business - Risk
Factors.
New Zealand, East Coast Basin, North Island
Regional Geology
Geologically, the East Coast Basin area in north-east New
Zealand lies in the forearc of an active convergent plate margin
between the subducting oceanic Pacific plate to the east and the
Indian-Australian plate of continental composition to the west.
The rocks exposed on land are characterized by thick marine clastic
sequences ranging in age from early Cretaceous to the Quaternary,
with complex stratigraphy and structure. The stratigraphy may be
simplified into five parts. The pre-Miocene geology can be divided
into autochthonous and allochthonous sequences. Both sequences
have some units in common, but there are material differences. The
basement rocks are Early to Mid-Cretaceous. Overlying the basement
rocks is an allochthonous unit that was emplaced by a foreland
style thrust belt in early Miocene times. This emplacement
occurred at the same time as a
<PAGE> 30
change in sedimentation from a slow, clastic-starved environment
(Late Cretaceous to Paleocene) to a rapid clastic deposition
environment (Miocene to Quaternary). Overlying this unit is
about 19,000 feet of Miocene strata that was laid down in a moderate to
deep marine environment. The sequence is interspersed with
turbiditic sandstone and mudstone sections of variable thickness of
up to 100 feet. The structural geology in the area is complex,
varying from large, open synclines and tight anticlines in the
north to low angle normal faults of several hundreds of feet
displacement in the west and disconformities and faulting in the
south. From Pliocene times, there was rapid uplift in the area,
which prevented further marine deposition, and rapid erosion began
with normal faulting occurring throughout the area.
Currently, there is no production from the East Coast Basin
except for small scale local use of gas seeps.
Petroleum Exploration Permit PEP 38328 (40.0%)
Most of PEP 38328 is flat or gentle hill country, with some
hilly areas to the south-east. The main population centers are the
twin cities of Hastings and Napier, which has a port, with a
combined population of about 110,000. These are the largest cities
on the east coast of the North Island and service a largely rural
area. Current gas consumption in the area is about 2.5 billion
cubic feet. Gas is supplied by an eight inch pipeline from the
Taranaki area on the west coast of the North Island. This pipeline
passes through the center of the permit area.
PEP 38328 has been very lightly explored. Only three wells
have been drilled in the permit area and limited seismic data has
been collected. A well in the south of the permit area encountered
Pliocene reservoir limestones, but these were water saturated and
the well was abandoned. Another well near Napier encountered gas
but was not tested. Later, gas was collected for local use. A
third well near Napier encountered Upper Pliocene turbidite
sandstones which contained a gassy brine. Upper Miocene turbidite
sandstones were also encountered below the Upper Pliocene. Other
horizons also has indications that they were gas bearing.
The Kereru Prospect was defined in 1988 to 1991, but much of
the permit has not been explored with seismic techniques. One of
the objects of the participants is to define additional structures
in the permit area. The East Coast Basin has many oil seeps, gas
seeps and indications of oil in outcrop but not enough is known
about sub-surface structures to determine likely reservoir
locations. The best source formations in the permit area are
considered to be the Upper Cretaceous to Paleocene Whangai
Formation and the Paleocene Waipawa black shale
<PAGE> 31
formation. The latter is usually about 100 feet thick and the
former about 300 feet thick. These formations are considered to be
likely oil bearing formations. Local gas seeps indicate that other
formations may be targets for the location of gas.
Surface geology and information from the wells drilled to date
indicate the Pliocene and Pleistocene limestones, which occur at
several stratigraphic levels and outcrop throughout the permit
area, have the best potential to be reservoir formations.
Thicknesses vary from 15 to several hundred feet. Other potential
reservoir formations include Pliocene and Pleistocene turbidite
sandstones that occur throughout the permit area, and Upper Miocene
turbidite sandstones.
Additional seismic work is required to delineate structures
within the permit area. Finally, regional conditions indicate that
the depth of burial of the source formations for oil and gas is in
excess of 13,000 feet, sufficient for the generation of
hydrocarbons. Seismic data indicates that there are structures
within the permit area which may act as traps for migrating
hydrocarbons.
In the fourth quarter of 1996, the Kereru-l exploration well
was drilled to a depth of 1,938 meters (6,391 feet). Several thin
and separated potential pay reservoir sandstones were encountered,
but the Registrant decided that the results did not justify the
expense of flow testing the well. The well was plugged and
abandoned. In the first half of 1997, a 120 mile seismic survey
costing approximately $1,000,000 was completed. Data was exchanged
with adjacent permit holders and indicated a previously
unidentified structure in the northern part of the permit. At
September 30, 1997 further exploration was to be determined after
processing and interpretation of the seismic data.
Petroleum Exploration Permit PEP 38330 (34%)
PEP 38330 is north of PEP 38328 on the eastern side of
Raukumara Peninsula, the most easterly part of the North Island.
The country covered by PEP 38330 ranges from low alluvium-filled
valleys to hilly incised country. The area is lightly populated,
comprised mostly of pastoral farmland increasingly converted to
forestry blocks in recent years. An extensive transportation
system is already in place. Gisborne, with a population of 30,000
serves as a port and service center for the area.
The permit area is very lightly explored. The abundance of
oil and gas seeps in the area indicates that hydrocarbon generation
has occurred, the most likely source rocks being the Whangai
Formation. The formation process will be complex as a result of
the complicated tectonic and burial history. In the permit area,
the Miocene turbiditic sandstones and minor
<PAGE> 32
conglomerate and limestone deposits are the likely areas where
reservoirs will be located. There are several promising outcrops
known with some indications of hydrocarbons. Finally, the
presence of mud volcanoes and hot springs in the permit area indicate that
the Miocene-Pliocene mudstone sequences contain stratigraphic
seals capable of containing hydrocarbons.
Historically, there have been six exploration wells drilled on
or adjacent to the permit area since 1945. Four of the wells were
drilled before 1972 with very poor seismic control. Two wells
drilled in 1985 and 1986 were supported with 75 miles of seismic
data but in both cases were unsuccessful. The Registrant is
concentrating on the acquisition of seismic data and on surface
geological mapping.
The main exploration targets currently recognized are around
the Waitangi Oil Seeps area in the south of the permit area and the
Matanui Anticline area in the center of the permit area. The
surface expression of the Matanui Anticline covers some 80 square
miles in area and there are few oil or gas seeps along its
boundaries, indicating a possible unbreached structure. The
Registrant is also considering drilling a well alongside the old
Waingaromia-1 well, which produced oil in the 1880's before the rig
burnt down due to ignition of gas escaping from the well. A recent
survey of this old well confirmed that it is still actively leaking
hydrocarbons.
A 15 mile regional seismic line was completed in April 1997,
over the main structural features of the basin, including the
Matanui and Pauariki Anticlines. Processing and interpretation of
this data is underway.
Petroleum Prospecting License PPL 38332 (42.5%)
PEP 38332 covers an area of approximately one million acres in
the East Coast Basin and is located onshore in the southern Hawke
Bay area, North Island, immediately south of PEP 38328.
The country covered by PEP 38332 is a fairly flat alluvial
plain in the center, but more hilly, incised country in the east
and west. Major road and rail links, including the eight-inch
natural gas line to the Hawke Bay area, running across the center
of PEP 38332. There is a good network of minor roads. The area is
predominantly pastoral farmland, with no major population centers.
The area is serviced from Napier and Hastings to the north.
Two wells were drilled in the east of the permit in the early
years of the 20th century, and both recorded oil and gas shows.
Two further wells, in 1969 and 1971, were drilled in the western
area of PEP 38332, but were unsuccessful. These results identify
the area east of the Waewaepa Fault as being the main
<PAGE> 33
area of exploration interest in PEP 38332. A number of prominent
oil and gas seeps in the eastern area, and oil source rocks seen in
outcrop, confirm its potential for discovery. Potential reservoirs
are also present in the Miocene sandstones and Pliocene limestones.
Some limited seismic data, acquired in 1970, together with surface
geological mapping identifies potential trapping structures
immediately east of the Waewaepa Fault.
Approximately 15 miles of new seismic data were acquired in
this area of PEP 38332 in May 1997, as an extension of the larger
program in PEP 38328, to the north. Further seismic in 1998 will
be considered after interpretation of this new seismic, together
with reinterpretation of the existing old seismic. Over the next
six months, the Registrant intends to continue the processing and
interpretation of seismic data.
The Registrant intends to apply for the acquisition of further
petroleum exploration rights in the East Coast Basin, New Zealand.
New Zealand, Canterbury Basin, South Island, Petroleum
Exploration Permit PEP 38256 (35%)
The Canterbury Basin is located both onshore and offshore in
the area surrounding Christchurch, on the east coast of the South
Island. The total area of the Canterbury Basin is about twelve
million acres. The sediments in the Canterbury Basin range in age
from Middle Cretaceous to Miocene and have evolved in a manner
similar to the Taranki Basin. There are numerous gas seeps in the
area.
At September 30, 1997 the participants were planning the first
phase of required work in order to determine the geologic structure
of the sedimentary basin. If the interpretation of the geologic
structure indicates the possible existence of hydrocarbons, the
participants will conduct further seismic surveys in order to
determine the location of possible drill targets.
There have been five wells drilled on PEP 38256 since 1914 and
four offshore wells drilled since 1970, two of which were
condensate discoveries, which are relevant in interpreting the
geology of PEP 38256. Generally, the area is lightly explored.
The basement rocks are Cretaceous sediments and volcanics with some
interbedding of coal formations. Overlying the Cretaceous
formations are Paleocene and Eocene terrestrial sediments which
gradually become of marine origin towards the eastern part of the
basin. Overlying these formations are Oligocene limestone and
sandstone formations which are principally marine in origin. The
early Miocene period saw the deposition of marine sandstones and
mudstones with a gradation to nonmarine sediments in the late
<PAGE> 34
Miocene period. The Pliocene and Quaternary strata are principally
gravels derived from the formation of the Southern Alps with some
volcanics.
Structures in the area trend from the north east to the south
west. Little is known of the local geologic structure. The
sandstones in the Miocene, Paleocene and late Cretaceous formations
are considered to be potential reservoirs, with lesser emphasis
placed on the Eocene and Oligocene limestones. Interbedded
mudstones would provide seals for the reservoirs. Source
formations are thought to be the upper Cretaceous coal formations
and the Whangai and Waipawa Black Shale formations which are found
elsewhere in the East Coast Basin.
The participants propose to carry out the first phase of the
required work program at an estimated cost of US$110,000. If
warranted, the participants will proceed to the second stage of the
work program at an estimated cost of US$440,000.
REGIONAL GEOLOGY
New Zealand, Taranaki Basin, North Island
The Taranaki Basin is located on the west coast of the North
Island. The sediments in the Taranaki Basin range in age from Late
Cretaceous to the Quaternary and encompass a depth of some 25,000
feet with complex structure and geology. Compression across the
eastern portion of the Basin during the early Miocene period
resulted in a thrusted fold belt up to ten miles wide, which
contains the McKee, Tariki, Ahuroa and Waihapa-Ngaere fields. The
eastern margin of the Basin, where PEP 38716 is located, is lightly
explored when compared with other areas of the Basin.
Petroleum Mining Permit PMP 38148 (5%) and Petroleum
Prospecting License PPL 38706 (7.75%)
PPL 38706 and PMP 38148 are situated onshore in the north
central part of the Taranaki Basin, and cover a total area of
approximately 40,000 acres. The area is immediately to the south
of PEP 38720.
Oil production from the four wells producing from sandstones
of the Mount Messenger Formation at depths of 5,000 feet has
remained steady at 1,400 to 1,500 barrels per day. The
participants intend to workover the producing Ngatoro-1 well and to
enhance the production levels in the other producing wells. After
this, a development well is planned to be drilled in the Ngatoro-2
pool and an exploration well is planned to be drilled to test an
undrilled structure in the PMP 38148 area. The estimated cost of
the workover program is US$380,000 and of the drilling of the two
wells is US$2,067,000. The Registrant's portion of the budgeted
cost is US$122,400.
<PAGE> 35
In PPL 38706, the participants are considering drilling two
exploration wells at an estimated cost of US$3,000,000. The
locations of the wells have not been determined. The Registrant's
portion of the budgeted cost is US$232,500.
Petroleum Exploration Permit PEP 38716 (24.8%)
PEP 38716 is situated in the eastern margin of the onshore
Taranaki Basin and covers an area of approximately 67,000 acres.
It is located adjacent to both the Kapuni gas-condensate field,
discovered in 1959, and the Waihapa-Ngaere oil and gas field. The
gathering station for the Waihapa-Ngaere oil and gas field is
located within a few miles of the boundary of PEP 38716. The area
consists of gently rolling hills with rural agriculture being the
main activity.
Exploration of PEP 38716 has to date resulted in the
collection of several hundred miles of seismic data from the area
overlying the Taranaki Fault which formed the eastern margin of the
Basin before Miocene thrusting. Two major plays are currently
recognized as the basis for further exploration.
The Crown Prospect is located in the northern part of PEP
38716. Two wells were drilled to the south of this prospect in
1991 and both were unsuccessful. The main target horizons in the
Crown Prospect are the Tikorangi limestones, with an estimated
depth of 8,000 feet and the Tariki sandstones, with a depth of
10,500 feet. The Crown Prospect is interpreted as a thrust block
anticline, somewhat similar in geological style and size to the
nearby Waihapa oil field.
Deeper reservoir targets are provided by the sandstones of the
Kapuni Group, with a depth of 12,000 to 16,000 feet. This
formation may underlie the Crown Prospect and areas in the southern
part of PEP 38716.
South of the Crown Prospect lies the Oru Prospect which
overlies the Miocene sandstones of the Mount Messenger Formation.
This horizon may contain oil at depths of less than 5,000 feet.
This is considered to be a secondary target within the permit area.
The Waihapa-8 well, drilled on the very edge of the Oru structure,
flow tested oil from the target sandstones at rates in excess of
750 barrels per day.
On PEP 38716, the participants intend to drill, and if
successful complete, the Crown-1 well and complete geological
studies at an estimated cost of US$5,000,000. The Registrant's
portion of the budgeted cost is US$1,240,000.
<PAGE> 36
Petroleum Exploration Permit PEP 38720 (50.0%)
PEP 38720 lies in the north central part of the Taranaki
Basin, immediately south-west of the McKee oil field and north-east
of the Ngatoro oil field. The Kaimiro gas field lies to the west
of the permit area. The permit area is underlain by a complete
Tertiary section including the Mount Messenger and Kapuni
Formations which are reservoir objectives.
The Inglewood Fault, a feature which has played a significant
geological role, both in creating traps for oil and gas, as in the
Kaimiro and Ngatoro fields and in providing a conduit for oil and
gas to move into such traps, crosses the northern part of PEP
38720. Movement on this fault system in the geological past has
created a structural trap at Kapuni level (12,000 feet) within PEP
38720, which has been mapped from existing seismic and well
information as covering an area of up to ten square km (2,500
acres). This feature, named the Waitoriki Prospect, will be the
main focus of the ongoing exploration effort.
A significant petroleum seep in a quarry on the permit
boundary, at a location where the Inglewood Fault cuts to ground
surface, demonstrates that oil entrapment at shallower levels can
also occur, in similar manner to the adjacent Ngatoro and Kaimiro
oil fields. This makes the shallower Mount Messenger Formation
(~5,000 feet depth) an exploration target.
On PEP 38720, the participants intend to drill an exploration
well to test the Mount Messenger Formation at an estimated cost of
US$1,000,000. The Registrant's portion of the budgeted cost is
US$500,000.
Petroleum Exploration Permit 38723
PEP 38723 is adjacent to, and was until 1993 part of, PEP
38706 and has similar geology. Exploration of the general area has
been conducted since 1978 and has resulted in the discovery of the
McKee, Tariki, Ahuroa, Kaimiro and Ngatoro fields. The discovery
of the McKee field in 1979 directed exploration towards
investigation of the overthrust area of the eastern Taranaki Basin.
In the general area, the formations which have been the targets of
exploration are the Kapuni Formation, the Mount Messenger Formation
and to a lesser extent the Upper Moki Formation. In 1993, 50% of
PEP 38706 was relinquished and there were no leads recognized in
the area covered by PEP 38723.
PEP 38723 is underlain by Late Cretaceous coal and marine
shale sequences. Above these formations lies the Kapuni Formation
of inter-bedded coal sequences which provide the principal source
of local oil and gas accumulations. Above the Kapuni formation
lies the McKee formation which was formed during the Eocene
period.
<PAGE> 37
This formation has a limited potential to be a producing horizon on
PEP 38723 due to its limited distribution, depth and absence of
prospects and leads. During the Oligocene period, there was
erosion followed by sandstone and then limestone deposition. The
Tikorangi limestones increase in thickness towards the eastern
boundary of the permit. In the Miocene period, clastic sediments
were deposited to form the Moki sandstones which are a secondary
reservoir target and to form the Mount Messenger sandstones which
have not been tested on PEP 38723, although they are the producing
horizon on the adjacent Ngatoro and Kaimiro fields. Tectonic
activity along the Taranaki and Tarata fault zones also occurred
during the Miocene period. Tilting to the southwest and about one
kilometer of uplift occurred in the late Pliocene period.
The principal target formation on PEP 38723 is the Mount
Messenger sandstones. There is, however, much regional variation
within this formation given its deposition as toe and slope fans.
Experience from the Ngatoro wells indicates that there may be as
little as 1000 meters of continuity in the Mount Messenger
formation. Definition of drilling targets requires well control,
strong seismic anomalies and evidence of geologic structural
closure.
Papua New Guinea
Petroleum Prospecting License PPL 192 (40.0%)
PPL 192 lies across the Strickland River in Western Province,
Papua New Guinea. The area is covered by forests and is relatively
flat. The area is sparsely populated and the lack of roads leaves the
principal mode of transport as the Strickland River.
Drilling of several wells near to PPL 192 has given geologic
indications of features favorable to oil and gas exploration on PPL
192. Thirty miles to the north-west of PPL 192 a well drilled by
British Petroleum in 1990 was directed at a large basement drape
structure of some 25,000 acres in area and 250 feet of vertical
relief. The well encountered a basal Cretaceous sandstone at
10,040 feet which produced gas at 11.9 MMCFPD and condensate at 634
BCPD. Other wells have encountered structures and horizons which
are likely to be replicated in PPL 192. Generally, the geologic
system contains sizable, four-way dip closures of areas of up to
5,000 acres at the levels of Late Jurassic to Early Cretaceous
target horizons. There is widespread development at the 5,500 to
6,000 foot level of the Toro sandstones and overlying Cretaceous
marine shale which provide topseals, both of which have been
encountered throughout the area. Finally, the geologic structures
in the area were formed before hydrocarbon emplacement, meaning
that structural traps for entrapment of hydrocarbons existed at the
time of any hydrocarbon migration in the area.
<PAGE> 38
PPL 192 has seen substantial exploration in the past. In the
early 1970's, the area was largely covered by seismic surveys by
Conoco, Marathon, Union Oil and others. In 1988 to 1990, Shell US,
spent about $30 million in exploration and acquired an open 8 km by
16 km seismic grid over most of the area, with an infilling down to
a 4 km by 4 km grid over the Kamu and Mamboi Prospects and the
Tagari and Pogo Leads. Several other single line leads are also
identified, and sizable structures may have been completely missed
by the existing seismic coverage, given the open nature of the
grid. In addition, the drilling in 1991 of the Langia-l well,
located in the southern part of PPL 192, resulted in the discovery
of 25 feet of gas pay at 5,000 feet depth which might extend over
an area of some 5,000 acres across the Langia structure.
Since 1991, there has been virtually no exploration in this
area as exploration in Papua New Guinea was at reduced levels and
was concentrated in the mountain fold belt to the north-east of PPL
192. Activity in the foreland area has recently increased. The
main feature in PPL 192 is the Kamu Prospect, a structure in the
center part of the area defined on seismic as covering an area of
approximately 4,500 acres, with a vertical relief of about 260 feet
at the Toro Sands level at about 5,500 feet depth. The Toro Sands
are widely developed across the Papuan Basin, and are the main
producing reservoir sequence in virtually all the onshore
discoveries. In addition to the Toro Sands, the Digimu and Imburu
Formations also may be target reservoir formations.
Computer reprocessing and remapping of the existing seismic
data is in process and a variety of geological studies are being
conducted to better define the potential size and exploration
uncertainties of the existing prospects and leads, particularly
focusing on the Kamu Prospect and the Langia Field. In the
immediate future, it is expected that several wells will be drilled
in adjacent foreland basin licenses, both southeast and northwest
of PPL 192, and these should also aid in understanding the
potential of PPL 192. After completion of the current geological
studies, further seismic acquisition will be considered before a
drilling program in the license is announced.
The participants intend to carry out a geological work
program, license administration and a seismic data collection,
processing and interpretation program at an estimated cost of
US$763,000. The Registrant's portion of the budgeted cost is
US$305,000.
The Registrant is in the process of applying for further
interests in Papua New Guinea.
<PAGE> 39
Australia
Offshore Petroleum Exploration Permit Ashmore Cartier
AC/P19, Timor Sea (65.0%)
The Western Australian continental margin was formed in the
late Paleozoic era by the extension of this area of Gondwanaland.
This event determined the major crustal architecture of the
region. The AC/P19 permit area lies within the northern and western
portion of the Vulcan sub-basin and the eastern flank of the Ashmore
Platform. The Vulcan Sub-basin is a north-east trending, fault
bounded deposition area that is characterized by several prominent
troughs and a graben terrain. It is bounded to the northwest and
to the southeast by the Permian-Triassic blocks of the Ashmore
Platform and the Londonderry High. Up to ten kilometers of Upper
Permian to Tertiary sediments lie in the basin.
The Vulcan Sub-basin is thought to have undergone a complex
structural evolution that was dominated by three tectonic events,
a Late Triassic compression, a Late Jurassic NNW-SSE extension and
a Tertiary compression on collision with Pacific plates. The fault
styles are dominated by a mixture of tilted fault blocks in the
southern area and hourglass structures in the northern area. The
location and geometry of the basement rocks control the relative
position of the source rocks, fluid migration paths and reservoirs.
The Ashmore Platform is a large, elevated block that extends
along the western margin of the Vulcan sub-basin. Triassic
sediments on the Ashmore Platform are up to 4.5 kilometers thick.
Faulting of the area in the Late Triassic resulted in extensive
uplift and erosion. Flat-lying Cretaceous and Tertiary sediments
unconformably overlie the Triassic sediments.
Regionally, Late Jurassic shales have been the source rocks
for hydrocarbon formation. Source rock shales may also have been
deposited in Middle and Early Jurassic shales in the Cartier
Trough. Four dry wells have been drilled on the Ashmore Platform
and this area is of little interest to the Registrant. The area of
greatest interest is the Cartier Trough. The main objectives for
exploration are traps that occur within and bounding the Cartier
Trough. The water depth in the area is about 400 meters.
The participants intend to carry out a geological program and
a seismic collection, processing and interpretation program at an
estimated cost of US$600,000. The Registrant's portion of the
budgeted cost is US$390,000.
The Registrant is in the process of applying for further
offshore interests in the Timor Sea.
<PAGE> 40
Offshore Gippsland Basin, Bass Strait Permit VIC/P-39
(33.33%)
The Gippsland Basin lies offshore between the mainland of
Australia and Tasmania, about 30 miles from the coastline of the
state of Victoria. All commercial oil and gas fields located in
the area have been discovered in structural or combined structural
and stratigraphic traps, mainly at the top of the Latrobe Group
Coarse Clastic formation. The basin was developed during the
separation of Australia from Antarctica by north-northeast to
south-southwest lithospheric extension during the Early Cretaceous
and the separation of Australia from the Lord Howe Rise and the
Campbell Plateau in the Late Cretaceous. Rifting occurred in the
Early Cretaceous and formed NNE-SSW transfer faults. Rift-bounding
faults terminate abruptly before reaching the Paleozoic Gippsland
Rise. The Rise is part of a regional belt which extends along the
eastern margin of Australia. A second phase of rifting occurred in
the Late Cretaceous, followed by a period of uplift and erosion
over much of the basin area. Most of the formations in the basin
area, including the Latrobe Group, are of marine to marginal marine
origin.
Source formations in the area of the Gippsland Basin are
located in the Western and Eastern Deeps. The Western Deep has
undergone predominantly coastal plain deposition while the Eastern
Deep was a transition zone between an estuary environment and
limited offshore deposition. The Eastern Deep was buried during
the Eocene period. Oil formation and migration occurred during the
Miocene period and is believed to have been over vertical distances
of two kilometers from the source formations to the coarse clastic
sandstone reservoirs.
Permit VIC/P-39 is surrounded by the Kingfish, Halibut and
Mackerel oil fields and the Marlin, Snapper, Bream and Barracouta
gas fields. Seismic mapping of the area is difficult due to the
existence of large, buried marine channels. Historically, seven
wells have been drilled in the area of permit VIC/P-39. However,
correct positioning of the exploration wells has been hindered by
the difficulty of interpreting seismic data. The buried marine
channels give a false representation of the subsurface geology.
The Veilfin-1 well tested gas with a small amount of condensate at
a depth of 9,760 feet and exhibited hydrocarbon shows in other
formations. Preliminary examination of seismic information
indicated that the well was drilled off structure and the area to
the south east of the well is considered a lead. The other wells
were also unsuccessful.
Other leads recognized in the permit area are Lead A and
Knifejaw. The former is an upthrown, tilted fault block about six
square kilometers in area and the latter has been mapped as a
downthrown tilted fault block. Water depths in the area are less
than 100 meters.
<PAGE> 41
The participants intend to carry out a program of seismic
collection, processing and interpretation at an estimated cost of
US$600,000. The Registrant's portion of the budgeted cost is
US$200,000.
Offshore Exploration Permit WA-199-P (5%), Timor Sea, Western
Australia
This permit area is located on the south east flank of the
Sahul Syncline in the Timor Sea, north east of the AC/P19 permit
area. The permit has been held since 1984 by the principal
participants and work to date has identified two main prospects,
the Kittiwake Prospect in the northern part of the permit area and
the Avocet Deep Prospect in the southern part of the permit area.
The water depth over the Kittiwake Prospect is about 300 feet and
the target formation for drilling is the Plover sandstones at a
depth of about 9,000 feet. The target formation is at a depth of
some 12,000 feet.
The participants to complete geological and geophysical
studies with an estimated cost of AUS$100,000 (US$75,000) by
December 31, 1997 and to drill two exploration wells by December
31, 1998 with an estimated cost of AUS$12,700,000 (US$9,500,000).
The first well will test the Kittiwake Prospect and is expected to
be commenced in the first quarter of 1998 at an estimated cost of
US$6,360,000. The Registrant's portion of the budgeted costs is
US$636,000 to earn its five percent interest in the permit.
China
China-Joint Study Agreement of March 18, 1996 (50%)
The Registrant and Moondance Energy Ltd. are nearing the
completion of the study of existing seismic data and the
preparation of the report on the Nanling and Wuwei basins.
The basins are situated immediately north and south of the
Yangtze River in south-eastern Anhui Province and cover
approximately 2.5 million acres (3,900 square miles). The
shipbuilding center of Wuhu, a trading hub and deep-water river
port, is located in the eastern part of the Wuwei Basin. It has a
population of about 600,000 and is the last deep water port on the
Yangtze River, accommodating ships of up to 10,000 tons year round.
Shanghai is some 180 miles downstream.
The basins are geologically closely linked to the Subei Basin
in North Jiangsu Province, about 100 miles to the northeast.
Regionally, there was marine sedimentary deposition from the
Proterozoic to Early Mesozoic eras. This was followed by what is
called the Indosinian orogeny. This was a period of folding and
the occurrence of thrust faults with later erosion occurring from
the collision of the Yangtze and Huanan plates
<PAGE> 42
into the Jurassic period. There was then a change to continental
sequences of deposition with arid conditions in the Early
Cretaceous, regional compression thrust faults and north-west
trending, high angle faulting occurred. This was followed in the
Late Cretaceous by extensional rift basin development which were
filled by thick continental deposits throughout the Cenozoic era.
As a consequence, the basins have complex structural features of
highly folded and eroded pre-Jurassic marine sequences which have
been later thrusted and buried under thousands of meters of
continental sedimentary formations. The current surface morphology
is relatively flat and the recent deposition of continental
sediments hides the complex structure.
The formations laid down in the Permian and Triassic periods
are considered the best source for hydrocarbons. Outcrops of
formations of Early Triassic age on the edges of the basins contain
hydrocarbons. Outcrops of the Late Cretaceous to early Cenozoic
strata have not been observed. The Paleozoic sediments are not
considered to be likely formations for the location of reservoirs.
On the south-western edge of the Wuwei Basin, there are outcrops of
Middle to Late Jurassic carbonates and on the south-east edge of
the Nanling basin there are outcrops of Cretaceous conglomerates
and an outcrop of a porous sandstone which may possibly be placed
in the Late Cretaceous period.
The regional folding that occurred during the Indosinian
orogeny created four-way dip closures that are the most favorable
structures for hydrocarbon entrapment. These "buried hill"
structures affect the overlying sediments. In the overlying
sediments, the normal and wrench faulting has created other traps
for hydrocarbons. Accordingly, there are a number of targets for
exploration, although the geology is complex. The basins contain
numerous other leads, including domal features and pinch outs,
unconformity, and stratigraphic and fault traps.
The basins have been lightly explored, with efforts by Chinese
exploration companies being limited to geophysical surveys and the
drilling of one deep exploration well. The participants have
reinterpreted about 360 miles of seismic data collected in the
Wuwei Basin in 1989 to 1994 and about 430 miles of pre-1982 analog
data and 52 miles of 1988 digital data in the Nanling Basin.
The existing seismic data from the Nanling and Wuwei Basins
was reprocessed in Shanghai for the Registrant as part of the
ongoing evaluation of these areas. The main Nanling Basin prospect
is the Hongzhuang Prospect, a mid-basin domal ridge approximately
8,000 feet deep at the crest, which is mapped in an upper level as
covering approximately 25 square miles, with almost 1,200 feet of
vertical relief. A second structure at about 12,000 feet deep
covering about eight square miles with almost 1,000 feet of
vertical relief has been detected.
<PAGE> 43
Conceptual planning and costing of exploration wells on the
Hongzhuang Prospect in the Nanling Basin and the Longtangwan
Prospect in the Wuwei Basin is being completed, together with an
assessment of the costs of additional seismic programs, in
preparation for the next phase of work in these areas.
The Registrant is negotiating a Production Sharing Contract
with China National Oil and Gas Exploration and Development
Corporation and, if successful, the participants intend to carry
out further seismic work in the first half of 1998. Along with the
costs of administration, the estimated costs are US$1,105,000 of
which the Registrant's portion is US$553,000.
GLOSSARY OF TERMS
Currency and Measurement All currency amounts in this Statement
are stated in Canadian dollars unless
otherwise indicated.
Conversion into imperial equivalents is as follows:
Metric Units Imperial Units
hectare 2.471 acres
meter (m) 3.281 feet
kilometer (km) 0.621 miles (5,280 feet)
Geologic Time
Name of Era Name of Period Number of Years Before Present
Quaternary Holocene 0 to 400,000
Pleistocene 400,000 to 1,800,000
Tertiary Pliocene 1,800,000 to 5,000,000
Miocene 5,000,000 to 24,000,000
Oligocene 24,000,000 to 36,500,000
Eocene 36,500,000 to 56,000,000
Paleocene 56,000,000 to 66,000,000
Mesozoic Cretaceous 66,000,000 to 140,000,000
Jurassic 140,000,000 to 200,000,000
Triassic 200,000,000 to 250,000,000
Paleozoic Permian 250,000,000 to 290,00,000
Carboniferous 290,000,000 to 365,000,000
Devonian 365,000,000 to 405,000,000
Silurian 405,000,000 to 425,000,000
Ordivician 425,000,000 to 500,000,000
Anticline A geologic structure in which the
sedimentary strata are folded to form an
arch or dome.
<PAGE> 44
Basin A segment of the crust of the Earth which
has been downwarped and in which thick
layers of sediments have accumulated over
a long period of time.
Condensate Hydrocarbons associated with natural gas
which are liquid under surface conditions
but gaseous in a reservoir before
extraction.
Depletion The reduction in petroleum reserves due
to production.
Development Phase The phase in which a proven oil or gas
field is brought into production by
drilling and completing production wells.
Dry Hole A well drilled without finding commercial
quantities of oil or gas.
Exploration Well A well drilled without knowledge of the
contents of the underlying rock.
Farm-In or Farm-Out A common form of agreement between
petroleum companies where the holder of
the petroleum interest agrees to assign
all or part of an interest in the
ownership to another party that is
willing to fund agreed exploration
activities.
Formation A reference to a group of rocks of the
same age extending over a substantial
area of a basin.
Hydrocarbons General term for oil, gas, condensate and
other petroleum products.
Lead An inferred geological feature or
structural pattern which on further
investigation may be upgraded to a
prospect.
Participating Interest An equity interest (compared with a
royalty interest) in an oil and gas
property whereby the participating
interest holder pays its proportionate
percentage share of development and
operating costs and receives the
equivalent share of the proceeds of
hydrocarbon sales after deduction of
royalties due on the gross income.
<PAGE> 45
Pay Zone The stratum of sedimentary rock in which
oil or gas is found.
Prospect A potential hydrocarbon trap which has
been confirmed by geological and
geophysical studies to the degree that
drilling of an exploration well is
warranted.
Reservoir A porous and permeable sedimentary rock
formation containing adequate pore space
in the rock to provide storage space for
oil, gas or water.
Seal An impervious sedimentary rock formation
overlying a reservoir that prevents the
further migration of hydrocarbons.
Seismic A geophysical technique using low
frequency sound waves to determine the
subsurface structure of sedimentary
rocks.
Trap A geological structure in which
hydrocarbons build up to form an oil or
gas field.
Working Interest An equity interest, compared with a
royalty interest, in an oil and gas
property whereby the working interest
holder pays its proportionate share of
exploration, development and operating
costs and receives the equivalent share
of proceeds of hydrocarbon sales after
deduction of royalties due on the gross
income.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The Registrant's securities are recorded on the books of its
transfer agent in registered form. However, the majority of such
shares are registered in the name of intermediaries such as
brokerage houses and clearing houses on behalf of their respective
clients and the Registrant does not have knowledge of the
beneficial owners thereof. The Registrant is not directly or
indirectly owned or controlled by a corporation or foreign
government.
As of September 30, 1997 the Registrant had authorized share
capital of 100,000,000 common shares without par value of which
28,262,398 shares were issued and outstanding.
<PAGE> 46
Of the issued and outstanding shares, there are 1,406,250
shares subject to escrow restrictions and held in escrow by Pacific
Corporate Trust Company ("Pacific Corporate"), 830 - 625 Howe
Street, Vancouver, British Columbia pursuant to an agreement dated
April 8, 1994. The escrow shares were originally issued in
accordance with Local Policy 3-07 of the British Columbia
Securities Commission. 1,361,250 shares are owned by 437577 B.C.
Ltd., a private company the voting shares of which are owned by
Alex Guidi. Mr. Guidi is a member of the board of directors,
chairman and promoter of the Registrant. Two former directors own
45,000 and they are by the terms of the agreement dated April 8,
1994 obligated to transfer the escrow shares held by them to 437577
B.C. Ltd. or surrender the shares to the Registrant.
The agreement of April 8, 1994 provides that the beneficial
ownership of the common shares or any interest in them will not be
sold, assigned, hypothecated, alienated, released from escrow,
transferred within escrow or otherwise in any manner dealt with,
without the expressed consent, order or direction in writing from
the Executive Director, British Columbia Securities Commission,
except as may be required by the death or bankruptcy of any
shareholder. All voting rights attached to the escrowed shares may
be exercised by the registered owner and any dividends declared on
the common shares of the Registrant will similarly be paid to the
holders of the escrowed shares. The shares are released from
escrow on application to the Executive Director and an assessment
by the Executive Director of the progress of the Registrant's
business. If any shares are not released from escrow before April
25, 1999, those shares are to be cancelled.
The beneficial shareholdings of persons or entities holding
five percent or more of the Registrant's common shares as at
September 30, 1997 is as follows:
<TABLE>
<CAPTION>
Percentage
Title of Class Person or Group Amount of Class
<S> <C> <C> <C>
Common shares Alex Guidi [1] 5,904,076 20.89% [4]
Common shares Peter Loretto [2] 2,148,208 7.60% [4]
Common shares Jack Loretto [3] 1,747,925 6.16% [4]
</TABLE>
[1] At September 30, 1997 Mr. Guidi held rights to acquire 994,000
common shares of the Registrant at various prices.
[2] At September 30, 1997 Mr. Loretto held rights to acquire
1,146,000 common shares at various prices.
[3] Jack Loretto is the father of Peter Loretto.
<PAGE> 47
[4] Calculated on a non-diluted basis. On a fully diluted basis,
Mr. Guidi beneficially owns 21.26% of the shares, Mr. Peter
Loretto beneficially owns 10.61% of the shares and Mr. Jack
Loretto beneficially owns 5.38% of the shares of the
Registrant.
The directors, officers and affiliates as a group (four
persons) owned as of September 30, 1997, 5,905,076 shares of the
Registrant which is 20.89% of the outstanding shares on a non-diluted
basis or 26.00% of the outstanding shares of the Registrant
on a fully diluted basis. The holdings of the directors and
officers as at September 30, 1997 were as follows:
Name No. of Shares Beneficially Held
David Bennett Nil
Alex Guidi 5,904,076
John Holland Nil
Brad Holland [1] Nil
Mark Katsumata [1] 1,000
Under the Securities Act (Yukon), insiders (generally officers
and directors of the Registrant and its subsidiaries, persons who
own or control at least ten percent of the voting shares and
employees or consultants of the Registrant) are required to file
individual insider reports of changes in their ownership in the
Registrant's securities within the first ten days of the calendar
month following any trade in the Registrant's securities. Copies of
such reports are available for public inspection at the offices of
the British Columbia Securities Commission, Suite 1100 - 865 Hornby
Street, Vancouver, British Columbia V6Z 2H4 phone (604) 660-4800.
As at September 30, 1997, the names, holdings, exercise price
and expiry date of outstanding options to acquire common shares of
the Registrant were as follows:
<TABLE>
<CAPTION>
Name Number of Shares Exercise Price Expiration
Under Option [1] Date
<S> <C> <C> <C>
David Bennett 200,000 US$2.50 Oct. 30, 1998
Jennifer Bennett 50,000 US$2.50 March 25, 1999
Alex Guidi 500,000 US$2.50 Oct. 30, 1998
Brad Holland 832,000 US$2.50 May 13, 1998
John Holland 500,000 US$2.50 March 25, 1999
Mark Katsumata 6,000 US$3.00 May 12, 1999
Jennifer Muzzin 5,000 US$3.125 May 22, 1999
Carol Price 142,000 CDN$0.837 Dec. 31, 1997
Paul Townson 5,000 US$3.125 May 22, 1999
</TABLE>
[1] In the three month period ended September 30, 1997, options to
acquire 169,000 shares were exercised.
<PAGE> 48
As at September 30, 1997, the names, holdings, exercise price
and expiry date of outstanding warrants to purchase common shares
of the Registrant were as follows:
Number of
Name Share Purchase Price Expiration Date
Warrants
Tracy Godoy 160,000 CDN$3.485 May 27, 1998
Alex Guidi 494,000 CDN$3.485 May 27, 1998
Peter Loretto 146,000 [1] CDN$3.485 May 27, 1998
1,000,000 [2] Note [2] July 3, 2000
Tanya Loretto 150,000 CDN$3.485 May 27, 1998
[1] In the three month period ended September 30, 1997, warrants
to acquire 50,000 shares were exercised.
[2] By an agreement dated June 2, 1997, Mr. Loretto purchased
1,000,000 units for US$1.80 per unit. Each unit is comprised
of one common share and one non-transferable share purchase
warrant. Each share purchase warrant entitles the holder to
purchase a common share for US$1.90 before July 4, 1998, for
US$2.00 from July 4, 1998 to July 3, 1999 and for US$2.10 from
July 4, 1999 to July 3, 2000.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The names, municipality of residence, age and position held of
the directors and officers of the Registrant are as follows:
Name and Municipality of Age Position Held
Residence
Dr. David Bennett [1] 51 President, Chief Executive
Makara, Wellington Officer and Director
New Zealand
Alex P. Guidi 38 Chairman of the Board
Vancouver, British Columbia and Director
Canada
John B. Holland [1][2] 70 Director
Vancouver, British Columbia
Canada
Brad Holland [1][2][3] 40 Director
Dhahran, Saudi Arabia
Mark Katsumata [3] 31 Secretary
Surrey, British Columbia
Canada
<PAGE> 49
[1] Member of audit committee.
[2] Brad Holland is the son of John Holland.
[3] Appointed on October 15, 1997.
Dr. David Bennett - President, Chief Executive Officer and a member
of the Board of Directors.
Dr. Bennett has been a member of the board of
directors and an officer since October 1996. Dr. Bennett
received a Bachelor of Arts (Natural Sciences) from Cambridge University
in 1968 and a Master of Science in Exploration Geophysics from the
University of Leeds in 1969. In 1973, Dr. Bennett received his
doctorate in Geophysics from the Australian National University
and from 1973 to 1975 conducted post-doctoral research at the
University of Texas (Dallas). From 1975 to 1977, Dr. Bennett was
a post-doctoral fellow and lecturer at the University of
Wellington, New Zealand. From 1977 to 1982, Dr. Bennett was
employed by the Department of Scientific and Industrial Research,
Government of New Zealand and from 1982 to 1994 was employed as
geophysicist, exploration manager and finally general manager by
New Zealand Oil and Gas Ltd. Dr. Bennett was an independent
consultant from 1994 to 1996 when he joined the Registrant and
other associated companies. Dr. Bennett has been the president
and a member of the board of directors of the Registrant since
October 1996. Since November 1996, Dr. Bennett has been a member of the
board of directors, and since April 1997 the president, of
Trans-Orient Petroleum Ltd. and since April 1997 a member of the
board of directors and president of Durum Energy Corp.
Mr. Alex Guidi - Chairman of the Board of Directors.
Mr. Guidi has been a member of the board of directors and an
officer since October 1996. Mr. Guidi has been involved in public
markets since 1980 and since 1986 in the oil and gas sector. Mr.
Guidi has organized and financed five oil and gas companies. Mr.
Guidi has been chairman of the board and a member of the board of
directors of the Registrant since October 1996. From July 1988 to
December 1995, Mr. Guidi was a member of the board of directors of
Trans-Orient Petroleum Ltd. From December 1990 to May 1996, Mr.
Guidi was a member of the board of directors of Durum Energy Corp.
and was president from August 1992 to May 1996.
Mr. John Holland - Member of the Board of Directors
Mr. Holland has been a member of the board of directors since
November 1995. Mr. Holland received a Bachelor of Science in
Petroleum Engineering from the University of Alberta in 1956. From
1956 to 1962, Mr. Holland was employed by Imperial Oil
<PAGE> 50
Limited (Esso) in production and reservoir engineering and project
and company evaluation. From 1962 to 1969, Mr. Holland worked with
Cancrude Engineering Ltd., a petroleum consulting firm with major
clients in Australia, Canada and the United States in the gas well
testing and deliverability, injectivity activity and storage
balance studies for gas reservoirs and in supervising all
professional engineering operations in Canada and Australia. In
1978, Mr. Holland formed a consulting firm specializing in
reservoir mechanics, and the production and transmission of natural
gas. In 1969 to 1972, Mr. Holland joined James A. Lewis
Engineering. He had responsibility for all engineering functions
and production management and supervised the installation of
various gas gathering plants and compression facilities, and
conducted reservoir studies, in Canada, the Middle East and
Australia. From 1973 to 1975, Mr. Holland also acted as a
consultant to a Canadian financial advisory firm, specializing in
stock market analysis, company research reports, industry forecasts
and monthly oil and gas commentary. From 1975 to 1977, Mr. Holland
was the president of the Canadian subsidiary of Omnium Techniques
de Transport par Pipelines and engaged in projects in Libya,
Turkey, Indonesia and Canada including two rural gasification
projects in Alberta. From 1978 to 1980, Mr. Holland returned to a
consulting practice specializing in property valuation, production
management, evaluation and financing for production acquisition.
From 1980 to 1984, Mr. Holland was the founder and manager of a
publicly listed oil and gas exploration and production company and
since 1984 has been a principal of a private oil and gas
exploration and production company operating principally in
Alberta. Mr. Holland has been a member of the board of directors
of the Registrant since August 1992 with an interregnum between
September 1993 and November 1995, and was the president of the
Registrant from November 1995 to October 1996. Mr. Holland has
been a director of the Registrant since November 1995. From June
1996 to April 1997, Mr. Holland was the president, chief executive
officer and a member of the board of directors of Trans-Orient
Petroleum Ltd. From July 1993 to April 1997, Mr. Holland was a
member of the board of directors of Durum Energy Corp. Mr. Holland
has also served as chief financial officer of Durum Energy Corp.
Since April 1996 Mr. Holland has been a lifetime member of the
Association of Professional Engineers, Geologists and Geophysicists
of Alberta, Canada.
Mr. Brad Holland - Member of the Board of Directors.
Mr. Holland was a member of the board of directors from May
1996 to February 1997, an officer from February 1997 to October 15,
1997 and was appointed a member of the board on October 15, 1997.
Mr. Holland received a Bachelor of Science in Chemical Engineering
from the University of Alberta in 1979. Mr. Holland was initially
employed for two years by John Holland Consultants Ltd. in property
valuation, production management, evaluation and financing for
<PAGE> 51
production acquisition. From 1982 to 1988, Mr. Holland was
employed by Canadian Western Natural Gas, a natural gas utility.
From 1988 to 1992, Mr. Holland was employed as a senior project
engineer with Nova Corp. where he was responsible for the design
and construction of large diameter pipeline projects. Since 1992,
Mr. Holland has been employed by ARAMCO in Saudi Arabia in the
construction of pipelines.
Mr. Mark Katsumata - Secretary and a member of the Board of
Directors
Mr. Katsumata was a director and officer from December 1994 to
November 1995 and an officer from November 1995 to February 1997.
Mr. Katsumata was appointed an officer on October 15, 1997. Mr.
Katsumata is a certified general accountant who was in public
practice from 1990 to 1994 in Vancouver, B. C. In 1994 Mr.
Katsumata joined the Registrant and associated companies as
controller.
All directors have a term of office expiring at the next
annual general meeting of the Registrant to be scheduled in June
1998 unless re-elected or unless a director's office is earlier
vacated in accordance with the by-laws of the Registrant or the
provisions of the Business Corporations Act (Yukon). All officers
have a term of office lasting until their removal or replacement by
the board of directors.
ITEM 6. EXECUTIVE COMPENSATION
During the nine month period ended September 30, 1997 the
Registrant had two executive officers: David Bennett, president and
chief executive officer and Alex Guidi, chairman of the board. The
aggregate cash compensation paid or payable by the Registrant and
its subsidiaries to its executive officers during the nine month
period ending September 30, 1997 was $66,550.
During the financial period ended December 31, 1996 the
Registrant had three executive officers: David Bennett, president
and chief executive officer; Alex Guidi, chairman of the board; and
John Holland, a former president and chief executive officer. The
aggregate cash compensation paid or payable by the Registrant and
its subsidiaries to its executive officers during the financial
period ending December 31, 1996 was $109,650. During the financial
period ended December 31, 1995, the Registrant had two executive
officers: John Holland, a former president and chief executive
officer, and Mark Katsumata, a former president and chief executive
officer. No cash compensation was paid or remains payable by the
Registrant and its subsidiaries to its executive officers during
the financial year ended December 31, 1995.
<PAGE> 52
No long-term incentive plan awards have been made to the
directors and officers for the Registrant's most recently completed
financial year or in the nine month period ended September 30,
1997.
No other cash compensation, including salaries, fees,
commissions, and bonuses, was paid or is to be paid to the
directors and officers of the Registrant for services rendered for
the financial year ended December 31, 1996 or the nine month period
ended September 30, 1997, nor was any remuneration paid to the
Registrant's directors in their capacity as such.
No profit sharing, pension or retirement benefit plans have
been instituted by the Registrant and none are proposed at this
time. There are no arrangements for payments on termination of
any member of management in the event of a change of control.
The aggregate value of directors' and senior officers' options
exercised below the market price of the shares at the time of
exercise for the nine month period ended September 30, 1997 was
$710,359, for the year ended December 31, 1996 was $3,224,925 and
for the period ended December 31, 1995 was nil. These benefits are
calculated as the difference between the market price and option
exercise price on the date of exercise. Actual proceeds of the
disposition will usually vary from the date of the exercise to the
date of actual disposition of such shares.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Acquisitions with Associated Companies
The Registrant has acquired interests in some petroleum
properties with four other companies, Durum Energy Corp.
("Durum"), Trans-Orient Petroleum Ltd. ("TOP"), Trans New Zealand
Oil Company ("TNZ") and Gondwana Energy Ltd. ("Gondwana"). Mr.
Alex Guidi is the promoter, a member of the board of directors and
the chairman of the Registrant. Mr. Guidi is also the promoter of
TOP, TNZ and Gondwana and a member of the board of directors of
TNZ. Dr. David Bennett is the president, chief executive officer
and a member of the board of directors of the Registrant, TOP and
Durum. Mr. John Holland is a director of the Registrant, a
director and secretary of TNZ and a director and treasurer of
Gondwana. Messrs. Bernhard Zinkhofer and Peter McKeown are members
of the board of directors of TOP and Durum.
At September 30, 1997 Mr. Guidi beneficially held 5,904,076
common shares of the Registrant of a total outstanding of
28,262,398 common shares (20.89%) and held rights to acquire an
additional 994,000 common shares at various prices. At October 15,
1997 Mr. Guidi beneficially held 2,463,700 common shares of
<PAGE> 53
TOP of a total outstanding of 9,063,520 common shares (27.18%) and
held warrants entitling him to purchase an additional 1,557,000
common shares. At September 30, 1997 Mr. Guidi beneficially held
1,000,000 common shares of Durum of a total outstanding of
9,541,908 common shares (10.48%). At September 30, 1997 Mr. Guidi
held 5,031,000 common shares of TNZ of a total outstanding of
9,000,000 common shares (55.9%).
Other
No director or senior officer, and no associate or affiliate
of the foregoing persons, and no insider has, or has had any
material interest, direct or indirect, in any transactions, or in
any proposed transaction which in either such case has materially
affected or will materially affect the Registrant or its
predecessors except as disclosed herein.
Related Party Transactions
In the nine month period ended September 30, 1997, consulting
fees of $66,550 were paid to Dr. David Bennett, president and chief
executive officer of the Registrant. During the fiscal year ended
December 31, 1996, consulting fees of $109,069 (December 31, 1995
fiscal period - $40,068) were paid to Dr. Bennett.
In May 1996, the Registrant sold 1,000,000 units pursuant to
a private placement. Each unit consists of one common share of
the Registrant and one share purchase warrant. Each share purchase
warrant entitles the holder to purchase a common share for $3.485
per share until May 27, 1998. Mr. Alex Guidi, chairman of the
board and a director of the Registrant, acquired 494,000 units.
By an agreement dated May 18, 1995, the Registrant granted
Durum Energy Corp. ("Durum"), a company with a common director, the
right to acquire up to a 20% interest in future exploration
ventures undertaken by the Registrant for a one year period,
renewable annually. In return, Durum would provide the Registrant
with certain services and duties in connection with the conduct of
the business of the Registrant. During the fiscal year ended
December 31, 1996, this agreement was cancelled.
By an agreement dated February 1, 1993, the Registrant entered
into an agreement with Dass No.35 Holdings Ltd. ("Dass"), a company
wholly owned by Peter Loretto, a former president and director of
the Registrant, whereby Dass would provide consulting services and
pay administrative expenses for $2,500 per month. During the
fiscal year ended December 31, 1996, the Registrant paid $20,500
(December 31, 1995 fiscal period - $16,500) to Dass. The agreement
was cancelled in 1996.
<PAGE> 54
By an agreement dated February 1, 1993, the Registrant entered
into an agreement with Wavecrest Capital Inc. ("Wavecrest"), a
company wholly owned by Tanya Loretto, wife of Peter Loretto,
whereby Wavecrest would provide management services for $2,500 per
month. During the fiscal year ended December 31, 1996, this
agreement was cancelled; however, $5,000 was paid by the Registrant
(December 31, 1995 fiscal period - $27,500) to Wavecrest.
By an agreement dated September 1, 1997 the Registrant
assigned a participating interest of 10.0% in petroleum exploration
permit 38328, East Coast Basin, New Zealand to a subsidiary of
Trans-Orient Petroleum Ltd. for nominal consideration.
By an agreement dated September 15, 1997 the Registrant
advanced $325,000 to Trans-Orient Petroleum Ltd. in consideration
of the issuance of 233,510 shares of Trans-Orient Petroleum Ltd.
for CDN$1.3918 (US$1.00) per share.
By an agreement dated September 1, 1997 the Registrant
assigned a participating interest of 10% in petroleum exploration
permit 38256, Canterbury Basin, New Zealand to a subsidiary of
Trans New Zealand Oil Company Ltd. and a participating interest of
5.0% to a subsidiary of Gondwana Energy Ltd. for nominal
consideration.
By an agreement dated June 30, 1997, the Registrant assigned
a participating interest of six percent in petroleum exploration
permit PEP 38716, Taranaki Basin, New Zealand to Durum Energy Corp.
for nominal consideration.
By an agreement dated June 30, 1997, the Registrant assigned
a participating interest of 20% in petroleum prospecting license
PPL 192, Papua New Guinea to a subsidiary of Trans Orient Petroleum
Ltd. and a participating interest of 20% in petroleum prospecting
license PPL 192, Papua New Guinea to a subsidiary of Durum Energy
Corp. for nominal consideration.
Any member of the Registrant's management that, in its
capacity as such, locates or acquires an interest in an oil and gas
property must, because of his or her fiduciary relationship with
the Registrant, present the opportunity to effect such acquisition
by the Registrant on terms commensurate with those prevailing in
the industry. If however, the Registrant declines to participate
in the acquisition of any such property, these members of the
Registrant's management may effect an acquisition for their own
account. The directors and officers of the Registrant are both by
statute and at common law, required to act fairly and in the best
interests of the Registrant and are not permitted to breach this
fiduciary duty for their own benefit.
<PAGE> 55
ITEM 8. LEGAL PROCEEDINGS
There are no material legal proceedings to which the
Registrant is subject or which are anticipated or threatened.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
The shares of the Registrant traded on the Vancouver Stock
Exchange ("VSE") in Vancouver, British Columbia, Canada to
September 13, 1996. Since January 1996 the shares of the
Registrant have traded and continue to trade on the OTC Bulletin
Board under the symbol "INDX". Summary trading by quarter,
adjusted for the 1996 stock subdivisions, for the two most recent
calendar years ending December 31, 1996 and to September 30, 1997
on the VSE and the Bulletin Board are as follows:
VSE and Bulletin Board
(in Canadian dollars unless otherwise indicated)
Year and High Low Close Trading Volume
Quarter
1995
First Quarter $ 0.32 $ 0.10 $ 0.32 1,224,585
Second Quarter 0.97 0.33 0.83 2,069,244
Third Quarter 1.05 0.78 0.80 1,755,039
Fourth Quarter 1.13 0.75 1.12 1,422,801
1996
First Quarter 2.75 0.97 2.67 6,100,851
Second Quarter 7.80 2.71 5.80 28,021,277
Third Quarter [1] US$10.25 US$3.00 US$5.75 9,214,099
Fourth Quarter US$ 7.75 US$1.75 US$3.13 8,341,500
1997
First Quarter US$ 4.03 US$0.30 US$2.25 10,027,100
Second Quarter US$ 4.437 US$2.25 US$4.312 2,337,700
Third Quarter US$ 3.687 US$3.562 US$3.656 52,900
[1] To September 12, 1996 on the VSE and thereafter only on the
Bulletin Board.
As at September 30, 1997 there were 28,262,398 of the
Registrant's shares issued and outstanding. At September 30, 1997
holders of record within the United States collectively held
16,250,947 of such shares, or approximately 57.5% of the
Registrant's issued and outstanding shares. To the best of the
knowledge, information and belief of the Registrant, shares of the
Registrant are held by U.S. residents through brokerage
<PAGE> 56
clearing houses, depositories or otherwise in unregistered form,
but the actual number and percentage of these shares is not known
by the Registrant.
No cash dividends have been declared by the Registrant nor are
any intended to be declared. The Registrant is not subject to any
legal restrictions respecting the payment of dividends (except that
they may not be paid to render the Registrant insolvent). Dividend
policy will be based on the Registrant's cash resources and needs
and it is anticipated that all available cash will be needed for
property development for the foreseeable future.
Exchange Controls and Other Limitations Affecting Security
Holders.
There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the
remittance of dividends, interest or other payments to a non-resident
holder of common shares of the Registrant, other than
withholding tax requirements. The 1980 Tax Convention between
Canada and the United States provides for a rate of withholding tax
on dividends of five percent of the amount to be paid if the
recipient is a corporation and holds more than 10% of the shares of
the Registrant and a withholding tax of 15% in all other cases. In
the absence of the 1980 Tax Convention, the rate would be 25%
percent on all distributions of dividends.
There is no law or governmental decree or regulation in Canada
that restricts the export or import of capital, or affects the
remittance of dividends, interest or other payments to a non-resident
holder of Common shares, other than withholding tax
requirements. Any such remittances to United States residents are
subject to withholding tax. See "Taxation."
There is no limitation imposed by the laws of Canada or by the
charter or other constituent documents of the Registrant on the
right of a non-resident to hold or vote common shares, other than
as provided in the Investment Canada Act (Canada) (the "Investment
Act"). The following discussion summarizes the principal features
of the Investment Act for a non-resident who proposes to acquire
common shares. It is general only, it is not a substitute for
independent advice from an investor's own advisor, and it does not
anticipate statutory or regulatory amendments.
The Investment Act generally prohibits implementation of a
reviewable investment by an individual, government or agency
thereof, corporation, partnership, trust or joint venture (each an
"entity") that is not a "Canadian" as defined in the Investment Act
(a "non-Canadian"), unless after review the minister responsible
for the Investment Act (the "Minister") is satisfied that the
investment is likely to be of net benefit to Canada. An investment
<PAGE> 57
in common shares by a non-Canadian other than a "WTO Investor" (as
that term is defined in the Investment Act and which term includes
entities which are nationals of or are controlled by nationals of
members of the World Trade Organization) when the Registrant was
not controlled by a WTO Investor, would be reviewable under the
Investment Act if it was an investment to acquire control of the
Registrant and the value of the assets of the Registrant was $5
million or more, or if an order for review was made by the federal
cabinet on the grounds that the investment related to Canada's
cultural heritage or national identity. An investment in common
shares by a WTO Investor, or by a non-Canadian when the Registrant
was controlled by a WTO Investor, would be reviewable under the
Investment Act if it was an investment to acquire control of the
Registrant and the value of the assets of the Registrant was not
less than a specified amount, which for 1997 is CDN. $172 million,
and which increases each year by an amount equal to the increase in
current nominal Gross Domestic Product. A non-Canadian would
acquire control of the Registrant for the purposes of the
Investment Act if the non-Canadian acquired a majority of the
common shares. The acquisition of less than a majority but one-third
or more of the common shares would be presumed to be an
acquisition of control of the Registrant unless it could be
established that, on the acquisition, the Registrant was not
controlled in fact by the acquirer through the ownership of
common shares.
Certain transactions relating to common shares would be
exempt from the Investment Act, including:
(a) an acquisition of common shares by a person in the
ordinary course of that person's business as a trader or dealer
in securities,
(b) an acquisition of control of the Registrant in connection
with the realization of security granted for a loan or other
financial assistance and not for a purpose related to the
provisions of the Investment Act, and
(c) an acquisition of control of the Registrant by reason of
an amalgamation, merger, consolidation or corporate reorganization
following which the ultimate direct or indirect control in fact of
the Registrant, through the ownership of common shares, remained
unchanged.
Acquisitions of control by WTO Investors of certain Canadian
businesses are subject to review even if the value of the assets
of the Canadian business does not exceed the annual threshold
applicable to WTO Investors (CDN.$160 million in 1995). For
example, investments in the following sectors are subject to the
$5 million threshold applicable to all non-Canadians: uranium,
financial services, transportation services and cultural
businesses, which include publication, distribution and sale of
<PAGE> 58
books, magazines, periodicals, newspapers, music, film and video
products and the exhibition of film and video products and
broadcast media such as television and radio services. The
Minister has also issued an Interpretation Note advising that oil
and gas properties, and other mineral properties, which are only
at the exploration stage, are not considered to be a business. A
producing mine, however, is considered to be a business as is a
property on which development of a mine has been commenced for
the purpose of production.
Taxation
The following summarizes the principal Canadian federal
income tax considerations applicable to the holding and
disposition of common shares by a holder of one or more common
shares (the "Holder") who is resident in the United States of
America and holds common shares solely as capital property. This
summary is based on the current provisions of the Income Tax Act
(Canada) (the "Tax Act"), the regulations thereunder and all
amendments to the Tax Act publicly proposed by the government of
Canada to the date hereof, and on the current provisions of the
Canada-U.S. 1980 Tax Convention (the "Treaty"). It has been
assumed that all currently proposed amendments to the Tax Act
will be enacted as proposed and there is no other relevant change
in any governing law, although no assurance can be given in these
respects.
Every Holder is liable to pay a Canadian withholding tax on
every dividend that is or is deemed to be paid or credited to the
Holder on the Holder's common shares. Under the Treaty, the rate
of withholding tax is, if the Holder is a company that owns at
least 10% of the voting stock of the Registrant and beneficially
owns the dividend, 5%, and in any other case 15%, of the gross
amount of the dividend.
Pursuant to the Act, a Holder will not be subject to
Canadian capital gains tax on any capital gain realized on an
actual or deemed disposition of a common share, including a
deemed disposition on death, provided either that the Holder did
not hold the common share as capital property used in carrying on
a business in Canada, or that neither the Holder nor persons with
whom the Holder did not deal at arm's length alone or together
owned 25% or more of the issued shares of any class of the
Registrant at any time in the five years immediately preceding
the disposition.
Subject to certain limited exceptions, a Holder who
otherwise would be liable for Canadian capital gains tax in
consequence of an actual or deemed disposition of a common share
will generally be relieved by the Treaty from such liability.
<PAGE> 59
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The Registrant has issued the following common shares at the
following prices:
Date No. of Shares Consideration
To Dec. 31, 1996 26,933,398 $19,275,707
March 20, 1997 10,000 8,400
June 26, 1997 100,000 344,325
July 3, 1997 4,000 16,580
July 8, 1997 50,000 171,063
July 15, 1997 1,000,000 2,471,760
July 29, 1997 100,000 345,350
July 30, 1997 15,000 12,550
Sept. 10, 1997 50,000 174,250
Total: 28,262,398 $22,819,985
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The securities of the Registrant to be registered are common
shares without par value. All common shares of the Registrant's
common stock, both issued and unissued are of the same class and
rank equally as to dividends, voting powers and participation in
the assets of the Registrant on a winding-up or dissolution. No
common shares have been issued subject to call or assessment.
There are no preemptive or conversion rights, and no provisions
for redemption, purchase for cancellation, surrender of sinking
fluid or purchase fund. Provisions as to the creation or
modifications, amendments or variations of such rights or such
provisions are contained in the Business Corporations Act
(Yukon). Each common share is entitled to one vote with respect
to the election of directors and other matters to which
shareholders are ordinarily entitled. All references to "shares"
or "common shares" herein refer to common shares without par
value of the Registrant or its predecessors, all of which have
had only one class or kind of security authorized or issued in
the past, that being common shares without par value.
Pursuant to the applicable provisions of the Business
Corporations Act (Yukon) (the "Corporations Act"), no right or
special right attached to any share of the Registrant, may be
prejudiced, modified or otherwise "interfered with" under the
Corporations Act or the by-laws of Registrant, unless the members
of the class of shareholders affected consent to such action by a
separate resolution of the members of that class adopted by at
least a majority of two-thirds of the votes cast with respect to
the resolution. Under certain circumstances, two-thirds of the
votes cast with respect to such resolution may be less than a
majority of more than 50% of the total number of shares in that
class which are issued and outstanding, since under the by-laws
<PAGE> 60
of the Registrant, a quorum for a general meeting of the holders
of a class of share consist of two shareholders holding not less
than five percent of the outstanding shares of that class share.
The Registrant's registrar and transfer agent is Pacific
Corporate Trust Company, Suite 830 - 625 Howe Street, Vancouver,
British Columbia, Canada V6C 3B8, telephone (604) 689-9853,
facsimile (604) 689-8144.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except with respect to an action by the Registrant to obtain
a judgment, the constating documents of the Registrant provide
for the indemnification of any director, officer, employee or
agent of the Registrant if the person acted honestly and in good
faith with a view to the best interests of the Registrant and,
with respect to any criminal action or administrative proceeding,
had reasonable grounds to believe that his action was lawful.
The Registrant has not, however, entered into any agreement with
a director and officer providing for the grant of a covenant of
indemnity by the Registrant pursuant to this provision in the
constating documents of the Registrant.
With respect to an action to obtain a judgment, the
Registrant is required under the Business Corporations Act
(Yukon) before performing its obligation to indemnify to obtain
the approval of the Supreme Court (Yukon) of the indemnity and
any payment to be made in connection with the indemnity.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
<PAGE> 61
AUDITORS' REPORT
To the Directors of Indo-Pacific Energy Ltd.
(Formerly Consolidated Newjay Resources Ltd.)
We have audited the consolidated balance sheets of Indo-Pacific
Energy Ltd. (formerly Consolidated Newjay Resources Ltd.)
as at December 31, 1996 and 1995 and the consolidated statements
of loss and deficit and changes in financial position for the
year ended December 31, 1996, for the eleven month period ended
December 31, 1995 and for the year ended January 31, 1995. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards in Canada. Those standards require
that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements
present fairly, in all material respects, the financial position
of the Company as at December 31, 1996 and 1995 and the results
of its operations and the changes in its financial position for
the year ended December 31, 1996, for the eleven month period
ended December 31, 1995 and for the year ended January 31, 1995
in accordance with generally accepted accounting principles in
Canada. As required by the Company Act (British Columbia), we
report that, in our opinion, these principles have been applied
on a consistent basis.
We have previously reported to the shareholders on our
report dated April 24, 1997 and these consolidated financial
statements are issued for purposes of regulatory filing and not
for any other purpose.
/s/ Sadovnick Telford & Skov
CHARTERED ACCOUNTANTS
Vancouver, B.C.
October 17, 1997
F-1
<PAGE> 62
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED BALANCE SHEET
(EXPRESSED IN CANADIAN DOLLARS)
AS AT DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Note
Reference 1996 1995
ASSETS
<S> <C> <C> <C>
CURRENT
Cash and short term deposits $12,941,964 $1,330,780
Accounts receivable 196,325 31,944
Prepaid expenses 15,723 34,878
13,154,012 1,397,602
PETROLEUM AND NATURAL
GAS PROPERTIES 3 1,517,758 83,178
PROPERTY AND EQUIPMENT 4 47,572 8,411
INCORPORATION COSTS - 971
$14,719,342 $1,490,162
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 119,291 $ 90,795
SHAREHOLDERS' EQUITY
SHARE CAPITAL 5, 12 19,275,707 5,861,540
DEFICIT (4,675,656) (4,462,173)
14,600,051 1,399,367
$14,719,342 $1,490,162
</TABLE>
APPROVED BY THE DIRECTORS:
/s/ Alex Guidi, Director
/s/ John Holland, Director
Subject to Auditors' Report dated October 17, 1997.
F-2
<PAGE> 63
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
(EXPRESSED IN CANADIAN DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 1996,
THE ELEVEN MONTH PERIOD ENDED DECEMBER 31, 1995
AND THE YEAR ENDED JANUARY 31, 1995
<TABLE>
<CAPTION>
For the Eleven
For the Year Month Period For the Year
Ended Ended Ended
December 31, December 31, January 31,
1996 1995 1995
(Note 10)
<S> <C> <C> <C>
REVENUE
Petroleum and
natural gas sales $ 222,501 $ - $ -
Interest income 358,214 53,352 36,407
580,715 53,352 36,407
COST OF SALES
Amortization
and depletion 133,879 1,318 -
Production costs 26,334 - -
Royalties 25,966 - -
186,179 1,318 -
394,536 52,034 36,407
EXPENSES
General and administrative
(Schedule) 556,716 233,676 108,049
Write-down of
petroleum properties 51,303 - -
608,019 233,676 108,049
NET LOSS FOR THE PERIOD 213,483 181,642 71,642
DEFICIT -
BEGINNING OF PERIOD 4,462,173 4,280,531 4,208,889
DEFICIT - END OF PERIOD $4,675,656 $4,462,173 $4,280,531
LOSS PER SHARE $ 0.01 $ 0.01 $ 0.01
</TABLE>
Subject to Auditors' Report dated October 17, 1997.
F-3
<PAGE> 64
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 1996,
THE ELEVEN MONTH PERIOD ENDED DECEMBER 31, 1995
AND THE YEAR ENDED JANUARY 31, 1995
<TABLE>
<CAPTION>
For the Eleven
For the Year Month Period For the Year
Ended Ended Ended
December 31, December 31, January 31,
1996 1995 1995
(Note 10)
<S> <C> <C> <C>
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Loss for the period $ (213,483) $(181,642) $ (71,642)
Items not affecting cash
Amortization and depletion 133,879 1,318 -
Write-down of
petroleum properties 51,303 - -
Write-off of
incorporation costs 971 - -
(27,330) (180,324) (71,642)
Changes in non-cash
working capital items:
Accounts receivable (164,381) (12,931) (10,004)
Accounts payable
and accrued liabilities 28,496 72,437 (41,557)
Prepaid expenses 19,155 (31,822) (1,701)
(144,060) (152,640) (124,904)
FINANCING
Issue of share capital 13,414,167 774,380 160,307
Share issue cost - - (23,128)
Repayment of loan payable - - (9,171)
13,414,167 774,380 128,008
INVESTING
Petroleum and natural
gas properties (1,610,539) (68,597) -
Property and equipment (48,384) (9,729) (14,581)
(1,658,923) (78,326) (14,581)
NET CASH INFLOW (OUTFLOW) 11,611,184 543,414 (11,477)
CASH AND SHORT TERM DEPOSITS
- BEGINNING OF PERIOD 1,330,780 787,366 798,843
CASH AND SHORT TERM DEPOSITS
- END OF PERIOD $12,941,964 $1,330,780 $ 787,366
</TABLE>
Subject to Auditors' Report dated October 17, 1997.
F-4
<PAGE> 65
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(EXPRESSED IN CANADIAN DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 1996,
THE ELEVEN MONTH PERIOD ENDED DECEMBER 31, 1995
AND THE YEAR ENDED JANUARY 31, 1995
Non-Cash Investing and Financing Activities
For the period ended December 31, 1995, the Company granted
stock options the market value of which at the date the options
were granted exceeded the exercise price by an aggregate of
$63,000.
For the year ended December 31, 1996, the Company granted
stock options the market value of which at the date the options
were granted exceeded the exercise price by an aggregate of
$697,923.
Subject to Auditors' Report dated October 17, 1997
F-5
<PAGE> 66
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF OPERATIONS
The Company is incorporated under the laws of the Province of
British Columbia. Its major activity is the acquisition,
exploration and development of petroleum and natural gas
interests.
The recoverability of amounts capitalized for petroleum and
natural gas properties is dependent upon the existence of
economically recoverable reserves.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Consolidation
These consolidated financial statements include the accounts
of Indo-Pacific Energy Ltd. and its wholly-owned subsidiaries,
Indo Overseas Exploration Ltd., Indo-Pacific Energy (PNG) Pty.
Limited and Indo-Pacific Energy (NZ) Limited and its wholly-owned
subsidiary, Ngatoro Energy Limited (formerly Minora Energy (New
Zealand) Limited).
b) Joint Operations
Substantially all of the Company's exploration and
production activities related to oil and gas activities are
conducted jointly with others and, accordingly, the accounts
reflect only the Company's proportionate interest in these
activities.
c) Cash and Short Term Deposits
Cash and short term deposits include Government treasury
bills and Bankers' Acceptance with maturity within 90 days of the
date purchase.
Subject to Auditors' Report dated October 17, 1997.
F-6
<PAGE> 67 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
d) Petroleum and Natural Gas Properties
The Company follows the full cost method of accounting for
petroleum and natural gas operations whereby all costs associated
with the acquisition of, exploration for and development of
petroleum and natural gas reserves are capitalized. Such costs
include lease acquisition, geological and geophysical, lease
rentals on non-producing properties, costs of drilling productive
and non-productive wells and overhead expenses directly related
to these activities. Such costs are depleted using the unit of
production method based on proven reserves of oil and gas as
determined by management and/or the Company's independent
consulting engineers.
In order to compute depletion, natural gas production and
reserves are stated in equivalent units of oil, based on the
relative energy content of each commodity. No gain or loss is
recognized on the sale or disposition of oil and gas properties
except for dispositions which would significantly change
depletion rates.
Costs of acquiring and evaluating unproven properties are
initially excluded from depletion calculations. These unproven
properties are assessed annually to ascertain whether impairment
has occurred. Impairment for each property is estimated by
applying factors that rely on historical experience.
At each fiscal year end, any unproven property without firm
plans for further exploration work in the foreseeable future will
be written off by the Company. In general, the Company may write
off any unproven property under one or more of the following
conditions:
i) exploration work done on the unproven property during
the fiscal year produced negative results which does not merit
further exploration;
ii) exploration work done in the vicinity of the unproven
property during the fiscal year produced negative results which
does not merit further exploration on the Company's unproven
property; and
Subject to Auditors' Report dated October 17, 1997
F-7
<PAGE> 68 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
d) Petroleum and Natural Gas Properties (Cont'd)
iii) for a non-renewable leased property or permit, the
expiration date of the permit does not allow sufficient time for
exploration work on the unproven property.
The Company applies a "ceiling test" to net capitalized
costs to ensure that such costs do not exceed estimated net
revenues after income taxes, general and administrative costs,
future removal and site restoration costs and financing costs
from production of proven reserves. Excess carrying value, if
any, is recorded as depletion in the year. Estimated net
revenues are determined by applying year-end prices to estimated
proven reserves.
e) Property and Equipment
Property and equipment are recorded at cost and amortized
over their estimated useful lives on a declining balance basis as
follows:
Office equipment 20% to 30%
Automobile 30%
In the period a capital asset is acquired, management deems
it to be acquired midway through the fiscal period and
accordingly the amortization recorded is restricted to one-half
of the normal rate. Amortization will not be taken in the period
of disposal.
f) Translation of Foreign Currencies
Foreign currencies are converted into Canadian dollars as
follows:
- Monetary assets and monetary liabilities at the rate of
exchange prevailing at the balance sheet date.
- Non-monetary assets at the rate of exchange prevailing at
the acquisition date; and
- Revenue and expenses at a rate which approximates the
average rate of exchange for the period.
- Exchange gains and losses are recorded as income or
expense in the period in which they occur.
Subject to Auditors' Report dated October 17, 1997
<PAGE> 69 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
g) Measurement Uncertainty
The amounts recorded for depletion and amortization of
petroleum and natural gas properties and equipment and for future
site restoration and abandonment are based on estimates of
reserves and future costs. By their nature, these estimates and
those related to the future cash flows used to assess impairment
are subject to measurement uncertainty and the impact on the
financial statements of future periods could be material.
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES
Petroleum and natural gas properties are comprised as follows:
<TABLE>
<CAPTION>
1996 1995
Accumulated Net Book Net Book
Cost Amortization Value Value
and Depletion
<S> <C> <C> <C> <C>
Proven:
New Zealand
Ngatoro Oil Field $ 626,569 $147,814 $ 478,755 $ -
Total Proven 626,569 147,814 478,755 -
Unproven:
New Zealand
PEP 38328 427,728 - 427,728 -
PEP 38330 32,085 - 32,085 -
PEP 38716 204,372 - 204,372 72,286
PEP 38720 15,278 - 15,278 -
New licenses 58,497 - 58,497 1,980
Total New Zealand 737,960 - 737,960 74,266
China
Nanling-Wuwei Basins 190,994 - 190,994 2,922
Papua New Guinea
PPL 192 110,049 - 110,049 5,990
Total Unproven 1,039,003 - 1,039,003 83,178
$1,665,572 $147,814 $1,517,758 $83,178
</TABLE>
Subject to Auditors' Report dated October 17, 1997
F-9
<PAGE> 70
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES (Cont'd)
a) PEP 38328
The Company has a 40% participating interest in Petroleum
Exploration Permit 38328 ("PEP 38328") located in New Zealand.
PEP 38328 grants the exclusive right to explore for petroleum for
an initial term of 5 years commencing July 1, 1996, renewable for
a further 5 years over one half of the original area, and the
exclusive right to apply for a 40 year production permit in the
event of a petroleum discovery.
During the first year, the Company and its co-participants
completed a work program which included:
i) reprocessing existing seismic data over the Kereru
prospect;
ii) acquiring, processing and interpreting a minimum of
eight km of new seismic data; and
iii) drilling one exploration well,
after which the participants must commit to an ongoing work
program for the remainder of the term or surrender PEP 38328.
In December 1996, the Company completed the drilling of an
exploration well in the PEP 38328 area (the "Kereru-1 Well").
By an agreement dated November 1, 1996, Boral Energy
Resources Limited ("Boral") acquired a 20% participating interest
in PEP 38328 from the Company by funding a disproportionate share
of costs associated with the drilling of the Kereru-1 Well up to
and including the plugging and abandonment of the Kereru-1 Well.
Trans-Orient Petroleum Ltd. ("Trans-Orient"), a company with
certain common directors, acquired a 10% participating interest
in PEP 38328 from the Company by similarly funding 20% of all
costs associated with the drilling of the Kereru-1 Well.
Subject to Auditors' Report dated October 17, 1997
F-10
<PAGE> 71 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES (Cont'd)
b) PEP 38330
The Company has a 34% participating interest in Petroleum
Exploration Permit 38330 ("PEP 38330") located in New Zealand.
PEP 38330 grants the exclusive right to explore for petroleum for
an initial term of 5 years commencing July 1, 1996, renewable
for a further 5 years over one half of the original area, and the
exclusive right to apply for a 40 year production permit in the
event of a petroleum discovery.
The Company and its co-participants are required to complete
a work program as follows:
i) reviewing existing seismic data and reprocessing and
interpreting a minimum of 80 km of seismic data during the first
year; and
ii) acquiring, processing and interpreting a minimum of 12
kilometers of new seismic data and undertaking a structural
review of PEP 38330 by the end of the second year; and
iii) acquiring, processing and interpreting a minimum of 60
km of new seismic data by the end of the third year,
after which the participants must surrender PEP 38330 or
commit to acquire, process and interpret a further 25 km of new
seismic data and to drill an exploration well by the end of the
fifth year.
c) PEP 38716
The Company has a 32.4% participating interest in Petroleum
Exploration Permit 38716 ("PEP 38716") located in New Zealand.
PEP 38716 grants the exclusive right to explore for petroleum for
an initial term of 5 years commencing January 30, 1996, renewable
for a further 5 years over one half of the original area, and the
exclusive right to apply for a 40 year production permit in the
event of a petroleum discovery.
During the first year and a half, the Company and its
co-participants completed a work program which included reprocessing
and interpreting a minimum of 250 km of existing seismic data and
acquiring, processing and interpreting 30 km of new seismic data.
The participants must commit by July 30, 1997 to drill an
exploration well by July 30, 1998 or surrender PEP 38716.
Subject to Auditors' Report dated October 17, 1997
F-11
<PAGE> 72 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES (Cont'd)
c) PEP 38716 (Cont'd)
Durum Energy Corp. ("Durum"), a company with a common
director, has a 6% participating interest in PEP 38716.
d) PEP 38720
The Company has a 50% participating interest in Petroleum
Exploration Permit 38720 ("PEP 38720") located in New Zealand.
PEP 38720 grants the exclusive right to explore for petroleum for
an initial term of 5 years commencing September 2, 1996,
renewable for a further 5 years over one half of the original
area, and the exclusive right to apply for a 40 year production
permit in the event of a petroleum discovery.
During the first year, the Company and its co-participants
are required to complete a work program which includes
reprocessing and interpreting a minimum of 100 km of seismic data
after which the participants have the following options:
i) commit to drilling an exploration well by the end of
the second year; or
ii) acquire, process and interpret a minimum of 15 km of
new seismic data by the middle of the third year; or
iii) surrender PEP 38720.
The participants are required to drill at least one
exploration well by the end of the third year in order for PEP
38720 to remain in good standing.
Trans-Orient has a 50% participating interest in PEP 38720.
e) Ngatoro Oil Field
By a Sale and Purchase Agreement dated December 4, 1996 and
effective September 1, 1996, the Company acquired a 5%
beneficial interest in Petroleum Mining Permit 38148 ("Ngatoro
Oil Field") and a 4.45% beneficial interest in the surrounding
Petroleum Prospecting License 38706 through the purchase of
Ngatoro Energy Limited (formerly Minora Energy (New Zealand)
Limited) for $575,000 in Australian funds. All obligatory work
commitments have been completed.
Subject to Auditors' Report dated October 17, 1997
F-12
<PAGE> 73 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES (Cont'd)
e) Ngatoro Oil Field (Cont'd)
The Ngatoro Oil Field includes four producing oil wells and
three shut in gas wells.
f) Nanling-Wuwei Blocks
By a Joint Study Agreement dated March 18, 1996 (the "Study
Agreement"), the Company acquired a 50% participating interest in
the Nanling and Wuwei Blocks, located in Anhui Province of the
People's Republic of China, from China National Oil and Gas
Exploration and Development Corp. ("CNODC"). Pursuant to the
Study Agreement, a detailed technical evaluation of the Blocks,
including seismic reprocessing and remapping, must be completed
by June 30, 1997.
During the term of the Study Agreement and for a further 180
days thereafter, the Company is entitled to negotiate with CNODC
for a Geophysical Survey Agreement or a Production Sharing
Contract covering the Blocks.
g) PPL 192
The Company has a 40% participating interest in Petroleum
Prospecting License No. 192 ("PPL 192") located in the Western
Province of Papua New Guinea. PPL 192 grants the exclusive right
to explore for petroleum for an initial six year term commencing
January 28, 1997, extendable for a further 5 year term over 50%
of the original area, and the right to enter into a Petroleum
Agreement upon a discovery. The Petroleum Agreement provides the
right to produce any oil and gas discovered for a period of up to
30 years from discovery, subject to a maximum 22.5% participating
interest that can be acquired by the Government of Papua New
Guinea.
The Company and its co-participants are required to complete
a work program as follows:
i) incur U.S.$100,000 during the first year on exploration
costs which includes reprocessing and interpreting a minimum of
200 km of existing seismic data; and
Subject to Auditors' Report dated October 17, 1997
F-13
<PAGE> 74 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 3 - PETROLEUM AND NATURAL GAS PROPERTIES (Cont'd)
g) PPL 192 (Cont'd)
ii) incur a further U.S.$100,000 during the second year on
exploration costs which includes field, environment, engineering
and economic analyses,
after which the participants can surrender PPL 192 or submit
proposals by the last two months of the second year for
exploration work for the third and fourth years which must
include, at a minimum, acquiring, processing and interpreting 50
km of new seismic data during the third year and drilling one
exploration well during the fourth year.
The participants can surrender PPL 192 by the last two
months of the fourth year or submit proposals for exploration
work for the fifth and sixth years which must include, at a
minimum, acquiring 400 km of new seismic data during the fifth
year and drilling one exploration well during the sixth year.
Trans-Orient and Durum each hold a 20% participating
interest in PPL 192, subject to regulatory acceptance.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment are comprised as follows:
<TABLE>
<CAPTION>
1996 1995
Accumulated Net Book Net Book
Cost Amortization Value Value
<S> <C> <C> <C> <C>
Office equipment $ 51,211 $ 7,435 $ 43,776 $ 2,544
Automobile 6,902 3,106 3,796 5,867
$ 58,113 $ 10,541 $ 47,572 $ 8,411
</TABLE>
NOTE 5 - SHARE CAPITAL
a) Authorized Share Capital
The authorized share capital of the Company is 100,000,000
common shares without par value.
Subject to Auditors' Report dated October 17, 1997
<PAGE> 75 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 5 - SHARE CAPITAL (Cont'd)
b) Issued Shares
<TABLE>
<CAPTION>
Number of
Shares Amount
<S> <C> <C>
Balance - January 31, 1995 5,006,978 $ 5,087,160
Issued during the period for:
Exercise of share
purchase warrants 2,498,000 774,380
Balance - December 31, 1995 7,504,978 5,861,540
Issued during the period for:
Exercise of stock options 386,500 2,496,290
Stock subdivision on a 1.5 new for
one old basis 3,945,559 -
11,837,037 8,357,830
Exercise of stock options 1,103,250 7,663,801
Stock subdivision on a two new for
one old basis 12,940,111 -
25,880,398 16,021,631
Exercise of stock options 53,000 224,076
Private placement 1,000,000 3,030,000
Balance - December 31, 1996 26,933,398 $19,275,707
</TABLE>
c) Subdivision of Share Capital
Effective April 15, 1996 the Company subdivided its share
capital on a 1.5 new for one old basis.
Effective May 31, 1996 the Company subdivided its share
capital on a 2 new for one old basis.
Subject to Auditor's Report dated October 17, 1997
F-15
<PAGE> 76
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 5 - SHARE CAPITAL (Cont'd)
c) Subdivision of Share Capital (Cont'd)
At an Extraordinary General Meeting held on October 9, 1996
the shareholders of the Company granted to the board of directors
the discretion to implement a stock subdivision based on one of
three alternative ratios: a 3 new for one old basis, a 4 new for
one old basis or a 5 new for one old basis. The Company has yet
to implement the subdivision.
d) Incentive Stock Options
The following incentive stock options are outstanding at
December 31, 1996:
Number of Exercise Price Expiry Date
Common Shares Per Share
167,000 $0.84 July 13, 1997
1,082,000 $5.33 May 13, 1998
700,000 US$5.13 October 30, 1998
Subsequent to the year ended, the Company renegotiated the
exercise price and extended the expiry date for certain existing
incentive stock options. (See Note 12)
e) Share Purchase Warrants
The following share purchase warrants are outstanding at
December 31, 1996:
Number of Shares Price per Share Expiry Date
1,000,000 $3.03/$3.485 May 27, 1997/1998
Subject to Auditors' Report dated October 17, 1997
F-16
<PAGE> 77 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 5 - SHARE CAPITAL (Cont'd)
f) Escrow Shares
There are 1,406,250 shares subject to escrow restrictions
and held in escrow by Pacific Corporate Trust Company ("Pacific
Corporate"), 830 - 625 Howe Street, Vancouver, British Columbia
pursuant to an agreement dated April 8, 1994. The escrow shares
were originally issued in accordance with Local Policy 3-07 of
the British Columbia Securities Commission. 1,361,250 shares are
owned by 437577 B.C. Ltd., a private company whose voting shares
are wholly owned by Alex Guidi. Mr. Guidi is a member of the
board of directors, chairman and promoter of the Company. Two
former directors own 45,000 shares and are by the terms of the
agreement dated April 8, 1994 obligated to transfer the escrow
shares held by them to 437577 B.C. Ltd. or surrender the shares
to the Company.
The agreement of April 8, 1994 provides that the beneficial
ownership of the common shares or any interest in them will not
be sold, assigned, hypothecated, alienated, released from escrow,
transferred within escrow or otherwise in any manner dealt with,
without the expressed consent, order or direction in writing from
the Executive Director, British Columbia Securities Commission,
except as may be required by the death or bankruptcy of any
shareholder. All voting rights attached to the escrowed shares
may be exercised by the registered owner and any dividends
declared on the common shares of the Company will similarly be
paid to the holders of the escrowed shares. The shares are
released from escrow on application to the Executive Director and
an assessment by the Executive Director of the progress of the
Company's business. If any shares are not released from escrow
before April 25, 1999, those shares are to be cancelled.
g) Other
On September 13, 1996 the shares of the Company were
delisted from the Vancouver Stock Exchange ("VSE"). At the time
the shares of the Company were delisted from trading through the
facilities of the VSE, the shares continued to be traded on the
OTC BB market and there was no interruption in the availability
of a public market for trading of the shares.
Subject to Auditors' Report dated October 17, 1997
F-17
<PAGE> 78 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 6 - LOSS PER SHARE
Loss per share is calculated using the weighted-average number of
common shares outstanding during the period. Shares that are
held in escrow have been included in determining loss per share.
For the purpose of calculating the weighted average number of
shares outstanding, stock splits and stock consolidations are
deemed to occur at the beginning of the period and are applied
retroactively to the preceding periods.
The weighted average number of shares outstanding used to
calculate loss per share are as follows:
December 31, 1996 25,279,799
December 31, 1995 16,840,440
January 31, 1995 13,331,199
NOTE 7 - RELATED PARTY TRANSACTIONS
The following are related party transactions not disclosed
elsewhere in these financial statements.
a) Accounts Payable
Included in accounts payable as at December 31, 1996 is an
amount of $8,021 (December 31, 1995 - $59,916) due to a company
with a common director.
Included in accounts receivable as at December 31, 1996 is
an amount of $555 (December 31, 1995 - accounts payable of
$16,623) due from a company with certain common directors.
b) Consulting and Management Agreements
The Company is of the view that the amounts paid for
services provided by related parties approximates what the
Company would pay to unrelated parties for the same services.
During the 1996 fiscal year, the Company paid $109,069
(December 31, 1995 fiscal period - $40,068) in consulting fees to
a director of the Company. The director occupied the office of
president and was responsible for the management of the business
of the Company of acquisition, exploration and development of,
and production from, petroleum interests and manages the New
Zealand office of the Company.
Subject to Auditors' Report dated October 17, 1997
F-18
<PAGE> 79 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 7 - RELATED PARTY TRANSACTIONS (Cont'd)
b) Consulting and Management Agreements (Cont'd)
A consulting agreement between the Company and a private
company owned by a former director of the Company requires a fee
of $2,500 per month. During the 1996 fiscal year, the Company
paid $20,500 (December 31, 1995 fiscal period - $27,500) to this
private company. This individual manages the general
administration of the Company, including internal corporate
affairs, public relations and personnel.
A management agreement between the Company and a private
company wholly-owned by a relative of a former director of the
Company requiring a fee of $2,500 per month was cancelled.
During the 1996 fiscal year, the Company paid $5,000 (December
31, 1995 fiscal period - $27,500) to this private company.
c) By a Strategic Alliance Agreement dated May 18, 1995, the
Company granted Durum Energy Corp. ("Durum") a company with a
common director, the right to acquire up to a 20% participating
interest in future exploration ventures undertaken by the Company
for a one year period, renewable annually. In return, Durum will
provide the Company with certain services and duties in
connection with the conduct of the business of the Company. This
agreement was cancelled during the year.
NOTE 8 - INCOME TAXES
There are no income taxes payable for the year ended December 31,
1996 and 1995.
The Company has approximately $2.1 million (1995 - $1.9 million)
of resource and other unused tax pools to offset future taxable
income.
In addition, the Company has non-capital losses of approximately
$552,825 available for future deduction from income. These
losses expire as follows:
1997 $ 33,247
1998 32,152
1999 79,630
2000 23,275
2001 52,731
2002 251,664
2003 80,126
$552,825
Subject to Auditors' Report dated October 17, 1997
<PAGE> 80 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 8 - INCOME TAXES (Cont'd)
The benefits of these excess resource tax pools and non-capital
loss carryforwards have not been recognized in these financial
statements.
NOTE 9 - NAME CHANGE
On May 9, 1995 the name of the Company was changed from
Consolidated Newjay Resources Ltd. to Indo-Pacific Energy Ltd.
NOTE 10 - YEAR END CHANGE
During the 1995 fiscal period the Company changed its year end
from January 31 to December 31 effective December 31, 1995.
NOTE 11 - COMPARATIVE FIGURES
Certain of the prior period's comparative figures have been
reclassified to conform to the current period's presentation.
NOTE 12 - SUBSEQUENT EVENTS
The following events have occurred subsequent to the year-end:
a) Stock Options
(i) The Company granted director and employee incentive
stock options entitling the holders thereof to purchase the
following:
Number of Exercise Price
Common Shares Per Share Expiry Date
550,000 US$2.50 March 25, 1999
30,000 US$3.00 May 12, 1999
10,000 US$3.125 May 22, 1999
(ii) The Company renegotiated the exercise price of certain
existing incentive stock options to U.S. $2.50 per share. These
options now entitle the optionees to purchase up to 1,082,000
common shares at an exercise price of U.S. $2.50 per share until
May 13, 1998 and up to 700,000 common shares at an exercise price
of U.S. $2.50 per share until October 30, 1998.
Subject to Auditors' Report dated October 17, 1997
F-20
<PAGE> 81 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 12 - SUBSEQUENT EVENTS (Cont'd)
a) Stock Options (Cont'd)
(iii) The Company has granted stock options the market
value of which at the date the options were granted exceeded the
exercise price by an aggregate of $98,604.
(iv) Stock options were exercised to purchase the following:
Number of Exercise Price
Common Shares Per Share Total Proceeds
25,000 $0.84 $ 20,950
250,000 US$2.50 US$625,000
4,000 US$3.00 US$ 12,000
v) The Company extended the expiry date of 142,000
existing stock options which entitled the holder to purchase
common shares at $0.84 per share from July 13, 1997 to December
31, 1997.
(vi) The Company received subscriptions for the purchase on
a private placement basis of 1,000,000 units of the Company ("the
Units") at U.S. $1.80 per Unit. Each Unit consists of one share
in the capital of the Company and one non-transferrable share
purchase warrant ("the Warrants"). Each Warrant entitles the
subscriber to purchase one additional share in the capital of the
Company at the price of U.S. $1.90 per share for the first year,
U.S. $2.00 per share for the second year, and U.S. $2.10 per
share for the third year.
(vii) Share purchase warrants were exercised to purchase
50,000 shares of the Company at a price of $3.485 per share for
total proceeds of $174,250.
b) Petroleum and Natural Gas Properties
(i) PEP 38332
The Company acquired a 42.5% participating interest in
Petroleum Explorations Permit 38332 ("PEP 38332") located in New
Zealand.
Subject to Auditors' Report dated October 17, 1997
F-21
<PAGE> 82 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 12 - SUBSEQUENT EVENTS (Cont'd)
b) Petroleum and Natural Gas Properties (Cont'd)
(i) PEP 38332 (Cont'd)
The permit area is situated immediately south of PEP
38328 and is 1,012,000 acres in area. The permit term is for
five years, renewable for a further five years over 50% of the
license area. Any production permits granted will be for a term
of up to 40 years from the date of issue. The Crown in right of
New Zealand has reserved a royalty of five percent of net sales
revenue from the sale of petroleum products.
By December 24, 1998, the Company is required to
reprocess 100 km of existing seismic data, collect 25 km of new
seismic data, undertake photogeologic and field geological
mapping, complete an evaluation of the exploration potential of
the permit area and make a further work commitment or relinquish
the permit. By December 24, 1999, the Company is required to
collect 50 km of seismic data, complete an evaluation of the
exploration potential of the permit area and make a further work
commitment or relinquish the permit. By June 24, 2000, the
Company is required to drill one exploration well and submit a
further program of work for approval.
A regional seismic program has been completed over the
permit area. This and earlier data are being processed before a
decision on further exploration is made.
(ii) VIC/P39
The Company has acquired a 33.33% participating
interest in VIC/P39 located in Australia.
The permit comprises of 541,250 acres and has a term of
six years. The permit provides for certain minimum work
requirements. In the first year, the Company must reprocess
certain seismic data. In the second year, a 500 km seismic
survey must be completed. In the third year, an exploration well
must be drilled. The work requirements for the balance of the
permit are not mandatory. The estimated cost for the first three
years is Australian $7,500,000.
Subject to Auditors' Report dated October 17, 1997
F-22
<PAGE> 83 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 12 - SUBSEQUENT EVENTS (Cont'd)
(iii) ACP19
The Company acquired a 65% participating interest in
ACP19 located in Australia.
The permit comprises of 364,500 acres and encompasses
the Cartier Trough and parts of the Ashmore Platform. The permit
has a term of six years. In the first three years of the permit,
the Company is required to carry out a program of seismic
reprocessing and acquisition, including the collection of 400 km
of seismic data, with an estimated cost of Australian $900,000.
(iv) PPL 38312
The Company acquired a participating interest of 10.5%
in PPL 38312, New Zealand. Under the terms of the license,
licensees are required to complete the following:
(a) before October 9, 1997, re-enter and complete the
drilling of Waitaria-1 to 1600 meters unless geological or
engineering constraints encountered while drilling make this
unreasonable; and
(b) before November 15, 1997, if a discovery is made
as a result of iv(a) above, assess the discovery and if
appropriate apply for an extension of the duration of the license
in order to undertake an appraisal work program.
(v) PEP 38256
The Company acquired a participating interest of 50% in
PEP 38256, Canterbury Area, New Zealand under a permit dated
August 25, 1997. The other participant is Trans-Orient Petroleum
(NZ) Limited. The permit is issued for a term of five years and
has an area of 11,183.17 square kilometers. At the end of the
third year, the participants must relinquish at least 50% of the
permit area. The Crown in right of New Zealand has reserved a
royalty of five percent of net sales revenue of any petroleum
products. Under the terms of the permit, the participants must:
(a) within 15 months of the commencement date of the
permit:
Subject to Auditors' Report dated October 17, 1997
F-23
<PAGE> 84 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 12 - SUBSEQUENT EVENTS (Cont'd)
(v)(a) PEP 38256 (Cont'd)
(i) locate and analyze petroleum seeps within the
permit area;
(ii) model existing gravity data and acquire new
gravity data as required to provide proper control on
density models derived from gravity modelling;
(iii) acquire, model and interpret a minimum of ten
new magnetotelluric stations;
(iv) scan and process existing BP and Bounty seismic
data;
(v) as necessary and appropriate, complete surface
geological work on source and other sequences;
(vi) integrate reprocessed onshore and existing
offshore seismic data with wells and new data acquired;
and
either make a firm commitment by notice in writing
to the Secretary of Commerce to complete the work program
detailed in (b) below or surrender the permit;
(b) within 24 months of the commencement date of the
permit acquire, process and interpret 80 kilometers of new
seismic data and either make a firm commitment by notice in
writing to the Secretary of Commerce to complete the work program
detailed in (c) below or surrender the permit;
(c) within 30 months of the commencement date of the
permit acquire, process and interpret 120 kilometers of new
seismic data and either make a firm commitment by notice in
writing to the Secretary of Commerce to complete the work program
detailed in (d) below or surrender the permit;
(d) within 36 months of the commencement date of the
permit drill one exploration well to the lesser of 1200 meter or
economic basement unless geological or engineering constraints
encountered while drilling make this unreasonable and either
submit to the Secretary of Commerce a satisfactory work program
for the remainder of the permit term or surrender the permit.
c) Corporate Reorganization
The Company continued its jurisdiction of incorporation from
the Province of British Columbia to the Yukon Territory pursuant
to the Yukon Business Corporation Act.
Subject to Auditors' Report dated October 17, 1997
F-24
<PAGE> 85 INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 13 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada ("Canadian
GAAP") which conform in all material respects with generally
accepted accounting principles in the United States ("U.S. GAAP")
except for the following differences:
1996 1995
a) Net loss reconciliation
Net loss under Canadian GAAP $ (213,483) $ (181,642)
Market price of shares in excess
of exercise price of option at
date options granted (697,923) (63,000)
Net loss under U.S. GAAP $ (911,406) $ (244,642)
b) Loss per share
Weighted average number of shares outstanding:
Under Canadian GAAP 25,279,799 16,840,440
Less escrow shares (1,406,250) (1,406,250)
Under U.S. GAAP 23,873,549 15,434,190
Loss per share
under U.S. GAAP $ (0.04) $ (0.02)
c) Balance Sheet Items
i) Share Capital
Under Canadian GAAP $19,275,707 $5,861,540
Additions
Market price of shares in excess
of exercise price of option
at date options granted 697,923 63,000
Cumulative historical
adjustments to date 306,750 243,750
Under U.S. GAAP $20,280,380 $6,168,290
Subject to Auditors' Report dated October 17, 1997
F-25
<PAGE> 86
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
DECEMBER 31, 1996 AND 1995
NOTE 13 - DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Cont'd)
1996 1995
c) Balance Sheet Items (Cont'd)
ii) Deficit
Under Canadian GAAP $(4,675,656) $(4,462,173)
Add - Loss under
Canadian GAAP 213,483 181,642
Deduct - Loss under U.S. GAAP (911,406) (244,642)
- cumulative historical
adjustments to date (306,750) (243,750)
Under U.S. GAAP $(5,680,329) $(4,768,923)
d) Statement of Changes in Financial Position
Deemed share proceeds
Under Canadian GAAP $ - $ -
Market price of shares in excess
of exercise price of option at
date option granted 697,923 63,000
Under U.S. GAAP $ 697,923 $ 63,000
Subject to Auditors' Report dated October 17, 1997
F-26
<PAGE> 87
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
CONSOLIDATED SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES
(EXPRESSED IN CANADIAN DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 1996,
THE ELEVEN MONTH PERIOD ENDED DECEMBER 31, 1995
AND THE YEAR ENDED JANUARY 31, 1995
<TABLE>
<CAPTION>
For the Eleven
For the Year Month Period For the Year
Ended Ended Ended
Note December 31, December 31, January 31,
Reference 1996 1995 1995
(Note 10)
<S> <C> <C> <C> <C>
EXPENSES
Accounting and audit $ 16,036 $ 5,175 $ 4,528
Consulting fees 7 37,240 16,500 18,000
Corporate relations
and development 70,765 26,822 4,125
Directors' fees 1,000 - -
Filing and transfer
agency fees 38,621 18,426 12,311
Foreign exchange loss 30,832 - -
Legal fees 53,795 17,017 30,937
Management fees 7 15,784 27,500 30,000
Office and miscellaneous 102,391 9,320 864
Printing 89,485 56,745 1,068
Rent 12,535 14,145 6,216
Telephone 34,001 12,014 -
Travel 21,236 18,375 -
Wages and benefits 32,024 11,637 -
Write-off of
incorporation costs 971 - -
$ 556,716 $ 233,676 $108,049
</TABLE>
Subject to Auditors' Report dated October 17, 1997
F-27
<PAGE> 88
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
SUPPLEMENTARY INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
DECEMBER 31, 1996
(Unaudited - Prepared by Management)
(Expressed in Canadian Dollars)
PROVED PETROLEUM AND NATURAL GAS RESERVE QUANTITIES
December 31, December 31, January 31,
1996 1995 1995
PETROLEUM RESERVES
Proved developed reserves, end of period
Oil (barrels) 70,000 - -
Gas (billion cubic feet) 0.17 - -
Proved reserves, end of period
Oil (barrels) 145,000 - -
Gas (billion cubic feet) 0.40 - -
All petroleum and natural gas reserves are located in New
Zealand.
Petroleum and natural gas reserves cannot be measured exactly.
Reserve estimates are based on many factors related to reservoir
performance which require evaluation by engineers interpreting
available data, as well as price, costs and other economic
factors. The reliability of these estimates at any point in time
depends on both the quality and quantity of the technical and
economic data, the production performance of the reservoirs as
well as extensive engineering judgment. Consequently, reserve
estimates are subject to revision as additional data becomes
available during the producing life of a reservoir. When a
commercial reservoir is discovered, proved reserves are initially
determined based on only limited data from the first well or
wells. Further drilling may better define the extent of the
reservoir and additional production performance, well tests and
engineering studies will likely improve the reliability of the
estimate.
Proved developed reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and
operating methods. Proved reserves are reserves which geological
and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reserves under existing
economic and operating conditions. Reserves are considered
proved if economic producibility is supported by either
production or conclusive formation tests.
F-28
<PAGE> 89
INDO-PACIFIC ENERGY LTD.
(FORMERLY CONSOLIDATED NEWJAY RESOURCES LTD.)
SUPPLEMENTARY INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES
AS AT DECEMBER 31, 1996
(Unaudited - Prepared by Management)
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING
TO PROVED OIL AND GAS RESERVES
(Expressed in Canadian Dollars)
December 31, December 31, January 31,
1996 1995 1995
Future cash inflows $1,243,000 $ - $ -
Future production and
development costs to abandonment
at December 31, 2003 460,000 - -
Future income taxes - - -
783,000 - -
Discount at 10% annual rate
for estimated timing of
cash flows 79,000 - -
$ 704,000 $ - $ -
Undiscounted future net cash flows from proved producing oil and
natural gas reserves is largely based on information provided by
in-house reserve calculations. A discount factor of 10% was
applied to estimated future cash flows to compute the estimated
present value of proved oil and natural gas reserves. This
valuations procedure does not necessarily result in an estimate
of the fair market value of the Company's oil and natural gas
properties.
No provision for income taxes, as the Company has resource and
other unused tax pools to offset future taxable income.
The only change in the standardized measure of future cash flows
from production has been due to the purchase of Ngatoro Energy
Limited (formerly Minora Energy (NZ) Ltd.), a company whose sole
asset was a 5% interest in the producing Ngatoro oil field. This
interest is the only interest the Company holds in a proven oil
property. The standardized measure calculation for the property,
at December 31, 1996, was $704,000, as compared to the Net Book
Value of $479,000.
F-29
<PAGE> 90 PART IV
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There are no changes in, or disagreements with, accountants on
accounting and financial disclosure.
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS
ON FORM 8-K.
(a) Financial Statements are contained in Item 8 of this Form
10.
(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
(c) Exhibits
Exhibit
Number Document Description
3.1 Certificate of incorporation as Pryme Energy
Resources Ltd. dated July 31, 1979.
3.2 Certificate of change of name from Pryme Energy
Resources Ltd. to Newjay Resources Ltd. dated August
23, 1985.
3.3 Certificate of change of name from Newjay Resources
Ltd. to Consolidated Newjay Resources Ltd. dated
August 25, 1993.
3.4 Certificate of change of name from Consolidated
Newjay Resources Ltd. to Indo-Pacific Energy Ltd.
dated May 9, 1995.
3.5 Articles of incorporation and memorandum of the
Registrant.
3.6 Articles of continuance dated September 10, 1997
under Business Corporations Act (Yukon).
3.7 Certificate of continuance dated September 25, 1997
under Business Corporations Act (Yukon).
3.8 Bylaws dated as at September 25, 1997.
10.1 Copy of permit dated August 19, 1997.
10.2 * Operating agreement with Asia Pacific Oil regarding PPL
38312. Filed via paper pursuant to a Hardship Exemption.
10.3 Copy of permit dated June 19, 1996.
<PAGE> 91
10.4 Farm-in agreement dated November 14, 1996 with
Trans-Orient Petroleum Ltd. and Indo-Pacific Energy
(NZ) Ltd.
10.5 Farm-in agreement dated October 30, 1997 with Boral
Energy Resources (NZ) Ltd., Indo-Pacific Energy (NZ)
Ltd. and Moondance Energy Ltd.
10.6 Deed of Assignment and Assumption dated October 30,
1997 with Indo-Pacific Energy (NZ) Ltd., Moondance
Energy Ltd., Croft Exploration Ltd. and Boral Energy
Resources (NZ) Ltd.
10.7 Deed of Assignment and Assumption dated November 6,
1997 with Indo-Pacific Energy (NZ) Ltd., Moondance
Energy Ltd., Croft Exploration Ltd., Boral Energy
Resources (NZ) Ltd. and Trans-Orient Petroleum (NZ)
Ltd.
10.8 Deed of Withdrawal, Assignment and Assumption dated
November 7, 1997 with Indo-Pacific Energy (NZ) Ltd.,
Moondance Energy Ltd., Croft Exploration Ltd., Boral
Energy Resources (NZ) Ltd. and Trans-Orient
Petroleum (NZ) Ltd.
10.9 Deed of Withdrawal, Assignment and Assumption dated
November 7, 1997 with Indo-Pacific Energy (NZ) Ltd.,
Moondance Energy Ltd., Boral Energy Resources (NZ)
Ltd. and Trans-Orient Petroleum (NZ) Ltd.
10.10 Copy of permit 38330 dated June 4, 1996.
10.11 Copy of permit 38332 dated June 24, 1997.
10.12 Deed of Assignment dated October 10, 1997 with Indo-Pacific
Energy (NZ) Ltd., Boral Energy Resources
Limited, Boral Energy Resources (NZ) Limited, Trans
New Zealand Oil Company.
10.13 Copy of permit 38256 dated August 25, 1997.
10.14 Copy of permit 38148 dated December 23, 1996.
10.15 Copy of licence 38706 dated August 1, 1993.
10.16 Share Purchase Agreement with Shareholders of Minora
Energy (New Zealand) dated December 4, 1996.
10.17 Deed of Assignment and Assumption from Minister of
Energy (New Zealand), December 23, 1996.
<PAGE> 92
10.18 * Operating agreement regarding PPL 38707 dated September 2,
1993. Filed via paper pursuant to a Hardship Exemption.
10.19 Copy of permit 38716 dated October 12, 1995.
10.20 * Operating agreement regarding PEP 38716 dated April 22,
1997. Filed via paper pursuant to a Hardship Exemption.
10.21 Assignment and novation agreement dated as of July
1, 1997 with Australian Worldwide Exploration NL.
10.22 Copy of permit 38720 dated September 2, 1996.
10.23 Copy of permit PEP 38723 dated October 30, 1997.
10.24 Copy of licence PPL 192 dated January 28, 1997.
10.25 Copy of permit AC P19.
10.26 Copy of permit 39.
10.27 Copy of permit WA-199-P.
10.28 Farmin agreement dated November 28, 1997 between Boral
Energy Resources Limited and Indo-Pacific Energy (Aust)
Pty. Ltd.
10.29 China-Joint Study Agreement of March 18, 1996 (50%).
27 Financial Data Schedule
99.2 Escrow agreement dated April 8, 1994 among the Pacific
Corporate Trust Company, the Registrant and certain
shareholders of the Registrant.
99.2 Form Incentive Stock Option Agreement.
99.3 * Letter granting continuing Hardship Exemption
* Filed via Continuing Hardship Exemption.
<PAGE> 93 SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this to the Form 10 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Wellington, New Zealand, on this 9th day of January, 1998.
INDO-PACIFIC ENERGY LTD.
BY: /s/ Dr. David Bennett, President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Dr. David Bennett, as true and
lawful attorney-in-fact and agent, with full power of substitution,
for his and in his name, place and stead, in any and all capacities,
to sign any and all amendments to this registration statement, and to
file the same, therewith, with the Securities and Exchange
Commission, and to make any and all state securities law or blue sky
filings, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing
requisite or necessary to be done in about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying the confirming all that said attorney-in-fact and agent, or
any substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signatures Title Date
/s/ Dr. David Bennett President, Chief January 9, 1998
Executive Officer
and member of the
Board of Directors
/s/ Alex Guidi Chairman of the January 8, 1998
Board of Directors
/s/ Alex Guidi Member of the January 8, 1998
John B. Holland Board of Directors
by his proxy
Alex Guidi
_____________________ Member of the ____________, 1998
Brad Holland Board of Directors
/s/ Mark Katsumata Secretary January 8, 1998
Mark Katsumata
<PAGE> 94
EXHIBIT INDEX
Exhibit
Number Document Description
3.1 Certificate of incorporation as Pryme Energy Resources
Ltd. dated July 31, 1979.
3.2 Certificate of change of name from Pryme Energy Resources Ltd.
to Newjay Resources Ltd. dated August 23, 1985.
3.3 Certificate of change of name from Newjay Resources Ltd. to
Consolidated Newjay Resources Ltd. dated August 25, 1993.
3.4 Certificate of change of name from Consolidated Newjay
Resources Ltd. to Indo-Pacific Energy Ltd. dated May 9, 1995.
3.5 Articles of incorporation and memorandum of the Registrant.
3.6 Articles of continuance dated September 10, 1997 under Business
Corporations Act (Yukon).
3.7 Certificate of continuance dated September 25, 1997 under Business
Corporations Act (Yukon).
3.8 Bylaws dated as at September 25, 1997.
10.1 Copy of permit dated August 19, 1997.
10.2 * Operating agreement regarding PPL 38312 with Asia Pacific Oil.
Filed via paper pursuant to a Continuing Hardship Exemption.
10.3 Copy of permit dated June 19, 1996.
10.4 Farm-in agreement dated November 14, 1996 with Trans-Orient
Petroleum Ltd. and Indo-Pacific Energy (NZ) Ltd.
10.5 Farm-in agreement dated October 30, 1997 with Boral Energy
Resources (NZ) Ltd., Indo-Pacific Energy (NZ) Ltd. and Moondance
Energy Ltd.
10.6 Deed of Assignment and Assumption dated October 30, 1997 with
Indo-Pacific Energy (NZ) Ltd., Moondance Energy Ltd.,
Croft Exploration Ltd. and Boral Energy Resources (NZ) Ltd.
10.7 Deed of Assignment and Assumption dated November 6, 1997 with
Indo-Pacific Energy (NZ) Ltd., Moondance Energy Ltd., Croft
Exploration Ltd., Boral Energy Resources (NZ) Ltd. and Trans-Orient
Petroleum (NZ) Ltd.
10.8 Deed of Withdrawal, Assignment and Assumption dated November 7,
1997 with Indo-Pacific Energy (NZ) Ltd., Moondance Energy Ltd.,
Croft Exploration Ltd., Boral Energy Resources (NZ) Ltd. and
Trans-Orient Petroleum (NZ) Ltd.
10.9 Deed of Withdrawal, Assignment and Assumption dated November 7,
1997 with Indo-Pacific Energy (NZ) Ltd., Moondance Energy
Ltd., Boral Energy Resources (NZ) Ltd. and Trans-Orient Petroleum
(NZ) Ltd.
10.10 Copy of permit 38330 dated June 4, 1996.
10.11 Copy of permit 38332 dated June 24, 1997.
<PAGE> 95
10.12 Deed of Assignment dated October 10, 1997 with Indo-Pacific Energy
(NZ) Ltd., Boral Energy Resources Limited, Boral Energy
Resources (NZ) Limited, Trans New Zealand Oil Company.
10.13 Copy of permit 38256 dated August 25, 1997.
10.14 Copy of permit 38148 dated December 23, 1996.
10.15 Copy of licence 38706 dated August 1, 1993.
10.16 Share Purchase Agreement with Shareholders of Minora Energy (New
Zealand) dated December 4, 1996.
10.17 Deed of Assignment and Assumption from Minister of Energy (New
Zealand), December 23, 1996.
10.18 * Operating agreement regarding PPL 38706 dated September 2, 1993.
Filed via paper pursuant to a Continuing Hardship Exemption.
10.19 Copy of permit 38716 dated October 12, 1995.
10.20 * Operating agreement regarding PEP 38716 dated April 22, 1997.
Filed via paper pursuant to a Continuing Hardship Exemption.
10.21 Assignment and novation agreement dated as of July 1, 1997 with
Australian Worldwide Exploration NL.
10.22 Copy of permit 38720 dated September 2, 1996.
10.23 Copy of permit PEP 38723 dated October 30, 1997.
10.24 Copy of licence PPL 192 dated January 28, 1997.
10.25 Copy of permit AC P19.
10.26 Copy of permit 39.
10.27 Copy of permit WA-199-P.
10.28 Farmin agreement dated November 28, 1997 between Boral Energy
Resources Limited and Indo-Pacific Energy (Aust) Pty. Ltd.
10.29 China-Joint Study Agreement of March 18, 1996 (50%).
27 Financial Data Schedule
99.1 Escrow agreement dated April 8, 1994 among the Pacific Corporate
Trust Company, the Registrant and certain shareholders of the
Registrant.
99.2 Form Incentive Stock Option Agreement.
99.3 * Letter granting Continuing Hardship Exemption.
* Filed via Continuing Hardship Exemption.
<PAGE> 96
EXHIBIT 3.1
CANADA: No. 194,694
Province of British Columbia
"Companies Act"
I hereby certify that
PRYME ENERGY RESOURCES LTD.
has this day been incorporated under the "Companies Act."
Seal
GIVEN under my hand and Seal of office at Victoria, Province
of British Columbia, this 31st day of July, one thousand nine
hundred and seventy-nine.
/s/ illegible
_____________________________
Deputy Registrar of Companies
<PAGE> 97
EXHIBIT 3.2
CANADA NUMBER
PROVINCE OF BRITISH COLUMBIA 194694
Province of British Columbia
Ministry of Consumer and Corporate Affairs
REGISTRAR OF COMPANIES
COMPANY ACT
Certificate
I HEREBY CERTIFY THAT
PRYME ENERGY RESOURCES LTD.
HAS THIS DAY CHANGED ITS NAME TO THE NAME
NEWJAY RESOURCES LTD.
GIVEN UNDER MY HAND AND SEAL OF OFFICE AT VICTORIA, BRITISH
COLUMBIA, THIS 23RD DAY OF AUGUST, 1985
/s/ Roberta J. Lowdon
------------------------------
ROBERTA J. LOWDON
DEPUTY REGISTRAR OF COMPANIES
<PAGE> 98
EXHIBIT 3.3
CERTIFICATE NUMBER: 194694
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that
NEWJAY RESOURCES LTD.
has this day changed its name to
CONSOLIDATED NEWJAY RESOURCES LTD.
Issued under my hand at Victoria, British Columbia on August 25,
1993
/s/ John S. Powell
JOHN S. POWELL
Registrar of Companies
<PAGE> 99
EXHIBIT 3.4
CERTIFICATE NUMBER: 194694
OF CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that
CONSOLIDATED NEWJAY RESOURCES LTD.
has this day changed its name to
INDO-PACIFIC ENERGY LTD.
Issued under my hand at Victoria, British Columbia on May 09,
1995
/s/ John S. Powell
------------------------------
JOHN S. POWELL
Registrar of Companies
<PAGE> 100
EXHIBIT 3.5
ARTICLES
PRYME ENERGY RESOURCES LTD.
TABLE OF CONTENTS
PART ARTICLE SUBJECT
1 INTERPRETATION
1.1 Definition
1.2 & 1.3 Construction of Words
1.4 Companies Act Definitions Applicable
1.5 Table "A" Inapplicable
2 SHARES AND SHARE CERTIFICATES
2.1 Member entitled to Certificate
2.2 Replacement of Lost or Defaced Certificate
2.3 Recognition of Trusts
2.4 Execution of Certificates
2.5 Delivery to Joint Holders
3 ISSUE OF SHARES
3.1 Directors authorized
3.2 Commissions and Discounts
4 SHARE TRANSFERS
4.1 Transferability and Instrument of Transfer
4.2 Submission of Instruments of Transfer
4.3 Execution of Instrument of Transfer
4.4 Enquiry as to Title not required
4.5 Transfer fee
4.6 Appointment of Registrar and/or Transfer
Agent
5 ALTERATION OF CAPITAL
5.1 Ordinary Resolution required
5.2 Articles Apply to New Capital
5.3 Class Meetings of Members
6 PURCHASE OF SHARES
6.1 Company authorized to Purchase its Shares
7 BORROWING POWERS
7.1 Powers of Directors
7.2 Negotiability of Debt Obligations
7.3 Special Rights on Debt Obligations
7.4 Registers of Debt Obligations and Holders
thereof
7.5 Execution of Debt Obligation Documents
/s/ Keith A. Christofferson
------------------------------
KEITH A. CHRISTOFFERSON
Solicitor
<PAGE> 101
8 GENERAL MEETINGS
8.1 Classification of General Meetings
8.2 Calling of Meetings
8.3 Notice for General Meetings
8.4 Waiver of Notice
8.5 Notice of Special Business at General Meeting
9 PROCEEDINGS AT GENERAL MEETINGS
9.1 Special Business
9.2 Quorum
9.3 Requirement of Quorum
9.4 Lack of Quorum
9.5 Chairman
9.6 Alternate Director
9.7 Scrutineer and Secretary
9.8 Adjournments
9.9 Decisions by Show of Hands or Poll
9.10 Resolution need not be Seconded
9.11 Casting Vote
9.12 Manner of Taking Poll
9.13 Casting of Votes
9.14 Demand for Poll
9.15 Demand for Poll not to prevent Continuance of
Meeting
9.16 Retention of Ballots Cast on a Poll
10 VOTES OF MEMBERS
10.1 Number of Votes per Share or Member
10.2 Votes by Joint Holders
10.3 Representative of a Corporate Member
10.4 Votes by Committee of a Member
10.5 Execution of Proxy Instrument
10.6 Qualification of Proxyholder
10.7 Deposit of Proxy
10.8 Validity of Proxy Vote
10.9 Form of Proxy
11 DIRECTORS
11.1 Responsible for Management
11.2 Number of Directors
11.3 Share Qualification of Directors
11.4 Remuneration and Expenses of Directors
11.5 Directors interested in Transactions with the
Company
11.6 Right to hold Office & contract with the
Company
11.7 Director acting in Professional Capacity
11.8 Alternate Directors
12 RETIREMENT AND ELECTION OF DIRECTORS
12.1 Election at Annual General Meetings
12.2 Filling a Casual Vacancy
<PAGE> 102
13 PROCEEDINGS OF DIRECTORS
13.1 Meetings - Quorum Chairman
13.2 Call and Notice of Meetings
13.3 Competence of Quorum
13.4 Appointment of Directors Committees
13.5 Committee Chairman
13.6 Committee Meetings
13.7 Validity of Meeting where Directorship
Deficient
13.8 Newly-elected Directors
13.9 Waiver of Notice of Meetings
13.10 Majority Rule
13.11 Resolution in Writing Effective
14 OFFICERS
14.1 President and Secretary Required
14.2 Directors Authority
15 EXECUTION OF DOCUMENTS
15.1 Seal optional
15.2 Official Seal
15.3 Affixation of Seal to Documents
15.4 Mechanical Reproduction of Signatures
16 DIVIDENDS
16.1 Declaration of Dividends
16.2 Proportionate to Number of Shares held
16.3 Dividend bears No Interest
16.4 Payment in Specie Permitted
16.5 Capitalization of Undistributed Surplus
16.6 Payment of Dividends
16.7 Effect of Transfer of Dividends
16.8 Fractional Shares
16.9 Reserves
17 ACCOUNTS
17.1 Accounts to be kept
17.2 Location of Accounts
18 NOTICES
18.1 Method of giving Notice
18.2 Notice to Joint Holders
18.3 Notice to Personal Representative
18.4 Notice Deemed Effective
18.5 Date Notice Deemed given
18.6 Persons to Receive Notice
<PAGE> 103
19 INDEMNIFICATION AND PROTECTION OF DIRECTORS, OFFICERS,
EMPLOYEES AND CERTAIN AGENTS
19.1 Party to Legal Proceedings
19.2 Officers, Employees, Agents
19.3 Extent of Indemnification
19.4 Persons Undertaking Liabilities
19.5 Limitation of Liability
19.6 Directors may rely
19.7 Company may purchase Insurance
"COMPANIES ACT"
ARTICLES
of
PRYME ENERGY RESOURCES LTD.
PART 1 - INTERPRETATION
1.1 In these Articles, unless the context otherwise requires:
(a) "Board of Directors" or "Board" means the directors of
the Company for the time being;
(b) "Companies Act" means the Companies Act of the Province
of British Columbia from time to time in force and all amendments
thereto and includes all regulations and amendments thereto made
pursuant to that Act;
(c) "directors" means the directors of the Company for the
time being;
(d) "month" means calendar month;
(e) "register" means the register of members to be kept
pursuant to the Companies Act;
(f) "registered address" of a member shall be his address
as recorded in the register;
(g) "registered address" of a director means his address as
recorded in the Company's register of directors to be kept
pursuant to the Companies Act;
(h) "seal" means the common seal of the Company, if the
Company has one;
(i) "share warrant" means an instrument granting the holder
thereof the right to purchase shares or any other security or
debt obligation of the Company.
1.2 Expressions referring to writing shall be construed as
including references to printing, lithography, typewriting,
photography and other modes of representing or reproducing words
in a visible form.
1.3 Words importing the singular include the plural and vice
versa; and words importing a male person include a female person
and a corporation.
<PAGE> 104
1.4 In these Articles, unless the context otherwise requires,
expressions defined in the Companies Act shall have the meanings
so defined.
1.5 Table "A" of the Companies Act shall not apply to the
Company.
PART 2 - SHARES AND SHARE CERTIFICATES
2.1 Every member is entitled, without charge, to one certificate
representing the share or shares of each class held by him or
upon paying a sum not exceeding the amount permitted by the
Companies Act, as the directors may from time to time determine,
several certificates)each for one or more of those shares;
provided that, in respect of a share or shares held jointly by
several persons, the Company shall not be bound to issue more
than one certificate, and delivery of a certificate for a share
to one of several joint holders or to his duly authorized agent
shall be sufficient delivery to all; and provided further that
the Company shall not be bound to issue certificates representing
redeemable shares, if such shares are to be redeemed within one
month of the date on which they were allotted. Any share
certificate may be sent through the post by registered prepaid
mail to the member entitled thereto at his registered address,
and the Company shall not be liable for any loss occasioned to
the member owing to any such share certificate so sent being lost
in the post or stolen.
2.2 If a share certificate:
(a) is worn out or defaced, the directors may, upon
production to them of that certificate and upon such other terms
if any, as they may think fit, order the certificate to be
cancelled and may issue a new certificate in lieu thereof;
(b) is lost, stolen or destroyed, then upon proof thereof
to the satisfaction of the directors and upon such indemnity, if
any, as the directors deem adequate being given, a new share
certificate in place thereof shall be issued to the person
entitled to the lost, stolen or destroyed certificate; or
(c) represents more than one share and the registered owner
thereof surrenders it to the Company with a written request that
the Company issue registered in his name two or more certificates
each representing a specified number of shares and in the
aggregate representing the same number of shares as the certi-
ficate so surrendered, the Company shall cancel the certificate
so surrendered and issue in place thereof certificates in
accordance with the request.
A sum, not exceeding that permitted by the Companies Act, as the
directors may from time to time fix, shall be paid to the Company
for each certificate issued under this article.
<PAGE> 105
2.3 Except as required by law or statute or these articles, no
person need be recognized by the Company as holding any share
upon any trust, and the Company shall not be bound by or
compelled in any way to recognize (even when having notice
thereof) any equitable, contingent, future or partial interest in
any share or any interest in any fractional part of a share or
(except only as by law or statute or these articles provided or
as ordered by a court of competent jurisdiction) any other rights
in respect of any share except an absolute right to the entirety
thereof in the registered holder.
2.4 Every share certificate shall be signed manually by at least
one officer or director of the Company, or by or on behalf of a
registrar, branch registrar, transfer agent or branch transfer
agent of the Company and any additional signatures may be printed
or otherwise mechanically reproduced and a certificate signed in
either of those fashions shall be as valid as if signed manually,
notwithstanding that any person whose signature is so printed or
mechanically reproduced on a share certificate has ceased to hold
the office that he is stated on such certificate to hold at the
date of the issue of a share certificate.
2.5 The certificates of shares registered in the name of two or
more persons shall be delivered to the person first named on the
register.
PART 3 - ISSUE OF SHARES
3.1 Subject to the Companies Act, the issue of shares shall be
under the control of the directors who may, subject to the rights
of the holders of the shares of the Company for the time being
issued, allot or otherwise dispose of, and/or grant options on,
shares authorized but not yet issued at such times and to such
persons, including directors, and in such manner and upon such
terms and conditions, and at such price or for such
consideration, as the directors, in their absolute discretion,
may determine.
3.2 Subject to the Companies Act, the Company or the directors
on behalf of the Company may pay a commission or allow a discount
to any person in consideration of his subscribing or agreeing to
subscribe, whether absolutely or conditionally, for any shares in
the Company, or procuring or agreeing to procure subscriptions,
whether absolutely or conditionally, for any such shares provided
that the rate of the commission or discount shall not in the
aggregate exceed twenty-five per cent (25%) of the subscription
price of such shares, or an amount equivalent to such percentage.
<PAGE> 106
PART 4 - SHARE TRANSFERS
4.1 Subject to the restrictions, if any, set forth in these
articles, any member may transfer his shares by instrument in
writing executed by or on behalf of such member and delivered to
the Company or its transfer agent. The instrument of transfer of
any share of the Company shall be in the form, if any, on the
back of the Company's form of share certificates, and in any
other form which the directors may approve. If the directors so
require, each instrument of transfer shall be in respect of only
one class of share.
4.2 Every instrument of transfer shall be executed by the
transferor and left at the registered office of the Company or at
the office of its transfer agent or registrar for registration
together with the share certificate for the shares to be
transferred and such other evidence, if any as the directors or
the transfer agent or registrar may require to prove the title of
the transferor or his right to transfer the shares. All
instruments of transfer where the transfer is registered shall be
retained by the Company or its transfer agent or registrar and
any instrument of transfer, where the transfer is not registered,
shall be returned to the person depositing the same together with
the share certificate which accompanied the same when tendered
for registration. The transferor shall remain the holder of the
share until the name of the transferee is entered on the register
in respect of that share.
4.3 The signature of the registered owner of any shares, or of
his duly authorized attorney, upon the instrument of transfer
constitutes an authority to the Company to register the shares
specified in the instrument of transfer in the name of the person
named in that instrument of transfer as transferee or, if no
person is so named, then in any name designated in writing by the
person depositing the share certificate and the instrument of
transfer with the Company or its agents.
4.4 The Company, and its directors, officers and agents are not
bound to enquire into any title of the transferee to any shares
to be transferred, and are not liable to the registered or any
intermediate owner of those shares, for registering the transfer.
4.5 There shall be paid to the Company in respect of the
registration of any transfer a sum, not exceeding that permitted
by the Companies Act, as the directors deem fit.
4.6 The Company may appoint a Trust Company as its Registrar and
Transfer Agent, or either of them and may keep its Register of
Members at the office of such Trust Company and may keep either
within or without the Province of British Columbia one or more
branch Registers of Members at the office of any corporation duly
authorized to act as agent for any other corporation for the
<PAGE> 107
purpose of issuing, countersigning, signing, registering or
certifying the certificate or other documents of titles to
shares, debentures or other securities.
PART 5 - ALTERATION OF CAPITAL
5.1 The Company may by ordinary resolution amend its memorandum
to increase the share capital of the Company by:
(a) creating shares with par value or shares without par
value, or both;
(b) increasing the number of shares with par value or
shares without par value, or both;
(c) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
5.2 Except as otherwise provided by conditions imposed at the
time of creation of any new shares or by these articles, any
addition to the authorized capital resulting from the creation of
new shares shall be subject to the provisions of these articles.
5.3 Unless these articles elsewhere specifically otherwise
provide, the provisions of these articles relating to general
meetings shall apply, with the necessary changes and so far as
they are applicable, to a class meeting of members holding a
particular class of shares.
PART 6 - PURCHASE OF SHARES
6.1 Subject to the special rights and restrictions attached to
any class of shares, the Company may, by a resolution of the
directors and in compliance with the Companies Act, redeem or
purchase any of its shares at the price and upon the terms
specified in such resolution and no redemption need be made pro
rata among members holding shares of the class or kind to be
redeemed. Unless the Company is purchasing the shares from a
dissenting member pursuant to the Companies Act or through a
stock exchange, the Company shall make its offer to purchase pro
rata to every member who holds shares of the class proposed to be
purchased.
PART 7 - BORROWING POWERS
7.1 The directors may from time to time at their discretion
authorize the Company to borrow any sum of money for the purposes
of the Company and may raise or secure the repayment of that sum
in such manner and upon such terms and conditions, in all
respects, as they think fit, and in particular, and without
limiting the generality of the foregoing, by the issue of bonds
or debentures, or any mortgage or charge, whether specific or
floating, or other security on the undertaking or the whole or
any part of the property of the Company, both present and future.
<PAGE> 108
7.2 The directors may make any debentures, bonds or other debt
obligations issued by the Company by their terms, assignable free
from any equities between the Company and the person to whom they
may be issued, or any other person who lawfully acquires the same
by assignment, purchase, or otherwise, howsoever.
7.3 The directors may authorize the issue of any share warrants
or of any debentures, bonds or other debt obligations of the
Company at a discount, premium or otherwise, and with special or
other rights or privileges as to redemption, surrender, drawings,
allotment of or conversion into or exchange for shares, attending
at general meetings of the Company and otherwise as the directors
may determine at or before the time of issue.
7.4 The Company shall keep or cause to be kept in accordance
with the Companies Act
(a) a register of its debentures and debt obligations, and
(b) a register of the holders of its bonds, debentures and
other debt obligations,
and subject to the provisions of the Companies Act may keep or
cause to be kept one or more branch registers of the holders of
its bonds, debentures, or other debt obligations within or
without the Province of British Columbia as the directors may
from time to time determine and the directors may by resolution,
regulations or otherwise make such provisions as they think fit
respecting the keeping of such branch registers.
7.5 If the directors so authorize, or if any instrument under
which any bonds, debentures or other debt obligations of the
Company are issued so provides, any bonds, debentures and other
debt obligations of the Company, instead of being manually signed
by the directors or officers authorized in that behalf, may have
the facsimile signatures of such directors or officers printed or
otherwise mechanically reproduced thereon and in either case,
shall be as valid as if signed manually, but no such bond,
debenture or other debt obligation shall be issued unless it is
manually signed, countersigned or certified by or on behalf of a
trust company or other transfer agent or registrar duly
authorized by the directors or the instrument under which such
bonds, debentures or other debt obligations are issued so to do.
Notwithstanding that any person whose facsimile signature is so
used shall have ceased to hold the office that he is stated on
such bond, debenture or other debt obligation to hold at the date
of the actual issue thereof, the bond, debenture or other debt
obligation shall be valid and binding on the Company.
PART 8 - GENERAL MEETINGS
8.1 Every general meeting, other than an annual general meeting,
shall be called an extraordinary general meeting.
<PAGE> 109
8.2 The directors may whenever they think fit call a general or
extraordinary general meeting of the Company.
8.3 Not less than 21 days' notice of any general meeting
specifying the time and place of meeting and in case of special
business, the general nature of that business shall be given in
the manner mentioned in Part 18 hereof, or in such other manner,
if any, as may be prescribed by ordinary resolution whether
previous notice thereof has been given or not, to any person as
may by law or under these Articles or other regulations of the
Company entitled to receive such notice from the Company. But
the accidental omission to give notice of any meeting to, or the
non-receipt of any such notice by, any of such persons shall not
invalidate any proceedings at that meeting.
8.4 Persons entitled to notice of a general meeting may waive or
reduce the period of notice convening the meeting, by unanimous
consent in writing, and may give such waiver before, during or
after the meeting.
8.5 Where any special business includes the presenting,
considering, approving, ratifying or authorizing of the execution
of any document, then the portion of ant, notice relating to such
document shall be sufficient if the same states that a copy of
the document or proposed document is or will be available for
inspection by members at a place in the Province of British
Columbia specified in such notice during specified business hours
in any specified working day or days prior to the date of the
meeting.
PART 9 - PROCEEDINGS AT GENERAL MEETINGS
9.1 The following business at a general meeting shall be deemed
to be special business:
(a) all business at an extraordinary-general meeting, and
(b) all business that is transacted at an annual general
meeting, with the exception of the consideration of the financial
statement and the report of the directors and auditors, the
determining of the number of directors, the election of
directors, the appointment of the auditors and determination of
the remuneration of auditors and directors, and such other
business as, under these Articles, ought to be transacted at an
annual general meeting, or any business which is brought under
consideration by the report of the directors or auditors.
9.2 Save as otherwise herein provided a quorum for a general
meeting shall be two members or proxyholders representing two
members, or one member and a proxyholder representing another
member, personally present at the commencement of the meeting and
holding or representing by proxy not less than one of the issued
<PAGE> 110
shares of a class of shares the holders of which are entitled to
attend and to vote at such meeting.
9.3 No business, other than the election of a chairman and the
adjournment of the meeting shall be transacted at any general
meeting unless the quorum requisite was present at the
commencement of the meeting.
9.4 If within one half (1/2) hour from the time appointed for a
meeting a quorum is not present, the meeting if convened by
requisition of the members, shall be dissolved; but in any other
case it shall stand adjourned to the same day, in the next week
at the same time and place. If at such adjourned meeting a
quorum is not present within one half (1/2) hour from the time
appointed, the members present shall be a quorum.
9.5 The Chairman of the Board, if any, or in his absence the
President of the Company shall be entitled to preside as chairman
at every general meeting of the Company.
9.6 If at any meeting neither the Chairman of the Board, if any,
nor the President is present within fifteen (15) minutes after
the time appointed for holding the meeting or is willing to act
as chairman, the directors present shall choose some one of their
number to be chairman. If no director be present or if all the
directors present decline to take the chair or shall fail to so
choose, the members present shall choose a chairman.
9.7 The chairman of the meeting shall appoint a scrutineer or
scrutineers and a secretary for the meeting. Such scrutineers
need not be shareholders of the Company.
9.8 The chairman of the meeting may, with the consent of any
meeting at which a quorum is present and shall if so directed by
the meeting, adjourn the meeting from time to time and from place
to place, but no business shall be transacted at any adjourned
meeting other than the business left unfinished at the meeting
from which the adjournment took place. When a meeting is
adjourned for sixty (60) days or more, notice of the adjourned
meeting shall be given as in the case of a general meeting. Save
as aforesaid, it shall not be necessary to give any notice of an
adjournment or of the business to be transacted at an adjourned
meeting.
9.9 Subject to the provisions of the Companies Act, every
question submitted to a general meeting shall be decided on a
show of hands unless a poll is, before or on the declaration of
the result of the show of hands, directed by the chairman or
demanded by a member entitled to vote who is present in person or
by proxy, and the chairman shall declare to the meeting the
decision on every question in accordance with the result of the
show of hands or the poll, and such decision shall be entered in
<PAGE> 111
the book of proceedings of the Company. A declaration by the
chairman that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by
a particular majority, and an entry to that effect in the book
containing the minutes of the proceedings of the Company shall be
conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against such
resolution. A proxyholder shall be entitled to vote as if he
were a member on a show of hands.
9.10 No resolution proposed at a meeting need be seconded and the
chairman of any meeting shall be entitled to move or second a
resolution.
9.11 In case of an equality of votes upon a resolution, the
chairman shall, either on a show of hands or on a poll, not have
a casting or second vote.
9.12 Subject to the provisions of Article 9.13 hereof, if a poll
is duly demanded as aforesaid, it shall be taken in such manner
and at such time within seven (7) days from the date of the
meeting and place as the chairman of the meeting directs, and
either at once or after an interval or adjournment not exceeding
seven (7) days, and the result of the poll shall be deemed to be
the resolution of the meeting at which the poll is demanded. A
demand for a poll may be withdrawn. In the case of any dispute
as to the admission or rejection of a vote, the chairman shall
determine the same and such determination made in good faith
shall be final and conclusive.
9.13 A member entitled to more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the
same way.
9.14 No poll may be demanded on the election of a chairman of a
meeting and a poll demanded on a question of adjournment shall be
taken at the meeting without adjournment.
9.15 The demand of a poll shall not prevent the continuance of a
meeting for the transaction of any business other than the
question on which a poll has been demanded.
9.16 Every ballot cast upon a poll and every proxy appointing a
proxyholder who cast a ballot upon a poll shall be retained by
the Secretary for the period and be subject to the inspection as
the Companies Act may provide.
PART 10 - VOTES OF MEMBERS
10.1 Subject to any special rights or restrictions for the time
being attached to any shares, on a show of hands every member
present in person shall have one vote, and on a poll every
<PAGE> 112
member, present in person or by proxy, shall have one vote for
each share of which he is the holder.
10.2 Where there are joint members registered in respect of any
share, any one of the joint members may vote at any meeting,
either personally or by proxy, in respect of the share as if he
were solely entitled to it. If more than one of the joint
members is present at any meeting, personally or by proxy, the
joint member present whose name stands first on the register in
respect of the share shall alone be entitled to vote in respect
of that share. Several executors or administrators of a deceased
member in whose sole name any share stands shall, for the purpose
of this Article, be deemed joint members.
10.3 A corporation, not being a subsidiary, that is a member may
vote by its proxyholder or by its duly authorized representative,
who is entitled to speak and vote, and in all other respects
exercise the rights of a member and any authorized representative
shall be deemed to be a member for all purposes in connection
with any general meeting of the Company.
10.4 A member for whom a committee has been duly appointed may
vote, whether on a show of hands or on a poll, by his committee
and his committee may appoint a proxyholder.
10.5 A proxy or an instrument appointing a duly authorized
representative or a corporation shall be in writing, under the
hand of the appointor or of his attorney duly authorized in
writing, or, if such appointor is a corporation, either under
its, seal or under the hand of an officer or attorney duly
authorized.
10.6 Any person may act as proxyholder whether or not he is
entitled on his own behalf to be present and to vote at the
meeting at which he acts as proxyholder. The proxy may authorize
the person so appointed to act as proxyholder for the appointor
for the period, at such meeting or meetings and to the extent
permitted by the Companies Act.
10.7 A proxy and the power of attorney or other authority, if
any, under which it is signed or a notarially certified copy
thereof shall be deposited at the registered office of the
Company or at such other place as is specified for that purpose
in the notice calling the meeting at such time as the directors
may fix by resolution, not exceeding forty-eight (48) hours,
excluding Saturdays and holidays, preceding any meeting or
adjourned meeting of members and in the absence of such
resolution may be deposited with the chairman of the meeting
prior to the commencement thereof. In addition to any other
method of depositing proxies provided for in these Articles, the
directors may from time to time make regulations permitting the
<PAGE> 113
lodging of proxies appointing proxyholders at some place or
places other than the place at which a meeting or adjourned
meeting of members is to be held and for particulars of such
proxies to be cabled or telegraphed or sent in writing before the
meeting or adjourned meeting to the Company or any agent of the
Company for the purpose of receiving such particulars and
providing that proxies appointing a proxyholder so lodged may be
voted upon as though the proxies themselves were produced to the
chairman of the meeting as required by this Part and with such
regulations shall be valid and shall be counted.
10.8 A vote given in accordance with the terms of a proxy shall
be valid notwithstanding the previous death or insanity of the
member or revocation of the proxy or of the authority under which
the proxy was executed, or the transfer of the share in respect
of which the proxy is given, provided no prior notice in writing
of the death, insanity, revocation or transfer as aforesaid shall
have been received at the registered office of the Company or by
the chairman of the meeting or adjourned meeting at which the
vote was given.
10.9 Unless, in the circumstances, the Companies Act requires any
other form of proxy, a proxy appointing a proxyholder, whether
for a specified meeting or otherwise, shall be in the form
following, or in any other form that the directors shall approve:
(Name of Company)
The undersigned hereby appoints ______________________
_________________ or failing him _________________
or __________________ as proxyholder for the under-
signed to attend at and vote for and on behalf of the
undersigned at the general meeting of the Company to
be held on the ____ day of ____________, 19__, and at
any adjournment of that meeting.
Signed this ____ day of ____________, 19__.
_________________________
(Signature of Member)
PART 11 - DIRECTORS
11.1 The management of the business of the Company shall be
vested in the directors and the directors may exercise all such
powers and do all such acts and things as the Company is, by its
Memorandum, Articles, the Companies Act, or otherwise, authorized
to exercise and do, but subject nevertheless to the provisions of
all laws affecting the Company and of these Articles and to any
regulations not being inconsistent with these Articles which
shall from time to time be made by the Company in general
<PAGE> 114
meeting; but no regulation made by the Company in general meeting
shall invalidate any prior act of the directors that would have
been valid if that regulation had not been made.
11.2 The subscribers to the Memorandum are the first directors.
The directors to succeed the first directors and the number of
directors may be determined in writing by a majority of the
subscribers to the Memorandum. The number of directors may be
changed from time to time by the directors but shall never be
less than one (1) while the Company is not a reporting company
and three (3) while the Company is a reporting company.
11.3 A director shall not be required to have any share
qualification but any person not being a member of the Company
who becomes a director shall be deemed to have agreed to be bound
by the provisions of the Articles to the same extent as if he
were a member of the Company.
11.4 The remuneration of the directors as such may from time to
time be determined by the directors, such remuneration to be in
addition to any salary or other remuneration paid to any officer
or employee of the Company as such, who is also a director. The
directors shall be repaid such reasonable expenses as they may
incur in and about the business of the Company and if any
director shall perform any professional or other services for the
Company that in the opinion of the directors are outside the
ordinary duties of a director or shall otherwise be specifically
occupied in or about the Company's business, he may be paid a
remuneration to be fixed by the Board, or, at the option of such
director, by the Company in general meeting, and such
remuneration may be either in addition to, or in substitution
for, and other remuneration that he may be entitled to receive,
and the same shall be charged as part of the ordinary working
expenses. Unless otherwise determined by ordinary resolution the
directors on behalf of the Company may pay a gratuity or pension
or allowance on retirement to any director who has held any
salaried office or place of profit with the Company or to his
spouse or dependants and may make contributions to any fund and
pay premiums for the purchase or provision of any such gratuity,
pension or allowance.
11.5 A director who is in any way, whether directly or
indirectly, interested in a contract or proposed contract or
transaction with the Company shall disclose the nature and extent
of his interest at a meeting of the directors in accordance with
the provisions of the Companies Act. A director may vote in
respect of any such contract or transaction with the Company in
which he is interested and he shall be counted in the quorum
present at the meeting at which such vote is taken if he attends
such meeting whether or not he votes.
<PAGE> 115
11.6 A director may hold any office or place of profit under the
Company, other than auditor, in conjunction with his office of
director for such period and on such terms, as to remuneration or
otherwise, as the directors may determine. Subject to compliance
with the Companies Act, no director or intended director shall be
disqualified by his office from contracting with the Company
either with regard to his tenure of any such office or place of
profit or as vendor, purchaser or otherwise.
11.7 Any director may act by himself or his firm in a
professional capacity for the Company, and he or his firm shall
be entitled to remuneration for professional services as if he
were not a director.
11.8 A director whose permanent place of residence is outside the
city where the registered office of the Company is situate, or
who is about to leave or is temporarily outside the said city,
may appoint any person, whether a member or director of the
Company or not, to act on his behalf as an alternate director and
while such other person holds office as an alternate director, he
shall be entitled to notice of meetings of the directors and to
attend and vote thereat accordingly and he shall, if present, be
included in computing the quorum, and if he be a director, shall
be entitled to two votes, one as a director and the other as an
alternate director, and shall further be empowered to sign
resolutions of the Board of Directors, and shall ipso facto
vacate office if and when the appointor vacates or is removed
from office as director and any appointment or removal under this
clause shall be effected by notice which may be in writing under
the hand of the director making the same or may be made by
telegram or cable to the registered office of the Company.
PART 12 - RETIREMENT AND ELECTION OF DIRECTORS
12.1 At each annual general meeting of the Company all the
directors shall retire and the Company shall elect a Board of
Directors consisting of the number of directors for the time
being fixed pursuant to these Articles. A retiring director
shall be eligible for re-election.
12.2 The directors shall have power at any time and from time to
time to appoint any person as a director, to fill a casual
vacancy on the Board or a vacancy resulting from an increase of
the number of directors as determined by them or as necessitated
by the Companies Act upon the Company becoming a reporting
company. Any director so appointed shall hold office only until
the next following annual general meeting of the Company but
shall be eligible for re-election at such meeting.
<PAGE> 116
PART 13 - PROCEEDINGS OF DIRECTORS
13.1 The directors may meet together at such places as they think
fit for the dispatch of business, adjourn and otherwise regulate
their meetings and proceedings, as they see fit. The directors
may from time to time fix the quorum necessary for the
transaction of business and unless so fixed such quorum shall be
A majority of the Board. The Chairman of the Board, if any, or
in his absence the President of the Company, shall be chairman of
all meetings of the Board, but if at any meeting neither the
Chairman of the Board, if any, nor the President shall be present
within thirty (30) minutes after the time appointed for holding
the same or if both the Chairman of the Board and the President,
being present decline to act, the directors present may choose
some one of their number to be chairman at such meeting. A
director interested is to be counted in a quorum notwithstanding
his interest.
13.2 A director may at any time, and the Secretary, upon the
written request of a director, shall call a meeting of the
directors. Notice thereof specifying the time and place of such
meeting shall be mailed, postage prepaid, addressed to each of
the directors at his registered address at least forty-eight (48)
hours before the time fixed for the meeting or such lesser period
as may be reasonable under the circumstances, or such notice may
be given to each director either personally or by leaving it at
his usual business or residential address or by telephone,
telegram, telex or other method of transmitting visually recorded
messages, at least forty-eight (48) hours before such time or
such lesser period as may be reasonable under the circumstances.
It shall not be necessary to give to any director notice of a
meeting of directors immediately following a general meeting at
which such director has been elected or notice of a meeting of
directors at which such director shall have been appointed.
Accidental omission to give notice of a meeting of directors to,
or the non-receipt of notice by, any director, shall not
invalidate the proceedings at that meeting.
13.3 A meeting of the directors at which a quorum is present
shall be competent to exercise all or any of the authorities,
power and discretions for the time being vested in or exercisable
by the directors.
13.4 The directors may delegate any but not all of their powers
to committees consisting of such of the directors as they think
fit. Any committee so formed shall in the exercise of the powers
so delegated conform to any regulations that may from time to
time be imposed on it by the directors, and shall report every
act or thing done in exercise of such powers to the earliest
meeting of the directors to be held next after the same shall
have been done.
<PAGE> 117
13.5 A committee may elect a chairman of its meetings; if no such
chairman is elected, or if at any meetings the chairman is not
present within thirty (30) minutes after the time appointed for
holding the same, the members present may choose one of their
number to be chairman of the meeting.
13.6 The members of a committee may meet and adjourn as they
think proper. Questions arising at any meeting shall be
determined by a majority of votes of the members present and in
case of an equality of votes the chairman shall not have a second
or casting vote.
13.7 All acts done by any meeting of the directors or by a
committee of directors or by any person acting as a director
shall, notwithstanding that it shall be afterwards discovered
that there was some defect in the appointment of any such
director or person acting as aforesaid, or that they or any of
them were disqualified, be as valid as if every such person had
been duly appointed and was qualified to be a director.
13.8 For the first meeting of the Board to be held immediately
following the appointment or election of a director or directors
at an annual or general meeting of shareholders or for a meeting
of the Board at which a director is appointed to fill a vacancy
in the Board, no notice of such meetings shall be necessary to
the newly elected or appointed director or directors in order for
the meeting to be duly constituted, provided that a quorum of
directors is present.
13.9 Any director of the Company who may be absent either
temporarily or permanently from the Province of British Columbia
may file at the office of the Company a waiver of notice which
may be by letter, telegram or cable of any meeting of the
directors and may at any time withdraw such waiver, and until
such waiver is withdrawn, no notice of meetings of directors
shall be sent to such director, and any and all meetings of the
directors of the Company, notice of which shall not have been
given to such director, shall, provided a quorum of the directors
is present, be valid and binding upon the Company.
13.10 Questions arising at any meeting of the directors shall
be decided by a majority of votes. In case of an equality of
votes the Chairman shall not have a second or casting vote. No
resolution proposed at a meeting of the Board need be seconded,
and the Chairman is entitled to move or propose a resolution.
13.11 A resolution in writing, signed by each director or his
alternate shall be as valid and effectual as if it had been
passed at a meeting of directors duly called and held. Such
resolution may be in one or more counterparts each signed by one
or more directors or alternate directors which together shall be
deemed to constitute one resolution in writing.
<PAGE> 118
PART 14 - OFFICERS
14.1 The Board of Directors shall from time to time appoint a
President, a Secretary, and such other officers of the Company as
it may determine, none of whom, save the Chairman of the Board,
if any, and the President, need be directors.
14.2 All appointments of officers shall be made upon such terms
and conditions and at such remuneration, whether by way of
salary, fee, commission, participation in profits, or otherwise,
as the directors may determine, and every such appointment shall
be subject to termination at the pleasure of the directors unless
otherwise fixed by contract.
PART 15 - EXECUTION OF DOCUMENTS
15.1 The directors may provide a common seal for the Company and
for its use and the directors shall have power from time to time
to destroy the same and substitute a new seal in place thereof.
15.2 Subject to the provisions of the Companies Act, the
directors may provide for use in any other Province, State or
Country an official seal, which shall have on its face the name
of the Province, Territory, State or Country where it is to be
used.
15.3 The directors shall provide for the safe custody of the
common seal of the Company, if any, which shall not be affixed to
any instrument except:
(a) by any two directors; or
(b) by any two officers; or
(c) by any one officer and one director; or
(d) by any one officer or Director of the Company as may be
prescribed by resolution of the Board of Directors or by ordinary
resolution, whether previous notice thereof has been given or
not;
and such officer or officers or director or directors shall
sign every instrument to which the seal of the Company is so
affixed in their presence.
15.4 The signature of any officer of the Company may, if
authorized by the directors, be printed, lithographed, engraved
or otherwise mechanically reproduced upon all instruments
executed or issued by the Company or any officer thereof; and any
instrument on which the signature of any such person is so
reproduced, shall be deemed to have been manually signed by such
person whose signature is so reproduced and shall be as valid to
all intents and purposes as if such instrument had been signed
manually, and notwithstanding that the person whose signature is
so reproduced may have ceased to hold office at the date of the
<PAGE> 119
delivery or issue of such instrument. The term "instrument" as
used in this Article shall include deeds, mortgages, hypothecs,
charges, conveyances, transfers and assignments of property, real
or personal, agreements, releases, receipts and discharges for
the payment of money or other obligations, certificates of the
Company's shares, share warrants of the Company, bonds,
debentures and other debt obligations of the Company, and all
paper writings.
PART 16 - DIVIDENDS
16.1 The directors may declare dividends and fix the date of
record therefor and the date for payment thereof. No notice need
be given of the declaration of any dividend.
16.2 Subject to the terms of shares with special rights or
restrictions, all dividends shall be declared according to the
number of shares held.
16.3 No dividend shall bear interest against the Company.
16.4 The directors may direct payment of any dividend wholly or
partly by the distribution of specific assets or of paid-up
shares, bonds, debentures or other debt obligations of the
Company, or in any one or more of those ways, and, where any
difficulty arises in regard to the distribution, the directors
may settle the same as they think expedient, and in particular
may fix the value for distribution of specific assets, and may
determine that cash payments shall be made to a member upon the
basis of the value so fixed in place of fractional shares, bonds,
debentures or other debt obligations in order to adjust the
rights of all parties, and may vest any of those specific assets
in trustees upon such trusts for the persons entitled as may seem
expedient to the directors.
16.5 Notwithstanding anything contained in these Articles the
directors may from time to time capitalize any undistributed
surplus on hand of the Company and may from time to time issue as
fully paid and non-assessable any unissued shares or any bonds,
debentures or other debt obligations of the Company as a dividend
representing such undistributed surplus on hand or any part
thereof.
16.6 Any dividend, interest or other moneys payable in cash in
respect of shares may be paid by cheque or warrant sent through
the post directed to the registered address of the holder, or, in
the case of joint holders, to the registered address of that one
of the joint holders who is first named on the register or to
such person and to such address as the holder or joint holders
may in writing direct. Every such cheque or warrant shall be
made payable to the order of the person to whom it is sent. Any
<PAGE> 120
one of two or more joint holders may give effectual receipts for
any dividends, bonuses or other moneys payable in respect of the
shares held by them as joint holders.
16.7 A transfer of a share shall not pass the right to any
dividend declared thereon before the registration of the transfer
in the register.
16.8 Notwithstanding any other provisions of these Articles
should any dividend result in any shareholders being entitled to
a fractional part of a share of the Company, the directors shall
have the right to pay such shareholders in place of that
fractional share, the cash equivalent thereof calculated on the
par value thereof or, in the case of shares without par value,
calculated on the price or consideration for which such shares
were or were deemed to be issued, and shall have the further
right and complete discretion to carry out such distribution and
to adjust the rights of the shareholders with respect thereto on
as practical and equitable a basis as possible including the
right to arrange through a fiscal agent or otherwise for the
sale, consolidation or other disposition of those fractional
shares on behalf of those shareholders of the Company.
16.9 The directors may, before declaring any dividend, set aside
out of the profits of the Company such sums as they think proper
as appropriations from income, which shall at the discretion of
the directors, be applicable for meeting contingencies, or for
equalizing dividends, or for any other purpose to which the
profits of the Company may be properly applied, and pending such
application may, either be employed in the business of the
Company or be invested in such investments as the directors in
their discretion may from time to time determine.
PART 17 - ACCOUNTS
17.1 The directors shall cause records and books of accounts to
be kept as necessary to properly record the financial affairs and
conditions of the Company and to comply with the provisions of
statutes applicable to the Company.
17.2 The directors shall determine the place at which the
accounting records of the Company shall be kept and those records
shall be open to the inspection of any director during the normal
business hours of the Company.
PART 18 - NOTICES
18.1 A notice may be given to any member or director, either
personally or by sending it by post to him in a prepaid letter,
envelope or wrapper addressed to the member or director at his
registered address.
<PAGE> 121
18.2 A notice may be given by the Company to joint members in
respect of a share registered in their names by giving the notice
to the joint member first named in the register of members in
respect of that share.
18.3 A notice may be given by the Company to the persons entitled
to a share in consequence of the death or bankruptcy of a member
by sending it through the post in a prepaid letter envelope or
wrapper addressed to them by name, or by the title of
representatives of the deceased, or trustee of the bankrupt, or
by any like description, at the address, if any, supplied for the
purpose by the persons claiming to be so entitled, or until that
address has been so supplied, by giving the notice in any manner
in which the same might have been given if the death or
bankruptcy had not occurred.
18.4 Any notice or document sent by post to or left at the
registered address of any member shall, notwithstanding that
member is then deceased and whether or not the Company has notice
of his death, be deemed to have been duly served in respect of
any registered shares, whether held solely or jointly with other
persons by that deceased member, until some other person is
registered in his place as the member or joint member in respect
of those shares, and that service shall for all purposes of these
Articles be deemed a sufficient service of such notice or
document on his personal representatives and all persons, if any,
jointly interested with him in those shares.
18.5 Any notice sent by post shall be deemed to have been served
on the business day following that on which the letter, envelope
or wrapper containing that notice is posted, and in proving
service thereof it shall be sufficient to prove that the letter,
envelope or wrapper containing the notice was properly addressed
mailed, postage prepaid.
18.6 Notice of every general meeting shall be given in the manner
authorized by these Articles, to:
(a) every member holding a share or shares carrying the
right to vote at such meetings on the record date or, if no
record date was established by the directors, on the date of the
mailing;
(b) the personal representative of a deceased member; and
(c) the trustee in bankruptcy of a bankrupt member.
PART 19 - INDEMNIFICATION AND PROTECTION OF DIRECTORS,
OFFICERS, EMPLOYEES AND CERTAIN AGENTS
19.1 The Company shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or proceeding, whether or not brought by the
Company or by a corporation or other legal entity or enterprise
<PAGE> 122
as hereinafter mentioned and whether civil, criminal or
administrative, by reason of the fact that he is or was a
director, officer, employee, or agent of the Company or is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, a partnership, joint
venture, trust or other enterprise, against all costs, charges
and expenses, including legal fees and any amount paid to settle
the action or proceeding or satisfy a judgment, if he acted
honestly and in good faith with a view to the best interests of
the corporation or other legal entity or enterprise as aforesaid
of which he is or was a director, officer, employee or agent, as
the case may be, and exercised the care, diligence and skill of a
reasonably prudent person, and with respect to any criminal or
administrative action or proceeding, he had reasonable grounds
for believing that his conduct was lawful; provided that the
Company shall not be bound to indemnify any such person, other
than a director, officer or an employee of the Company, who shall
have notice of this Article and to have contracted with the
Company in the terms hereof solely by virtue of his acceptance of
such office or employment, if in acting as agent for the Company
or as a director, officer, employee or agent of another
corporation or other legal entity or enterprise as aforesaid, he
does so by written request of the Company containing an express
reference to this Article; and provided further that no
indemnification of a director or former director of the Company,
or director or former director of a corporation in which the
Company is or was a shareholder, shall be made except to the
extent approved by the Court pursuant to the Companies Act or any
other statute. The determination of any action, suit or
proceeding by judgment, order, settlement, conviction or
otherwise shall not, of itself, create a presumption that the
person did not act honestly and in good faith and in the best
interests of the Company and did not exercise the care, diligence
and skill of a reasonably prudent person and, with respect to any
criminal action or proceeding, did not have reasonable grounds to
believe that his conduct was lawful.
19.2 The Company shall indemnify any person other than a director
in respect of any loss, damage, costs or expenses whatsoever
incurred by him while acting as an officer, employee or agent for
the Company unless such loss, damage, costs or expenses shall
arise out of failure to comply with instructions, willful act or
default or fraud by such person in any of which events the
Company shall only indemnify such person if the directors, in
their absolute discretion, so decide or the Company by ordinary
resolution shall so direct.
19.3 The indemnification provided by this Part shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any other Part, or any
valid and lawful agreement, vote of members or disinterested
directors or otherwise, both as to action in his official
<PAGE> 123
capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall enure to the
benefit of the heirs, executors and administrators of such
person. The indemnification provided by this Article shall not
be exclusive of any powers, rights, agreements or undertakings
which may be legally permissible or authorized by or under any
applicable law. Notwithstanding any other provisions set forth
in this Part, the indemnification authorized by this Part shall
be applicable only to the extent that any such indemnification
shall not duplicate indemnity or reimbursement which that person
has received or shall receive otherwise than under this Part.
19.4 The directors are authorized from time to time to cause the
Company to give indemnities to any director, officer, employee,
agent or other person who has undertaken or is about to undertake
any liability on behalf of the Company or any corporation
controlled by it.
19.5 Subject to the Companies Act, no director or officer or
employee for the time being of the Company shall be liable for
the acts, receipts, neglects or defaults of any other director or
officer or employee, or for joining in any receipt or act for
conformity, or for any loss, damage or expense happening to the
Company through the insufficiency or deficiency of title to any
property acquired by order of the Board for the Company, or for
the insufficiency or deficiency of any security in or upon which
any of the moneys of or belonging to the Company shall be
invested or for any loss or damages arising from the bankruptcy,
insolvency, or tortious act of any person, firm or corporation
with whom or which any moneys, securities or effects shall be
lodged or deposited or for any loss occasioned by any error of
judgment or oversight on his part or for any other loss, damage
or misfortune whatever which may happen in the execution of the
duties of his respective office or trust or in relation thereto
unless the same shall happen by or through his own willful act or
default, negligence, breach of trust or breach of duty.
19.6 Directors may rely upon the accuracy of any statement of
fact represented by an officer of the Company to be correct or
upon statements in a written report of the auditor of the Company
and shall not be responsible or held liable for any loss or
damage resulting from the paying of any dividends or otherwise
acting in good faith upon any such statement.
19.7 The directors may cause the Company to purchase and maintain
insurance for the benefit of any person who is or was a director,
officer, employee or agent of the Company or is or was serving at
the request of the Company as a director, officer, employee or
agent of another corporation, a partnership, joint venture, trust
or other enterprise against any liability incurred by him as a
director, officer, employee or agent.
<PAGE> 124
EXHIBIT 3.6
YUKON Justice YUKON BUSINESS CORPORATIONS ACT FORM 3-01
(Section 190)
ARTICLES OF CONTINUANCE
1. Name of Corporation: INDO-PACIFIC ENERGY LTD.
2. The classes and any maximum number of shares that the
Corporation is authorized to issue:
100,000,000 common shares without par value.
3. Restrictions, if any, on share transfers: None.
4. Number (or minimum or maximum) of Directors: Minimum of 3
and maximum of 11.
5. Restrictions if any on business the Corporation may carry
on:
The Corporation is restricted from carrying on
the business of a railway, steamship,
air transporter, canal, telegraph, telephone
or irrigation company.
6. If change of name effected, previous name: Not applicable.
7. Details of Incorporation:
Incorporated on Juy 31, 1979 under the Company Act (British
Columbia) as Pryme Energy Resources Ltd., incorporation number
194694; changed its name to Newjay Resources Ltd. on August 23,
1985; changed its name to Consolidated Newjay Resources Ltd. on
August 25, 1993; and changed its name to Indo-pacific Energy Ltd.
on May 9, 1995.
8. Other provisions, if any:
A. A meeting of the shareholders of the Corporation may, in the
directors' unfettered discretion, be held at a location specified
by the ddirectors in the notice of such meeting.
B. The directors of the Corporation may, between annual general
meetings of the Corporation, appoint one or more additional
directors to serve until the next annual general meeting but the
number of additional directors shall not at any time exceed one
third of the number of directors who held office at the
expiration of the last general meeting, and in no event shall the
total number of directors exceed the maximum number of directors
fixed pursuant to paragraph 4 of the Articlesof Continuance.
<PAGE> 125
9. Date Signature Title
Sept. 10, 1997 John Holland Director
<PAGE> 126
EXHIBIT 3.7
YUKON Justice BUSINESS CORPORATIONS ACT FORM 3
Certificate of Continuance
INDO-PACIFIC ENERGY LTD.
I herby certify that the above-mentioned corporation was
continued into Yukon, as set out in the attached Articles of
Continuance, under section 190 of the Business Corporations Act.
Corporate Access Number: 26121
Date of Continuance: 1997-09-25
(signed) M. Richard Roberts
M. Richard Roberts
Registrar of Corporations
<PAGE> 127
EXHIBIT 3.8
BYLAW NO. 1
A BY-LAW RELATING GENERALLY TO THE TRANSACTION OF
THE BUSINESS AND AFFAIRS OF INDO-PACIFIC ENERGY LTD.
(THE "CORPORATION")
CONTENTS PAGE
1. Interpretation 2
2. Business of the Corporation 3
3. Borrowing and Securities 4
4. Directors 5
5. Committees 9
6. Officers 10
7. Protection of Directors, Officers and Others 12
8. Shares 13
9. Dividends and Rights 15
10. Meetings of Shareholders 16
11. Divisions and Departments 21
12. Notices 21
BE IT ENACTED as a By-Law of the Corporation as follows:
Section One
INTERPRETATION
1.01 Definitions - in the By-Laws of the Corporation, unless the
context otherwise requires:
"Act" means the Business Corporations Act (Yukon) and any statute
that may be substituted therefore, as from time to time amended;
marginal references to sections of the Act are not made for the
purpose of modifying or affecting the meaning of any provision of
this By-Law in any way but are inserted only for the purpose of
directing attention to provisions of the Act which may be
regarded as relevant;
"appoint" includes "elect" and vice versa;
"Articles" means the Articles attached to the Certificate of
Continuance dated September 25, 1996 of the Corporation as from
time to time amended or restated;
"Board" means the board of directors of the Corporation;
<PAGE> 128
"By-Laws" means this By-Law and all other By-Laws of the
Corporation from time to time in force and effect relating to
transaction of business and affairs of the Corporation in
addition hereto, or in amendment hereof or in substitution for
all or any part of this By-Law;
"Corporation" means the Corporation incorporated by Certificate
of Continuance under the Act and named Indo-Pacific Energy Ltd.;
"Meeting of Shareholders" includes an annual meeting of
shareholders and a Special Meeting of Shareholders;
"non-business day" means Saturday, Sunday and any other day that
is a holiday as defined in the Interpretation Act (Canada); or
the Interpretation Act (Yukon);
"Prohibited Corporate Shareholder" means a corporation prohibited
from holding shares in itself or its holding body corporate or a
subsidiary corporation prohibited from holding shares in its
parent corporation pursuant to the Act and not exempted from such
prohibited shareholdings by virtue of the Act;
"recorded address" means in the case of a shareholder his address
as recorded in the securities register; and in the case of joint
shareholders the address appearing in the securities register in
respect of such joint holdings determined under Section 8.09; and
in the case of a director, officer, auditor or member of a
committee of directors, his latest address as recorded in the
records of the Corporation;
"Special Meeting of Shareholders" includes both a meeting of any
class or classes acting separately from any other class or
classes and also a meeting, other than an annual meeting, of all
shareholders entitled to vote at any annual meeting of
shareholders;
Words and expressions defined in the Act have the same meaning
when used herein; and words importing the singular number include
the plural and vice versa; words importing gender include the
masculine, feminine and neuter genders; and words importing
persons include individuals, bodies corporate, partnerships,
trusts and unincorporated organizations.
Section Two
BUSINESS OF THE CORPORATION
2.01 Registered Office - Until changed in accordance with the
Act, the registered office of the Corporation will be at the City
of Whitehorse, in the Yukon Territory, and at such location
therein as the Board may from time to time determine.
<PAGE> 129
2.02 Corporate Seal - Until changed by the Board, the corporate
seal of the Corporation and any facsimiles thereof adopted by the
Board for use in jurisdictions outside the Yukon Territory will
be in the form approved by the directors.
2.03 Financial Year - The financial year of the Corporation will
end on the day in each year that is established by the Board.
2.04 Execution of Instruments - Deeds, transfers, assignments,
contracts, obligations, certificates and other instruments
required by law or otherwise by these By-Laws or any resolution
of the Board or shareholders of the Corporation to be executed
under corporate seal may be signed on behalf of the Corporation
by any one or two or more persons each of which is either a
director of the Corporation or a person who holds the office of
chief executive officer, chairman of the board, president,
managing director, vice-president, secretary, treasurer,
assistant secretary, assistant treasurer or any other office
created by by-law or by resolution of the Board. However, the
Board may from time to time direct the manner in which and the
person or persons by whom any particular instrument or class of
instruments may or will be signed or sealed. Any signing officer
may affix the corporate seal to any instrument requiring the
same.
2.05 Banking Arrangements - The banking business of the
Corporation including the borrowing of money and the giving of
security therefore, will be transacted with such banks, trust
companies or other bodies corporate or organizations as may from
time to time be designated by or under the authority of the
Board. Such banking business or any part thereof will be
transacted under such agreements, instructions and delegations of
powers as the Board may from time to time by resolution prescribe
or authorize.
2.06 Voting Rights in Other Bodies Corporate - The signing
officers of the Corporation may execute and deliver proxies and
arrange for the issuance of voting certificates or other evidence
of the right to exercise the voting rights attaching to any
securities held by the Corporation. Such instruments,
certificates or other evidence will be in favour of such person
or persons as may be determined by the officers executing such
proxies or arranging for the issuance of voting certificates or
such other evidence of the right to exercise such voting rights.
In addition the Board may from time to time direct the manner in
which and the person or persons by whom any particular voting
rights or class of voting rights may or will be exercised.
2.07 Withholding Information from Shareholders - Subject to the
provisions of the Act, no shareholder will be entitled to
discovery of any information respecting any details or conduct of
the Corporation's business which, in the opinion of the Board, it
<PAGE> 130
would be inexpedient in the interests of the shareholders or the
Corporation to communicate to the public. The Board may from
time to time determine whether and to what extent and at what
time and place and under what conditions or regulations the
accounts, records and documents of the Corporation or any of them
will be open to the inspection of shareholders and no shareholder
will have any right of inspecting any account, record or document
of the Corporation except as conferred by the Act or authorized
by the Board or by resolution passed at a general meeting of
shareholders.
Section Three
BORROWING AND SECURITIES
3.01 Borrowing Power - Without limiting the borrowing powers of
the Corporation as set forth in the Act, the Board is authorized
from time to time:
(a) to borrow money upon the credit of the Corporation in
such amounts and on such terms as may be deemed expedient by
obtaining loans or advances or by way of overdraft or
otherwise;
(b) to issue, re-issue, sell or pledge bonds, debentures,
notes or other evidence of indebtedness or guarantees of the
Corporation, whether secured or unsecured for such sums and
at such prices as may be deemed expedient;
(c) subject to the Act, to issue guarantees on behalf of the
Corporation to secure the performance of the obligations of
any person; and
(d) to charge, mortgage, hypothecate, pledge or otherwise
create a security interest in all or any currently owned or
subsequently acquired real or personal, movable or
immova ble, property and undertaking of the Corporation,
including book debts, rights, powers and franchises for the
purpose of securing any such bonds, debentures, notes or other
evidences of indebtedness or guarantee or any other present or
future indebtedness or liability of the Corporation.
Nothing in this section limits or restricts the borrowing of
money by the Corporation on bills of exchange or promissory notes
made, drawn, accepted or endorsed by or on behalf of the
Corporation.
3.02 Delegation of Borrowing Power - The Board may from time to
time delegate to such one or more of the directors and officers
of the Corporation as may be designated by the Board all or any
<PAGE> 131
of the powers conferred on the Board by section 3.01 to such
extent and in such manner as the Board will determine at the time
of each such delegation.
Section Four
DIRECTORS
4.01 Number of Directors and Quorum - Until changed in accordance
with the Act, the Board will consist of not fewer than three and
not more than eleven directors. Subject to section 4.07, the
Articles and the Act the quorum for the transaction of business
at any meeting of the Board will consist of a majority of the
directors or such lesser number of directors as the Board may
from time to time determine.
4.02 Qualification - No person will be qualified for election as
a director if he is less than 19 years of age; if he is of
unsound mind and has been so found by a court in Canada or
elsewhere; if he is not an individual; or if he has the status of
a bankrupt. A director need not be a shareholder.
4.03 Election and Term - Each director named in the notice of
directors filed at the time of continuance will hold office from
the date of the Certificate of Continuance until the first
meeting of shareholders thereafter. An election of directors
will take place at such first meeting of shareholders and at each
annual meeting of shareholders thereafter and all the directors
then in office will retire but, if qualified, will be eligible
for re-election. A director will retain office only until the
election of his successor. The number of directors to be elected
at any such meeting will be the number of directors then in
office unless the directors or the shareholders otherwise
determine. The election will be by ordinary resolution of the
shareholders. If an election of directors is not held at the
proper time, the incumbent directors will continue in office
until their successors are elected.
4.04 Removal of Directors - Subject to the provisions of the Act,
the shareholders may by ordinary resolution passed at a special
meeting remove any director from office and the vacancy created
by such removal may be filled at the same meeting failing which
it may be filled by the directors.
4.05 Vacation of Office - A director ceases to hold office when:
he dies; he is removed from office by the shareholders; he ceases
to be qualified for election as a director; or his written
resignation is sent or delivered to the Corporation, or if a time
is specified in such resignation, at the time so specified,
whichever is later.
<PAGE> 132
4.06 Vacancies - Subject to the Act and the Articles, a quorum of
the Board may fill a vacancy in the Board, except a vacancy
resulting from an increase in the minimum number of directors or
from a failure of the shareholders to elect the minimum number of
directors and if the Articles so provide, may also add to their
numbers and appoint additional director(s) in accordance with the
Act, but so that the total number of directors will not exceed
the maximum number fixed by section 4.01. In the absence of a
quorum of the Board, or if the vacancy has arisen from a failure
of the shareholders to elect the minimum number of directors the
Board will forthwith call a special meeting of the shareholders
to fill the vacancy. If the Board fails to call such meeting or
if there are no such directors then in office, any shareholder
may call the meeting.
4.07 Action by the Board - The Board will manage the business and
affairs of the Corporation. The powers of the Board may be
exercised by resolution passed at a meeting at which a quorum is
present or by resolution in writing, whether by document,
telegram, telecopy or any method of transmitting legibly recorded
messages or other means, signed by all the directors entitled to
vote on that resolution at a meeting of the Board and any
resolution in writing so signed will be as valid as if it had
been passed at a meeting of directors or a committee of directors
and will be held to relate to any date therein stated to be the
effective date thereof, and a copy of every such resolution in
writing will be kept with the minutes of the proceedings of
directors or committee of directors. Where there is a vacancy in
the Board, the remaining directors may exercise all the powers of
the Board so long as a quorum remains in office. Where the
Corporation has only one director, that director may constitute a
meeting. An act of a director is valid notwithstanding any
irregularity in his election or appointment or a defect in his
qualifications.
4.08 Meetings by Telephone - A director may participate in a
meeting of the Board or of a committee of directors by means of
such telephone or other communications facilities as permit all
persons participating in the meeting to hear each other, and a
director participating in such a meeting by such means is deemed
to be present at the meeting. Any such consent will be effective
whether given before or after the meeting to which it relates and
may be given with respect to all meetings of the Board and of
committees of directors held while a director holds office.
4.09 Place of Meeting - Meetings of the Board may be held at any
place in or outside Canada.
4.10 Calling of Meetings - Meetings of the Board will be held
from time to time and at such place as the Board may determine.
In addition, each of the chairman of the board, the managing
directors, the president or any two directors may convene or
direct the convening of a meeting of the Board.
<PAGE> 133
4.11 Notice of Meeting - Except as otherwise provided in section
4.12, notice of the time and place of each meeting of the Board
will be given in the manner provided in section 12.01 to each
director not less than 48 hours before the time when the meeting
is to be held. A notice of a meeting of directors need not
specify the purpose of or the business to be transacted at the
meeting except where section 115(3) of the Act requires such
purpose or business to be specified, including any proposal to:
(a) submit to the shareholders any question or matter
requiring approval of the shareholders;
(b) fill a vacancy among the directors or in the office of
auditor;
(c) issue securities;
(d) declare dividends;
(e) purchase, redeem, or otherwise acquire shares of the
Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve any annual financial statements; or
(i) adopt, amend or repeal By-Laws.
A director may in any manner waive notice of or otherwise consent
to a meeting of the Board either before or after the convening of
the meeting.
4.12 Regular Meetings - The Board may by resolution appoint a day
or days in any month or months for regular meetings of the Board
at a place and hour to be named in the resolution. No notice
will be required for any such regular meeting.
4.13 First Meeting of New Board - Provided a quorum of directors
is present, each newly elected Board may without notice hold its
first meeting immediately following the meeting of shareholders
at which such Board or portion thereof is elected.
4.14 Adjourned Meeting - Notice of an adjourned meeting of the
Board is not required if the time and place of the adjourned
meeting is announced at the original meeting.
4.15 Chairman - The chairman of any meeting of the Board will be
the first mentioned of such of the following officers as have
been appointed and who is a director and is present at the
meeting: chairman of the board, managing director, president, or
<PAGE> 134
a vice-president who is a director. If no such officer is
present, the directors present will choose one of their number to
be chairman.
4.16 Votes to Govern - At all meetings of the Board every
question will be decided by a majority of the votes cast on the
question. In cases of an equality of votes the chairman of the
meeting will be entitled to a second or casting vote.
4.17 Conflict of Interest - A director or officer who is a party
to, or who is a director or officer of or has a material interest
in any person who is a party to, a material contract or proposed
material contract with the Corporation will disclose the nature
and extent of his interest at the time and in the manner provided
by the Act. Any such contract or proposed contract will be
referred to the Board or shareholders for approval even if such
contract is one that in the ordinary course of the Corporation's
business would not require approval by the Board or shareholders,
and a director interested in a contract so referred to the Board
will not vote on any resolution to approve the same except as
provided by the Act.
4.18 Remuneration and Expenses - The directors will be paid such
remuneration for their services as the Board may from time to
time determine. The directors will also be entitled to be
reimbursed for travelling and other expenses properly incurred by
them in attending meetings of the Board or any committee thereof.
Nothing herein contained will preclude any director from serving
the Corporation in any other capacity and receiving remuneration
therefore.
4.19 Alternate Director (a) Any director (the "Appointor") may
from time to time by written notice to the Corporation appoint
any person (the "Appointee") to be his alternate director
provided that the directors approve of such appointment by
resolution. Such approval will not be required if a director is
appointed alternate director for another director. A person,
including a director, may be appointed as an alternate director
by more than one director.
(b) The Appointee while he holds office as an alternate
director will be entitled and authorized:
(i) if expressly so specified by the Appointor in the
instrument appointing the Appointee, to receive notice
of meetings of the directors, and notice of meetings of
all committees of which the Appointor is a member;
(ii) to attend and vote as a director at meetings of
the directors in the absence of the Appointor;
<PAGE> 135
(iii) to attend and vote at meetings of all committees
of which the Appointor is a member, in the absence of
the Appointor;
(iv) execute consents to resolutions in writing of the
directors and such committees, in substitution for the
Appointor; and
(v) if expressly so authorized by the Appointor in the
instrument appointing the Appointee, to execute all
documents, instruments and writings under the seal of
the Corporation or otherwise which the Appointor is
authorized to execute on behalf of the Corporation, in
substitution for the Appointor,
and for the purposes thereof the Appointee will be deemed to
be a director. He will not be deemed to be the agent of the
Appointor.
(c) The Appointee will have a separate vote on behalf of
each director for whom he is an alternate director. If the
Appointee is also a director, the Appointee will be counted
separately in determining the quorum of a meeting and will
have a separate vote on behalf of each director for whom he
is an alternate director in addition to being so counted and
voting in his own right as a director.
(d) The Appointee will not be entitled to be remunerated as
an alternate director otherwise than out of the remuneration
of the Appointor.
(e) No person will act as an alternate director unless he
qualifies under the Act to act as a director of the
Corporation and has consented in writing to his appointment.
(f) An Appointee's appointment as an alternate director will
terminate if:
(i) the Appointor gives written notice revoking the
Appointee's appointment; or
(ii) the Appointee resigns; or
(iii) the Appointor ceases for any reason to be a
director; or
(iv) the Appointee ceases to be qualified under the Act
to act as a director; or
(v) the term of the Appointee's appointment, if any,
expires.
<PAGE> 136
(g) Any Appointor may make or revoke an appointment of an
Appointee by notice in writing delivered to, mailed to or
transmitted by telegram, cable or telecopier to the
registered office of the Corporation, delivery, postage or
transmission charges prepaid.
Section Five
COMMITTEES
5.01 Committee of Directors
(a) The Board may appoint one or more committees of
directors, however designated, and delegate to such
committee any of the powers of the Board except those which,
under the Act, a committee of directors has no authority to
exercise.
(b) The directors may by resolution appoint an executive
committee to consist of such member or members of their body
as they think fit, which committee will have, and may
exercise during the intervals between the meetings of the
Board, all the powers vested in the Board except the power
to fill vacancies in the Board, the power to change the
membership of, or fill vacancies in, such committee or any
other committee of the Board and such other powers, if any,
as may be specified in the resolution. The committee will
keep regular minutes of its transactions and will cause them
to be recorded in books kept for that purpose, and will
report the same to the Board at such times as the Board may
from time to time require. The Board will have the power at
any time to revoke or override the authority given to or
acts done by the executive committee except as to acts done
before such revocation or overriding and to terminate the
appointment or change the membership of such committee and
to fill vacancies in it. The executive committee may make
rules for the conduct of its business and may appoint such
assistants as it may deem necessary. A majority of the
members of a committee will constitute a quorum thereof.
(c) The directors may from time to time by resolution
constitute, dissolve or reconstitute standing committees and
other committees consisting of such persons as the Board may
determine. Every committee constituted by the Board will
have the powers, authorities and discretions delegated to it
by the Board (which will not include the power to fill
vacancies in the Board and the power to change the
membership of or fill vacancies in any committee constituted
by the Board or the power to appoint or remove officers
appointed by the Board) and will conform to the regulations
which may from time to time be imposed upon it by the Board.
<PAGE> 137
(d) The executive committee and any other committee may
meet and adjourn as it thinks proper. Questions arising at
any meeting will be determined by a majority of votes of the
members of the committee present, and in case of an equality
of votes the chairman will not have a second or casting
vote. A resolution approved in writing by all the members
of the executive committee or any other committee will be as
valid and effective as if it had been passed at a
meeting of such committee duly called and constituted.
Such resolution may be in two or more counterparts which
together will be deemed to constitute one resolution in
writing. Such resolution will be filed with the minutes
of the proceedings of the committee and will be
effective on the date stated thereon or on the latest
date stated in any counterpart.
5.02 Transaction of Business - Subject to the provisions of
section 4.07, the powers of a committee of directors may be
exercised by a meeting at which a quorum is present or by
resolution in writing signed by all the members of such
committee who would have been entitled to vote on that
resolution at a meeting of the committee. Meetings of such
committee may be held at any place in or outside Canada.
5.03 Audit Committee - When required by the Act, the Board
will, and at any other time the Board may, elect annually
from among its number an audit committee to be composed of
not fewer than three directors of whom a majority will not be
officers or employees of the Corporation or its affiliates.
The audit committee will have the powers and duties provided
in the Act.
5.04 Procedure - Unless otherwise determined by the Board,
each committee of directors will have the power to fix its
quorum at not less than a majority of its members, to elect
its chairman and to regulate its procedure.
Section Six
OFFICERS
6.01 Appointment - The Board may from time to time appoint a
president, chief executive officer one or more vice-presidents
(to which title may be added words indicating
seniority or function), a secretary, a treasurer and such
other officers as the Board may determine, including one or
more assistants to any of the officers so appointed. The
Board may specify the duties of and, in accordance with this
By-Law and subject to the provisions of the Act, delegate to
such officers powers to manage the business and affairs of
the Corporation. Subject to sections 6.02 and 6.03, an
officer may but need not be a director and one person may
hold more than one office.
<PAGE> 138
6.02 Chairman of the Board - The Board may from time to time
also appoint a chairman of the board who will be a director.
The chairman of the board will, when present, preside at all
meetings of the Board, committees of directors and at all
meetings of shareholders. In addition, the Board may assign
to him any of the powers and duties that may by the
provisions of this by-law be assigned to the managing
director or to the president; and he will have such other
powers and duties as the board may specify.
6.03 Managing Director or Chief Executive Officer - The Board
may from time to time appoint a managing director or chief
executive officer who will be a director. Subject to the
authority of the Board, he will have general supervision of
the business and affairs of the Corporation; and he will,
subject to the provisions of the Act, have such other powers
and duties as the Board may specify. During the absence or
disability of the president, or if no president has been
appointed, the managing director or chief executive officer
will also have the powers and duties of the president's
office.
6.04 President - The Board, from time to time, may elect from
among its number, a president. The president, in the absence
or non-appointment of the chairman of the board, will preside
at meetings of the Board and at all meetings of the
shareholders. He will have general and active management of
the business and affairs of the Corporation, and without
limitation to the foregoing:
(a) he will have general supervision and direction of
all the other officers of the Corporation;
(b) he will submit the annual report of the Board, if
any, and the annual balance sheets and financial
statements of the business and affairs and reports on
the financial position of the Corporation as required by
the statutes to the annual general meeting and from time
to time will report to the Board on all matters within
his knowledge which the interest of the Corporation
requires to be brought to their attention; and
(c) he will be ex-officio a member of all standing
committees.
6.05 Vice-President - A vice-president will have such powers
and duties as the Board may specify.
6.06 Secretary - The secretary will attend and be the
secretary of all meetings of the Board, shareholders and
committees of the Board and will enter or cause to be entered
in records kept for that purpose minutes of all proceedings
<PAGE> 139
thereat; he will give or cause to be given, as and when
instructed, all notices to shareholders, directors, officers,
the auditor and members of the committees of directors; he
will be the custodian of the stamp or mechanical device
generally used for affixing the corporate seal of the
Corporation and of all books, papers, records, documents and
instruments belonging to the Corporation, except when some
other officer or agent has been appointed for that purpose;
and he will have such other powers and duties as the Board
may specify.
6.07 Treasurer - The treasurer will keep proper accounting
records in compliance with the Act and will be responsible
for the deposit of money, the safekeeping of securities and
the disbursement of the funds of the Corporation; he will
render to the Board whenever required an account of all his
transactions as treasurer and of the financial position of
the Corporation; and he will have such other powers and
duties as the Board may specify.
6.08 Powers and Duties of Other Officers - The powers and
duties of all other officers will be such as the terms of
their engagement call for or as the Board or the chief
executive officer may specify. Any of the powers and duties
of an officer to whom an assistant has been appointed may be
exercised and performed by such assistant, unless the Board
otherwise directs.
6.09 Variation of Powers and Duties - The Board may from time
to time and subject to the provisions of the Act, vary, add
to or limit the powers and duties of any officer.
6.10 Term of Office - The Board, in its discretion, may
remove any officer of the Corporation, without prejudice to
such officer's rights under any employment contract,
otherwise each officer appointed by the Board will hold
office until the earlier of the date his resignation becomes
effective, the date his successor is appointed or he will
cease to be qualified for that office.
6.11 Terms of Employment and Remuneration - The terms of
employment and the remuneration of officers appointed by the
Board will be settled by it from time to time.
6.12 Conflict of Interest - An officer will disclose his
interest in any material contract or proposed material
contract with the Corporation in accordance with section
4.17.
<PAGE> 140
6.13 Agents and Attorneys - The Board will have power from
time to time to appoint agents or attorneys for the
Corporation in or outside of Canada with such powers of
management or otherwise, including the power to sub-delegate,
as may be thought fit.
6.14 Fidelity Bonds - The Board may require such officers,
employees and agents of the Corporation as the Board deems
advisable to furnish bonds for the faithful discharge of
their powers and duties, in such form and with such surety as
the Board may from time to time determine.
Section Seven
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 Limitation of Liability - No director will be liable for
the acts, receipts, neglects or defaults of any other
director or officer or employee, or for joining in any
receipt or other act for conformity, or for any loss, damage
or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired
for or on behalf of the Corporation, or for the insufficiency
or deficiency of any security in or upon which any of the
moneys of the Corporation will be invested, or for any loss
or damage arising from the bankruptcy, insolvency or tortious
acts of any person with whom any of the moneys, securities or
effects of the Corporation will be deposited, or for any loss
occasioned by any error of judgment or oversight on his part,
or for any other loss, damage or misfortune whatever which
will happen in the execution of the duties of his office or
in relation thereto, unless the same are occasioned by his
own wilful neglect or default; provided that nothing herein
will relieve any director or officer from the duty to act in
accordance with the Act and the regulations thereunder or
from liability for any breach thereof.
7.02 Indemnity - Subject to the limitations contained in the
Act, and to the extent he is otherwise fairly and reasonably
entitled thereto, the Corporation will indemnify a director
or officer, a former director or officer, or a person who
acts or acted at the Corporation's request as a director or
officer of a body corporate of which the Corporation is or
was a shareholder or creditor (or a person who undertakes or
has undertaken any liability on behalf of the Corporation or
any such body corporate) and his heirs and legal
representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil,
criminal or administrative action or proceeding to which he
is made a party by reason of being or having been a director
or officer of the Corporation or such body corporate, if
<PAGE> 141
(a) he acted honestly and in good faith with a view to
the best interests of the Corporation; and
(b) in the case of a criminal or administrative action
or proceeding that is enforced by a monetary penalty, he
had reasonable grounds for believing that his conduct
was lawful.
7.03 Insurance - Subject to the limitations contained in the
Act, the Corporation may purchase and maintain such insurance
for the benefit of its directors and officers as such, as the
Board may from time to time determine.
Section Eight
SHARES
8.01 Allotment and Issue - The Board may from time to time
allot, or grant options to purchase the whole or any part of
the authorized and unissued shares of the Corporation at such
times and to such persons and for such consideration as the
Board will determine, provided that no share will be issued
until it is fully paid as prescribed by the Act. Subject to
the Articles, no holder of any class of share of the capital
of the Corporation will be entitled as of right to subscribe
for, purchase or receive any part of any new or additional
issue of shares of any class, or any bonds, debentures or
other securities convertible into shares of any class.
8.02 Commissions - The Board may from time to time authorize
the Corporation to pay a reasonable commission to any person
in consideration of his purchasing or agreeing to purchase
shares of the Corporation, whether from the Corporation or
from any other person, or procuring or agreeing to procure
purchasers for any such shares.
8.03 Registration of Transfer
(a) Subject to the provisions of the Act, no transfer of
shares will be registered in a securities register
except upon presentation of the certificate representing
such shares with a transfer endorsed thereon or
delivered therewith duly executed by the registered
holder or by his attorney or successor duly appointed,
together with such reasonable assurance or evidence of
signature, identification and authority to transfer as
the Board may from time to time prescribe, upon payment
of all applicable taxes and any fees prescribed by the
Board, upon compliance with such restrictions on
transfer, if any, as are authorized by the Articles, and
upon satisfaction of any lien referred to in section
8.05.
<PAGE> 142
(b) The signature of the registered owner of any shares,
or of his duly authorized attorney, upon an authorized
instrument of transfer will constitute a complete and
sufficient authority to the Corporation, its directors,
officers and agents to register, in the name of the
transferee as named in the instrument of transfer, the
number of shares specified therein or, if no number is
specified, all the shares of the registered owner
represented by share certificates deposited with the
instrument of transfer. If no transferee is named in
the instrument of transfer, the instrument of transfer
will constitute a complete and sufficient authority to
the corporation, its directors, officers and agents to
register, in the name of the person in whose behalf any
certificate for the shares to be transferred is
deposited with the Corporation for the purpose of
having the transfer registered, the number of shares
specified in the instrument of transfer or, if no number
is specified, all the shares represented by all share
certificates deposited with the instrument of transfer.
(c) Neither the Corporation nor any director, officer or
agent thereof will be bound to inquire into the title of
the person named in the form of transfer as transferee,
or, if no person is named therein as transferee, of the
person on whose behalf the certificate is deposited with
the Corporation for the purpose of having the transfer
registered or be liable to any claim by such registered
owner or by any intermediate owner or holder of the
certificate or of any of the shares represented thereby
or any interest therein for registering the transfer,
and the transfer, when registered, will confer upon the
person in whose name the shares have been registered a
valid title to such shares.
(d) Every instrument of transfer will be executed by the
transferor and left at the registered office of the
Corporation or at the office of its transfer agent or
branch transfer agent or registrar for registration
together with the share certificate for the shares to be
transferred and such other evidence if any, as the
directors or the transfer agent or branch transfer agent
or registrar or branch registrar may require to prove
the title of the transferor or his right to transfer the
shares and the right of the transferee to have the
transfer registered. All instruments of transfer where
the transfer is registered will be retained by the
Corporation or its transfer agent or branch transfer
agent or registrar or branch\registrar and any
instrument of transfer, where the transfer is not
registered, will be returned to the person depositing
the same together with the share certificate which
accompanied the same when tendered for registration.
<PAGE> 143
(e) There will be paid to the Corporation in respect of
the registration of any transfer such sum, if any, as
the directors may from time to time determine.
8.04 Transfer Agents and Registrars - The Board may from time
to time appoint a registrar to maintain the securities
register and a transfer agent to maintain the register of
transfers and may also appoint one or more branch registrars
to maintain branch securities registers and one or more
branch transfer agents to maintain branch registers of
transfer, but one person may be appointed both registrar and
transfer agent. The Board may at any time terminate any such
appointment.
8.05 Lien for Indebtedness - If the Articles provide that the
Corporation will have a lien on shares registered in the name
of a Shareholder indebted to the Corporation, such lien may
be enforced, subject to any other provision of the Articles,
by the sale of the shares thereby affected or by any other
action, suit, remedy or proceeding authorized or permitted by
law or by equity and, pending such enforcement, may refuse to
register a transfer of the whole or any part of such shares.
8.06 Non-Recognition of Trusts - Subject to the provisions of
the Act, the Corporation will treat as absolute owner of the
share the person in whose name the share is registered in the
securities register as if that person had full legal capacity
and authority to exercise all rights of ownership, regardless
of any indication to the contrary through knowledge or notice
or description in the Corporation's records or on the share
certificate.
8.07 Share Certificates - Every holder of one or more shares
of the Corporation will be entitled, at his option, to a
share certificate, or to a non-transferable written
acknowledgement of his right to obtain a share certificate,
stating the number and list or series of shares held by him
as shown on the securities register. Share certificates and
acknowledgements of a Shareholder's right to a share
certificate, respectively, will be in such form as the Board
will from time to time approve. Any share certificate will
be signed in accordance with section 2.04 and need not be
under the corporate seal; provided that, unless the Board
otherwise determines, certificates representing shares in
respect of which a transfer agent or registrar has been
appointed will not be valid unless countersigned by or on
behalf of such transfer agent or registrar. The signature of
one of the signing officers or, in the case of share
certificates which are not valid unless countersigned by or
on behalf of a transfer agent or registrar, the signatures of
both signing officers, may be printed or mechanically
reproduced in facsimile upon share certificates and every
<PAGE> 144
such facsimile signature will for all purposes be deemed to
be the signature of the officer whose signature it reproduces
and will be binding upon the Corporation. A share
certificate executed as aforesaid will be valid
notwithstanding that one or both of the officers whose
facsimile signature appears thereon no longer holds office at
the date of issue of the certificate.
8.08 Replacement of Share Certificates - The Board or any
officer or agent designated by the Board may in its or his
discretion direct the issue of a new share certificate in
lieu of and upon cancellation of a share certificate that has
been mutilated or in substitution for a share certificate
claimed to have been lost, destroyed or wrongfully taken or
which does not comply as to form with the requirements from
time to time of the Act in this regard, on payment of such
fee as the Board may direct and on such terms as to
indemnity, reimbursement of expenses and evidence of loss and
of title as the Board may from time to time prescribe,
whether generally or in any particular case.
8.09 Joint Shareholders - If two or more persons are
registered as joint holders of any share, the Corporation
will not be bound to issue more than one certificate in
respect thereof, and delivery of such certificate to one of
such persons will be sufficient delivery to all of them. Any
one of such persons may give effectual receipts for the
certificate issued in respect thereof or for any dividend,
bonus, return of capital or other money payable or warrant
issuable in respect of such share. Joint shareholders may
collectively designate in writing an address as their
recorded address for service of notice and payment of
dividends but in default of such designation the address of
the first named joint shareholder will be deemed to be the
recorded address aforesaid.
8.10 Deceased Shareholders - In the event of the death of a
holder, or of one of the joint holders, of any share, the
Corporation will not be required to make any entry in the
securities register in respect thereof or to make payment of
any dividends thereon except upon production of all such
documents as may be required by law and upon compliance with
the reasonable requirements of the Corporation and its
transfer agents.
Section Nine
DIVIDENDS AND RIGHTS
9.01 Dividends - Subject to the provisions of the Act, the
Board may from time to time declare dividends payable to the
shareholders according to their respective rights and
<PAGE> 145
interest in the Corporation. Dividends may be paid in money
or property or by issuing fully paid shares of the
Corporation.
9.02 Dividend Cheques - A dividend payable in cash will be
paid by cheque drawn on the Corporation's bankers or one of
them to the order of each registered holder of shares of the
class or series in respect of which it has been declared and
mailed by prepaid ordinary mail to such registered holder at
his recorded address, unless such holder otherwise directs.
In the case of joint holders the cheque will, unless such
joint holders otherwise direct, be made payable to the order
of all of such joint holders and mailed to them at their
recorded address. The mailing of such cheque as aforesaid,
unless the same is not paid on due presentation, will satisfy
and discharge the liability for the dividend to the extent of
the sum represented thereby plus the amount of any tax which
the Corporation is required to and does withhold.
9.03 Non-Receipt of Cheques - In the event of non-receipt of
any dividend cheque by the person to whom it is sent as
aforesaid, the Corporation will issue to such person a
replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt
and of title as the Board may from time to time
prescribe, whether generally or in any particular case.
9.04 Record Date for Dividends and Rights - The Board may fix
in advance a date, preceding by not more than 50 days the
date for the payment of any dividend or the date for the
issue of any warrant or other evidence of right to subscribe
for securities of the Corporation, as a record date for the
determination of the persons entitled to receive payment of
such dividend or to exercise the right to subscribe for such
securities, provided that, where the Corporation is a
distributing corporation for purposes of the Act, notice of
any such record date is given not less than seven days before
such record date by newspaper advertisement and otherwise in
the manner provided in the Act. Where no record date is
fixed in advance as aforesaid, the record date for the
determination of the persons entitled to receive payment of
any dividend or to exercise the right to subscribe for
securities of the Corporation will be at the close of
business on the day on which the resolution relating to such
dividend or right to subscribe is passed by the Board.
9.05 Unclaimed Dividends - Any dividend unclaimed after a
period of six years from the date on which the same has been
declared to be payable will be forfeited and will revert to
the Corporation.
<PAGE> 146
Section Ten
MEETINGS OF SHAREHOLDERS
10.01 Annual Meetings - The annual meeting of
shareholders will be held at such time in each year and,
subject to the Act and to section 10.04, at such place as the
Board, the chairman of the board, the managing director or
the president may from time to time determine, for the
purpose of considering the financial statements and reports
required by the Act to be placed before the annual meeting,
electing directors, appointing auditors and for the
transaction of such other business as may properly be brought
before the meeting.
10.02 Special Meetings - The Board, the chairman of the
board, the managing director or the president will have power
to call a special meeting of shareholders at any time.
10.03 Special Business - All business transacted at a
special meeting of shareholders and all business transacted
at an annual meeting of shareholders, except consideration of
the financial statements, auditors reports, election of
directors and reappointment of the incumbent auditors, is
deemed to be special business.
10.04 Place of Meeting - Subject to the Articles, meetings of
shareholders may be held at Vancouver, British Columbia or
such other place or places as the directors in their absolute
discretion may determine from time to time.
10.05 Notice of Meeting - Notice of the time and place of
each meeting of shareholders will be given in the manner
provided in section 12.01 not less than twenty-one nor more
than fifty days before the date of the meeting to each
director, to the auditor and to each shareholder who at the
close of business on the record date, if any, for notice is
entered in the securities register as the holder of one or
more shares carrying the right to vote at the meeting.
Notice of a meeting of shareholders called for any purpose
other than consideration of the financial statements and
auditor's report, election of directors and re-appointment of
the incumbent auditor will state the nature of such business
in sufficient detail to permit the shareholder to form a
reasoned judgment thereon and will state the text of any
special resolution to be submitted to the meeting. A
shareholder and any other person entitled to attend a meeting
of shareholders may in any manner waive notice of or
otherwise consent to a meeting of shareholders.
<PAGE> 147
10.06 List of Shareholders Entitled to Notice - For every
meeting of shareholders, at any time that the Corporation has
more than fifteen shareholders entitled to vote at a meeting
of shareholders, the Corporation will prepare a list of
shareholders entitled to receive notice of the meeting,
arranged in alphabetical order and showing the number of
shares entitled to vote at the meeting held by each
shareholder. If a record date for the meeting is fixed
pursuant to section 10.07, the shareholders listed will be
those registered or constructively registered pursuant to the
Act at the close of business of the record date, such list to
be prepared on a day not later than ten days after such
record date. If no record date is fixed, the list of
shareholders will be prepared no later than at the close of
business on the day immediately preceding the day on which
notice of the meeting is given, or where no such notice is
given, the day on which the meeting is held. The list will
be available for examination by any shareholder during usual
business hours at the records office of the Corporation or at
the place where the central securities register is kept and
at the place where the meeting is held.
10.07 Record Date for Notice - The Board may fix in
advance a record date, preceding the date of any meeting of
Shareholders by not more than fifty days and not less than
twenty-one days for the determination of the shareholders
entitled to notice of the meeting, provided that notice of
any such record date is given, not less than seven days
before such record date, by newspaper advertisement in the
manner provided in the Act. If no record date is so fixed,
the record date for the determination of the shareholders
entitled to notice of the meeting will be the close of
business on the day immediately preceding the day on which
the notice is given, or if no notice is given, the day on
which the meeting is held.
10.08 Meetings Without Notice - A meeting of shareholders
may be held without notice at any time and place permitted by
the Act:
(a) if all the shareholders entitled to vote thereat are
present in person or represented by proxy or if those
not present or represented by proxy waive notice of or
otherwise consented to such meeting being held, and
(b) if the auditor and the directors are present or
waived notice of or otherwise consent to such meeting
being held.
At such meeting any business may be transacted which the
Corporation at a meeting of shareholders may transact. If
the meeting is held at a place outside the Yukon Territory,
<PAGE> 148
shareholders not present or represented by proxy, but who
have waived notice of or otherwise consented to such meeting,
will also be deemed to have consented to the meeting being
held at such place.
10.09 Meetings by Telephone - If a majority of the
shareholders consent, a shareholder may participate in a
meeting of shareholders by means of such telephone or other
communications facilities as permit all persons participating
in the meeting to hear each other, and a shareholder
participating in such a meeting by such consent will be
effective whether given before or after the meeting to which
it relates.
10.10 Chairman, Secretary and Scrutineers - The chairman
of any meeting of shareholders will be the first mentioned of
such of the following officers as having been appointed and
who is present at the meeting: chairman of the board,
president, managing director, or a vice-president. If no
such officer is present within fifteen minutes from the time
fixed for holding the meeting, the persons present and
entitled to vote will choose one of their number to be
chairman. If the secretary of the Corporation is absent or
otherwise declines to act, the chairman will appoint some
person, who need not be a shareholder, to act as secretary of
the meeting. If desired, one or more scrutineers, who need
not be shareholders, may be appointed by a resolution or by
the chairman with the consent of the meeting.
10.11 Persons Entitled to be Present - The only persons
entitled to be present at a meeting of shareholders will be
those entitled to vote thereat, the directors and auditor of
the Corporation and others who, although not entitled to
vote, are entitled or required under any provision of the Act
or the Articles or By-Laws to be present at the meeting. Any
other person may be admitted only on the invitation of the
chairman of the meeting or with the consent of the meeting.
10.12 Quorum - Save as herein otherwise provided, a
quorum will be two shareholders or proxyholders present
representing a minimum of five percent of the issued voting
shares in the Corporation. If there is only one shareholder,
the quorum is one person present and being, or representing
by proxy, such shareholder. The directors, the secretary or,
in his absence, an assistant secretary, and the solicitor of
the Corporation will be entitled to attend at any general
meeting but no such person will be counted in the quorum or
be entitled to vote at any general meeting unless he is a
shareholder or proxyholder entitled to vote thereat. If a
quorum is present at the opening of any meeting of
<PAGE> 149
shareholders, the shareholders present or represented by
proxy may proceed with the business of the meeting
notwithstanding that a quorum is not present throughout the
meeting.
10.13 Right to Vote - Record Date for Voting - Subject to
the provisions of the Act as to authorized representative of
any other body corporate, at any meeting of shareholders in
respect of which the Corporation has prepared the list
referred to in section 10.06, every person who is named in
such list will be entitled to vote the shares shown thereon
opposite his name except, where the Corporation has fixed a
record date in respect of such meeting pursuant to section
10.07, to the extent that such person has transferred any of
his shares after such record date and the transferee, upon
producing properly endorsed certificates evidencing such
shares or otherwise establishing that he owns such shares,
demands not later than ten days before the meeting that his
name be included in such list, in which event the transferee
alone will be entitled to vote the transferred shares at the
meeting. Where no record date for notice has been fixed and
no notice of meeting given, or in the absence of a list
prepared as aforesaid in respect of a meeting of
shareholders, every person will be entitled to vote at the
meeting who at the time is entered in the securities register
as the holder of one or more shares carrying the right to
vote at such meeting.
10.14 Proxies
(a) Every shareholder entitled to vote at a meeting of
shareholders, may appoint a proxyholder, or one or more
alternate proxyholders, who need not be shareholders, to
attend and act at the meeting in the manner and to the
extent authorized and with the authority conferred by
the proxy. A proxy will be in writing executed by the
shareholder or his attorney and will conform with the
requirements of the Act. An instrument of proxy will be
valid only at the meeting in respect of which it is
given or any adjournment thereof.
(b) Any corporation, other than a Prohibited Corporate
Shareholder, which is a shareholder of the Corporation
may by resolution of its directors or other governing
body authorize such person as it thinks fit to act as
its representative at any meeting. The person so
authorized will be entitled to exercise in respect of
and at such meeting the same powers on behalf of the
corporation which he represents as that corporation
could exercise if it were an individual member of the
Corporation personally present, including, without
limitation, the right, unless restricted by such
<PAGE> 150
resolution, to appoint a proxyholder to represent such
corporation, and will, if present at the meeting, be
counted for the purpose of forming a quorum and be
deemed to be a member present at the meeting. Evidence
of the appointment of any such representative may be
sent to the Corporation by written instrument, telegram,
telex, facsimile or any method of transmitting legibly
recorded messages.
10.15 Time for Deposit of Proxies - The Board may specify
in a notice calling a meeting of shareholders a time,
preceding the time of such meeting by not more than forty-eight
hours exclusive of non-business days, before which time
proxies to be used at such meeting must be deposited. A
proxy will be acted upon only if, prior to the time so
specified, it will have been deposited by written instrument,
telegram, telex, facsimile or any method of transmitting
legibly recorded messages with the Corporation or an agent
thereof specified in such notice or, if no such time is
specified in such notice, unless it has been received by the
secretary of the Corporation or by the Chairman of the
meeting or any adjournment thereof before the time of voting.
10.16 Joint Shareholders - If two or more persons hold
shares jointly, any one of them present in person or
represented by proxy at a meeting of shareholders may, in the
absence of the other or others, vote the shares but if two or
more of those persons are present in person or represented by
proxy and vote, they will vote as one on the shares jointly
held by them and in the absence of agreement between those so
voting the person named first in the Register will vote the
shares.
10.17 Votes to Govern - At any meeting of shareholders
every question will, unless otherwise required by the
Articles or By-Laws or by law, be determined by the majority
of the votes cast on the question. In case of an equality of
votes either upon a show of hands or upon a poll, the
chairman of the meeting will be entitled to a second or
casting vote.
10.18 Motion - The chairman may propose or second a
motion.
10.19 Show of Hands - Subject to the provisions of the
Act any question at a meeting of shareholders will be decided
by a show of hands unless a ballot thereon is required or
demanded as hereinafter provided. Upon a show of hands,
every person who is present and entitled to vote will have
one vote. Whenever a vote by show of hands will have been
taken upon a question, unless a ballot thereon is so required
or demanded, a declaration by the chairman of the meeting
<PAGE> 151
that the vote upon the question has been carried or carried
by a particular majority or not carried, an entry to that
effect in the minutes of the meeting will be conclusive
evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any
resolution or other proceeding in respect of such question,
and the result of the vote so taken will be the decision of
the shareholders upon such question.
10.20 Ballots
(a) On any question proposed for consideration at a
meeting of shareholders, and whether or not a show of
hands has been taken thereof, any shareholder or
proxyholder entitled to vote at the meeting may require
or demand a ballot. A ballot so required or demanded
will be taken in such manner as the chairman will
direct. A requirement or demand for a ballot may be
withdrawn at any time before the taking of the ballot.
If a ballot is taken each person present will be
entitled in respect of the shares which he is entitled
to vote at the meeting upon the question, to that number
of votes provided by the Act or the Articles, and the
result of the ballot so taken will be the decision of
the shareholders upon the said question.
(b) No ballot may be demanded on the election of a
chairman. A ballot demanded on a question of
adjournment will be taken forthwith. A ballot demanded
on any other question will be taken as soon as, in the
opinion of the chairman, is reasonably convenient, but
in no event later than seven days after the meeting and
at such time and place and in such manner as the
chairman of the meeting directs. The result of the
ballot will be deemed to be the resolution of and passed
at the meeting at which the ballot was demanded. Any
business other than that upon which the ballot has been
demanded may be proceeded with pending the taking of the
ballot. In any dispute as to the admission or rejection
of a vote the decision of the chairman made in good
faith will be final and conclusive.
10.21 Adjournment - If a meeting of shareholders is
adjourned for less than thirty days, it will not be necessary
to give notice of the adjourned meeting, other than by
announcement at the earliest meeting that it is adjourned.
If a meeting of Shareholders is adjourned by one or more
adjournments for an aggregate of thirty days or more, notice
of the adjourned meeting will be given as for an original
meeting. At any such adjourned meeting no business will be
transacted other than business left unfinished at the meeting
from which the adjournment took place.
<PAGE> 152
10.22 Resolution in Writing - A resolution in writing
signed by all the shareholders entitled to vote on that
resolution at a meeting of shareholders is as valid as if it
had been passed at a meeting of the shareholders, and will be
held to relate to any date therein stated to be the effective
date thereof.
10.23 Only One Shareholder - Where the Corporation has
only one shareholder or only one holder of any class or
series of shares, the shareholder present in person or by
proxy constitutes a meeting.
10.24 Only Two Shareholders - Where the Corporation has
only two shareholders a quorum for transaction of business at
any meeting of shareholders will be one person present in
person, being a shareholder entitled to vote thereat, or a
duly appointed proxy of such shareholder, holding not less
than ten percent of the outstanding shares of the Corporation
entitled to vote at the meeting.
Section Eleven
DIVISIONS AND DEPARTMENTS
11.01 Creation and Consolidation of Divisions - The Board
may cause the business and operations of the Corporation or
any part thereof to be divided or to be segregated into one
or more divisions upon such basis, including without
limitation, character or type of operation, geographical
territory, product manufactured or service rendered, as the
Board may consider appropriate in each case. The Board may
also cause the business and operations of any such division
to be further divided into sub-units and the business and
operations of any such divisions or sub-units to be
consolidated upon such basis as the Board may consider
appropriate in each case.
11.02 Name of Division - Subject to the Act any division
or its sub-units may be designated by such name as the Board
may from time to time determine and may transact business,
enter into contracts, sign cheques and other documents of any
kind and do all acts and things under such name, provided
that the Corporation will set out its name in legible
characters in all contracts, invoices, negotiable instruments
and orders for goods or services issued or made by or on
behalf of the Corporation. Any such contract, cheque or
documents will be binding upon the Corporation as if it had
been entered into or signed in the name of the Corporation.
11.03 Officers of Division - From time to time the Board
or if authorized by the Board, the president or chief
executive officer, may appoint one or more officers for any
<PAGE> 153
division, prescribe their powers and duties and settle their
terms of employment and remuneration. The Board or, if
authorized by the Board, the president or chief executive
officer, may remove at its or his pleasure any Officers so
appointed, without prejudice to such Officer's right under
any employment contract. Officers of divisions or their
sub-units will not, as such, be officers of the Corporation.
Section Twelve
NOTICES
12.01 Method of Giving Notices - Any notice (which term
includes any communication or document) to be given (which
term includes sent, delivered or served) pursuant to the Act,
the regulations thereunder, the Articles, the By-Laws or
otherwise to a shareholder, director, officer, auditor or
member of a committee of directors will be sufficiently given
if delivered personally to the person to whom it is to be
given or if delivered to his recorded address by any means of
prepaid transmitted or recorded communication. A notice so
delivered will be deemed to have been given when it is
delivered personally or to the recorded address as aforesaid;
a notice so mailed will be deemed to have been received by
him at the time it would be delivered in the ordinary course
of mails; and a notice so sent by any means of transmitted or
recorded communication will be deemed to have been given when
dispatched or delivered to the appropriate communication
corporation or agency or its representative for dispatch.
Subject to the Act, a notice of meeting of shareholders will
be deemed to have been sent to the Shareholder on the day on
which it is deposited in the mail. The secretary may change
or cause to be changed the recorded address of any
shareholder, director, officer, auditor or member of a
committee of directors in accordance with any information
believed by him to be reliable.
12.02 Notice to Joint Shareholders - If two or more
persons are registered as joint holders of any share, any
notice will be addressed to all of such joint holders but
notice given to any one or more of such persons at the
recorded address for such joint shareholders will be
sufficient notice to all of them.
12.03 Computation of Time - In computing the date when
notice must be given under any provision requiring a
specified number of days notice of any meeting or other
event, the date of giving the notice will be excluded and the
date of the meeting or other event in respect of which the
notice is being given will be included.
<PAGE> 154
12.04 Undelivered Notices - If any notice given to a
shareholder pursuant to section 12.01 is returned on three
consecutive occasions because he cannot be found or served or
is unknown at his recorded address, the Corporation will not
be required to give any further notices to such shareholder
until he informs the Corporation in writing of his new
recorded address.
12.05 Proof of Service - A certificate of the secretary
or other duly authorized officer of the Corporation in office
at the time of the making of the certificate, or of any agent
of the Corporation as to the facts in relation to the mailing
or delivery or sending of any notice to any shareholder,
director, the auditors, or conclusive evidence thereof and
will be binding on every shareholder, director, the auditors
or any officer of the Corporation as the case may be.
12.06 Omissions and Errors - The accidental omission to
give any notice to any shareholder, director, officer,
auditor or member of a committee of directors or the non-receipt
of any notice by any such person or any error in any
notice not affecting the substance thereof will not
invalidate any action taken at any meeting held pursuant to
such notice or otherwise founded thereon.
12.07 Persons Entitled by Death or Operation of Law -
Every person who by operation of law, transfer, death of a
shareholder or any other means whatsoever, will become
entitled to any share, will be bound by every notice in
respect of such share which will have been duly given to the
shareholder from whom he derives his title prior to such
person's name and address being entered on the securities
register (whether such notice was given before or after the
happening of the event upon which he became so entitled) and
before his furnishing to the Corporation the proof of
authority or evidence of his entitlement prescribed by the
Act.
12.08 Waiver of Notice - Any shareholder (or his duly
appointed proxyholder), director, officer, auditor or member
of a committee of directors may at any time waive the sending
of any notice, or waive or abridge the time for any notice,
required to be given to him under any provision of the Act,
the regulations thereunder, the Articles, the By-Laws or
otherwise and such waiver or abridgement will cure any
default in the giving or the time of such notice, as the case
may be. Any such waiver or abridgement will be in writing
except a waiver of notice of a meeting of shareholders or of
the Board which may be given in any manner.
<PAGE> 155
ENACTED by the Board as at September 25, 1997.
___________________________________
Chairman of the Board
CONFIRMED by the Shareholders in accordance with the Act on
______________, 1998
____________________________________
Chairman of the Shareholders' Meeting
<PAGE> 156
EXHIBIT 10.1
PETROLEUM PROSPECTING LICENCE 38312
LICENCE ENDORSEMENT
Licence PPL 38312
Action In terms of section 10 of the Petroleum Act 1937, the
Secretary of Commerce, acing under delegated authority form the
Minister of Energy of 3 May 1991 has agreed to amend the Second
Schedule work programme.
Date 19 August 1997
Details The Secretary of Commerce has agreed to amend the
Second Schedule work programme whereby the attached work
programme is adopted for the remainder of the term of the
licence.
Certified true and correct.
/s/ C. T. Bennett
C. T. Bennett for Unit Manager-Permitting
25/8/1997
<PAGE> 157
EXHIBIT 10.03
PETROLEUM EXPLORATION PERMIT 38328
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991, I, DOUGLAS
LORIMER KIDD, Minister of Energy Do Hereby
Grant Indo-Pacific Energy (NZ) Ltd 70%
Moondance Energy Pty Ltd 20%
Croft Exploration Ltd 10%
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly that
delineated on the plan attached hereto.
This Exploration Permit is issued for a term of five years
commencing on 1 July 1996. The Permit is granted subject to the
Crown Minerals Act 1991 and any regulations made thereunder, and
to the terms and conditions specified in the Second and Third
Schedules hereto.
Dated at Wellington this 19th day of June 1996.
/s/ Doug Kidd
Hon Doug Kidd
Minister of Energy
<PAGE> 158
EXHIBIT 10.04
INDO-PACIFIC ENERGY LTD.
SUITE 7, 249 KARORI ROAD
P.O. BOX 17258
WELLINGTON, NEW ZEALAND
PEP 38328 FARMIN OFFER
Trans-Orient Petroleum Ltd. on behalf of its NZ based subsidiary
Trans-Orient Petroleum (NZ) Ltd. ("Farmee") hereby offers to
acquire a 10% participating interest in eexploration permit 38328
from Indo-Pacific Energy (NZ) Ltd. ("Indo-Pacific") the "Farmor"
on the following terms:
1 The Farmee is assigned a 10% participating interest in PEP
38328 by Indo-Pacific with provision for divestiture in the event
of default by the Farmee. The Farmor will use its best endeavours
to secure the necessary government approvals of the assignment of
the interest prior to spudding of the Kereru-1 well.
2. In consideration for the assignment of the 10% interest in
PEP 38328, the Farmee will fund 20% of all Kereru-1 well costs up
to and including:
(i) the plugging and abandonment of the Kereru-1 well,or
(ii) the setting of production casing at Fereru-1 (provided
however that the costs of procuring the 7" casing and
spool are not Kereru-1 well costs for the purpose of this
clause 2 and the Farmee shall only be laible for its
paticipating interest percentage of such casing and spool
procurement), or
(iii) the expenditure by the Farmee of NZ$0.367 million,
whichever occurs first.
Thereafter, Farmee will fund costs in proporation to its
participating interest as may be approved and incurred by the PEP
38328 joint venture.
For the purpose of determining Kereru-1 well costs, such costs
will be determined to include the costs associated with permit
management, pre-planning, inventory purchase (with the exception
of the 7" casing an spool), site preparation and drilling, all
relating to the Kereru-1 well.
3. The Kereru-1 well, which will be spudded by the end of
1996,
is to be drilled to a depth which the greater of either 1,700
metres or 100 metres deeper than the Miocene/Pliocene
unconformity (or lesser depth as may be agreed) in accordance
with the Kereru-1 well plan.
<PAGE> 159
4. Farmee is able to vote its 10% participting interest and
shall have all the rights and obligations of a joint venture
party as from the date of acceptance of this offer.
5. The Farmee is to participate in the process of agreeing to
the substance of the joint venture operating agreement for the
management of all operations within exploration permit 38328.
6. This offer is subject to any New Zealand or Canadian
government consents/approvals necessary and to any applicable
stock exchange requirements.
7. The terms and conditions of this offer shall remain
confidential to Indo-Pacific and Trans-Orient subject to their
respective obligations of disclosure at law or as required by the
relevant stock exchanges.
8. This offer shall be deemed valid if signed by fax
counterpart.
PEP 38328 Farmin Offer accepted by:
/s/ D.J. Bennett /s/ John B. Holland
Chief Executive Officer President
Indo-Pacific Energy (NZ)Ltd. Trans-Orient Petroleum Ltd.
Date: 14/11/96 Date: Nov. 14, 1996
<PAGE> 160
EXHIBIT 10.05
Agreement dated 30 October 1997.
Between
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron
Road, Henderson, Auckland, New Zealand ("BORAL ENERGY")
AND
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("INDO-PACIFIC")
AND
MOONDANCE ENERGY PTY LTD of 133 Edward Street, Perth,
Western Australia, 6849 ("MOONDANCE")
together the Parties ("Parties");
RECITALS
A Indo-Pacific and Moondance are the beneficial owners of a
70% Participating Interest and a 20% Participating Interest
respectively in and under the Permit:
B Pursuant to a letter agreement dated 4 November 1996,
Indo-Pacific agreed to assign to Boral Energy the
Indo-Pacific Assigned Interest and Moondance agreed to
assign to Boral Energy the Moondance Assigned Interest,
which Boral Energy agreed to acquire and the Parties have
set out the terms and conditions of the assignments in this
Agreement.
OPERATIVE PART
1 DEFINITIONS AND INTERPRETATIONS
1.1 Definitions
In this Agreement ( including the Recitals), unless the
context otherwise requires:
1.1.1 "Act" means the Crown Minerals Act (NZ) 1991 and
any regulations thereto.
1.1.2 "Affiliate" means a corporation that controls a
Party or is controlled by a Party or a corporation that is
controlled by a corporation that also controls the Party and
control means the right to exercise 100% of the voting right
thereof.
<PAGE> 161
1.1.3 "Area" means, at any time, the area subject of the
Permit.
1.1.4 "Agreement" means this agreement between the
Parties.
1.1.5 "Indo-Pacific Assigned Interest" means a 20%
Participating Interest owned by Indo-Pacific assigned to Boral
Energy.
1.1.6 "Effective Date" means 2 November 1996.
1.1.7 "Joint Venturers" means together Indo-Pacific,
Moondance and Croft Exploration Ltd.
1.1.8 "Moondance Assigned Interest" means a 10%
Participating Interest owned by Moondance assigned to Boral
Energy.
1.1.9 "Operator" means Indo-Pacific.
1.1.10 "Participating Interest" means a percentage
interest of a Party in the Permit.
1.1.11 "Permit" means petroleum exploration permit PEP
38328 or any renewal or extension thereof and any mining permit
granted pursuant thereto.
1.1.12 "Well Costs" means all costs (including permit
management, pre-planning and inventory purchase) incurred by the
Operator in drilling the Kereru 1 Well but which expressly
excludes the cost of purchase of the 7" casing and spool.
1.1.13 "Kereru 1 Well" means the well referred to as
Kereru 1 at a location defined by the coordinates 39' 39' 40.5"
south and 176' 26' 12.3" east, being Peg 216 on seismic line
C91-04 to be drilled, to either a programmed depth of 1700 metres
or 100 metres deeper than the Miocene/Pliocene unconformity,
whichever is the lesser, or as otherwise may be agreed.
1.1.14 "Minister" means the Minister of Energy as defined
in the Act who administers the approval and registration
procedure under the Act.
1.1.15 "Boral Energy Participating Interest" means
together the Indo-Pacific Assigned Interest and the Moondance
Assigned Interest assigned to Boral Energy.
1.2 Interpretation Rules
In this Agreement, unless a contrary intention appears:
<PAGE> 162
1.2.1 a reference to this Agreement is a reference to
this Agreement as amended, varied, novated or substituted from
time to time;
1.2.2 a reference to any legislation or any provision
of any legislation includes:
(a) all regulations, orders or instruments issued under
the legislation or provisions; and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such legislation or
provision;
1.2.3 a word:
(a) importing the singular includes the plural and vice
versa; and
(b) denoting an individual includes corporations, firms,
unincorporated bodies, authorities and instrumentalities;
1.2.4 a reference to a Party to this Agreement or any
other instrument includes that Party's executors, administrators,
successors or permitted assigns;
1.2.5 where a word or phrase is given meaning, any
other part of speech or grammatical form has a corresponding
meaning; and
1.2.6 a reference to a clause number, schedule number
or annexure number (or letter) is a reference to a clause,
schedule or annexure of this Agreement;
1.2.7 words and expressions used in this Agreement
which are used in the Act shall where the context admits have the
same meaning as they have in the Act.
1.3 Entire Agreement
This Agreement is the entire agreement between the Parties
as to its subject matter and supersedes all prior agreements,
representations and understandings.
1.4 Amendments
No amendment of, or addition to this Agreement is binding
unless it is in writing and executed by the Parties.
<PAGE> 163
1.5 Headings
Any heading, index, table of contents or marginal note is
for convenience only and does not affect the interpretation of
this Agreement.
1.6 Recitals
The Recitals of this Agreement form part of the Agreement
and have effect as if set out in full in this Agreement.
2 APPROVALS
2.1 Each dealing evidenced by this Agreement that would,
apart from the terms of this Clause or Section 41 of the Act,
have an effect of a kind referred to in Section 41 of the Act in
relation to the Permit shall be of no force or effect until the
dealing, insofar as it relates to the Permit has been approved
and registered by the Minister and an entry has been made in the
register in relation to the dealing by the Minister in accordance
with Section 41 of the Act.
2.2 All provisions of this Agreement which are not of the
nature described in clause 2.1 shall, unless otherwise expressly
provided, come into effect on the Effective Date. Upon the
approval and registration referred to in clause 2.1 being
obtained, those provisions of the Agreement which are subject to
that approval and registration shall be deemed to relate back to
and take effect as between the Parties on and from the Effective
Date.
2.3 As soon as practical after the date of this Agreement,
Boral Energy shall apply for all approvals and registrations of
the dealings as evidenced by this Agreement.
2.4 Each of the Parties will use all reasonable efforts to
enable the dealings evidenced by this Agreement to be approved as
expeditiously as possible and, with all convenient despatch, will
execute all such documents and do all such acts and things as are
necessary or desirable to achieve that approval.
2.5 If any dealing evidenced by this Agreement is not
approved and registered in accordance with clause 2.1 within 12
months after the date on which it is lodged for approval and
registration (or such later date as the Parties may agree), any
Party may terminate this Agreement in respect of that dealing
only at any time by notice to the other Parties and this
Agreement in respect of that dealing only (except for this clause
2.5 and clause 2.6) shall terminate on the receipt of that
notice.
<PAGE> 164
2.6 On the termination of this Agreement under clause 2.5,
Indo-Pacific and Moondance (as the case may be) shall reimburse
Boral Energy, within 7 days, for all amounts which Boral Energy
has paid pursuant to this Agreement and the Parties shall execute
all documents and do all other things necessary or desirable to
place each other in the same position as they would have been in
had this Agreement not been executed or acted upon.
3. ASSIGNMENTS
With effect on and from the Effective Date, Indo-Pacific and
Moondance respectively assign to Boral Energy and Boral Energy
accepts the assignment of the Indo-Pacific Assigned Interest and
Moondance Assigned Interest.
4. BORAL ENERGY'S OBLIGATIONS
4.1 In consideration of Indo-Pacific agreeing to assign the
Indo-Pacific Assigned Interest to Boral Energy and Moondance
agreeing to assign the Moondance Assigned Interest to Boral
Energy, Boral Energy will fund 60% of all Well Costs cash called
in accordance with accepted petroleum joint venture operating
practice until the earliest to occur of the
following;
4.1.1 the plugging and abandonment of the Kereru 1 Well;
or
4.1.2 the setting of production casing at the Kereru 1
Well; or
4.1.3 the expenditure by Boral Energy of NZ$1.1 million.
4.2 The Parties agree that the costs of procuring the 7"
casing and spool are not Well Costs and those 7" casing and spool
costs and other Permit costs (but excluding the Well Costs) are
borne by the Joint Venturers and Boral Energy in accordance with
each of their Participating Interest percentages.
5. BORAL ENERGY'S FURTHER RIGHTS
The Parties acknowledge and agree that:
5.1 On and from the Effective Date Boral Energy shall have
all the rights and obligations of a joint venture party and shall
be able to vote the Boral Energy Participating Interest.
5.2 Indo-Pacific will transfer to Boral Energy operatorship
of all matters pertaining to petroleum production in the Permit
including without limitation all activities related to:
5.2.1 field development and production;
<PAGE> 165
5.2.2 plant and process engineering; and
5.2.3 product distribution and marketing.
5.3 should Boral Energy;
5.3.1 elect not to accept the transfer of operatorship
referred to in clause 5.2; or
5.3.2 assign the Boral Energy Participating Interest in
whole or part to a third party which is not a Joint Venturer;
then Boral Energy will support re-assignment of operatorship (if
it was accepted by Boral Energy) to Indo-Pacific for as long as
Indo-Pacific and its Affiliates retain equity in the Permit that
is greater than that of Boral Energy and its Affiliates or that
of Boral Energy's assignees.
5.4 Boral Energy shall be entitled to participate in the
negotiation of the joint venture operating agreement for the
management of all operations within the Permit and Indo-Pacific
and Moondance agree that they have procured the agreement of
Croft Exploration Ltd to this clause 5.4.
6 DEFAULT
6.1 If Boral Energy fails to pay any of the costs at the
times required under this Agreement then Indo-Pacific and/or
Moondance may after giving Boral Energy 14 days notice to remedy
the default, pay such costs and recover the sum (if applicable)
not so paid as a liquidated debt, together with interest on the
amount outstanding at the rate charged from time to time by
Indo-Pacific's or Moondance's bankers on overdrafts in excess of
$100,000 such interest being calculated on a daily basis from the
date of payment by Indo-Pacific or Moondance until the date of
recovery from Boral Energy, capitalised on the last day of each
month.
6.2 In the event that Boral Energy fails to remedy the
default in clause 6.1 after a further 30 days then Indo-Pacific
or Moondance may require Boral Energy to forthwith assign to
Indo-Pacific and Moondance the Indo-Pacific Assigned Interest and
the Moondance Assigned Interest as the case may be assigned to
Boral Energy under this Agreement for no consideration other than
the complete discharge of all liability of Boral Energy under,
and in respect of, this Agreement.
6.3 The Parties acknowledge and agree that the provisions
of clause 6.1 and 6.2 arise out of a genuine attempt to
compensate Indo-Pacific and Moondance for any loss and damage
estimated by the Parties to be suffered by Indo-Pacific and
Moondance as a result of an unremedied default of Boral Energy
and Boral Energy shall not be liable for any costs charges or
damages whether direct indirect or consequential.
<PAGE> 166
7 INDO-PACIFIC'S REPRESENTATIONS, WARRANTIES AND
INDEMNITY
7.1 Indo-Pacific represents and warrants to Boral Energy
that:
7.1.1 it has the power and authority, and all necessary
corporate and other action has or will be taken, to enable it to
enter into and perform its obligations under this Agreement and
each further document and assurance required under clause 10
hereof;
7.1.2 Indo-Pacific Assigned Interest is free of all
mortgages, charges, liens, secured interests, royalties and
encumbrances other than royalties and encumbrances necessarily
imposed by the Act and Indo-Pacific further warrants that once
the obligations under clause 4 of this Agreement have been
satisfied, Boral Energy shall only by liable to the extent of the
Indo-Pacific Assigned Interest;
7.1.3 it is not engaged in any litigation or
arbitration proceeding in respect of the Permit, and there are no
actions, suits or other proceedings pending or threatened against
it in relation to the Permit or which affects or may affect the
validity of the Permit or this Agreement;
7.1.4 the Permit is valid, subsisting and in good
standing and all obligations imposed by the Act in relation
thereto have been duly performed and complied with;
7.1.5 no part of the Area comprised in the Permit has
been surrendered or forfeited or is subject to surrender and
forfeiture;
7.1.6 Indo-Pacific has not entered into any contract
other than with Boral Energy disposing of or granting an option
over or creating any interest in the Permit except as disclosed
to Boral Energy; and
7.1.7 Indo-Pacific is not in breach of any of its
obligations under the Permit.
7.2 Indo-Pacific shall indemnify Boral Energy and keep
Boral Energy indemnified against all liability, cost, loss and
damage which Boral Energy suffers or incurs as a result of a
breach of any representation and warranty contained in clause
7.1.
8 MOONDANCE'S REPRESENTATIONS, WARRANTIES AND INDEMNITY
8.1 Moondance represents and warrants to Boral Energy
that:
<PAGE> 167
8.1.1 it has the necessary power and authority, and all
necessary corporate and other action has or will be taken, to
enable it to enter into and perform its obligations under this
Agreement and each further document and assurance required under
clause 10 hereof;
8.1.2 the Moondance Assigned Interest is free of all
mortgages, charges, liens, secured interests, royalties and
encumbrances other than royalties and encumbrances necessarily
imposed by the Act and Moondance further warrants that once the
farmin obligations under clause 4 of this Agreement have been
satisfied, Boral Energy shall only be liable to the extent of the
Moondance Assigned Interest;
8.1.3 it is not engaged in any litigation or
arbitration proceeding in respect of the Permit, and there are
not actions, suits or other proceedings pending or threatened
against it in relation to the Permit or which affects or may
affect the validity of the Permit or this Agreement;
8.1.4 the Permit is valid, subsisting and in good
standing and all obligations imposed by the Act in relation
thereto have been duly performed and complied with;
8.1.5 no part of the Area comprised in the Permit has
been surrendered or forfeited or is subject to surrender and
forfeiture;
8.1.6 Moondance has not entered into any contract other
than with Boral Energy disposing of or granting an option over or
creating any interest in the Permit except as disclosed to Boral
Energy; and
8.1.7 Moondance is not in breach of any of its
obligations under the Permit.
8.2 Moondance shall indemnify Boral Energy and keep Boral
Energy indemnified against all liability, cost, loss and damage
which Boral Energy suffers or incurs as a result of a breach of
any representation and warranty contained in clause 8.1.
9 BORAL ENERGY'S REPRESENTATION, WARRANTY AND INDEMNITY
9.1 Boral Energy represents and warrants to both
Indo-Pacific and Moondance that it has the necessary power and
authority, and all necessary corporate and other action has been
taken, to enable it to enter into and perform its obligations
under this Agreement and each further document and assurance
required under clause 10 hereof.
<PAGE> 168
9.2 Boral Energy shall indemnify both Indo-Pacific and
Moondance and keep both Indo-Pacific and Moondance indemnified
against all liability, cost, loss and damage which either
Indo-Pacific or Moondance suffers or incurs as a result of any
breach of the representation and warranty contained in clause
9.1.
10 FURTHER ASSURANCES
10.1 The Parties agree that they will each sign, execute
and complete all further documents and assurances, and do all
further acts and things as may be reasonably required to confirm
or give effect to the intent and object of this Agreement.
10.2 Each further document and assurance required under
clause 10.1 shall be completed in a form approved by the Parties.
11 COSTS AND STAMP DUTY
11.1 Each of the Parties shall bear its own costs and
expenses (including, without limitation, all legal costs and
expenses) in relations to the preparation, negotiation and
execution of this Agreement and each of the documents which this
Agreement requires any of the Parties to execute.
11.2 Boral Energy shall bear all stamp duty and
registration fees payable under the Act on this Agreement and
each of the documents which this Agreement requires any of the
Parties to execute.
12 GOVERNING LAW
12.1 This Agreement shall be deemed to be a contract under,
and shall be governed by and interpreted in accordance with, the
laws of New Zealand.
12.2 The Parties submit to the non-exclusive jurisdiction
of the Courts of New Zealand and any courts competent to hear
appeals therefrom.
13 NOTICES
13.1 How notices may be given
A notice approval, direction, consent, offer, demand or
other communication in connection with this Agreement must
be:
13.1.1 in writing;
13.1.2 signed by an authorised officer of the relevant
Party; and
<PAGE> 169
13.1.3 given to the recipient Party;
(a) by hand delivery;
(b) by pre-paid mail or courier sent to that Party; or
(c) by facsimile transmission to that Party.
13.2 Where notices must be sent For the purposes of clause
13.1:
13.2.1 deliveries must be delivered to the address of the
recipient Party set out below;
13.2.2 mail must be sent to the address of the recipient
party set out below;
13.2.3 facsimile messages must be transmitted to the
facsimile number of the recipient Party set out below; and in
each case
13.2.4 must be marked for the attention of the person
specified below in relation to the recipient Party:
Name: Boral Energy Resources NZ Limited
Address: Level 3
60 Hindmarsh Square
ADELAIDE SOUTH AUSTRALIA 5000
Attention: Dr. R. Willink
Facsimile: (+61 8) 8223 1851
Name: Indo-Pacific Energy (NZ) Ltd
Address: 284 Karori Road
WELLINGTON NEW ZEALAND
Attention: Dr. D. Bennett
Facsimile: +64 4 476 0120
Name: Moondance Energy Ltd
133 Edward Street
PERTH WESTERN AUSTRALIA 6000
Attention: Mr. C. Crabb
Facsimile: (+61 9) 277 9079
13.3 Change of Details
13.3.1 A Party may from time to time change any of the
details specified in clause 13.2.4 by giving not less than 5
business days notice to each other party.
13.3.2 If details are changed in accordance with clause
13.3.1, clause 13.2.4 applies as if those changed details were
set out in clause 13.2.4.
<PAGE> 170
13.4 Proof of Notices
13.4.1 Proof of posting by pre-paid mail is proof of
receipt on the seventh clear business day after posting or the
fourth clear business day in the case of courier delivery.
13.4.2 Proof of transmission of a facsimile message is
proof of receipt on the date of transmission, but if a
transmission is not made on a business day or not made before
4.00pm, then it will be deemed to have been received at 10.00am
in the time zone of the recipient on the next business day in the
time zone of the recipient after transmission.
14 WAIVER
A Party's failure to exercise or delay in exercising a power
or right is not a waiver of that power or right, and the exercise
of a power or right does not preclude the future exercise of that
or any other power or right.
15 REMEDIES
15.1 All remedies, rights, undertakings, obligations or
agreements of the Parties under this Agreement arising by law in
respect of this Agreement shall be cumulative and none thereof
shall be in limitation of any other rights, remedies,
undertakings, obligations or agreements of the Parties.
15.2 Each of the Parties may follow any such remedy to which
it is entitled by law or otherwise, either concurrently or
successively at its option.
16 SEVERANCE
Each provision of this Agreement shall be deemed to be
separate and severable from the others of them. If any provision
of this Agreement is determined to be invalid or unenforceable in
any jurisdiction, it shall be severed from this Agreement and not
invalidate the rest of this Agreement which shall remain of full
force and effect as if such provision had not been made a part
hereof. Such a determination of invalidity or enforceability
shall not affect the validity or enforceability of that provision
in any other jurisdiction.
17 EXECUTION
This Agreement may be executed by the separate execution and
delivery of counterparts and proof of execution and delivery of
those counterparts may be achievable by the transmission of
executed copies by facsimile.
<PAGE> 171
18 CONFIDENTIALITY
The Parties agree and undertake to keep the terms of this
Agreement confidential subject to their respective obligations
and rights to disclose to Affiliates and as may be required by
law or rule of stock exchange.
19 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes
all prior agreements, representations, warranties, promises and
understandings between the Parties.
EXECUTED as an Agreement
THE COMMON SEAL of ) The Common Seal of
BORAL ENERGY RESOURCES ) BORAL ENERGY RESOURCES
(NZ) LIMITED ) NZ LIMITED
was affixed in accordance with )
its articles of association: )
/s/ Owen William Poole /s/ Robbert Jan Willink
Signature of Authorised Person Signature of Authorised Person
Director Director
Office Held Office Held
OWEN WILLIAM POOLE ROBBERT JAN WILLINK
Name of authorised person Name of authorised person
(BLOCK LETTERS) (BLOCK LETTERS)
THE COMMON SEAL of ) The Common Seal of
INDO-PACIFIC ENERGY ) INDO-PACIFIC ENERGY
(NZ) LIMITED ) (NZ) LIMITED
was affixed in accordance )
with its articles of )
association )
/s/ Jenni Lean /s/ David Bennett
Signature of Authorised Person Signature of Authorised Person
Corporate Affairs Manager Director
Office Held Office Held
JENNI LEAN DAVID BENNETT
Name of authorised person Name of authorised person
(BLOCK LETTERS) (BLOCK LETTERS)
<PAGE> 172
THE COMMON SEAL of ) COMMON SEAL
MOONDANCE ENERGY ) MOONDANCE ENERGY PTY LTD
PTY LTD ) A.C.N. 073 213 546
was affixed in accordance )
with its articles of )
association: )
/s/ Colin Crabb /s/ Gregory Alan Corner
Signature of Authorised Person Signature of Authorised Person
Director Secretary
Office Held Office Held
COLIN CRABB GREGORY ALAN CORNER
Name of authorised person Name of authorised person
(BLOCK LETTERS) (BLOCK LETTERS)
<PAGE> 174
EXHIBIT 10.06
THIS DEED is made 30 October 1997
BETWEEN
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Indo-Pacific")
AND
MOONDANCE ENERGY PTY LTD of 133 Edward Street, Perth,
Western Australia ("Moondance")
AND
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron Road,
Henderson, Auckland ("Boral Energy")
AND
CROFT EXPLORATION LTD of Fountain House, 3 Woodside
Crescent, Glasgow G37UN, United Kingdom ("Croft")
RECITALS
A. As at the Effective Date Indo-Pacific, Moondance and Croft
are parties to an unincorporated joint venture for the purpose of
holding their respective Participating Interests in PEP 38328 in
the percentages set out as follows;
Indo-Pacific 70%
Moondance 20%
Croft 10%
B. Indo-Pacific has agreed with Boral Energy pursuant to a
farmin agreement dated 30 October 1997 to assigning the
Indo-Pacific Assigned Interest to Boral Energy.
C. Moondance has agreed with Boral Energy pursuant to a farmin
agreement dated 30 October 1997 to assign the Moondance Assigned
Interest to Boral Energy.
THE PARTIES AGREE as follows:
1. Definitions and Interpretations
1.1 Definitions
In this Deed (including the Recitals) unless the context
otherwise requires:
<PAGE> 175
1.1.1 "Act" means the Crown Minerals Act (NZ) 1991 and any
regulations made thereto.
1.1.2 "Deed" means this deed between the Parties.
1.1.3 "Indo-Pacific Assigned Interest" means a 20%
Participating Interest owned by Indo-Pacific assigned to Boral
Energy.
1.1.4 "Effective Date" means 2 November 1996.
1.1.5 "Moondance Assigned Interest" means a 10% Participating
Interest owned by Moondance assigned to Boral Energy.
1.1.6 "Parties" means each of Indo-Pacific, Moondance, Boral
Energy and Croft.
1.1.7 "Participating Interest" means a percentage interest of
a Party in the Permit.
1.1.8 "Permit" means petroleum exploration permit PEP 38328
or any renewal or extension thereof and any mining permit granted
pursuant thereto.
1.1.9 "Minister" means the Minister of Energy as defined
under the Act who administers the approval and registration
procedure under the Act.
1.1.10 "Boral Participating Interest" means together the
Indo-Pacific Assigned Interest and the Moondance Assigned
Interest assigned to Boral.
1.2 Interpretation
In this Deed, unless a contrary intention appears:
1.2.1 a reference to this Deed is a reference to this Deed as
amended, varied, novated or substituted from time to time;
1.2.2 a reference to any legislation or any provision of any
legislation includes:
(a) all regulations, orders or instrument issued under the
legislation or provision; and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such legislation
or provision;
1.2.3 a word:
<PAGE> 176
(a) importing the singular includes the plural and vice
versa; and
(b) denoting an individual includes corporations,
firms, unincorporated bodies, authorities and instrumentalities;
1.2.4 a reference to a Party to this Deed or any other
instrument includes that Party's executors, administrators,
successors and permitted assigns;
1.2.5 where a word or phrase is given meaning, any other part
of speech or grammatical form has a corresponding meaning; and
1.2.6 a reference to a clause number, schedule number or
annexure number (or letter) is a reference to a clause, schedule
or annexure of this Deed;
1.2.7 words and expressions used in this Deed which are used
in the Act shall where the context admits have the same meaning
as they have in the Act.
2. Approval
2.1 Each dealing evidenced by this Deed to which the Act applies
will relate back to and take effect on and from the Effective
Date upon the date of obtaining approval for such dealing in
accordance with the Act.
2.2 Indo-Pacific, Moondance and Boral Energy must use all
reasonable endeavours to have all dealings evidenced by this Deed
approved and registered as contemplated by clause 2.1 as
expeditiously as possible.
2.3 If any dealing evidenced by this Deed is not approved and
registered in accordance with clause 2.1 within 12 months of
execution of this deed (or such other date as the Parties may
agree), any Party may terminate this Deed at any time by notice
to other Parties and this Deed will terminate on the receipt of
that notice.
2.4 On termination of this Deed under clause 2.3, the Parties
must execute all documents and do all other things necessary or
desirable to place each other in the same position as they would
have been had this Deed or the farmin agreements referenced in
Recitals B and C not been executed or acted upon.
3. Boral Energy
3.1 With effect on and from the Effective Date, Boral Energy
assumes the obligations and liabilities arising on and from the
Effective Date (but always excluding liabilities and obligations
arising prior to the Effective Date) and shall be entitled to the
<PAGE> 177
full benefit and advantage of the Boral Participating Interest
and all rights thereunder to the same extent to which
Indo-Pacific and Moondance would have been so entitled had the
Boral Participating Interest not been assigned to Boral Energy.
3.2 Boral Energy will indemnify and keep indemnified Croft
against all liability which it may incur by reason of any breach
or non-observance by Boral Energy of any of the provisions of
this Deed.
3.3 With effect on and from the Effective Date Croft accepts the
liability of Boral Energy as set out in clause 3.1 hereof.
4. Indo-Pacific and Moondance
4.1 Each of Indo-Pacific and Moondance covenant and agree with
Croft to duly and punctually discharge all liabilities and
perform all obligations incurred in respect of the Indo-Pacific
Participating Interest and the Moondance Participating Interest
respectively prior to the Effective Date (but excluding
liabilities and obligations scheduled for performance on or after
the Effective Date) regardless of whether such liability and
obligations arise before or after the Effective Date.
4.2 Each of Indo-Pacific and Moondance shall indemnify and hold
Croft harmless from and against all liability which it may incur
by reason of any breach or non-observance by Indo-Pacific or
Moondance of this Deed.
5. Participating Interests
The Parties agree that on and from the Effective Date their
respective Participating Interests shall be as set out below;
Indo-Pacific 50%
Moondance 10%
Boral Energy 30%
Croft 10%
____
100%
6. Notices
Any notice to be given to Boral Energy under this Deed must be
delivered or sent to:
Boral Energy Resources NZ Limited
C/- 60 Hindmarsh Square
Adelaide SA 5000
Facsimile: (08) 8223 1851
<PAGE> 178
7. Miscellaneous
7.1 This Deed will be binding upon the enure to the benefit of
the Parties, their respective successors and each person who
derives from them title to a Participating Interest.
7.2 This Deed will be governed by and construed in accordance
with laws of New Zealand for the time being in force.
7.3 The Parties submit to the non-exclusive jurisdiction of the
Courts of New Zealand and all courts competent to hear appeals
therefrom.
7.4 The Parties will bear their own legal costs arising out of
the preparation of this Deed, but Boral Energy will bear all
stamp duty and registration fees payable on this Deed and any
document directly related to or consequential upon this Deed.
7.5 Each of the Parties must take all such steps, execute all
such documents and do all such acts and things as may be
reasonably required by any other Party to give effect to the
intent of this Deed.
7.6 Each attorney executing this Deed states that he has no
notice of the revocation of his power of attorney.
EXECUTED by the parties as a Deed.
SIGNED by INDO-PACIFIC ) The Common Seal of
ENERGY (NZ) LIMITED by its duly ) INDO-PACIFIC ENERGY
authorised attorney Jennifer ) (NZ) LIMITED
Margaret Lean:
/s/ Jenni Lean /s/ David Bennett
Signature Signature
Attorney Director
Office held Office held
The COMMON SEAL of BORAL ) The Common Seal of
ENERGY RESOURCES NZ LIMITED ) Boral Energy Resources NZ
was affixed in the ) Limited
presence of: )
/s/ Owen William Poole /s/ Robbert Jan Willink
Signature Signature, Director
Director Director
Office held Office held
<PAGE> 179
The COMMON SEAL of ) COMMON SEAL
MOONDANCE ENERGY PTY LIMITED ) MOONDANCE ENERGY PTY
was affixed in the presence of: ) LTD A.C.N. 073 213 546
/s/ Gregory Alan Corner /s/ Colin Crabb
Signature Signature
Secretary Director
Office held Office held
The COMMON SEAL of )
CROFT EXPLORATION LTD )
was affixed in the presence of: )
/s/ David Wood /s/ R. Stevenson
Signature Signature
Director Secretary
Office held Office held
<PAGE> 180
EXHIBIT 10.07
THIS DEED is made 6 November 1997
BETWEEN
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Indo-Pacific")
AND
MOONDANCE ENERGY PTY LTD of 133 Edward Street, Perth,
Western Australia ("Moondance")
AND
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron Road,
Henderson, Auckland ("Boral Energy")
AND
CROFT EXPLORATION LTD of Fountain House, 3 Woodside
Crescent, Glasgow G37UN, United Kingdom ("Croft")
AND
TRANS-ORIENT PETROLEUM (NZ) LIMITED OF 284 Karori Road,
Wellington, New Zealand ("Trans-Orient")
RECITALS
A. As at the date of this Deed Indo-Pacific, Moondance, Croft
and Boral are parties to an unincorporated joint venture for the
purpose of holding their respective Participating Interests in
PEP 38328 in the percentages set out as follows:
Indo-Pacific 50%
Moondance 10%
Croft 10%
Boral 30%
B. Indo-Pacific has agreed with its Related Body Corporate
Trans-Orient to assign the Assigned Interest to Trans-Orient and
the Other Parties agree to the assignment on the terms set out
herein.
THE PARTIES AGREE as follows:
1. Definitions and Interpretation
<PAGE> 181
1.1 Definitions
In this Deed (including the Recitals) unless the context
otherwise requires:
1.1.1. "Act" means the Crown Minerals Act (NZ) 1991 and
any regulations made thereto.
1.1.2 "Deed" means this deed between the Parties.
1.1.3 "Assigned Interest" means a 22.5% Participating
Interest owned by Indo-Pacific assigned to
Trans-Orient.
1.1.4 "Effective Date" means 15 November 1996.
1.1.5 "Parties" means each of Indo-Pacific, Moondance,
Boral Energy, Croft and Trans-Orient.
1.1.6 "Participating Interest" means a percentage
interest of a Party in the Permit.
1.1.7 "Permit" means petroleum exploration permit PEP
38328 or any renewal or extension thereof and any
mining permit granted pursuant thereto.
1.1.8 "Minister" means the Minister of Energy as defined
under the Act who administers the approval and
registration procedure under the Act.
1.1.9 "Related Body Corporate" shall have the meaning to
the term as set out in the Companies Act 1993 NZ.
1.1.10 "Other Parties" means together Croft, Boral Energy
and Moondance.
1.2 Interpretation
In this Deed, unless a contrary intention appears:
1.2.1 a reference to this Deed is a reference to this
Deed as amended, varied, novated or substituted
from time to time;
1.2.2 a reference to any legislation or any provision of
any legislation includes:
(a) all regulations, orders or instruments issued
under the legislation or provision: and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such
legislation or provision;
<PAGE> 182
1.2.3 a word:
(a) importing the singular includes the plural and
vice versa; and
(b) denoting an individual includes corporations,
firms, unincorporated bodies, authorities and
instrumentalities;
1.2.4 a reference to a Party to this Deed or any other
instrument includes that Party's executors,
administrators, successors and permitted assigns;
1.2.5 where a word or phrase is given meaning, any other part
of speech or grammatical form has a corresponding
meaning; and
1.2.6 a reference to a clause number, schedule number or
annexure number (or letter) is a reference to a clause,
schedule or annexure of this Deed;
1.2.7 words and expressions used in this Deed which are used
in the Act shall where the context admits have the same
meaning as they have in the Act.
2. Approval
2.1 Each dealing evidenced by this Deed to which the Act
applies will relate back to and take effect on and from
the Effective Date upon the date of obtaining approval
for such dealing in accordance with the Act.
2.2 Indo-Pacific and Trans-Orient must use all reasonable
endeavours to have all dealings evidenced by this Deed
approved and registered as contemplated by clause 2.1
as expeditiously as possible.
2.3 If any dealing evidenced by this Deed is not approved
and registered in accordance with clause 2.1 within 12
months of execution of this deed (or such other date as
the Parties may agree), any Party may terminate this
Deed at any time by notice to other Parties and this
Deed will terminate on the receipt of that notice.
2.4 On termination of this Deed under clause 2.3, the
Parties must execute all documents and do all other
things necessary or desirable to place each other in
the same position as they would have been had this Deed
not been executed or acted upon.
<PAGE> 183
3. Assignee
3.1 With effect on and from the Effective Date, Trans-Orient
assumes the obligations and liabilities of the Assigned
Interest arising on and from the Effective Date (but always
excluding liabilities and obligations arising prior to the
Effective Date) and shall be entitled to the full benefit
and advantage of the Assigned Interest and all rights
thereunder to the same extent to which Indo-Pacific would
have been so entitled had the Assigned Interest not been
assigned to Trans-Orient.
3.2 Trans-Orient will indemnify and keep indemnified the Other
Parties against all liability which each of them may incur
by reason of any breach or non-observance by Trans-Orient of
any of the provisions of this Deed.
3.3 With effect on and from the Effective Date the Other Parties
accept the liability of Trans-Orient as set out in clause
3.1 hereof.
4. Assignor
4.1 Indo-Pacific covenants and agrees with the Other Parties to
duly and punctually discharge all liabilities and perform
all obligations incurred in respect of the Assigned Interest
prior to the Effective Date (but excluding liabilities and
obligations scheduled for performance on or after the
Effective Date) regardless of whether such liability and
obligations arise before or after the Effective Date.
4.2 Indo-Pacific shall indemnify and hold the Other Parties
harmless from and against all liability which each of them
may incur by reason of any breach or non-observance by
Indo-Pacific of this Deed.
4.3 In the event that Trans-Orient ceases to be a Related Body
Corporate of Indo-Pacific during the period of 5 years from
the Effective Date then the Assigned Interest shall be
re-assigned to Indo-Pacific or if Indo-Pacific ceases to exist
then the Other Parties shall be entitled to have the
Assigned Interest assigned to them in proportion to their
respective Participating Interests at no charge.
5. Participating Interests
The Parties agree that on and from the Effective Date their
respective Participating Interests shall be as set out below;
<PAGE> 184
Indo-Pacific 27.5%
Moondance 10.0%
Boral Energy 30.0%
Croft 10.0%
Trans-Orient 22.5%
______
100.0%
6. Notices
Any notice to be given to Trans-Orient under this Deed must be
delivered or sent to:
284 Karori Road
Wellington New Zealand
7. Miscellaneous
7.1 This Deed will be binding upon the enure to the benefit of
the Parties, their respective successors and each person who
derives from them title to a Participating Interest.
7.2 This Deed will be governed by and construed in accordance
with laws of New Zealand for the time being in force.
7.3 The Parties submit to the non-exclusive jurisdiction of the
Courts of New Zealand and all courts competent to hear
appeals therefrom.
7.4 The Parties will bear their own legal costs arising out of
the preparation of this Deed, but Trans-Orient will bear all
stamp duty and registration fees payable on this Deed and
any document directly related to or consequential upon this
Deed.
7.5 Each of the Parties must take all such steps, execute all
such documents and do all such acts and things as may be
reasonably required by any other Party to give effect to the
intent of this Deed.
7.6 Each attorney executing this Deed states that he has no
notice of the revocation of his power of attorney.
EXECUTED by the parties as a Deed,
Executed for and on behalf of
INDO-PACIFIC ENERGY (NZ)
LIMITED by its duly authorised
representative in the presence of;
/s/ Jenni Lean /s/ David Bennett
Signature of witness Signature of
representative
<PAGE> 185
The COMMON SEAL of BORAL ) The Common Seal of
ENERGY RESOURCES NZ LIMITED ) Boral Energy Resources NZ
was affixed in ) Limited
the presence of: )
/s/ Owen William Poole /s/ Robbert Jan Willink
Signature Signature
Director Director
Office held Office held
The COMMON SEAL of )
MOONDANCE ENERGY PTY LIMITED )
was affixed in the presence of: )
/s/ Gregory Alan Corner /s/ Colin Crabb
Signature Signature
Secretary Director
Office held Office held
The COMMON SEAL of )
CROFT EXPLORATION LTD )
was affixed in the presence of: )
/s/ David Wood /s/ R. Stevenson
Signature Signature
Director Secretary
Office held Office held
Executed for and on behalf of TRANS-ORIENT
PETROLEUM (NZ) LIMITED by its duly
authorised representative in the presence of;
/s/ Jenni Lean /s/David Bennett
Signature of witness Signature of representative
<PAGE> 186
EXHIBIT 10.08
THIS DEED is made 7 November 1997
BETWEEN
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Indo-Pacific")
AND
MOONDANCE ENERGY PTY LTD of 133 Edward Street, Perth,
Western Australia ("Moondance")
AND
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron Road,
Henderson, Auckland ("Boral Energy")
AND
CROFT EXPLORATION LTD of Fountain House, 3 Woodside
Crescent, Glasgow G37UN, United Kingdom ("Croft")
AND
TRANS-ORIENT PETROLEUM (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Trans-Orient")
RECITALS
A. As at the date of this Deed the Parties are parties to an
unincorporated joint venture for the purpose of holding their
respective Participating Interests in PEP 38328 in the
percentages set out as follows;
Indo-Pacific 27.5%
Moondance 10.0%
Croft 10.0%
Boral Energy 30.0%
Trans-Orient 22.5%
B. Croft have notice of withdrawal from the joint venture and
the Permit effective as of 00.01 hours on 1 July 1997 and this
Deed evidences the said withdrawal.
THE PARTIES AGREE as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Deed (including the Recitals) unless the context
otherwise requires:
<PAGE> 187
1.1.1 "Act" means the Crown Minerals Act (NZ) 1991 and any
regulations made thereto.
1.1.2 "Deed" means this deed between the Parties.
1.1.3 "Croft Interest" means a 10% Participating Interest
owned by Croft assigned to Indo-Pacific.
1.1.4 "Effective Date" means 00.01 hours on 1 July 1997.
1.1.5 "Parties" means each of Indo-Pacific, Moondance, Boral
Energy, Croft and Trans-Orient.
1.1.6 "Participating Interest" means a percentage interest of
a Party in the Permit.
1.1.7 "Permit" means petroleum exploration permit PEP 38328
or any renewal or extension thereof and any mining
permit granted pursuant thereto.
1.1.8 "Minister" means the Minister of Energy as defined
under the Act who administers the approval and
registration procedure under the Act.
1.1.9 "Continuing Parties" means together Boral Energy,
Moondance and Trans-Orient.
1.2 Interpretation
In this Deed, unless a contrary intention appears:
1.2.1 a reference to this Deed is a reference to this Deed as
amended, varied, novated or substituted from time to
time;
1.2.2 a reference to any legislation or any provision of any
legislation includes:
(a) all regulations, orders or instruments issued
under the legislation or provision; and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such
legislation or provision;
1.2.3 a word:
(a) importing the singular includes the plural and
vice versa; and
(b) denoting an individual includes corporations,
firms, unincorporated bodies, authorities and
instrumentalities;
<PAGE> 188
1.2.4 a reference to a Party to this Deed or any other
instrument includes that Party's executors,
administrators, successors and permitted assigns;
1.2.5 where a word or phrase is given meaning, any other part
of speech or grammatical form has a corresponding
meaning; and
1.2.6 a reference to a clause number, schedule number or
annexure number (or letter) is a reference to a clause,
schedule or annexure of this Deed;
1.2.7 words and expressions used in this Deed which are used
in the Act shall where the context admits have the same
meaning as they have in the Act.
2. Approval
2.1 Each dealing evidenced by this Deed to which the Act applies
will relate back to and take effect on and from the
Effective Date upon the date of obtaining approval for such
dealing in accordance with the Act.
2.2 The Parties must use all reasonable endeavours to have all
dealings evidenced by this Deed approved and registered as
contemplated by clause 2.1 as expeditiously as possible.
2.3 If any dealing evidenced by this Deed is not approved and
registered in accordance with clause 2.1 within 12 months of
execution of this deed (or such other date as the Parties
may agree), any Party may terminate this Deed at any time by
notice to other Parties and this Deed will terminate on the
receipt of that notice.
2.4 On termination of this Deed under clause 2.3, the Parties
must execute all documents and do all other things necessary
or desirable to place each other in the same position as
they would have been had this Deed not been executed or
acted upon.
3. Assignee
3.1 With effect on and from the Effective Date, Indo-Pacific
assumes the obligations and liabilities in respect of the
Croft Interest arising on and from the Effective Date (but
always excluding liabilities and obligations arising prior
to the Effective Date) and shall be entitled to the full
benefit and advantage of the Croft Interest and all rights
thereunder to the same extent to which Croft would have been
so entitled had the Croft Interest not been assigned to
Indo-Pacific.
<PAGE> 189
3.2 Indo-Pacific will indemnify and keep indemnified the
Continuing Parties against all liability which each of them
may incur by reason of any breach or non-observance by
Indo-Pacific of any of the provisions of this Deed.
3.3 With effect on and from the Effective Date the Continuing
Parties accept the liability of Indo-Pacific as set out in
clause 3.1 hereof.
4. Assignor
4.1 Croft covenants and agrees with the Continuing Parties and
Indo-Pacific to duly and punctually discharge all
liabilities and perform all obligations incurred in respect
of the Croft Interest prior to the Effective Date (but
excluding liabilities and obligations scheduled for
performance on or after the Effective Date) regardless of
whether such liability and obligations arise before or after
the Effective Date.
4.2 Croft shall indemnify and hold the Continuing Parties and
Indo-Pacific harmless from and against all liability which
each of them may incur by reason of any breach or
non-observance by Croft of this Deed.
5. Participating Interests
The Parties agree that on and from the Effective Date their
respective Participating Interests shall be as set out below;
Indo-Pacific 37.5%
Moondance 10.0%
Boral Energy 30.0%
Trans-Orient 22.5%
_____
100.0%
6. Miscellaneous
6.1 This Deed will be binding upon the enure to the benefit of
the Parties, their respective successors and each person who
derives from them title to a Participating Interest.
6.2 This Deed will be governed by and construed in accordance
with laws of New Zealand for the time being in force.
6.3 The Parties submit to the non-exclusive jurisdiction of the
Courts of New Zealand and all courts competent to hear
appeals therefrom.
<PAGE> 190
6.4 The Parties will bear their own legal costs arising out of
the preparation of this Deed, but Croft will bear all stamp
duty and registration fees payable on this Deed and any
document directly related to or consequential upon this
Deed.
6.5 Each of the Parties must take all such steps, execute all
such documents and do all such acts and things as may be
reasonable required by any other Party to give effect to the
intent of this Deed.
6.6 Each attorney executing this Deed states that he has no
notice of the revocation of his power of attorney.
EXECUTED by the parties as a Deed,
Executed for and on behalf of
INDO-PACIFIC ENERGY (NZ)
LIMITED by its duly authorised
representative in the presence of;
/s/ Jenni Lean /s/ David Bennett
Signature Signature
Jenni Lean David Bennett
Name of Witness Name of representative
The COMMON SEAL of BORAL ) The Common Seal of
ENERGY RESOURCES NZ LIMITED ) Boral Energy Resources NZ
was affixed in ) Limited
the presence of: )
/s/ Owen William Poole /s/ Robbert Jan Willink
Signature Signature
Owen William Poole Director, Robbert Jan Willink
Print Name Print Name
Director Director
Office held Office held
The COMMON SEAL of )
MOONDANCE ENERGY PTY LIMITED )
was affixed in the presence of: )
/s/ Gregory Alan Corner /s/ Colin Crabb
Signature Signature
Secretary Director
Office held Office held
<PAGE> 191
The COMMON SEAL of )
CROFT EXPLORATION LTD )
was affixed in the presence of: )
/s/ David Wood /s/ R. Stevenson
Signature Signature
David Wood R. Stevenson
Print Name Print Name
Director Secretary
Office held Office held
Executed for and on behalf of TRANS-ORIENT PETROLEUM (NZ) LIMITED
by its duly authorised representative in the presence of;
/s/ Jenni Lean /s/ David Bennett
Signature of witness Signature of representative
Jenni Lean David Bennett
Name of witness Name of representative
<PAGE> 192
EXHIBIT 10.09
THIS DEED is made 7 November 1997
BETWEEN
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Indo-Pacific")
AND
MOONDANCE ENERGY PTY LTD of 133 Edward Street, Perth,
Western Australia ("Moondance")
AND
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron Road,
Henderson, Auckland ("Boral Energy")
AND
TRANS-ORIENT PETROLEUM (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Trans-Orient")
RECITALS
A. As at the date of this Deed the Parties are parties to an
unincorporated joint venture for the purpose of holding their
respective Participating Interests in PEP 38328 in the
percentages set out as follows;
Indo-Pacific 37.5%
Moondance 10.0%
Boral Energy 30.0%
Trans-Orient 22.5%
B. Moondance gave notice of withdrawal from the joint venture
and the Permit effective as of 00.02 hours on 1 July 1997 and
this Deed evidences the said withdrawal.
THE PARTIES AGREE as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Deed (including the Recitals) unless the context
otherwise requires:
1.1.1 "Act" means the Crown Minerals Act (NZ) 1991 and any
regulations made thereto.
1.1.2 "Deed" means this deed between the Parties.
<PAGE> 193
1.1.3 "Moondance Interest" means a 10% Participating Interest
owned by Moondance assigned to the following:
Boral 7.5%
Indo-Pacific 2.5%
1.1.4 "Effective Date" means 00.02 hours on 1 July 1997.
1.1.5 "Parties" means each of Indo-Pacific, Moondance, Boral
Energy and Trans-Orient.
1.1.6 "Participating Interest" means a percentage interest of
a Party in the Permit.
1.1.7 "Permit" means petroleum exploration permit PEP 38328
or any renewal or extension thereof and any mining
permit granted pursuant thereto.
1.1.8 "Minister" means the Minister of Energy as defined
under the Act who administers the approval and
registration procedure under the Act.
1.1.9 "Continuing Parties" means Trans-Orient.
1.2 Interpretation
In this Deed, unless a contrary intention appears:
1.2.1 a reference to this Deed is a reference to this Deed as
amended, varied, novated or substituted from time to
time;
1.2.2 a reference to any legislation or any provision of any
legislation includes:
(a) all regulations, orders or instruments issued
under the legislation or provision; and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such
legislation or provision;
1.2.3 a word:
(a) importing the singular includes the plural and
vice versa; and
(b) denoting an individual includes corporations,
firms, unincorporated bodies, authorities and
instrumentalities;
<PAGE> 194
1.2.4 a reference to a Party to this Deed or any other
instrument includes that Party's executors,
administrators, successors and permitted assigns;
1.2.5 where a word or phrase is given meaning, any other part
of speech or grammatical form has a corresponding
meaning; and
1.2.6 a reference to a clause number, schedule number or
annexure number (or letter) is a reference to a clause,
schedule or annexure of this Deed;
1.2.7 words and expressions used in this Deed which are used
in the Act shall where the context admits have the same
meaning as they have in the Act.
2. Approval
2.1 Each dealing evidenced by this Deed to which the Act applies
will relate back to and take effect on and from the
Effective Date upon the date of obtaining approval for such
dealing in accordance with the Act.
2.2 The Parties must use all reasonable endeavours to have all
dealings evidenced by this Deed approved and registered as
contemplated by clause 2.1 as expeditiously as possible.
2.3 If any dealing evidenced by this Deed is not approved and
registered in accordance with clause 2.1 within 12 months of
execution of this deed (or such other date as the Parties
may agree), any Party may terminate this Deed at any time by
notice to other Parties and this Deed will terminate on the
receipt of that notice.
2.4 On termination of this Deed under clause 2.3, the Parties
must execute all documents and do all other things necessary
or desirable to place each other in the same position as
they would have been had this Deed not been executed or
acted upon.
3. Assignee
3.1 With effect on and from the Effective Date, each of Boral
and Indo-Pacific assumes the obligations and liabilities in
respect of the Moondance Interest assigned to it arising on
and from the Effective Date (but always excluding
liabilities and obligations arising prior to the Effective
Date) and shall be entitled to the full benefit and
advantage of the Moondance Interest and all rights
thereunder to the same extent to which Moondance would have
been so entitled had the Moondance Interest not been
assigned to Boral and Indo-Pacific.
<PAGE> 195
3.2 Each of Boral and Indo-Pacific will indemnify and keep
indemnified the Continuing Parties against all liability
which each of them may incur by reason of any breach or
non-observance by each of Boral and Indo-Pacific of any of
the provisions of this Deed.
3.3 With effect on and from the Effective Date the Continuing
Parties accept the liability of each of Boral and
Indo-Pacific as set out in clause 3.1 hereof.
3.4 The liabilities and obligations of Boral and Indo-Pacific
are several and not joint and not joint and several.
4. Assignor
4.1 Moondance covenants and agrees with the Continuing Parties
and Boral and Indo-Pacific to duly and punctually discharge
all liabilities and perform all obligations incurred in
respect of the Moondance Interest prior to the Effective
Date (but excluding liabilities and obligations scheduled
for performance on or after the Effective Date) regardless
of whether such liability and obligations arise before or
after the Effective Date.
4.2 Moondance shall indemnify and hold the Continuing Parties
and Boral and Indo-Pacific harmless from and against all
liability which each of them may incur by reason of any
breach or non-observance by Moondance of this Deed.
5. Participating Interests
The Parties agree that on and from the Effective Date their
respective Participating Interests shall be as set out below;
Indo-Pacific 40.0%
Boral Energy 37.5%
Trans-Orient 22.5%
______
100.0%
6. Miscellaneous
6.1 This Deed will be binding upon the enure to the benefit of
the Parties, their respective successors and each person who
derives from them title to a Participating Interest.
6.2 This Deed will be governed by and construed in accordance
with laws of New Zealand for the time being in force.
6.3 The Parties submit to the non-exclusive jurisdiction of the
Courts of New Zealand and all courts competent to hear
appeals therefrom.
<PAGE> 196
6.4 The Parties will bear their own legal costs arising out of
the preparation of this Deed, but Moondance will bear all
stamp duty and registration fees payable on this Deed and
any document directly related to or consequential upon this
Deed.
6.5 Each of the Parties must take all such steps, execute all
such documents and do all such acts and things as may be
reasonable required by any other Party to give effect to the
intent of this Deed.
6.6 Each attorney executing this Deed states that he has no
notice of the revocation of his power of attorney.
EXECUTED by the parties as a Deed,
Executed for and on behalf of
INDO-PACIFIC ENRGY (NZ)
LIMITED by its duly authorised
representative in the presence of;
/s/ Jenni Lean /s/ David Bennett
Signature of witness Signature of representative
Jenni Lean David Bennett
Name of Witness Name of representative
The COMMON SEAL of BORAL ) The Common Seal of
ENERGY RESOURCES NZ LIMITED ) BORAL ENERGY RESOURCES
was affixed in the ) NZ LIMITED
presence of: )
/s/ Owen William Poole /s/ Robbert Jan Willink
Signature Signature
Owen William Poole Director, Robbert Jan Willink
Print Name Print Name
Director Director
Office held Office held
The COMMON SEAL of ) MOONDANCE ENERGY
MOONDANCE ENERGY PTY LIMITED ) PTY LTD. A.C.N. 073 213
was affixed in the presence of: ) 546 COMMON SEAL
/s/ Gregory Alan Corner /s/ Colin Crabb
Signature Signature
Gregory Alan Corner Colin Crabb
Print Name Print Name
Secretary Director
Office held Office held
<PAGE> 197
Executed for and on behalf of TRANS-ORIENT
PETROLEUM (NZ) LIMITED by its duly
authorised representative in the presence of;
/s/ Jenni Lean /s/ David Bennett
Signature of witness Signature of representative
Jenni Lean David Bennett
Name of witness Name of representative
<PAGE> 199
EXHIBIT 10.10
PETROLEUM EXPLORATION PERMIT 38330
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991, I DOUGLAS
LORIMER KIDD, Minister of Energy
Do Hereby
Grant Indo-Pacific Energy (NZ) Ltd. 34%
Moondance Energy Pty Ltd 33%
Mosaic Oil NL 20%
Continental Oil NL 13%
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly that
delineated on the plan attached hereto.
This Exploration Permit is issued for a term of five years
commencing on 1 July 1996. The Permit is granted subject to the
Crown Minerals Act 1991 and any regulations made thereunder, and
to the terms and conditions specified in the Second and Third
Schedules hereto.
Dated at Wellington this 4th day of June 1996.
/s/ Doug Kidd
Hon Doug Kidd
Minister of Energy
<PAGE> 198
EXHIBIT 10.11
PETROLEUM EXPLORATION PERMIT 38332
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991 and acting
under delegated authority from the Minister of Energy of 7
October 1991, I PAUL STEPHEN CARPINTER, Secretary of Commerce.
Do Hereby Grant
Indo-Pacific Energy (NZ) Limited 42.50 percent
Boral Energy Resources Limited 37.50 percent
Trans New Zealand Oil Company 20.00 percent
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly that
delineated on the plan attached hereto.
This Exploration Permit is issued for a term of five years
commencing on the date stated below. The Permit is granted
subject to the Crown Minerals Act 1991 and any regulations made
thereunder, and to the terms and conditions specified in the
Second and Third Schedules hereto.
Dated at Wellington this 24th day of June 1997.
/s/ Paul Stephen Carpinter
Paul Stephen Carpinter
Secretary of Commerce
<PAGE> 200
EXHIBIT 10.12
THIS DEED is made 10th October 1997
BETWEEN
INDO-PACIFIC ENERGY (NZ) LIMITED of 284 Karori Road,
Wellington, New Zealand ("Indo-Pacific")
AND
BORAL ENERGY RESOURCES LIMITED (ACN 0007 845 338) OF 60
Hindmarsh Square Adelaide, South Australia ("BERL")
AND
BORAL ENERGY RESOURCES NZ LIMITED of 38 Bruce Mclaron Road,
Henderson Auckland ("Boral Energy")
AND
TRANS NEW ZEALAND OIL COMPANY of 284 Karori Road,
Wellington, New Zealand ("TNZO")
RECITALS
A. As at the date of this Deed the Parties are parties to an
unincorporated joint venture for the purpose of holding their
respective Participating Interests in PEP 38332 in the
percentages set out as follows:
Indo-Pacific 42.50%
BERL 37.50%
TNZO 20.00%
B. The Permit was issued incorrectly in the name of BERL rather
than Boral Energy and this Deed evidences an assignment to
correct the error.
THE PARTIES AGREE as follows:
1. Definitions and Interpretation
1.1 Definitions
In this Deed (including the Recitals) unless the context
otherwise requires:
1.1.1 "Act" means the Crown Minerals Act (NZ) 1991 and any
regulations made thereto.
1.1.2 "Deed" means this deed between the Parties.
<PAGE> 201
1.1.3 "BERL Interest" means a 37.50% Participating Interest
owned by BERL.
1.1.4 "Effective Date" means 00.01 hours on 25 June 1997.
1.1.5 "Parties" means each of Indo-Pacific, Boral Energy,
BERL and TNZO.
1.1.6 "Participating Interest" means a percentage interest of
a Party in the Permit.
1.1.7 "Permit" means petroleum exploration permit PEP 38332
or any renewal or extension thereof and any mining
permit granted pursuant thereto.
1.1.8 "Minister" means the Minister of Energy as defined
under the Act who administers the approval and
registration procedure under the Act.
1.1.9 "Continuing Parties" means Indo-Pacific and TNZO.
1.2 Interpretation
In this Deed, unless a contrary intention appears:
1.2.1 a reference to this Deed is a reference to this
Deed as amended, varied, novated or substituted
from time to time;
1.2.2 a reference to any legislation or any provision of
any legislation includes:
(a) all regulations, orders or instruments issued
under the legislation of provision; and
(b) any modification, consolidation, amendment,
re-enactment, replacement or codification of such
legislation or provision;
1.2.3 a word:
(a) importing the singular includes the plural and
vice versa; and
(b) denoting an individual includes corporations,
firms, unincorporated bodies, authorities and
instrumentalities;
1.2.4 a reference to a Party to this Deed or any other
instrument includes that Party's executors,
administrators, successors and permitted assigns;
<PAGE> 203
1.2.5 where a word or a phrase is given meaning, any
other part of speech or grammatical form has a
corresponding meaning; and
1.2.6 a reference to a clause number, schedule number or
annexure number (or letter) is a reference to a
clause, schedule or annexure of this Deed;
1.2.7 words and expressions used in this Deed which are
used in the Act shall where the context admits
have the same meaning as they have in the Act.
2. Approval
2.1 Each dealing evidenced by this Deed to which the Act applies
will relate back to and take effect on and from the
Effective Date upon the date of obtaining approval for such
dealing in accordance with the Act.
2.2 The Parties must use all reasonable endeavors to have all
dealings evidenced by this Deed approved and registered as
contemplated by clause 2.1 as expeditiously as possible.
2.3 If any dealing evidenced by this Deed is not approved and
registered in accordance with clause 2.1 within 12 months of
execution of this deed (or such other date as the Parties
may agree), any Party may terminate this Deed at any time by
notice to other Parties and this Deed will terminate on the
receipt of that notice.
2.4 On termination of this Deed under clause 2.3, the Parties
must execute all documents and do all other things necessary
or desirable to place each other in the same position as
they would have been had this Deed not been executed or
acted upon.
3. Assignee
3.1 With effect on and from the Effective Date, Boral Energy
assumes the obligations and liabilities in respect of the
BERL Interest assigned to it arising on and from the
Effective Date ( but always excluding liabilities and
obligations arising prior to the Effective Date) and shall
be entitled to the full benefit sand advantage of the BERL
Interest and all rights thereunder to the same extent to
which BERL would have been so entitled had the BERL Interest
not been assigned to Boral Energy.
3.2 Boral Energy will indemnify and keep indemnified the
Continuing Parties against all liability which each of them
may incur by reason of any breach or non-observance by Boral
Energy of any of the provisions of this Deed.
<PAGE> 204
3.3 With effect on and from the Effective Date the Continuing
Parties accept the liability of Boral Energy as set our in
clause 3.1 hereof.
4. Assignor
4.1 BERL covenants and agrees with the Continuing Party and
Boral Energy to duly and punctually discharge all
liabilities and perform all obligations incurred in respect
of the BERL Interest prior to the Effective Date (but
excluding liabilities and obligations scheduled for
performance on or after the Effective Date) regardless of
whether such liability and obligations arise before or after
the Effective Date.
4.2 BERL shall indemnify and hold the Continuing Party and Boral
Energy harmless from and against all liability which each of
them may occur by reason of any breach or non-observance by
BERL of this Deed.
5. Participating Interests
The Parties agree that on and from the Effective date their
respective Participating Interests shall be as set out below:
Indo-Pacific 42.5%
Boral Energy 37.5%
TNZO 20.0%
100.0%
6. Miscellaneous
6.1 This Deed will be binding upon the enure to the benefit of
the Parties, their respective successors and each person who
derives from them title to a Participating Interest.
6.2 This Deed will be governed by and construed in accordance
with laws of New Zealand for the time being in force.
6.3 The Parties submit to the non-exclusive jurisdiction of the
Courts of New Zealand and all courts competent to hear
appeals therefrom.
6.4 The Parties will bear their own legal costs arising out of
the preparation of this Deed, but BERL will bear all stamp
and duty and registration fees payable on this Deed and any
document directly related to or consequential upon this
Deed.
6.5 Each of the Parties must take all such steps, execute all
such documents and do all such acts and things as may be
reasonably required by any other Party to give effect to the
intent of this Deed.
<PAGE> 205
6.6 Each attorney executing this Deed states that he has no
notice of the revocation of his power of attorney.
EXECUTED by the parties as a Deed.
Executed for and on behalf of
INDO-PACIFIC ENERGY (NZ)
LIMITED by its duly authorised
representative in the presence of;
/s/ D.J. Bennett /s/ Jenni Lean
Signature of witness Signature of representative
D.J. Bennett Jenni Lean
Name of witness Name of representative
The COMMON SEAL of BORAL )
ENERGY RESOURCES NZ LIMITED )
was affixed in the presence of: )
/s/ Robert Jan Willink /s/ Owen W. Poole
Signature Signature
Robert Jan Willink Owen W. Poole
Print Name Print Name
Director
Office held Office held
The COMMON SEAL of BORAL )
ENERGY RESOURCES LIMITED )
was affixed in the presence of: )
/s/ W. M. Fowler /s/ Robert Jan Wilink
Signature Signature
W.M. Fowler Robert Jan Wilink
Print Name Print Name
Executed for and on behalf of TRANS
NEW ZEALAND OIL COMPANY by its duly
authorised representative in the presence of;
/s/ David Bennett /s/ Jenni Lean
Signature of witness Signature of representative
David Bennett Jenni Lean
Name of witness Name of representative
<PAGE> 206
EXHIBIT 10.13
PETROLEUM EXPLORATION PERMIT (PEP) 38256
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991, I Paul
Stephen Carpinter, Secretary of Commerce Do Hereby Grant
Indo-Pacific Energy (NZ) Limited and Trans-Orient Petroleum (NZ)
Limited, in equal proportions the exclusive right to explore for
petroleum in the area described in the First Schedule and more
particularly delineated on the plan attached hereto.
This exploration permit is issued for a term of five years
commencing on the date stated below. The permit is granted
subject to the Crown Minerals Act 1991 and any regulations made
thereunder, and to the terms and conditions specified in the
Second and Third Schedules hereto.
Dated at Wellington this 25th day of August 1997.
/s/ Paul Stephen Carpinter
Paul Stephen Carpinter
Secretary of Commerce
<PAGE> 207
EXHIBIT 10.14
PETROLEUM MINING PERMIT 38148
(NGATORO)
Background
1. The Licensees listed below are the holders of Prospecting
Licence 38706.
Licence Interest %
Fletcher Challenge Energy Taranaki Limited 26.50835
Southern Petroleum (Ohanga) Limited 26.50835
Petroleum Resources Limited 18.18330
Australia and New Zealand Petroleum Limited 13.35000
Minora Energy (NZ) Limited 4.45000
Minister of Energy 11.00000
2. The Licensees have applied to the Minister of Energy to
surrender the Prospecting Licence 38706 as to part of the
land comprised in that Licence and described in the Second
Schedule to this Permit. The Licensees listed in the First
Schedule to this Permit have applied to the Minister of
Energy to receive in exchange a mining permit.
NOW THEREFORE
I, MAX BRADFORD, MINISTER OF ENERGY, acting pursuant to section
25 of the Crown Minerals Act 1991 HEREBY GRANT a Mining Permit,
on the conditions in this Permit and Schedules, to the Permit
Holders named in the First Schedule to this permit.
PERMIT CONDITIONS
1. Definitions
1.1 In this Permit:
"Permit" includes the Schedules to this Permit;
"Permit Holder" means the permit holders named in the First
Schedule to this permit and refers to each and all of the
permit holders jointly and severally.
1.2 The headings to the Clauses of this Permit are for
convenience only and have no legal effect.
2. Duration
2.1 This permit is granted for a duration of fourteen (14)
years.
<PAGE> 208
3. Mining
3.1 The Permit Holder shall have the right to prospect, explore,
and mine for petroleum in the area described in the Second
Schedule to this Permit, and delineated on that plan in the
Schedule.
4. Compliance
4.1 The Permit Holder will comply with the conditions specified
in this Permit and with every other obligation arising under
the Crown Minerals Act 1991 and any Regulations made under
that Act.
5. Work Programme
5.1 The Permit Holder will comply with the work programme in the
Third Schedule to this Permit.
5.2 The Permit Holder is responsible for ensuring that all
appropriate consents are obtained before commencing any of
the works authorised under the Permit.
5.3 The Permit Holder will at all time make all reasonable
efforts to conduct exploration, appraisal and mining
operations as appropriate in accordance with good oilfield
practice and will meet that degree of due diligence and
prudence reasonably and ordinarily exercised by experienced
operators engaged in a similar activity under similar
circumstances.
6. Fees
6.1 The Permit Holder will pay all fees payable in relation to
this Permit.
7. Royalties
7.1 The Permit Holder will pay to the Secretary of Commerce a
royalty calculated in accordance with the conditions set out
in the Fourth Schedule to this Permit.
8. Date of Commencement of Production
8.1 Mining operations may commence on the day following the
grant of this Permit.
9. Wells and Production Facilities
9.1 The Permit Holder will produce petroleum from wells in the
Ngatoro Field in the manner described in the approved Work
Programme.
<PAGE> 209
9.2 The Permit Holder will not undertake any works in relation
to the injection of water or gas into any underground
reservoir (except as may be authorised by an amendment to
this Permit).
9.3 The Permit Holder shall not flare gas from the Ngatoro field
in the normal course of operations during any twelve month
period commencing on 1 July in any year unless the consent
of the Secretary of Commerce to such flaring has been
obtained prior to the commencement of the period within
which flaring is to take place.
9.4 The Permit Holder may drill additional wells and conduct
initial well testing operations in accordance with the
relevant Crown Minerals (Petroleum) Regulations. Additional
wells drilled into petroleum reservoirs identified in the
existing wells Ngatoro-1, -2, -3, -4, -5, -6, -7, -8 may be
placed into commercial production under this Permit
according to the work programme in the Third Schedule. New
petroleum reservoirs discovered in additional wells shall
not be placed in commercial production except as authorised
by an amendment to this permit.
10. Amendments to Permit
10.1 The Permit Holder may request an amendment to this Permit by
forwarding to the Secretary of Commerce, for consideration
by the Minister of Energy, the information referred to in
the relevant Crown Minerals (Petroleum) Regulations.
10.2 An amendment to the Permit will not generally be required
for minor modifications to equipment where such
modifications do not affect the approved production
operations. In such cases, details of any changes to
facilities or equipment included in the Work Programme
approved in the Third Schedule are to be provided to the
Secretary within 3 months of installation thereof.
11. Abandonment
11.1 At the completion of production operations in the Permit,
the Permit Holder shall abandon any wells, remove surface
facilities and restore operating sites in accordance with
good oil field practice. Any gas and liquid export lines
well be swabbed free of gas/hydrocarbon liquid and abandoned
in-situ. Prior to the abandonment of any facilities in the
Permit, the Permit Holder will submit a report to the
Secretary of Commerce describing the proposed abandonment
and the reasons for the abandonment.
Dated at Wellington this 23rd day of December, 1996
/s/ Max Bradford
Minister of Energy
<PAGE> 210
EXHIBIT 10.15
PETROLEUM PROSPECTING PERMIT 38706
LICENCE ENDORSEMENT
Licence PPL 38706
Action In terms of section 10 of the Petroleum Act 1937, the
Acting Secretary of Commerce, acting under delegated
authority of the Minister of Energy of 3 May 1991 has
agreed to amend the Second Schedule work programme.
Date 12 September 1996
Details The Acting Secretary of Commerce has agreed to amend
the Second Schedule work programme whereby the attached
work programme is adopted for the remainder of the term
of the licence.
Certified true and correct
/s/ W. P. Player
W.P. Player for Unit Manager-Permitting
16/09/96
LICENCE ENDORSEMENT
Licence PPL 38706
Action Minora Energy (New Zealand) Limited changed its name to
Ngatoro Energy Limited
Date 07 January 1997
Certified true and correct
/s/ W.P. Player
W.P. Player
for Unit Manager - Permitting
10/01/97
LICENCE ENDORSEMENT
Licence: 38706
Action:
1. In terms of section 18(2) of the Petroleum Act 1937,
the terms specified in Clause 3 of the second schedule work
programme for Petroleum Prospecting Licence (PPL) 38706 are
hereby amended; and, a new Third Schedule to define the royalty
provisions applicable to the licence is hereby attached to the
licence.
<PAGE> 211
2. In terms of section 23 of the Petroleum Act 1937, the
assignment of an 11 percent in the licence by the Minister of
Energy to the remaining licensees is hereby approved.
Details: A revised Second Schedule is attached.
A new Third Schedule is attached.
The participating interests in this licence area are now as
follows:
percent
Fletcher Challenge Energy Taranaki Limited 29.784650
Southern Petroleum (Ohanga) Limited 29.784650
Petroleum Resources Ltd 20.430070
Australia and New Zealand Petroleum Ltd 15.000000
Minora Energy (New Zealand) Ltd 5.000000
DATED at Wellington this 23rd day of December 1996.
/s/ Max Bradford
SIGNED by Hon MAX BRADFORD, Minister of Energy
<PAGE> 212
EXHIBIT 10.16
SALE AND PURCHASE OF SHARES IN MINORA ENERGY (NEW ZEALAND) LTD.
AGREEMENT dated December, 1996
BETWEEN MINORA ENERGY (AUSTRALASIA) PTY LIMITED
(ACN 009 082 599) AND MINORA ENERGY LIMITED
(ACN 008 996 889) ("Vendors")
AND INDO-PACIFIC ENERGY (NZ) LIMITED a duly incorporated
company having its registered office at Wellington or
its nominee ("Purchaser")
RECITALS
A. MINORA ENERGY (NEW ZEALAND) LIMITED ("Company") is a private
company incorporated in New Zealand under the Companies Act 1955.
B. The Vendors hold all of the shares in the capital of the
Company comprising 2,421,279 ordinary shares of NZ$1 each
("Shares") with no other shares, convertible notes, options or
other equity interests in the capital of the Company existing.
C. The Vendors agree to sell and the Purchaser (or its nominee)
agrees to purchase the Shares upon the following terms and
conditions.
OPERATIVE PART
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions - In this agreement, unless the context
otherwise requires:
"Associated Person" has the same meaning as provided by
section 2 of the Goods and Services Tax Act 1985;
"Business Day" means a day (other than a Saturday or Sunday)
on which banks are customarily open for business in Wellington;
"Company Accounts" means the Accounts of the Company for the
financial year ending on 30 June 1996 and for the period
commencing on 30 June 1996 and ending on the Effective Date;
"Completion" means the completion of the sale of the Shares
to the Purchaser and the payment for the shares to be carried out
in the manner specified in clause 4;
"Completion Date" means the date on which Completion occurs,
intended to be the date determined pursuant to clause 4.1;
<PAGE> 213
"Conditions Precedent" means the conditions specified in
clause 7.1;
"Effective Date" means 00.01 am, 1 September 1996;
"Interim Period" means the period between the Effective Date
and the Completion Date;
"Joint Venture" means the joint venture constituted by the
joint venture agreement dated 2 September 1993, for the
exploration, development and production operations in the Licence
area.
"Licence" means Petroleum Prospecting Licence 38706 and any
licence or mining permit issued as a renewal, extension or
replacement thereof.
1.2 Interpretation - In the construction and interpretation of
this agreement and the schedules, except to the extent that the
context otherwise requires:
(a) Any reference to "Accounts" includes the relevant
balance sheets and profit and loss accounts of the Company and
the notes to it together with all documents which are or would be
required by any applicable law to be annexed to the accounts of
the Company and laid before the Company in general meeting for
the accounting reference period in question.
(b) References to recitals, clauses and schedules are to
recitals, clauses and schedules of this agreement;
(c) The headings are for convenience only and shall not
affect the interpretation of this agreement;
(d) Words importing the singular number include the plural
and vice versa and references to any gender include every gender
and reference to persons includes corporations and unincorporated
bodies of persons, government or semi-government bodies or
agencies or political subdivisions of them;
(e) Where any act, matter, or thing is to be done on a day
which is not a Business Day, that act, matter or thing may be
done on the next succeeding Business Day;
(f) References to "dollars" and "$" are references to New
Zealand dollars, unless otherwise specified;
(g) References to "written" and "in writing" include any
means of permanent visible representation;
(h) References to time are to New Zealand time;
<PAGE> 214
(i) References to any document includes all modifications
and replacement documents from time to time;
(j) References to any statue or regulation are to New
Zealand statutes and regulations and shall with all necessary
modifications apply to any modifications or re-enactment.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
The Vendors agree to sell to the Purchaser and the Purchaser
agrees to purchase from the Vendors the Shares free from all
charges, liens and encumbrances on the Completion Date upon the
terms and conditions set out in this agreement and with all
rights now and hereafter attaching to the Shares, with effect
from the Effective Date.
3. PURCHASE PRICE
3.1 Purchase Price - The purchase price ("Purchase Price") for
the Shares shall be A$575,000 (five hundred and seventy five
thousand Australian dollars).
3.2 Payment of Purchase Price - The Purchase Price shall be paid
on the Completion Date as required by clause 4.3.
3.3 Purchase Price lowest price - The parties agree that the
Purchase Price for the Shares is the lowest price that the
parties would have agreed upon for the sale by the Vendors of the
Shares upon the basis of payment in full as at the Effective Date
and as at the date of this agreement.
4. COMPLETION
4.1 Completion - Completion shall take place at the offices of
the Vendor specified in clause 8.12, on the day falling 2
Business Days after the Conditions Precedent have been satisfied.
4.2 Completion steps - On the Completion Date, the Vendors shall
hand to the Purchaser:
(a) all share certificates to the Shares together with
transfers of the Shares to the Purchaser (or the Purchaser's
nominee) duly executed by the Vendors;
(b) a resolution of the directors of the Company approving
the transfer of the Shares to the Purchaser (or the Purchaser's
nominee);
(c) all things necessary to enable the Purchaser or the
Purchaser's nominee or both to be entered on the register of
members of the Company as the holders of all the Shares;
<PAGE> 215
(d) all documents and records of the Company including the
certificate of incorporation and Memorandum and Articles of
Association, all minute books and registers of the Company which
shall be up to date and properly kept in accordance with the
provisions of the Companies Act 1955, the common seal of the
Company, and copies of all contracts or particulars of contracts
and of the returns of the kinds referred to in section 60 of the
Companies Act 1955 in respect of shares in the capital of the
Company credited as fully paid or partly paid up otherwise than
in cash;
(e) the written resignations of the secretary and of all
directors of the Company (without payment of any compensation or
provision therefor);
(f) evidence satisfactory to the Purchaser that the Vendors
have complied with the requirement of clause 5.14.
4.3 Payment of Purchase Price - Contemporaneously with the
handing to the Purchaser of all Completion requirements specified
in clause 4.2, the Purchaser shall pay to the Vendors the
Purchase Price in an Australian Dollar bank cheque, as specified
by the Vendors. The Vendor will pay the Purchaser with a NZ$ bank
cheque for Interim Period revenues and royalty refunds. The
Purchaser shall also provide evidence or undertakings
satisfactory to the Vendors that the Purchaser will promptly
change the name of the Company.
4.4 Purchaser's obligation to complete - The Purchaser shall not
be obliged to complete other than in respect of all of the Shares
and unless all Completion requirements specified in clause 4.2
are complied with.
5. REPRESENTATIONS AND WARRANTIES BY VENDOR
The Vendors (jointly and severally) represent, warrant and
covenant (each of which shall constitute the basis on which the
Purchaser has entered into this agreement).
5.1 Recitals - Recitals A, B and C to this agreement are true
and correct in all respects and will be true and correct at the
Completion Date.
5.2 Shares - All the Shares are held and will be held at the
Completion Date by the Vendors as specified in the first schedule
to this agreement and are and will be at the Completion Date
fully paid up and free of any lien, charge, encumbrance or pledge
whatsoever either legal or equitable.
5.3 No options, increases of capital or assignments - Neither
the Vendors nor the Company is or will at the Completion Date be
committed to any contract providing for an option for any person
<PAGE> 216
to take shares in the Company or on an increase in capital of the
Company and all the Vendors have full rights of assignment of the
respective Shares held by them and that the transfer of such
Shares will entitle the Purchaser to the sole ownership and
control of the Company.
5.4 No dividends - During the Interim Period, no dividend (as
defined in section 4 of the Income Tax Act 1976) bonus or
distribution of any kind whatever has been made or will be
declared paid or made to the Vendors except as approved in
writing by the Purchaser.
5.5 Closing Accounts - The management accounts of the Company
for the period ending on the Effective Date ( a copy of which is
annexed to this agreement signed by one or more directors on
behalf of the board of directors as true and correct) truly and
fairly reflect the position of the Company as at the Effective
Date and are prepared in accordance with generally accepted
accounting principles consistently applied.
5.6 Liabilities at Effective Date - The Company was in a
financial position at the Effective Date, or the Vendors shall
make such payments to ensure that the Company's financial
position will at the Completion Date be, equivalent to having:
(a) received all revenues and paid all royalties and taxes
on oil sales up to the Effective Date;
(b) paid its share of all authorised cash calls relating to
Joint Venture operations up to the Effective Date;
(c) paid all royalties due on the Company's share of any
production produced before the Effective Date, other than those
outstanding liabilities specifically referred to in the final
sentence of clause 6.1.
5.7 Financial position of Company - There has not been nor is
there presently threatened any material adverse change in the
financial condition of the Company since the Effective Date, and
as at the Completion Date there will not be any material adverse
change in the financial condition of the Company.
5.8 Carry on business - The Company has carried on business
since the Effective Date and will carry on business in a normal
manner without let or hindrance down to the Completion Date.
5.9 Material contracts - The Company will not prior to the
Completion Date enter into any material contract except in the
normal and ordinary course of business and will not become a
party to any unusual abnormal or onerous contract or arrangement
except such as has been fully disclosed in writing and approved
in writing by the Purchaser, and in particular the Company has
<PAGE> 217
not ....... during the Interim Period do any act or enter into
any commitments in relation to the Licence or the Joint Venture
which might affect materially the value of the Company's
interest, without the prior written approval of the Purchaser.
5.10 Disclosure of contracts - The Vendors have prior to the
execution of this agreement made full disclosure to the Purchaser
of all contracts or agreements to which the Company is a party or
is subject.
5.11 Guarantees or indemnities - The Company is not and will not
prior to Completion become a party to any contract of guarantee
or indemnity except as contained in the contracts or agreements
referred to in clause 5.10 or as approved in writing by the
Purchaser.
5.12 Contingent liabilities - The Purchaser has been advised
prior to the date of this agreement of all contingent liabilities
of the Company and the Vendors will ensure that the Company does
not enter into or incur (except as approved in writing by the
Purchaser) any other contingent liability before Completion.
5.13 Information
(a) To the best of the Vendor's information, knowledge and
belief all information provided to the Purchaser was when given
true, complete and accurate in all material respects and the
Vendors are not aware of any fact or matter not disclosed in
writing to the Purchaser which renders any such information
untrue, inaccurate, misleading or incomplete.
(b) The Vendors have not failed to disclose matters within
their knowledge relating to the Company and its assets and
liabilities of the Company which could reasonably be considered
to be material to an assessment whether or not to purchase the
Shares.
5.14 Moneys owing to the Company to be repaid - The Vendors will
repay any moneys owing by them or any Associated Person to the
Company and, whether in respect of loans, calls on capital, or
otherwise, whether or not that money is due or payable on the
Completion Date and will (except as approved in writing by the
Purchaser) ensure that on Completion all business arrangements
and other relationships between the Vendors and their Associated
Persons of the one part and the Company of the other part are
terminated so that neither the Vendors nor any of their
Associated Persons shall thereafter have any claim on the
Company.
5.15 Assets - At Completion all assets of the Company will be the
property of the Company and will not be subject to any charge,
encumbrance, lien, pledge (whether equitable or legal) factoring
<PAGE> 218
or discount agreement, or royalty agreement (other than the
royalty to the Crown which is a condition of the Licence).
5.16 Insurance - All the Company assets which are of an insurable
nature are insured in an insurance office for their full
insurable value respectively and that the Company will not prior
to the Completion Date allow any policy of insurance over its
assets to lapse or to be discontinued or to be cancelled and that
the Company will punctually pay all premiums payable in respect
of such insurances as the same may fall due and be payable prior
to the Completion Date.
5.17 Maintain Licence - The Company has and shall act in all ways
within its power to maintain its interest in the Joint Venture
and the Licence in good standing and to meet all obligations of
the Licence, the Joint Venture Agreement and the relevant
legislation, up to and including the Effective Date, and will
continue to do so during the Interim Period.
5.18 Employees and contractors - Except as disclosed in writing
to the Purchaser, the Company is not and will not at the
Completion Date be a party to any agreements with any independent
contractors, directors, managers or other officers, servants or
employees.
5.19 Litigation - The Company is not at present engaged in any
litigation nor are the Vendors aware of any cause of action or
right to claim for compensation or damage which could or might be
used for the purpose of commencing proceedings whether criminal
or civil against the Company, including but not limited to as a
participant in the Joint Venture, or as a holder of the Licence,
whether for environmental damage arising from the condition,
operation or ownership of the Licence and Joint Venture
operations and assets prior to the Effective Date or otherwise,
other than a dispute between the Joint Venture and the Crown
regarding the point of valuation for payment of the royalty due
to the Crown.
5.20 Books of Company - The books of the Company have been or
will be properly written up to and including the Completion Date
and that the books are in order in every respect.
5.21 Books of account - The Company holds in its possession all
books or account and other records (such as wage books) which it
is bound by law to retain in its possession.
5.22 Resolutions - No resolution by the members of the Company
has been passed which has not been recorded in the Minute Book of
the Company and that no resolution will be passed prior to the
Completion Date without the prior express approval of the
Purchaser in writing.
<PAGE> 219
5.23 Inland Revenue returns - The Company has and will at the
Completion Date have as and when required by law rendered to the
Commissioner of Inland Revenue all necessary returns that those
returns have been made on a proper basis and that there is no
dispute outstanding with the Commissioner of Inland Revenue in
respect of those returns.
5.24 Companies Office returns - The Company has and will at the
Completion Date have filed with the Registrar of Companies all
documents and returns required by law so that at the Completion
Date the records of the Company with the Registrar of Companies
will be correct and fully up to date.
5.25 Particulars of charges - The particulars of charges set out
in the second schedule to this agreement comprise all the
charges, liens, encumbrances or mortgages over the assets of the
Company.
6. LIABILITIES OF VENDORS AND PURCHASER
6.1 Indemnity by Vendors - The Vendors agree to hold the
Purchaser harmless and indemnified against any liability, loss or
damage arising from or out of any breach by the Vendors of any of
the warranties or covenants herein contained AND will on written
demand pay to the Purchaser an amount to fully compensate the
Purchaser for such liability loss or damage. Such indemnity shall
include, without limitation, payment of any amount found to be
owed by the Company contrary to the warranties in clause 5.6.
However, the Purchaser is aware of the contingent liability
relating to the ongoing dispute with the Crown regarding the
Point of Valuation for royalty purposes, and will accept such
liability if and when it fails due, irrespective of the fact that
it would largely relate to royalty underpayments prior to the
Effective Date, otherwise payable by the Vendors under clause
5.6.
6.2 Tax Indemnity
6.2.1 The Vendors will indemnify the Purchaser and the
Company and will keep them indemnified from the Completion Date
against the costs, losses or money payable on account of any
claim for or in respect of any Taxation. For this purpose
"Taxation" includes any income or transaction taxes, duties or
charges payable to any government or local authority in New
Zealand or elsewhere, or the Accident Rehabilitation and
Compensation Insurance Corporation, and all withholdings or
deductions in respect of those obligations, whatever their
nature. This indemnity shall extend to any Taxation which is
calculated by reference to:
(a) income or profits earned or attributed, or deductions
or relief claimed, on or before Completion; or
<PAGE> 220
(b) any other event on or before Completion (whether it was
a known or contingent liability at that date),
but excluding any obligation to pay royalties on petroleum
produced (which will be dealt with in accordance with the other
provisions of this Agreement).
6.2.2 By this indemnity, the Vendors will on demand pay to
the Purchaser or the Company (as the case may be) the amount
incurred by that party in respect of any Taxation including:
(a) the effect of any denial or loss of any allowance or
deduction or cancelling any right to repayment of Taxation;
(b) all reasonable costs and expenses properly payable by
the Purchaser or the Company in connection with any claim;
(c) reimbursement of any Taxation payable on payments made
in accordance with this indemnity (so that the Purchaser or the
Company receives the net sum it would have had or retained if no
claim had been made).
6.2.3 If the Company of the Purchaser receives a claim in
respect of Taxation, or proposes to claim against the Vendor,
they will provide full details to the Vendor and will give the
Vendor an opportunity to defend or dispute the claim. The
Purchaser and the Company will be entitled to take any steps to
avoid prejudice to their own respective tax positions and will be
indemnified by the Vendor even if the Vendor disputes the claim.
If the Purchaser or the Company is required to take or
contemplate any action which may prejudice the tax position of
the Vendor, it will consult with the Vendor before doing so.
6.3 Indemnity by Purchaser - Subject to the Vendor not having
breached any relevant warranty, the purchaser agrees to hold the
Vendors Jointly and severally harmless and indemnified against
any and all liability, loss, damage, claims or expenses arising
out of:
(a) environmental damage arising from the condition,
operation and ownership of the Licence, Joint Venture operations
or assets prior to the Effective Date,
(b) obligations of the Company incurred on or after the
Effective Date, including but not limited to any obligation to
properly plug and abandon any well and to restore any site or
workings located in the area of the Licence whether in existence
at or after the effective Date; and
(c) the contingent liability referred to in the final
sentence of clause 6.1
<PAGE> 221
6.4 Warranties and Representations by Purchaser - the Purchaser
represents, warrants and covenants to and for the benefits of
each Vendor severally that:
(a) no act, event or omission has occurred which (or which
passage of time) would render it liable to be struck off the
register of the State in which it is incorporated;
(b) it has full power and authority to make this agreement
and to perform and observe the conditions hereof; and
(c) the Purchaser is not the subject of an order for
liquidation or winding up nor has it entered into a scheme of
arrangement with its own creditors or any class of them, no
receiver or receiver and manager has been appointed to all or any
part of its undertaking or property, no petition has been
presented for its winding up and no writ of execution has been
presented against it or any of its property and, to the best of
its knowledge, information and belief, no such action is
threatened or contemplated and no act, event or omission has
occurred which (or which with the effluxion of time) might result
in any such action or event.
7. CONDITIONS PRECEDENT
7.1 Conditions Precedent - Without prejudice to any other
conditions applicable to this agreement or the completion of
those conditions, this agreement is conditional upon the Vendors
confirming in writing, on or before the date 90 days after the
date of this agreement, that no party to the Joint Venture
Agreement has exercised any preferential right of purchase,
7.2 Conditions Precedent Unsatisfied - If the above Conditions
Precedent is not met, or waived by the Purchaser, on or before
the date specified in clause 7.1, then this agreement shall be at
an end and neither party shall have a claim on the other.
8. MISCELLANEOUS
8.1 Entire Agreement - This agreement contains all the terms of
the arrangement between the parties and supercedes and
extinguishes all prior agreements, discussion and arrangements
between the parties with respect to the matters covered by this
agreement.
8.2 Dispute Resolution
(a) All differences and disputes which may arise between the
Vendors and the Purchaser touching and concerning this agreement
or any act or thing to be done, suffered or omitted in pursuance
of this agreement, ot touching or concerning the construction of
this agreement (except any dispute relating to any adjustments to
<PAGE> 222
be made to the Purchase Price) shall be referred to negotiation,
mediation or some other alternative dispute resolution technique
as agreed by the parties. If within 30 days of referral, the
parties cannot agree on the technique, timetable, procedures or
facilitator to be used, or the dispute is not resolved, any party
may refer the dispute to arbitration in New Zealand by 1
arbitrator appointed by agreement between the parties, or in the
absence of agreement by the President of the New Zealand Law
Society, such arbitration to be in accordance with the
Arbitration Act 1908.
(b) All disputes relating to any adjustments to be made to the
Purchase Price shall be decided by an independent expert whose
decision shall be binding on the parties. If the parties cannot
agree on the expert to be used within 30 days of referral, an
expert shall be appointed by the President of the Institute of
Chartered Accountants of New Zealand.
8.3 Costs - Each of the parties shall bear their own legal and
other costs in the preparation and implementation of this
agreement. The Purchaser shall bear any stamp duties, consent
fees and other imposts or taxes (including taxes under the Goods
and Services Tax Act 1985) arising from this agreement or the
transfer of the Shares.
8.4 Confidentiality - The parties mutually covenant that each
shall (except as any be required for the purpose of satisfying
the conditions precedent pursuant to clause 7.1 or as required
pursuant to clause 8.10 or as required by law, directive or the
listing requirements of any Stock Exchange and except for its
professional advisors) maintain, and aid in maintaining the
confidentiality of this agreement and the negotiations and other
steps leading to the agreement. The public disclosure of the
arrangements between the parties, including all statements to the
news media, shall proceed by way of mutual agreement between the
parties.
8.5 Non-merger - The warranties, undertakings, agreements,
covenants and indemnities given under or pursuant to this
agreement shall not merge on completion of the sale and purchase
of the Shares or the transfer of the Shares or otherwise, but
shall remain enforceable to the fullest extent despite any rule
of law to the contrary.
8.6 Right to inspect books and records - The Purchaser may at
all reasonable times together with the auditors of the Purchaser
inspect and make copies of the records and bolls of account of
the Company from the date of this agreement down to the
Completion Date and the Vendors will promptly and prior to the
Completion Date reply in writing to any request by the Purchaser
for information regarding the books of account or records or
<PAGE> 223
business of the Company relevant to any of the covenants,
warranties, conditions or other provisions contained or implied n
this agreement.
8.7 Governing law
(a) The governing law of this agreement and of the relations of
the parties arising from it shall be New Zealand law.
(b) The parties to this agreement hereby accept the jurisdiction
of the High Court of New Zealand and any proceedings issued in
respect of any claim, dispute or other matter arising out of this
agreement shall be issued out of the High Court at Wellington.
8.8 Nominee - This agreement shall be binding on and sahll enure
to the benefit of the administrators, executors and heirs of the
Vendors and to the benefit of the administrators, executors,
heirs and assigns of the Purchaser. It is acknowledged that the
Purchaser may nominate any person to be purchaser under this
agreement and upon such nomination such shall person shall take
over and assume all the obligations and benefits of the
Purchaser.
8.9 Joint and several - In the event of the Vendors being more
than one person their obligations under this agreement shall be
on a joint and several basis.
8.10 Announcements - The Vendors shall on completion, if
requested to do so by the Purchaser, make announcements to
customers, suppliers and agents of the Company in whatever forms
may be reasonably required by the Purchaser.
8.11 Nomination and assignment
(a) The Purchaser shall have the right to nominate in writing at
least 1 business day prior to the Completion Date any subsidiary
or associate to acquire as beneficial owner the Shares and from
and after such nomination he party so nominated shall take over
the rights and privileges conferred on the Purchaser under this
agreement as if such nominated party were Indo-Pacific Energy
(NZ) Limited.
(b) The Purchaser shall not be entitled to assign the benefit of
this agreement except under clause 8.11(a) and any party
nominated under clause 8.11(a) shall not be entitled to further
assign the benfit of this agreement or make any further such
nomination prior to Completion.
8.12 Notice - Any notice or communication document or demand
requiring to be made or served pursuant to this agreement shall
be in writing signed by the party giving the notice or by any
officer or solicitor of that party and served as follows:
<PAGE> 224
To the Vendors:
Discovery Petroleum NL
3rd Floor, 31 Ventnor Avenue
West Perth, Western Australia 6005
Fax: 61-9-324-1212
Attention: Eric Strietberg
To the Purchaser:
Indo-Pacific Energy (NZ) Limited
Units 6-8, Karori New Ventures Centre
249 Karori Road, P.O. Box 17-258
Karori, Wellington, New Zealand
Fax: 64--476-0120
Attention: David Bennett
with a contemporaneous copy to the Purchaser's Solicitors:
Rudd Watt & Stone
125 The Terrace, P.O. Box 2793
Wellington, New Zealand
Fax: 64-4-473-8232
Attention: Gavin Adlam
or in respect of a party to such other address as that party may
at least 2 business days notice advise the other party as its
address for service.
Any notice shall be determined to be duly given or made:
(a) when delivered by hand;
(b) if sent by facsimile when transmission is confirmed by the
sending machine;
(c) if sent by post, 7 business days after posting.
8.13 Counterparts - This agreement may be signed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument. Any party may enter into this agreement
by signing any counterpart.
8.14 Facsimile - A Party may enter into this agreement by signing
any counterpart in either original of facsimile form (and if in
facsimile form shall as soon as practicable following execution
deliver the Agreement in original form to the other Parties). A
counterpart of the signature pages of this agreement in facsimile
form showing signatures in facsimile form shall be conclusive
evidence of signatures on the whole of the original form.
8.15 Non-waiver - Failure or omission by a party at any time to
enforce or require strict or timely compliance with any
provisions of this agreement shall not affect or impair that
provision in any way or the rights of that party to avail itself
of the remedies it may have in respect of any breach of that
provision.
<PAGE> 225
8.16 Further assurance - each party undertakes to do all acts and
things and execute and sign all deeds and documents which may be
required to be executed or signed or both to carry out or give
effect to the provisions of this agreement.
8.17 Amendment - No amendment to this agreement shall be
effective unless it is in writing and signed by the parties.
8.18 Partial invalidity - The illegality, invalidity or
unenforceability of a provision of this agreement under any law
shall not affect the legality, validity or enforceability of that
provision under another law or the legality, validity or
enforceability of any other provision of this agreement.
8.19 No assignment - Subject to clause 8.11(a), no party shall
assign its rights under this agreement without the prior written
consent of all other parties.
8.20 All parties to sign - This agreement shall not be binding on
any of the parties until all parties set out below as being
required to sign this agreement have signed this agreement.
EXECUTED as an agreement
SIGNED BY INDO-PACIFIC ENERGY (NZ) LIMITED in the presence of:
/s/ A.H. Streiner /s/ David Bennett
A.H. Streiner Signature of Director/Authorised
Consultant Person
Perth, Western Australia
THE COMMON SEAL OF MINORA ENERGY PROPERTY (AUSTRALASIA) PTY
LIMITED was hereunto affixed in the presence of:
/s/ Illegible
Director
/s/ Illegible
Secretary
THE COMMON SEAL OF MINORA ENERGY LIMITED was hereunto affixed in
the presence of:
/s/ Illegible
Director
/s/ Illegible
Secretary
<PAGE> 226
EXHIBIT 10.17
THE MINISTER OF ENERGY FOR NEW ZEALAND
FLETCHER CHALLENGE ENERGY TARANAKI LIMITED
(FORMERLY PETROCORP EXPLORATION LIMITED)
SOUTHERN PETROLEUM (OHANGA) LIMITED
PETROLEUM RESOURCES LTD.
AUSTRALIA AND NEW ZEALAND PETROLEUM LTD
MINORA ENERGY (NEW ZEALAND) LTD
DEED OF ASSIGNMENT AND ASSUMPTION PPL 38706
RECITALS 1
AGREEMENT 1
1 INTERPRETATION 1
1.1 Definitions 1
1.2 Rules of Interpretation 2
2 ASSIGNMENT 3
2.1 Assignment 3
2.2 Effective Date of Assignment 3
2.3 Precedence Over JVOA 3
2.4 Allocation of Minister Intent 3
2.5 Percentage Interests as From Effective Date 3
3. ASSUMPTION 3
3.1 Assumption of Obligation 3
3.2 Release 3
4 INDEMNITY 4
4.1 JVOA Indemnity 4
4.2 General Indemnity 4
5 AGREEMENT TO VARY LICENCE 4
5.1 Agreement to Vary Licence 4
6 CONFIRMATION OF JVOA 4
6.1 Deed Confirmed 4
7 CONSENT OF MINISTER 4
7.1 Consent of Minister 4
SCHEDULE 1 5
APPENDIX A 6
APPENDIX B 9
EXECUTION 32
DEED dated 23rd December 1996
PARTIES
1 THE MINISTER OF ENERGY FOR NEW ZEALAND acting on behalf
of HER MAJESTY THE QUEEN in right of New Zealand and acting under
his power contained in the Act (the "Minister")
2 FLETCHER CHALLENGE ENERGY TARANAKI LIMITED (previously
known as PETROCORP EXPLORATION LIMITED) SOUTHERN PETROLEUM
(OHANGA) LIMITED PETROLEUM RESOURCES LIMITED AUSTRALIA AND NEW
ZEALAND PETROLEUM LTD. and MINORA ENERGY (NEW ZEALAND) LTD. (the
"Remaining Parties")
<PAGE> 227
RECITALS
A. The Minister is the holder of an undivided Interest in
Licence PPL 38706. Under the terms of the licence the Minister's
Interest carries no obligation to contribute to costs or meet
liabilities or royalties on petroleum production.
B. The Minister and the Remaining Parties are parties to a
Joint Venture Operating Agreement dated 2 September 1993 (the
"JVOA") for exploration and development of discoveries of
petroleum under the Licence. The JVOA provides that the Minster
has no obligation to contribute to costs or meet liabilities and
royalty on petroleum production.
C. The Minister wishes to assign to the Remaining Parties,
and the Remaining Parties wish to receive from the Minister, the
Minister's Interest in the Licence and under the JVOA.
D. The Minister and the Remaining Parties have also agreed
that the conditions of the Licence providing for the basis for
calculation of royalties and the rate of that royalty under the
Licence shall be amended as provided for in this Deed.
AGREEMENT
1 INTERPRETATION
1.1 Definitions: For the purpose of this Deed the following
terms sahll have the following meanings, unless the context
otherwise required:
Act means the Petroleum Act 1937 or the Crown Minerals Act 1991
as applicable.
Deed means this Deed and includes all recitals, schedules and
appendices.
Effective Date means the date of the Minister's consent pursuant
to clause 7.1
Interest means in respect of each party the individual
participating interest held by it in the Licence and under any
JVOA or any other agreement which defined the Party's respective
rights, interests and obligations in relation to the Licence.
Licence means PPL 39706.
1.2 Rules of Interpretation: In this Deed, unless the context
otherwise requires:
(a) Headings: Clause headings and other headings are for ease of
reference only and shall be deemed not to form any part of this
Deed or to affect the construction of this Deed;
<PAGE> 228
(b) Plural and Singular: Words importing the singular number
shall include the plural and vice versa;
(c) Parties: References to parties are references to the Minister
and the Remaining Parties;
(d) Persons: References to persons shall be deemed to include
references to individuals, companies, corporations, firms,
partnerships, joint ventures, associations, organizations,
trusts, states or agencies of state, government departments and
local and municipal authorities in each case whether or not
having separate legal personality;
(e) Clauses, Schedules, Appendices etc.: References to Clauses,
Schedules and Appendices are references to Clauses, Schedules and
Appendices of this Deed;
(f) Obligations: Any obligation not to do something shall be
deemed to include an obligation not to suffer, permit or cause
that thing to be done. An obligation to do something shall be
deemed to include and obligation to cause that thing to be done.
(g) Statutes and Regulations: References to a statute include
references to regulations, orders, notices or codes of practice
made under or pursuant to such statute, or regulations made under
the statute, and references to a statute and regulation include
references to all amendments to that statute of regulation
(whether by subsequent statute or otherwise) and references to a
statute or regulation passed in substitution for that statute or
regulation.
2 ASSIGNMENT
2.1 Assignment: The Minister hereby assigns to the Remaining
Parties, and the Remaining Parties accept upon the terms set out
in this Deed, all of the Minister's right, title and interest in
his Interest.
2.2 Effective Date of Assignment: The assignment of the
Minister's Interest shall take effect from and on the Effective
Date.
2.3 Precedence Over JVOA: For the avoidance of doubt, the
Parties acknowledge and agree that Clauses 2.1 and 2.2 shall be,
in relation only to the Minister's assignment of its Interest, in
place of and shall have precedence over any articles or clauses
in any JVOA or other agreement which defines the Parties'
respective rights, interests and obligations in relation to the
Licence and which set out any particular method of withdrawal
from the Licence or are in any other way inconsistent with this
Deed.
<PAGE> 229
2.4 Allocation of Minister Interest: The Minister's Interest
shall be assigned to the Remaining Parties in the proportion in
which their respective Interests prior to the Effective Date bear
to the total of their Interests as at that date.
2.5 Percentage Interests as from the Effective Date: The
Remaining Parties and the Minister acknowledge and agree that on
and from the Effective Date, their respective interests in the
Licence and any JVOA or other agreement which defined their
respective rights, interests and obligations in relation to the
Licence shall be as set out in Schedule 1 of this Deed.
3. ASSUMPTION
3.1 Assumption of Obligations: With effect from the Effective
Date, each of the Remaining Parties to the extent of the Interest
in the Licence assigned and conveyed to them by the Minister
under this Deed, hereby undertakes to observe, perform, discharge
and be bound by all the covenants, conditions, liabilities and
obligations of the Minister arising under the Licence or under
any JVOA or other agreement which defines the Parties' respective
rights, interests and obligations in relation to the Licence, and
whether actual, accrued, contingent or otherwise and whether
incurred prior to, on or after the Effective Date.
3.2 Release: With effect from the Effective Date, each of the
Remaining Parties agrees and confirms that the Minister shall be
released and discharged from all obligations and responsibilities
under the Licence and any JVOA or other agreement which defines
the Parties respective right, interests and obligations in
relation to the Licence.
4 INDEMNITY
4.1 JVOA Indemnity: The Parties acknowledge that under the JVOA,
the Minister is indemnified from all actions, claims, demands and
proceedings arising out of or in connection with the Licence or
any operations conducted under the JVOA.
4.2 General Indemnity: The Parties hereby acknowledge and
confirm that the Minister shall be and continue to be indemnified
in perpetuity from, and shall have no liability in respect of,
any actions, claims, demands and proceedings that may arise out
of or in connection with the Licence, any JVOA or other agreement
which defines their respective rights, interests and obligations
in relation to the Licence (whether arising out of any action or
omission whether before or after the Effective Date).
<PAGE> 230
5 AGREEMENT TO VARY LICENCE
5.1 Agreement to Vary Licence: The Minister and the Remaining
Parties hereby agree pursuant to section 18(2) of the Petroleum
Act 1937 that the conditions of the Licence providing the basis
for calculation of royalties and the rate of that royalty under
the Licence shall be amended as follows:
(a) condition 3 of the Second Schedule of the Licence shall be
amended; and
(b) a new Third Schedule which sets out the new terms and
conditions of the basis of payment to royalty to the Minister
shall be included in the conditions to the Licence; and
(c) the amended Second Schedule and the new Third Schedule are
appended to this Deed and Appendix A and Appendix B.
6 CONFIRMATION OF JVOA
6.1 Deed Confirmed: This Deed shall be read with the JVOA, and
the Parties hereby confirm that all rights and obligations under
the JVOA remain in full force and on the Parties to this Deed
without variation except as set out in this Deed.
7 CONSENT OF MINISTER
7.1 Consent of Minister: This Deed is subject to and conditional
upon the consent of the Minister of Energy being given to this
Deed in accordance with the provisions of section 23 of the
Petroleum Act 1937.
SCHEDULE 1
Party Percentage Interests
(expressed as a percentage)
The Minister 00.00
Fletcher Challenge Energy Taranaki Limited 29.784650
Southern Petroleum (Ohanga) Limited 29.784650
Petroleum Resources Limited 20.430070
Australia and New Zealand Petroleum Ltd. 15.000000
Minora Energy (New Zealand) Ltd. 5.000000
APPENDIX A
PPL 38706
SECOND SCHEDULE
1. The licencees shall carry out the following work program:
a Prior to 1 August 1994
<PAGE> 231
i complete technical evaluation of the licence area;
and
either make a firm commitment by notice in writing to the
Secretary of Commerce to complete the work programme
detailed in (a)(ii) below;
or
surrender the licence.
ii acquire, process and interpret 25 kilometres of 2D
seismic, or 3D seismic of equivalent value;
or
drill one exploration well to an approved Miocene target
unless geological or engineering constraints encountered
whilst drilling make this unreasonable.
b Prior to 1 October 1995
i if a commitment to seismic was made under (a) above,
then complete this seismic programme; and
either
make a firm commitment by notice in writing to the Secretary
of Commerce to drill an exploration well to an approved
Miocene target prior to 1 August 1996
or
surrender the licence.
ii if well drilling was committed to under (a) above, then
complete the drilling and assessment of this well; and
either\submit to the Secretary of Commerce, for the approval
of the Minister of Energy, a work programme fro the
remainder of the licence term;
or
surrender the licence.
c Prior to 1 August 1996
i if well drilling was committed to under (b)(i) above,
then complete drilling and assessment of this well; and
either
submit to the Secretary of Commerce, for the approval of the
Minister of Energy, a work programme fro the remainder of
the licence terms;
or
surrender the licence.
2 An annual fee is to be paid under sections 9 and 47M(1)(f)
of the Petroleum Act 1937 and Amendment One of the Petroleum
Regulations 1978.
<PAGE> 232
3 The Licencees shall pay to the Secretary of Commerce a
royalty on any petroleum produced under this licence or any
mining licence produced from this prospecting licence and granted
in accordance with section 11 of the Petroleum Act 1937. The
royalty shall be calculated in accordance with the attached Third
Schedule.
4 The Minister of Energy, or any other person authorized by
him to act on behalf of the Crown, shall immediately on the grant
of this prospecting licence acquire and shall be deemed to (1)
have acquired an interest of 11 percent in the licence and (2) be
a holder of the licence to the extent of the interest. The
interest shall be held on the following terms and conditions:
a the interest is and undivided 11 percent interest in
the licence;
b the interest is participating and carries no obligation
to contribute to any costs or meet any liabilities
associated with holding an interest in the licence
subject to section 21 of the Petroleum Act 1937;
c the interest shall continue for the term of the licence
and any extensions thereof granted pursuant to section
6(4) of the Petroleum Act 1937;
d the interest may be sold or otherwise dealt with (in
which case the rights of the Minister of Energy, or any
other person authorized by him to act on behalf of the
Crown, as holder of the interest contained in (e) below
shall run with the interest);
e if this licence or part of this licence is surrendered
and exchanged for a mining licence pursuant to section
11 of the petroleum Act 1937, the Minister of energy
and any other person authorised by him to act on behalf
of the Crown as holder of the interest shall be
entitled to participate in the mining of petroleum
under that mining licence on the following terms and dn
conditions:
i the interest shall be an undivided 11 percent
interest in the mining licence;
ii the interest will be participating and will carry
an obligation to contribute all costs and
liabilities associated with holding an interest in
the mining licence but only to the extent of that
interest;
iii the interest will continue for the term of the
mining licence and any extensions thereof granted
pursuant to section 13(3)(c) of the Petroleum Act
1937; and
iv the interest may be sold or otherwise dealt with.
<PAGE> 233
APPENDIX B
PETROLEUM PROSPECTING LICENCE (PPL) 38706
THIRD SCHEDULE
The licencees shall pay to the Secretary of Commerce a royalty on
any petroleum produced under the licence and any subsequent
mining permit granted in accordance with section 32 of the Crown
Minerals Act. The royalty shall be calculated as follows:
The numbering in this schedule follows the numbering in the
Minerals Programme for Petroleum 1995.
7.1 In this licence/permit, unless the context otherwise
requires:
"permit" includes a licence issued under the Petroleum Act
1937;
"permit holder" includes a licencee under the Petroleum Act
1937.
7.2 Terms used in these royalty provisions indicated in bold are
defined in paragraph 7.52 or reference is given there to where
the term is elsewhere defined. In calculating royalties, the
permit holder shall be required to use accounting procedures
which are in accordance with generally accepted accounting
practice, except where otherwise indicated.
7.3 The permit holder shall be liable for the calculation and
payment of royalties to the Crown in respect of all petroleum
obtained under the permit, which is either sold or used in the
production process as fuel or is otherwise exchanged or removed
from the permit without sale, or remains unsold on the surrender,
expiry or revocation of the permit, except as provided for in
paragraph 7.4.
7.4 No royalty is payable in respect of:
(a) any petroleum that in the opinion of the Minister, has been
unavoidably lost. This includes petroleum which is flared for
safety reasons, or flared as part of an approved testing
programme; and
(b) any petroleum which has been mined or otherwise recovered
from its natural condition, but which has been returned to its
natural reservoir within the area of the permit (for example,
reinjected gas).
7.5 On all petroleum produced under this prospecting licence,
the permit holder shall pay a 5 percent ad valorem royalty in
respect of any period in which a royalty return must be provided,
in accordance with paragraph 7.29. The ad valorem royalty is to
be determined in accordance with paragraphs 7.7 and 7.10 to 7.19.
<PAGE> 234
7.6 On all petroleum produced under any subsequent mining permit
awarded under section 32 of the Crown Minerals Act the permit
holder shall calculate and pay the higher of either a 5 percent
ad valorem royalty or a 20 percent accounting profits royalty in
respect of any period for which a royalty return must be provided
in accordance with paragraph 7.29, except where the exemption in
paragraph 7.45 applies. In the event that abandonment costs are
still to be incurred in respect of the permit, the permit holder
shall be liable o pay the higher of a 5 percent ad valorem
royalty or a 20 percent provisional accounting profits royalty,
except where the exemption in paragraph 7.45 applies. The ad
valorem royalty, the accounting profits royalty and the
provisional accounting profits royalty are to be determined in
accordance with the provisions of paragraphs 7.7 to 7.27.
AD VALOREM ROYALTY
7.7 The ad valorem royalty (AVR) shall be 5 percent of the net
sales revenues from the permit calculated in accordance with the
provisions in paragraphs 7.10 to 7.19.
ACCOUNTING PROFITS ROYALTY
7.8 The accounting profits royalty (APR) shall be 20 percent of
accounting profits from the mining permit. For any period for
which a royalty return must be provided, accounting profits are
the excess of net sales revenues (determined in accordance with
paragraphs 7.10 to 7.19) over the total of allowable APR
deductions. Allowable APR deductions are:
Production Costs
Capital Costs (exploration costs, development costs, permit
acquisition costs and feasibility study costs)
Indirect Costs
Abandonment Costs
Operating and Capital Overhead Allowance
Operating Losses and Capital Costs Carried Forward and
Abandonment Costs Carried Back
The total of allowable APR deductions for any period for which a
royalty return must be provided is the sum of allowable APR
deductions less any capital proceeds. For the purposes of
calculating the allowable APR deductions, all costs are to be
included as incurred. The allowable APR deductions and the total
of allowable APR deductions are discussed further in paragraphs
7.20 to 7.24. In no case may non allowable costs be deducted in
calculating accounting profits for accounting profits royalty
purposes and, as provided in paragraph 7.25, no deduction or
allowance shall be made more than once in respect of any amount
expended.
<PAGE> 235
7.9 The provisional accounting profits royalty shall be 20
percent of provisional accounting profits from the mining permit.
For any period for which a royalty return must be provided,
provisional accounting profits are in excess of net sales
revenues over the allowable APR deductions referred to in
paragraph 7.8, other than abandonment costs carried back. When
abandonment costs carried back are taken into account in
accordance with paragraph 7.20(g), the resulting figures shall be
the final accounting profits figures for such periods, upon which
the final accounting profits royalty liability is calculated.
NET SALES REVENUES
7.10 Net sales revenues are the basis of calculating the ad
valorem royalty of accounting profits royalty or provisional
accounting profits royalty liability. For each period for which a
royalty return must be provided, net sales revenues are the sum
of total gross sales of petroleum (G), plus the value of
petroleum not sold but on which royalty is payable (P), minus any
allowable netbacks (or plus any net forwards)(N), as defined in
paragraphs 7.11 to 7.19 below.
i.e., Net sales revenues=(G)+(P)-(N) [or (G)+(P)+(N)]
For the purposes of calculating net sales revenue, all revenues
are to be included as realized (except where indicated
otherwise).
7.11 Gross sales mean the total of all sales of petroleum from
the permit during the period for which a royalty return must be
provided, determined in accordance with generally accepted
accounting practice (GAAP) and excluding goods and services tax
(GST), always provided that:
i where a take or pay contract or a forward sales
contract applies then the sale of petroleum shall be
included in gross sales at the date of delivery and the
sales price will be that received under the default
provisions of the take or pay contract or under the forward
sales contract;
ii if any of the sales prices have been denominated in a
foreign currency, the sales price to be used for calculating
gross sales will be translated into New Zealand dollars at
the sell rate obtained. In the event that sale proceeds are
not immediately translated into New Zealand dollars, but are
retained in a foreign currency, then the exchange rate to
use will be the mid point between the buy and sell rates for
the foreign currency on the date of sale, set by a major New
Zealand registered bank. Foreign currency gains or losses
are non allowable costs;
<PAGE> 236
iii if any gross sale amount has not been determined on a
fully arm's length basis, for example, pursuant to a
contract between related parties, then the said quantity
shall be valued by the permit holder using an arm's length
value, as approved by the Minister in accordance with
paragraph 7.27; and
iv petroleum futures contracts used as hedging
transactions are irrelevant in determining gross sales, and
gains and losses arising therefrom are non allowable costs.
Payments received in respect of the default provisions of
take or pay contracts, which are not recompensed with
delivery of petroleum products at a later date before the
expiry of the permit are irrelevant in determining gross
sales.
7.12 The value of petroleum used in the production process and
not sold, but on which royalty is payable (refer paragraphs 7.3
and 7.4) shall be determined using an arm's length value, as
approved by the Minister in accordance with paragraph 7.27. In
determining an appropriate price, the Minister will take into
consideration that petroleum used as a process fuel or otherwise
exchanged or removed from the permit without sale, may have a
lesser value to a similar product being marketed.
7.13 Netbacks (net forwards) means that portion of the sale price
that represents the cost of transporting and/or sorting and/or
processing the petroleum between the point of valuation (refer
paragraphs 7.15 to 7.19) and the point of sale provided that:
i if any of the costs of transporting, storing or
processing are not considered to have been charged on a
fully arm's length basis, for example costs that have been
determined pursuant to a contract between related parties,
then the netbacks (net forwards) to be used shall be
calculated by the permit holder using an arm's length value,
as approved by the Minister in accordance with paragraph
7.27; and
ii the amount of net backs may not exceed gross sales.
7.14 If the point of sale for petroleum is downstream from the
point of valuation, netbacks should be deducted from gross sales
to arrive at net sales revenues. If the point of sale is upstream
of the point of valuation, then net forwards incurred between the
point of sale and the point of valuation should be added to gross
sales to arrive at the net sales revenues.
POINT OF VALUATION
7.15 The point of valuation for calculating net sales revenue
shall be defined by the Minister, in consultation with the permit
holder, at the time of granting of a mining permit or in respect
of a prospecting licence, by written notice given by the Minister
<PAGE> 237
to the permit holder within 30 working days, or such other time
as shall be notified to the permit holder, after the time when
production of petroleum under the permit commences. The Minister
shall endeavour to provide that the point of valuation will
generally be the same as, or very close to, the point of sale for
each product stream and, therefore, netbacks or net forwards will
not generally be allowed or will not be significant.
7.16 In the case of oil, the point of valuation will normally be
expected to be defined at the point where both:
i the associated bulk sediment and water content of the
oil is less than one percent (or such higher levels as are
acceptable to a purchaser); and
ii the oil is available for shipment to customers via a
mainline pipeline, a marine tanker or appropriate truck or
rail transport.
The point of valuation for oil will normally be expected to be
defined as the outlet valve of a central storage facility, which
is the final storage facility prior to the sale of oil.
7.17 In the case of natural gas, the point of valuation will
normally be expected to be defined at the outlet valve from the
production facilities or an associated processing plant.
7.18 In the case of natural gas liquids which are sold as
products distinct from oil and natural gas, the point of
valuation will normally be expected to be defined at the outlet
valve of the processing facilities producing a readily saleable
product.
7.19 When determining the point of valuation, the Minister has as
the objective to obtain an ad valorem royalty take per unit of
output for similar products that is broadly equitable between
permit holders notwithstanding that permit holders may have
different delivery and sales arrangements.
ALLOWABLE APR DEDUCTIONS
7.20 For any period for which a royalty return must be provided,
accounting profits are the excess of net sales revenues over the
total of allowable APR deductions. The allowable APR deductions
are:
a Production Costs
The eligible costs are described in definition (pp), paragraph
7.52.
b Capital Costs
Development costs, exploration costs, feasibility study costs and
permit acquisition costs are deductible from net sales revenues
as capital costs.
<PAGE> 238
These are described in definitions (o), (p), (q) and (ll)
respectively, paragraph 7.52.
Development costs which are deductible from net sales revenues
are those incurred by the permit holder to enable mining
operations in respect of the mining permit, both before and
subsequent to the date that the mining permit was granted and
prior to the date the mining permit is relinquished.
Exploration costs which are deductible from net sales revenue are
those incurred by the permit holder:
i In respect only of the area defined in the mining
permit, subsequent to the date that the mining permit was
granted; and
ii Within an area defined in the prospecting licence from
which the mining permit was derived, subsequent to the date
that the respective mining permit was granted. This includes
exploration costs within any part of the prospecting
licence, even if the area had been relinquished in
accordance with section 6(3)(a) of the Petroleum Act 1937
(refer also paragraphs 7.23 and 7.24; and
iii Within the area of any extensions of area to the mining
permit, prior to their inclusion in the mining permit,
provided that these were incurred under an exploration
permit held by the permit holder immediately before the
area's inclusion in the mining permit.
c Indirect Costs
Those costs deductible from net sales revenue are defined in
definition (x), paragraph 7.52.
d Abandonment Costs
The eligible costs deductible from net sales revenues are defined
in definition (a), paragraph 7.52. In most instances, abandonment
costs are incurred when production under the permit has ended.
These will be able to be deducted from the surplus of net sales
revenues over other allowable APR deductions, once the actual
abandonment costs have been incurred (also refer abandonment
costs carried back below).
e Operating and Capital Overhead Allowance
This is an allowance to reflect head office costs attributable to
the mining permit. For any period for which a royalty return must
be provided, the allowance is 2.5 percent (for onshore mining
permits) or 1.5 percent (for offshore or part offshore mining
permits) of the total production costs, capital costs and
indirect costs claimed in the period for which royalty return
must be provided. This allowance may not be claimed in respect of
abandonment costs.
<PAGE> 239
f Operating Losses and Capital Costs Carried Forward
The excess of operating and capital expenses (being the sum of
production costs, capital costs, indirect costs, abandonment
costs, operating and capital overhead allowance) over net sales
revenues in any period for which a royalty return must be
provided, may be accumulated as operating losses and capital
costs carried forward. Operating losses and capital costs carried
forward may then be deducted in subsequent periods for which
royalty returns must be provided where net sales revenues exceed
operating and capital expenses. Operating losses and capital
costs carried forward are taken forward to subsequent periods for
which royalty returns must be provided until fully utilised or
the mining permit is relinquished.
g Abandonment Costs Carried Back and Recapture of capital
Expenditure Deductions
Abandonment costs that are incurred during the duration of the
permit and are unable to be deducted against net sales revenue
because they are incurred after production on the permit has
significantly declined or has finished, should be included in the
permit holder's final royalty return for the purpose of
calculating the abandonment costs carried back. Abandonment costs
carried back may be claimed as a deduction in respect of any
period or periods for which provisional accounting profits
royalties were paid.
In the royalty return in which such abandonment costs are
entered, the permit holder will also provide a schedule setting
out all equipment and other tangible assets which have been
included in the previous royalty returns as capital costs. Such
schedule will list:
i each such item of equipment and other tangible asset
and its original cost; and
ii the means by which each has been or will be disposed
of, whether by sale, transfer or scrapping; and
iii the actual or estimated proceeds from such
dispositions; and
iv the reporting period in which the equipment or other
tangible asset which has been sold or transferred had been
accounted for as capital proceeds.
Except for equipment and other tangible assets previously
accounted for as capital proceeds, abandonment costs carried back
will be reduced by the proceeds of the sale of the equipment or
other tangible assets, the cost of which was previously deducted,
and/or insurance reimbursement resulting from loss or damage to
such equipment and other tangible assets, not to exceed the
equipment's or other tangible assets' original cost.
Except for equipment and other tangible assets previously
accounted for as capital proceeds, if equipment or other tangible
assets, either in total or in part, the cost of which was
<PAGE> 240
previously deducted, has been transferred to or in respect of
another exploration or mining permit without being sold, a sale o
such equipment or other tangible assets will be deemed to have
occurred, with the proceeds of such sale being the arm's length
sale value of the equipment or other tangible assets or part
thereof.
In respect of equipment and tangible assets, the cost of which
was previously deducted, for which disposition has not actually
occurred, a sale of such equipment or other tangible assets will
be deemed to have occurred with the proceeds of such sale being
the arm's length sale value of the equipment or other tangible
assets or part thereof.
For those periods to which abandonment costs are carried back,
accounting profits will be redetermined in accordance with
paragraph 7.8. The final royalties payable for those periods will
be redetermined in accordance with paragraph 7.6.
7.21 The total of allowable APR deductions for any period for
which a royalty return must be provided, as noted in paragraph
7.8, is the sum of allowable APR deductions as outlined in
paragraph 7.20(a) to (g) above, less any capital proceeds.
Capital proceeds result from the sale of equipment or other
tangible assets, the cost of which was previously deducted,
and/or insurance reimbursement resulting from loss or damages to
such equipment or other tangible assets, not to exceed the
related equipment's or other tangible assets' original cost. If
equipment or other tangible assets, either in total or in part,
the cost of which was previously deducted, is transferred to or
in respect of another exploration or mining permit without being
sold, a sale of said equipment or other tangible assets will be
deemed to have taken place with the proceeds of the sale being
the arm's length sale value of the equipment or other tangible
assets or part thereof.
7.22 If any of the production costs, indirect costs, abandonment
costs, exploration costs, development costs, permit acquisition
costs, feasibility study costs or capital proceeds have not been
determined pursuant to an arm's length contract, then the
relevant costs to be used shall be calculated by the permit
holder using an arm's length value approved by the Minister in
accordance with paragraph 7.27.
CARRYING FORWARD OF EXPLORATION COSTS INCURRED PRIOR TO MINING
7.23 The permit holder shall ensure that any exploration costs to
be claimed as a deduction as described in paragraph 7.20(b)(ii)
are brought forward for accounting profits royalty assessment
purposes in the first royalty return forwarded after the grant of
the mining permit, or in the case of exploration costs described
in paragraph 7.20(b)(iii), the first royalty return after the
extension is approved.
<PAGE> 241
7.24 With respect to exploration costs incurred by the permit
holder in a prospecting licence or exploration permit preceding
the mining permit, paragraphs 7.20(b)(ii) and 7.23 have been
written on the general premise that the exploration costs that
are incurred within a prospecting licence or exploration permit
area will be attributable to a single mining permit, for
deduction against accounting profits royalty liabilities.
However, it is recognized that there may be cases in which the
permit holder develops more than one mining permit from a
prospecting licence or exploration permit area, on the basis of
information gained during the term of the prospecting licence or
exploration permit. In this case the Minister will accept
requests, at the time of granting the first mining permit, for
the allocation of the total exploration costs incurred within the
prospecting licence or exploration permit area prior to the
commencement of the first mining permit, between the first mining
permit and any additional mining permits envisaged by the permit
holder.
DEDUCTION ALLOWED ONLY ONCE
7.25 Notwith standing that an amount expended by a permit holder
may fall under more than one category of deduction under these
royalty provisions, no deduction or allowance shall be made more
than once in respect of any amount expended.
ARM'S LENGTH VALUE
7.26 When a person is not, or having been, ceases to be, under
the influence or control of another, he is said to be "at arm's
length" with him. If such is not the situation, and there are
contracts or transactions between the parties, then the contracts
or transactions may be deemed to be not at arm's length. For
example, contracts or transactions between related parties.
7.27 Where costs and prices used in determining petroleum
royalties liabilities are not the result of arm's length
transactions between the parties, the arm's length value of costs
and prices used shall be such amount as is agreed between the
permit holder and the Minister or, in the absence of such
agreement within such time period as the Minister allows, shall
be such amount as is determined by the Minister to be the value.
The Minister, in determining the arm's length value, shall have
regard, but is not limited to, any of the following as relevant:
the grade of the petroleum product;
the point of valuation;
the nature of the market for the petroleum being sold or
transferred or the asset or service being purchased or acquired;
the terms of relevant sales contracts or sales agreements and the
quantities specified therein;
the state of the market at the time the prices in the contract or
<PAGE> 242
sales, purchase, employment, service etc agreements were set;
the provisions of the contracts or sales agreements relating to
the variation or renegotiation of prices;
prices paid to producers of similar petroleum product elsewhere
in arm's length transactions;
costs paid for similar assets or services elsewhere in arm's
length transactions;
prices recommended by international associations of governments
of countries producing the mineral commodity;
any provision in joint venture operating agreements which relate
to transactions between related parties; and
such other matters as the Minister thinks fit.
In determining arm's length value, the Minister may seek advice
from experts but, in any event, the Minister's decision is final.
REPORTING PERIOD
7.28 The 12 month reporting period which is to be the basis for
the calculation and payment of royalty liability by the permit
holder shall be specified upon grant of any mining permit. The
reporting period shall be determined by the Minister in
consultation with the mining permit applicant prior to the grant
of the permit. The reporting period shall be either the financial
year of the permit holder or some other fiscal year approved by
the Minister.
7.29 If exploration under this prospecting licence results in
petroleum production on which royalty is payable (refer
paragraphs 7.3 and 7.4), then the Minister may, after
consultation with the permit holder, amend the conditions of the
permit in accordance with section 36 of the Crown Minerals Act
1991, to specify a 12 monthly reporting period, with the initial
period for which royalty return must be provided commencing on a
specified date. As for mining permits, the reporting period shall
be either the financial year of the permit holder or some other
fiscal year approved by the Minister.
PERIOD FOR WHICH A ROYALTY RETURN MUST BE PROVIDED
7.30 The permit holder shall provide to the Secretary a royalty
return for every period within the duration of the permit,
between a date for the commencement of a period and the next
following date for the expiry of a period.
7.31 Dates for the commencement of a period are:
(a) the date of commencement of the permit;
(b) the date of commencement of a reporting period; and
(c) the date following the date of transfer of the permit or of
an ownership interest in the permit.
<PAGE> 243
7.32 Dates for the expiry of a period are:
(a) the date of expiry of a reporting period;
(b) the date of transfer of the permit or an ownership interest
in the permit; and
(c) the date of expiry, surrender or revocation of the permit.
7.33 In the case of a prospecting licence, the initial period for
which a royalty return must be provided shall not commence before
the initial reporting period commencement date specified in the
permit (refer paragraph 7.29).
7.34 A royalty return shall be provided within 90 days of the end
of the relevant period.
ROYALTY RETURN
7.35 The royalty return shall be in the form prescribed, from
time to time, in the relevant regulations. In summary, the permit
holder will be required where applicable to provide, on the
royalty return, the following information:
(a) a calculation of gross sales and net sales revenue for the
relevant period as determined in accordance with paragraphs 7.30
to 7.33;
(b) for the relevant period as determined in accordance with
paragraphs 7.30 to 7.33 in total, details of:
Production Costs
Capital Costs
Indirect Costs
Abandonment Costs
Operation and Capital Overhead Allowance
Operating Losses and Capital Costs Carried Forward
Capital Proceeds
(c) a calculation of the provisional accounting profits for the
relevant period as determined in accordance with paragraphs 7.30
to 7.33; and
(d) a calculation of ad valorem royalties and the provisional
accounting profits royalty for the relevant period as determined
in accordance with paragraphs 7.30 to 7.33.
There will be a special final royalty return form for taking into
account abandonment costs carried back and calculating final
accounting profits royalty liabilities.
7.36 Where the permit holder is a joint venture, partnership or
otherwise made up of two or more parties, a royalty return may
include separate statements from each of the parties detailing
each party's share of:
Gross sales
Net sales revenue
Production costs
<PAGE> 244
Capital costs
Indirect costs
Abandonment costs
Operating and Capital Overhead Allowance
Operation Losses and Capital Costs Carried Forward
Capital Proceeds and
The royalty liability
7.37 Every royalty return is required to be accompanied by a
written statement from an auditor, or in the case of a royalty
return which includes separate statements from each of the
parties comprising a permit holder, a written statement from an
auditor in respect of each party's statement. This shall be in
the form prescribed in the relevant regulations. it is expected
that the auditor making the written statement will be the auditor
that the permit holder uses in the regular course of business.
The audited statement shall be paid for by the permit holder or
party.
7.38 The collection of royalties shall be administered by the
Secretary. The Secretary shall review every royalty return and,
if required, may request additional information or a detailed
explanation of the basis of the royalty return from the permit
holder who shall comply with such request within a reasonable
time. The Secretary may also audit royalty returns or appoint
someone else to do the audit. The Secretary shall pay for any
such audit.
SALE OR TRANSFER OF ALL OR PART OF PERMIT INTEREST
7.39 Where a permit has been sold or transferred, or an ownership
interests in a permit has been sold or transferred, any pro-rata
balance of operating losses and capital costs carried forward
which have not been deducted against net sales revenues, shall be
carried forward and shall be available to the new permit holder
to the same extent as if no transaction had taken place.
PAYMENT AND REFUND OF ROYALTIES
7.40 The permit holder shall pay the royalty due for any period
for which a royalty return must be provided within 90 days of the
end of the period. where the royalty return has been provided
with separate statements from the parties to a permit (refer
paragraph 7.36), the royalty due may be paid by such parties
forwarding their share of the royalty due together with a copy of
their statement.
7.41 Where the royalty due is the provisional accounting profits
royalty, the royalty shall be provisional pending the calculation
of total abandonment costs for the duration of the permit (refer
paragraph 7.20(g)). Following the calculation of total
abandonment costs, the final accounting profits royalty shall be
<PAGE> 245
determined. After the Secretary is satisfied as to the validity
of the final royalty return, a one time refund, if any, to the
permit holder shall be made. The permit holder filing the final
royalty return may nominate the persons to whom any final refund
of royalty shall be paid.
Interim Payments
7.42 If the net sales revenue for any quarter in a reporting
period, or a lesser period for which a royalty return must be
provided, are $250,000 or more, the permit holder shall make
interim royalty payment to the Secretary, of 5 percent of the net
sales revenue for the quarter or lesser period, within 30
calendar days after the end of the quarter or lesser period.
Where the permit holder is a partnership, joint venture or
otherwise made up of two or more parties, the interim payment due
may b made by each of the parties paying an agreed share.
7.43 If the interim royalties paid in a period vary by more than
20 percent from the previous quarterly payment, the permit holder
may be required to provide an explanation of the variance and, if
required by the Minister, copies of underlying
accounting/production records.
Final Payment
7.44 If, upon completion of a royalty return for a period, there
is a balance of royalties payable net of interim payments made n
respect of the period, the permit holder shall be required to pay
the balance within 90 days after the end of the period. If upon
completion of the royalty return, the total of interim payments
exceeds the amount of the royalties due for the period, the
overpayment of royalties shall be refunded or may, at the request
of the permit holder, be applied against future liabilities.
SPECIAL PROVISION FOR SMALL PRODUCERS
7.45 Until such time as net sales revenue exceeds one million
dollars within a reporting period for the permit, the permit
holder shall only be required to calculate and pay the 5 percent
ad valorem royalty for any period for which a royalty return must
be provided and shall be exempt from the provisional accounting
profits royalty or the accounting profits royalty.
7.46 Where a permit has initial net sales revenues below one
million dollars within a reporting period (and thus the permit
holder is exempt the provisional accounting profits royalty) but
it is anticipated net sales revenue will exceed $1,000,000 in
subsequent reporting periods, the permit holder shall retain
comprehensive records of operating and capital expenses in order
to claim allowable APR deductions against future accounting
profits royalty liabilities.
<PAGE> 246
7.47 [deleted]
BOOKS AND RECORDS
7.48 The permit holder shall, for the purposes of supporting the
royalty return, keep for ten years or until the expiry of the
permit, whichever occurs first, proper books of account and
records maintained in accordance with accepted business practice.
The permit holder shall provide detailed records and supporting
information to explain any aspect of the royalty return upon the
request of the Secretary.
FAILURE TO FILE A RETURN AND FAILURE TO PAY A ROYALTY
7.49 Every permit holder who fails to comply with a condition
requiring the permit holder to file a royalty return or fails to
pay royalties owed to the Crown commits an offence against
[section 100(2) of the Crown Minerals Act 1991] or[section 47L of
the petroleum Act 1937] and shall be liable on summary conviction
to a fine not exceeding $10,000 and, if the offence is a
continuing one, to a further fine not exceeding $1,000 for every
day or part off a day during which the offence continues.
7.50 [deleted]
7.51 [deleted]
DEFINITIONS
7.52 Unless specifically defined, terms and references in these
royalty provisions shall be interpreted in accordance with
generally accepted usage in the International oil and Gas
Industry and specifically with reference to the interpretations
set out in Regulation SX 4-10 of the United States Securities and
Exchange Commission entitled "Financial Reporting for Oil and Gas
Producing Activities Pursuant to the federal Securities Laws and
The Energy Policy and Conservation Act of 1975".
a Abandonment Costs means for any mining permit, the
post-production costs of abandoning and restoring sites and
dismantling or demolishing equipment or structures, used in
mining operations in respect of the mining permit.
b Abandonment Costs Carried Back has the meaning expressed in
paragraph 7.20(g) of these royalty provisions.
c Accounting profits has the meaning expressed in paragraph
7.8 of these royalty provisions.
d Accounting Profits Royalty means a royalty in respect of
accounting profits resulting from petroleum producing activities
determined in accordance with paragraphs 7.8 and 7.10 to 7.27.
<PAGE> 247
e Ad Valorem Royalty means a royalty in respect of net sales
revenues resulting from petroleum producing activities determined
in accordance with paragraphs 7.7 and 7.10 to 7.19.
f Allowable APR Deductions has the meaning expressed in
paragraphs 77.8 and 7.20.
g Arm's Length has the meaning expressed in paragraph 7.26.
h Arm's Length Value means in respect of costs and prices,
those which a willing buyer and a willing seller who are not
related parties would agree are fair in the circumstances.
Paragraph 7.27 describes criteria that may be used to determine
the arm's length value of costs and prices when this situation is
not satisfied.
i Auditor means:
i a member of the New Zealand Society of Accountants who
holds a certificate of public practice; or
ii an officer of the Audit Department authorised in
writing by the Controller and Auditor-General to be an
auditor of a company for the purposes of section 199 of the
Companies Act 1993; or
iii a member, fellow, or associate of an association of
accountants constituted outside of New Zealand which is for
the time being approved for the purposes of section 199 of
the Companies Act of 1993 by the Minister of Justice by
notice in the Gazette.
j Capital costs are development costs, exploration costs,
feasibility study costs and permit acquisition costs as outlined
in paragraph 7.20(b).
k Capital Proceeds has the meaning expressed in paragraph 7.21
of these royalty provisions.
l Condensate means a liquid hydrocarbon of high API gravity
above 60 degrees (very light crude-oil composition) that
condenses into a liquid upon production and surface conditions.
m Date of Delivery means the actual date a petroleum product
is transferred to the purchaser.
n Date of Sale means the date on which a sale is deemed to
have occurred in accordance with GAAP. In respect of forward
sales contracts and take or pay contracts, notwith standing the
terms of such contracts, date of sale means the date of delivery
of the petroleum to the purchaser.
o Development Costs means costs incurred to obtain access to
petroleum and to provide facilities for extracting, treating,
gathering and storing the petroleum up to the point of valuation.
<PAGE> 248
More specifically, development costs include, but are not limited
to costs incurred to:
i Gain access to and prepare well location sited for
drilling, including surveying well locations for the purpose
of determining specific development drilling sites, clearing
ground, draining, road building, and relocating public
roads, gas lines and power lines, to the extent necessary in
developing the resource;
ii drill and equip development wells, development type
stratigraphic test wells and service wells, including the
costs of platforms and of well equipment such as casting,
tubing, pumping equipment ad the wellhead equipment;
iii acquire, construct and install production facilities
such as flow lines, separators, treaters, heaters,
manifolds, measuring devices and production storage tanks,
natural gas cycling and processing pants and central utility
and waste disposal systems;
iv provide improved recovery systems;
v acquire through purchase or capitalisable lease
equipment otherwise used in production; and
vi acquire, construct and install support facilities to
service the development site and the personnel directly
involved in development and production.
Development costs do not include indirect costs, exploration
costs, abandonment costs, production costs and non-allowable
costs.
p exploration Costs are those costs incurred in identifying
areas that may warrant examination and in examining and
appraising specific areas that are considered to have prospects
of containing petroleum reserves including costs of drilling
exploratory wells and exploratory type stratigraphic test wells.
Principal types of exploration costs, which include capital and
applicable operating costs of support facilities charges through
day rates or other allocation mechanisms and other costs of
exploration activities, are costs of topographical, geological
and geophysical studies, rights of access to properties to
conduct those studies and salaries and other expenses of
geologists, geophysical crews and others conducting those
studies. Collectively, these cost are sometimes referred to as
Geological and Geophysical or G&G Costs. These
i costs may be incurred directly by the permit holder or
on behalf of the permit holder pursuant to a contract, or in
the form of a payment to a third party to purchase the
results of G&G studies carried out by that third party;
ii costs of drilling and equipping exploratory and
appraisal wells;
<PAGE> 249
iii costs of seismic work undertaken outside the
prospecting licence area to facilitate bridging to
pre-existing survey tie lines; and
iv costs associated with testing operations of any
discovery made
Exploration costs do not include development costs, production
costs, indirect costs, abandonment costs or non allowable costs.
q Feasibility Study Costs means costs of studies leading to
the determination of technical feasibility and commercial
viability of a prospecting licence or a mining permit. This may
include market feasibility studies and market negotiations
relating to initial petroleum sales contracts.
r Forward Sales Contract means a contract to sell production
from a permit producing petroleum at a specified price on a fixed
future time.
s Futures Contract means transactions undertaken for hedging
purposes which involve the purchase and sale of contracts to
supply petroleum on a recognized futures trading exchange.
t GAAP means Generally Accepted Accounting Practice.
u Generally Accepted Accounting Practice is as defined in the
Financial Reporting Act 1993.
v Gross Sales has the meaning expressed in paragraph 7.11.
w Head Office Costs means costs incurred outside of the mining
permit operations which, while in some manner may benefit the
mining permit, do not qualify as indirect costs and are therefore
non allowable costs. An operating and capital overhead allowance
is permitted in lieu of head office costs.
x Indirect Costs means actual general and administrative costs
incurred by the permit holder that are not capital costs, non
allowable costs, production costs or abandonment costs, directly
related to the petroleum producing activities carried out on or
in respect to the mining permit. Such costs, while not directly
relating to production form the mining permit, provide support
services which are reasonable and necessary to effective and
efficient production. Insurance costs are included in this
definition. Marketing costs incurred up to the point of sale
which are directly related to petroleum produced from the mining
permit are also included in this definition. Indirect costs are
those which would normally be allocated by the operator to joint
venture parties in a conventional Joint Venture Operating
Agreement such as, but no limited to, communications, travel,
audit, legal, office expenses, insurance etc.
<PAGE> 250
y Insurance Costs means costs incurred by the permit holder in
keeping normal business practices, which provide reasonable and
prudent protection against the risk of loss of assets, equipment,
personnel etc related to the prospecting licence and mining
permit, and result from the payment of premiums to an insurance
company. Insurance costs include reasonable and prudent
co-insurance and deductible amounts.
z Land Access Costs means either:
i payments made to land owners and/or occupiers to gain
access to their land to conduct mining operations; or
ii costs of purchasing land to gain access to land to
conduct mining operations, provided that the amount which
can be claimed shall be the lesser of the actual land
purchase price or twice the government valuation of the
land.
aa Natural Gas means all gaseous hydrocarbons produced from
wells including wet gas and residual gas remaining after the
extraction of condensate and natural gas liquids from wet gas.
bb Natural Gas Liquids means, for these royalty provisions, the
liquid hydrocarbons other than condensate extracted from wet gas
and sold as natural gas liquids, for example, LPG.
cc Netbacks (Net forwards) has the meaning expressed in
paragraph 7.13. Netbacks or net forwards are amounts either
incurred to third parties, or where the permit holder owns its
own means of transportation, storage or processing are the arm's
length cost to use those means between the point of sale and the
point of valuation. In this respect, the capital costs of any
owned transportation, storage or processing are therefore non
allowable costs.
dd Net Sales Revenue has the meaning expressed in, and is
determined in accordance with, paragraphs 7.10 to 7.19.
ee Non Allowable Costs include the following categories:
i depreciation and amortization;
ii royalties payable to the Crown or any other party from
the proceeds of production;
iii head office costs;
iv interest costs or cost of equity;
v income taxes and Goods and Services taxes;
vi costs incurred in purchasing title to an existing
prospecting licence or exploration permit or mining permit
or an ownership interest therein;
vii cash bonus bid payments;
viii foreign exchange gains or losses;
ix the capital cost of owned transportation, storage and
processing assets used by the permit holder between the
point of valuation and the point of sale;
<PAGE> 251
x donations; and
xi other costs not directly associated with the mining
permit.
ff offshore means any area of the sea out from the landward
boundary, as detailed in the "Coastal Marine Area" definition
given in the Resource Management Act 1991. If there is any
disagreement as to whether a project is onshore, then the
Minister shall have the right of determination.
gg Oil means all petroleum, including condensate, except
natural gas and natural gas liquids.
hh Onshore means any petroleum project inland from the landward
boundary, as detailed in the "Coastal Marine Area" definition
given in the Resource Management Act 1991. If there is any
disagreementas to whether a project is onshore, then the Minister
shall have the right of determination.
ii Operating and Capital Expenses means the sum of production
costs, capital costs, indirect costs, abandonment costs and
operating and capital overhead allowance (refer paragraph
7.20(f).
jj Operating Losses and Capital Costs Carried Forward has the
meaning expressed in paragraph 7.20(f).
kk Operating and Capital overhead Allowance is an allowance to
reflect the head office costs attributable to the mining permit.
For any period for which a royalty return must be provided, the
allowance is 2.5 percent for onshore permits or 1.5 percent for
offshore or part offshore and onshore mining permits of the total
production costs, capital costs and indirect costs claimed in the
particular period. The operating and capital overhead allowance
may not be claimed in respect of abandonment costs (refer
paragraph 7.20(e)).
ll Permit Acquisition Costs means payments made to the Crown
and other governmental authorities by the permit holder to:
i obtain and maintain an exploration permit and/or mining
permit, other than cash bonus bidding payments which are non
allowable costs; and
ii to obtain and maintain associated resource consents,
including costs associated with the preparation of any
Environmental Impact Statement which may be required under
the Resource Management Act 1991.
mm Petroleum Producing Activities include:
i the search for petroleum in its natural state and
original location; and
<PAGE> 252
ii construction, drilling and production activities
necessary to retrieve petroleum from its natural reservoirs
and the acquisition, construction, installation and
maintenance of field gathering and storage systems,
including lifting the petroleum to the surface and
gathering, treating, field processing (as in the case of
processing gas to extract liquid hydrocarbons) and field
storage. For the purposes of this definition, the petroleum
producing activities shall normally be regarded as
terminating at the point of valuation.
nn Point of Sale means the point at which the sale of petroleum
is deemed to have occurred in accordance with GAAP.
oo Point of Valuation has the meaning expressed and is
determined in accordance with the provisions outlined in
paragraphs 7.15 to 7.19.
pp Production Costs means:
i costs incurred to operate and maintain wells and
related equipment and facilities up to the point of
valuation, including capital and applicable operating costs
of support facilities, charged to production activities in
the form of a day rate or similar allocation mechanism, and
other costs incurred to maintain and operate those wells and
related facilities. Examples of production costs are:
Cost of labour to operate the wells and related
equipment and facilities; labour costs may include
remuneration elements such as wages and salaries and
reasonable fringe benefits as provided for in
employment contracts such as housing, education, health
care and recreation;
Repairs and maintenance;
Materials, supplies and purchased fuel consumed and
supplies used in operating wells and related equipment
and facilities;
Site maintenance costs during production;
Costs for leasing or hiring of capital equipment.
ii some support equipment or facilities may serve
petroleum producing activities on two or more mining permit
and may also serve transportation, refining and marketing
activities. To the extent that support equipment and
facilities are used in respect of two or more mining permits
and/or in more than one facet of petroleum producing
activities, a reasonable allocation of related capital and
applicable operating costs can be deducted as production
costs. In no circumstances may the total of such allocated
costs exceed the cost to be allocated.
Production costs do not include exploration costs, development
costs, indirect costs, abandonment costs or non allowable costs.
<PAGE> 253
qq Provisional Accounting Profits Royalty has the meaning
expressed and is determined in accordance with the provisions
outlined in paragraph 7.9.
rr Related Parties referred to:
i entities that directly or through one or more
intermediaries, exercise control, or are controlled by, or
are under common control with the permit holder; and
similarly the corresponding set of entities when the
relationship is based on significant influence. (Included
are holding companies, subsidiaries and associates and
fellow subsidiaries and associates, joint ventures and other
contractual arrangements);
ii individuals and their close family members or
controlled trusts owning directly or indirectly an interest
in the voting power of the permit holder that gives then
significant influence over that entity. (Close members of
the family of an individual are those that may be expected
to influence or be influenced by that person in their
dealing with an entity);
iii key management personnel, that is those persons having
authority and responsibility for planning, directing and
controlling the activities of the permit holder including
directors and officers of companies and close members of the
families of such individuals; and
iv entities in which a substantial interest in the voting
power is owned directly or indirectly by any person
described in (ii) or (iii) over which such a person is able
to exercise significant influence. This includes entities
owned by directors or major shareholders of the permit
holder and entities that have a member of key management in
common with the permit holder.
ss Reporting Period means the fiscal year defined in the permit
as the reporting period for the permit (refer also to paragraphs
7.28 and 7.29).
tt Royalty Return means a detailed statement of the permit
holder's petroleum producing activities in the form prescribed,
from time to time, in regulations (refer paragraph 7.35).
uu Take or Pay Contract means a contract between a producer and
a purchaser whereby a purchaser agrees to take or pay for a
minimum quantity of product per year whether or not the purchaser
takes delivery of the product. Usually any product paid for but
not taken in a particular period my be taken at some later time
subject to limitations.
EXECUTION
Executed as a Deed.
<PAGE> 254
EXECUTED by and on behalf of HER MAJESTY THE QUEEN in right of
New Zealand by THE MINISTER OF ENERGY in the presence of:
/s/ Wayne Jennings /s/ Maxwell Robert Bradford
Private Secretary
Parliament Buildings
Wellington
EXECUTED under the name and seal of FLETCHER CHALLENGE ENERGY
TARANAKI LIMITED
/s/ C.R. Sander
EXECUTED under the name and seal of SOUTHERN PETROLEUM (OHANGA)
LTD.
/s/ C. R. Sander
SIGNED for and on behalf of PETROLEUM RESOURCES LTD.
/s/ Roy Antony Radford
/s/ Gordon Alexander Ward
SIGNED for and on behalf of AUSTRALIA AND NEW ZEALAND PETROLEUM
LTD.
/s/ John Hopkins
SIGNED by MINORA ENERGY (NEW ZEALAND) LTD.
/s/ David J. Bennett
<PAGE> 255
EXHIBIT 10.19
PETROLEUM EXPLORATION PERMIT 38716
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991, I,
DOUGLAS LORIMER KIDD, Minister of Energy
Do Hereby
Grant Marabella Enterprises Limited 52.80 percent
Indo Overseas Exploration Limited 38.40 percent
Euro Pacific Energy Pty Limited 8.80 percent
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly that
delineated on the plan attached hereto.
This Exploration Permit is issued for a term of five years
commencing on the date stated below. The Permit is granted
subject to the Crown Minerals Act 1991 and any regulations made
thereunder, and to the terms and conditions specified in the
Second and Third Schedules hereto.
Dated at Wellington this 30th day of January 1996.
/s/ Doug Kidd
Hon Doug Kidd
Minister of Energy
<PAGE> 256
EXHIBIT 10.21
PETROLEUM EXPLORATION PERMIT 38716
DEED OF ASSIGNMENT
THIS DEED OF ASSIGNMENT is made this 10th day of July 1997
BETWEEN: MARABELLA ENTERPRISES LTD, of Level 18,200 Mart
St, Brisbane, Queensland, Australia ("Marabella")
AND: INDO OVERSEAS EXPLORATION LTD, of Suite 1200, 1090
West Pender St, Vancouver, British Columbia, Canada ("Indo
Overseas")
AND: INDO-PACIFIC ENERGY (NZ) LTD, of 284 Karori Rd,
Karori, Wellington, New Zealand (Indo (NZ)")
AND: DURUM ENERGY CORPORATION LTD, of Suite 1200, 1090
West Pender St, Vancouver, British Columbia, Canada ("DUE")
AND: DURUM ENERGY (NZ) LTD, of 284 Karori Rd, Karori,
Wellington, New Zealand ("DUE (NZ)")
AND: EURO PACIFIC ENERGY PTY LTD, of 133 Edward St,
East Perth, Western Australia, Australia ("Euro")
RECITALS
A. Marabella, Indo Overseas and Euro are holders of PEP38716 in
the following percentage interests:
Marabella 52.8%
Indo Overseas 38.4%
Euro 8.8%
A. Indo Overseas has agreed to assign to DUE 6% of its 38.4%
interest in PEP38716.
B. Indo Overseas has agreed to assign to DUE (NZ) 15% of its
38.4% interest in PEP38716.
C. Indo Overseas has agreed to assign to Indo (NZ) 17.4% of its
38.4% interest in PEP38716
NOW THIS DEED WITNESSETH
1. DEFINITIONS AND INTERPRETATION
1.1 definitions
In this deed, including the Recitals, except to the extent that
the context otherwise requires:
<PAGE> 257
"Effective Date" means 30 January 1996
"PEP38716 means Petroleum Exploration Permit 38716 issued under
the Crown Minerals Act 1991 of New Zealand as amended time to
time.
2. ASSIGNMENT OF INTEREST
Indo Overseas hereby assigns to DUE 6% of its 38.4% interest in
PEP38716, Indo Overseas hereby assigns to DUE (NZ) 15% of its
38.4% interest in PEP38716 and Indo Overseas hereby assigns to
Indo (NZ) 17.4% of its 38.4% interest in PEP38716 with effect
from the Effective Date and DUE, DUE (NZ) and Indo (NZ) severally
accept such assignments so that with effect from the Effective
Date, Marabella, Indo (NZ), DUE, DUE (NZ) and Euro hold the
following undivided interests in PEP38716
Marabella 52.80%
Indo(NZ) 17.40%
DUE 6.00%
DUE(NZ) 15.00%
Euro 8.80%
3. ASSUMPTION OF OBLIGATIONS
Indo (NZ), to the extent of the 17.4% undivided interest assigned
to it under this Deed; DUE, to the extent of the 6.0% undivided
interest assigned to it under this Deed; DUE(NZ), to the extent
of the 15.00% undivided interest to it under it under this Deed
all assume and covenant with each of Marabella, and Euro to
perform with the effect from the Effective Date the liabilities,
obligations, responsibilities and duties of Indo Overseas with
respect to the 38.4% interest which is assigned to them under
this Deed and agree to indemnify and hold Marabella and Euro
harmless against all such liabilities, obligations,
responsibilities and duties.
4. COSTS AND STAMP DUTY
The costs of and incidental to the preparation and execution of
this Deed together with all stamp duty and registration fees
payable on this Deed shall be borne and paid by Indo (NZ), DUE
and DUE(NZ).
5. GOVERNING LAW
This Deed shall be governed by and construed in accordance with
New Zealand law.
IN WITNESS WHEREOF this Deed of Assignment was executed on the
day and year first written above.
<PAGE> 258
Signed for and on behalf of /s/ N. J. Malloy
MARABELLA ENTERPRISES LTD by Director
N. J. Malloy
Name of Director
Signed for and on behalf of /s/ D. J. Bennett
INDO OVERSEAS EXPLORATION LTD by Director
D. J. Bennett
Name of Director
Signed for and on behalf of /s/ D.J. Bennett
INDO PACIFIC ENERGY (NZ) LTD by Director
D.J. Bennett
Name of Director
Signed for and on behalf of DURUM /s/ D.J. Bennett
ENERGY CORPORATION by Director
D.J. Bennett
Name of Director
Signed for and on behalf of /s/ Colin Crabb
EURO PACIFIC ENERGY LIMITED by Director
Colin Crabb
Name of Director
CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY
I, David John Bennett, certify:
1. That by deed dated 20th June 1997, Indo Overseas Exploration
Ltd appointed me to be its attorney on the terms and subject to
the conditions set out in that deed; and
2. That, at the date of this certificate, I have not received
any notice or information of the revocation of that appointment
by the liquidation of Indo Overseas Exploration Ltd or otherwise.
Signed at Wellington, N.Z. this 10th day of October, 1997
/s/ D.J. Bennett
DAVID JOHN BENNETT
<PAGE> 259
EXHIBIT 10.22
PETROLEUM EXPLORATION PERMIT 38720
CROWN MINERALS ACT 1991
Pursuant to Section 25 of the Crown Minerals Act 1991, I, DOUGLAS
LORIMER KIDD, Minister of Energy
Do Hereby Grant Indo-Pacific Energy (NZ) Ltd 50%
And Trans-Orient Petroleum Ltd 50%
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly that
delineated on the plan attached hereto.
This Exploration Permit is issued for a term of five years
commencing on the date stated below. The Permit is granted
subject to the Crown Minerals Act 1991 and any regulations made
thereunder, and to the terms and conditions specified in the
Second and Third Schedules hereto.
Dated at Wellington this 2nd day of September 1996.
/s/ Doug Kidd
Hon Doug Kidd
Minister of Energy
<PAGE> 260
EXHIBIT 10.23
PETROLEUM EXPLORATION PERMIT 38723
CROWN MINERALS ACT 1991
Pursuant to section 25 of the Crown Minerals Act 1991 and acting
under delegated authority from the Minister of Energy of 7
October 1991, I, Paul Stephen Carpinter, Secretary of Commerce
Do Hereby Grant
Indo-Pacific Energy (NZ) Limited 40.00 percent
Trans-Orient Petroleum (NZ) Limited 40.00 percent
Trans New Zealand Oil Co. (NZ) Limited 20.00 percent
the exclusive right to explore for petroleum in the area
described in the First Schedule and more particularly delineated
on the plan attached hereto.
This exploration permit is issued for a term of five years from
the date stated below. The permit is granted subject to the Crown
Minerals Act 1991 and any regulations made thereunder, and to the
terms and conditions specified in the Second and Third Schedules
hereto.
Dated at Wellington this 30th day of October 1997.
(signed) P.S. Carpinter
Paul Stephen Carpinter Secretary of Commerce
30/10/97
<PAGE> 261
EXHIBIT 10.24
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Petroleum Act, Chapter No. 198
PETROLEUM PROSPECTING LICENCE NO: 192
I, JOHN R. GIHENO, CMG, M.P., Minister for Mining and Petroleum,
acting pursuant to section 20 of the Petroleum Act, Chapter No.
198 and all other powers me enabling and having considered a
report of the Petroleum Advisory Board, HEREBY GRANT to:
INDO-PACIFIC ENERGY (PNG) PTY LIMITED
MOSAIC OIL NIUGINI PTY LIMITED
CONTINENTAL OIL (PNG) PTY LIMITED
(hereinafter collectively referred to as the "Licensee") this
Petroleum Prospecting Licence No. 192 in respect of the blocks
described hereunder for a period of six years subject to the
conditions set out hereunder.
Interpretation
In this Licence, "the Act" means the Petroleum Act, Chapter No.
198 and includes any amendment or re-enactment of that Act and
words or expressions used in this Licence have the same
respective meanings as in the Act.
Description of Blocks
All blocks listed hereunder can be identified by map title and
section number as shown on the Graticular Section maps
(1:1,000,000) prepared and published under the authority of the
Minister and available at the Department of Mining and Petroleum,
Port Moresby.
FLY RIVER MAP SHEET
(S, B, 54 BLOCKS)
2206 to 2214
2278 to 2286
2350 to 2358
2422 to 2430
2495 to 2502
2569 to 2574
2641 to 2644
2714 to 2716
2786 to 2788
The total number of blocks in respect of this Licence is sixty
(60) and all are inclusive.
<PAGE> 262
Conditions
1. This Licence shall take effect from the date of grant.
2. The Licensees shall at all times comply with:
(a) the provisions of the Act and the Regulations; and
(b) all directions given to him under the Act and the Regulations
3. The Licensees shall not transfer, or in any way deal in,
this Licence unless to or with a "related corporation" within the
meaning of the Companies Act during the first two years of the
Licence unless the intending farminee(s) are acceptable to the
Minister.
4. Within twelve months from the date of grant of this Licence,
the Licensees at a cost of not less than K100,000 shall undertake
the following work:
(a) reprocess and redisplay a minimum of 200 km of existing
seismic;
(b) load reprocessed seismic on seismic workstation, together
with log data from offset wells Eleva-1 and Lnagia-1, and conduct
seismic attribute analysis and forward modelling studies to
better delineate stratigraphic and structural highgraded areas;
(c) extend, by inclusion of Langia-1 and other wells, the
existing fluid inclusion data base and review all evidence for
oil generation and migration to the relevant area; and
(d) multi-level licence wide seismic remapping in time and depth,
aided by workstation usage over highgraded areas.
5. Before the expiry of the second year of the Licence, the
Licensees, at a cost of not less than US $100,000 shall complete
the following work:
(a) field review of Douglas Bend staging area on Strickland
River, and of environment in Kamu area, with a view to the
logistics of future seismic, drilling and development;
(b) conceptual engineering and economic analysis of gas
cycling/condensate stripping development of a "Kamu" type gas
discovery; and
(c) integrated prospect and lead ranking report with
recommendations.
6. The Licensees shall, not later than two months before the
expiration of the second year of this Licence, submit acceptable
proposals for work and expenditure in the third and fourth years
of this Licence to the Minister for approval which shall at least
include:
(a) the acquisition, processing and interpretation of 50 line km
of detailed seismic data during year 3;
(b) the drilling of one exploration well in year 4 to a target
approved by the Director;
(c) particulars of the financial resources available to the
Licensees to carry out the foregoing work programme or if so
requested by the Director an acceptable schedule of actions to be
taken by the Licensees to ensure the availability of the
necessary financial resources and of documentary evidence which
will be submitted to the Director at appropriate times during the
third and fourth years to this Licence to demonstrate that such
actions have been taken.
<PAGE> 263
7. If:
(a) the programme carried out and completed under conditions 4
and 5 does not show significant results; or
(b) the proposals and financial particulars submitted under
condition 6, together with any additional or alternative
proposals and financial particulars which may be requested by the
Minister, or submitted by the Licensees, are not acceptable to
the Licensees or the Minister, and have not been approved within
two months of the submission of the final submission of proposals
under condition 6;
the Licensees may, by written notice served on the Director,
apply to the Minister for consent to surrender the Licence.
8. The Licensees shall, not later than two months before the
expiration of the fourth year of this Licence, submit acceptable
proposals for work and expenditure in the fifth and sixth years
of this Licence to the Minister for approval which shall include
at least:
(a) the acquisition of 400 line km of 2D seismic data or 3D to
equivalent value during year 5;
(b) the drilling of an exploration well in year 6 to test a
target approved by the Director;
(c) if so requested by the Director, provide particulars of the
financial resources available to the Licensees to carry out the
foregoing work programme or if so requested by the Director an
acceptable schedule of actions to be taken by the Licensees to
ensure the availability of the necessary financial resources and
of documentary evidence which will be submitted to the Director
at appropritate times during the fifth and sixth years to this
Licence to demonstrate that such actions have been taken.
9. If:
(a) the programme carried out and completed under condition 6
does not show significant results; or
(b) the proposals and financial particulars submitted under
condition 8, together with any additional or alternative
proposals and financial particulars which may be requested by the
Minister, or submitted by the Licensees, are not acceptable to
the Licensees or the Minister, and have not been approved within
two months of the submission of the final submission of
proposalsunder condition 6;
the Licensees may, by written notice served on the Director,
apply to the Minister for consent to surrender the Licence.
10. Subject to section 99 of the Act, the Licensees after
service of notice under condition 7 or 9 shall cease to be liable
for any obligations in respect of this Licence whether arising
under the Act, the Regulations or these conditions to be
performed or observed after the date of service of the notice,
but this shall not affect the liability of the Licensees for any
such obligations which should have been performed or observed
before such date. A notice under conditions 7 or 9 may be served
on the Director in accordance with section 115 of the Act.
<PAGE> 264
11. If the Licensees should surrender the Licence under
conditions 7 or 9, this Licence shall terminate upon the date of
service of the instrument under section 97(6) of the Act.
12. The Licensees may take samples of any petroleum found in the
Licence area for the purpose of testing and determining its
chemical composition. With prior approval of the Director well
flow tests may be carried out, but the Licensees shall not
otherwise recover any petroleum from the Licence area.
13. The Licensees shall execute a Petroleum Agreement with the
Independent State of Papua New Guinea (the "State") in respect of
this Licence prior to the drilling of the first exploration well
in the Licence area. The agreement shall, inter alia, provide
that:
(a) the State shall be given the right to participate as a joint
owner to the extent of not more than 22.5% in any development and
in any petroleum development licence which results from the
discovery of petroleum under this Licence;
(b) such participation, at the discretion of the State, shall be
on a carried interest or paid basis, In the case where the State
participates on a carried interest basis, the cost of the State's
ownership interest will be paid out of its share of the petroleum
produced; and
(c) the landowners of the petroleum development licence area
shall be given the right to participate to the extent of not more
than two percent. Such interest will be given to them free of
cost up to the commencement of commercial production in respect
of each development. The cost of such interest up to the
commencement of commercial production will be contributed by the
Licensee and the State in proportion to their respective
interest.
Dated this 28th day of January, 1997
/s/ John R. Giheno
John R. Giheno, CMG, M.P.
Minister for Mining and Petroleum
<PAGE> 265
EXHIBIT 10.25
COMMONWEALTH OF AUSTRALIA
Petroleum (Submerged Lands) Act 1967
EXPLORATION PERMIT FOR PETROLEUM NO. AC/P19
I, WARWICK RAYMOND PARER, the Designated Authority in respect of
the adjacent area in respect of the Territory of Ashmore and
Cartier Islands, hereby grant to:
Indo-Pacific Energy Ltd. and
Mosaic Oil NL
an exploration permit for petroleum in respect of the blocks
described hereunder being blocks within the abovementioned area,
subject to the conditions summarized hereunder, to have effect
for a period of six years from and including the date hereof.
INTERPRETATION
In this permit, "the Act" means the Act under which this permit
is granted and includes any Act with which that Act is
incorporated and words used in this permit have the same
respective meanings as in the Act.
Dated this thirteenth day of May, 1997.
MADE under the Petroleum (Submerged Lands) Act 1967 of the
Commonwealth of Australia.
/s/ Warwick Parer
Warwick Parer
Designated Authority
DESCRIPTION OF BLOCKS
(The reference hereunder is to the name of the map sheet of the
1:1 000 000 series published by the Designated Authority and the
numbers of graticular sections shown thereon)
MAP SHEET SC 51 (TIMOR)
Block Nos
3007 3008 3079 3080 3081
3082 3151 3152 3153 3154
3155 3223 3224 3225 3226
3227 3297 part 3298 part
Assessed to contain 18 blocks
<PAGE> 266
CONDITIONS
1. (1) Subject to clause (2), during the term of the permit
set out in the first column of the following table, the permitee:
(a) shall carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, the work
specified in the minimum work requirements set out opposite that
year in the second column of the table;
(b) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, all or part of
the work specified in the minimum work requirements of a
subsequent year or years of that term set out opposite that year
or those years in the second column of the table; and
(c) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, work in addition
to the work specified in the minimum work requirements set out
opposite that year and in the subsequent year or years, if any,
of that term in the second column of the table.
(2) The permitee shall not commence any works or petroleum
exploration operations in the permit area except with and in
accordance with the approval in writing of the Designated
Authority, or a person authorised by the Designated Authority, to
give that approval.
(3) For the purpose of this clause, any work to be carried out
or carried out in accordance with clause 1(b) shall, if the
Designated Authority, in his discretion by instrument in writing
so approves, by treated as it were to be carried out or had been
carried out in the subsequent year or years of the term of the
permit specified by the Designated Authority, in that instrument.
Estimated
Year of Work Requirements Expenditure
Term of in Constant Dollars Constant
Permit
(INDICATIVE ONLY)
FIRST Collection of collation of data.
$200 000
Seismic reprocessing
SECOND Mapping on workstation, and seismic
200 000
attribute analysis. Prospect and lead delineation
THIRD Run seismic grid over Cartier depression fan
500 000 leads, 300 km
<PAGE> 267
FOURTH Run additional seismic if necessary. Map
500 000 and interpret data
FIFTH One (1) well
8 000 000
SIXTH Reinterpretation and evaluation of results
200 000
1A. During the first 3 year period of the term of the permit the
permitee must complete the work specified in the minimum work
requirements for the years in that period.
2. The permitee shall not recover any petroleum from the permit
area except as a result of production testing of a well.
3. The permitee shall:
(a) furnish to the Designated Authority, in such form as the
Designated Authority may from time to time require, full
particulars of the quantity of petroleum recovered by the
permittee; and
(b) permit a person authorised in writing for the purpose by the
Designated Authority, or an inspector, to test or examine any
measuring device installed that has been, is being or it to be
used by the permittee to measure the quantity of any petroleum
recovered in the permit area.
4. The permittee shall not construct any installation or
install any equipment in the permit area except with and in
accordance with the approval in writing of the Designated
Authority or a person authorised in writing by the Designated
Authority to give that approval.
5. The permittee shall not abandon, suspend or complete any
well except with and in accordance with the approval in writing
of the Designated Authority or of a person authorised by the
Designated Authority to give that approval.
6. The permittee shall at all times comply with -
(a) the provisions of the Act and any regulations for the time
being in force under the Act; and
(b) all directions given to it under the Act or regulations for
the time being in force under the Act.
7. In carrying out its operations in the permit area the
permittee shall take adequate measures for the protection of the
environment and shall comply with directions of the Designated
Authority in relation thereto.
8. It is a condition of this permit that the permittee complies
with the requirements of section 97A of the Act.
<PAGE> 268
EXHIBIT 10.26
COMMONWEALTH OF AUSTRALIA
Petroleum (Submerged Lands) Act 1967
NOTIFICATION AS TO GRANT OF PERMIT OVER AREA V96-G2
I, PATRICK McNAMARA, the Designated Authority in respect of the
area specified as being adjacent to the State of Victoria acting
for and on behalf of the Commonwealth - Victoria Offshore
Petroleum Joint Authority have considered the application by -
MOSAIC OIL NL
11th Floor
15-17 Young Street
SYDNEY NSW 2000
EURO PACIFIC ENERGY PTY LTD
133 Edward Street
PERTH WA 6000
INDO PACIFIC ENERGY PTY LTD
249 Karori Road
Wellington
NEW ZEALAND
and I am prepared to grant an exploration permit for petroleum on
the application in respect of the blocks described hereunder,
being blocks within the abovementioned area, subject to the
conditions summarized hereunder.
In order to comply with the Act, the applicant should submit to
the Designated Authority, a request under Section 22(3) of the
Act.
The application will lapse if the applicant does not make a
request under Section 22(3) of the Act under which this
instrument is made in respect of the grant of the exploration
permit for petroleum.
Attention is drawn to the provisions of Section 22 of the Act
relating to the period within which a request may be made.
INTERPRETATION
In this Permit, "the Act" means the Act under which this Permit
is granted and includes any Act with which that Act is
incorporated and words used in this Permit have the same
respective meanings as in the Act.
DESCRIPTION OF BLOCKS
In the adjacent area of the State of Victoria -
<PAGE> 269
MELBOURNE Sheet SJ55 prepared and published for the purposes of
the Petroleum (Submerged Lands) Act 1967.
A. BLOCKS
MELBOURNE MAP SHEET
BLOCK NO. BLOCK NO. BLOCK NO. BLOCK NO.
1992 2061 2062 2063
2064 2065 2066 2136
2137 2138 2139
Assessed to contain 11 blocks
CONDITIONS
1. (1) Subject to sub-clause (2), during a year of the term of
the permit set out in the first column of the following table,
the permittee -
(a) shall carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, the work
specified in the minimum work requirements set out opposite that
year in the second column of the table;
(b) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, all or part of
the work specified in the minimum work requirements of the
subsequent year or years of that term set out opposite that year
or those years in the second column of the table; and
(c) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, work in addition
to the work specified in the minimum work requirements set out
opposite that year and in the subsequent year or years, if any,
of that term in the second column of the table.
(2) The permittee shall not commence any works or petroleum
exploration operations in the permit area except with, and in
accordance with the approval in writing of the Designated
Authority or of a person authorised by the Designated Authority
to give that approval.
(3) For the purposes of this clause, any work carried out in
accordance with paragraph (1)(b) shall, if the Designated
Authority in his discretion by instrument in writing so approves,
be treated as if it had been carried out in the subsequent year
or years of the term of the permit specified by the Designated
Authority in that instrument.
<PAGE> 270
Year of Term Minimum Work Estimated of Permit
Requirements in Expenditures
Constant Dollars
(indicative only)
First Data Review $ 250,000
Seismic Reprocessing
Second 500 Km 2D Seismic Survey 750,000
Third One (1) Well 6,500,000
Fourth Data Review 250,000
Seismic Reprocessing
Fifth 500 Km 2D Seismic Survey 750,000
Sixth One (1) Well 6,500,000
1A. During the first 3 year period of the term of the permit the
permittee must complete the work specified in the minimum work
requirements for the years in the period.
2. The permittee shall not recover any petroleum from the
permit area except as a result of production testing of a well.
3. The permittees shall not construct any installation or
install any equipment in the permit area except with and in
accordance with the approval in writing of the Designated
Authority or a person authorised in writing by the Designated
Authority to give that approval.
4. The permittee shall not abandon, suspend or complete any
well except with and in accordance with the approval of the
Designated Authority or of a person authorised by the Designated
Authority to give that approval.
5. In carrying out its operations in the permit area the
permittee shall take adequate measure for the protection of the
environment.
6. The permittee shall at all times comply with -
(a) the provisions of the Act and of any regulations for the
time being in force under the Act; and
(b) all Directions given to him under the Act or the Regulations
for the time being, in force under the Act.
7. It is a condition of this Exploration Permit for Petroleum
that the Permittee complies with the requirements of Section 97A
of the Act.
Dated at Melbourne this 25th day of June 1997
MADE under the Petroleum (Submerged Lands) Act 1967 of the
Commonwealth of Australia on behalf of the Commonwealth Victoria
Offshore Petroleum Joint Authority
/s/ Patrick McNamara
DESIGNATED AUTHORITY
<PAGE> 271
EXHIBIT 10.27
COMMONWEALTH OF AUSTRALIA
Petroleum (Submerged Lands) Act 1967
RENEWAL OF EXPLORATION PERMIT FOR PETROLEUM NO. WA-199-P
I, GORDON LESLIE HILL, the Designated Authority in respect of the
area specified as being adjacent to the State of Western
Australia acting for and on behalf of the Commonwealth - Western
Australian Offshore Petroleum Joint Authority, hereby, subject to
the conditions set out hereunder, grant to
LASMO OIL (AUSTRALIA) LIMITED
of 4th Floor
40 Kings Park Road
WEST PERTH WA 6005
NORCEN INTERNATIONAL LIMITED
of Level 12
50 Berry Street
NORTH SYDNEY NSW 2060
BRIDGE OIL LIMITED
of Level 9
255 Elizabeth Street
SYDNEY NEW 2000
PETROZ NL
of GPO Box 1010
BRISBANE QLD 4001
a renewal of the exploration permit for petroleum -
(a) in respect of each of the blocks that is constituted by a
graticular section, or by part of the graticular section,
described hereunder; and
(b) where, at any time during the renewal term of this permit, a
graticular section, or part of a graticular section, so described
constitutes a block
in respect of each block so constituted.
This renewal of permit has effect for a period of five (5) years
from the date hereof.
INTERPRETATION
In this permit "the Act" means the Act under which the permit is
granted and includes any Act with which that Act is incorporated
and words used in this permit have the same respective meanings
as in the Act.
<PAGE> 272
DESCRIPTION
A. BLOCKS
(The reference hereunder are to the names of map sheets of the
1:1 000 000 series published by the Designated Authority and to
the numbers of graticular sections shown thereon).
KUPANG MAP SHEET
Block No. Block No. Block No. Block No.
2592 2663 B 2664 2735 A
2736 2806 B 2807 2808
2878 A 2879 2880 2949 B
2950 2951 2952 3021 A
3022 3023 3024 3093
3094 3095 3165 3166
3167 3168 3239 3240
3311 3312 3379 3450 A
3451
Assessed to contain 33 blocks
CONDITIONS
1. (1) Subject to sub-clause (2), during a year of the term of
the permit set out in the first column of the following table,
the permittee:
(a) shall carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, the work
specified in the minimum work requirements set out opposite that
year in the second column of the table;
(b) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, all or part of
the work specified in the minimum work requirements of a
subsequent year or years of that term set out opposite that year
or those years in the second column of the table; and
(c) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, work in addition
to the work specified in the minimum work requirements set out
opposite that year and in the subsequent year or years, if any,
of that term in the second column of the table.
(2) The permittee shall not commence any works or petroleum
exploration operations in the permit area except with, and in
accordance with the approval in writing of the Designated
Authority or of a person authorised by the Designated Authority
to give that approval.
<PAGE> 273
(3) For the purposes of this clause, any work carried out in
accordance with paragraph (1) (b) shall, if the Designated
Authority in his discretion by instrument in writing so approves,
be treated as if it had been carried out in the subsequent year
or years of the term of the permit specified by the Designated
Authority in that instrument.
Year of Term Minimum Work Estimated Expenditure
of Permit Requirements in Constant Dollars
(indicative only)
First 500 km Reprocessing 428,000
Geological and Geophysical Studies
Second 200 km Seismic 500,000
Geological and Geophysical Studies
Third 300 km Seismic 650,000
Geological and Geophysical Studies
Fourth One Well 6,400,000
Geological and Geophysical Studies
Fifth One Well 6,400,000
Geological and Geophysical Studies
2. The permittee shall not recover any petroleum from the
permit area except as a result of production testing of a well.
3. The permittee shall -
(a) furnish to the Designated Authority, in such form as the
Designated Authority may from time to time require, full
particulars of the quantity of petroleum recovered by the
permittee; and
(b) permit a person authorised in writing for the purpose by the
Designated Authority, or an inspector, to test or examine any
measuring device installed that has been, is being or is to be
used by the permittee to measure the quantity of any petroleum
recovered in the permit area.
4. The permittee shall not construct any installation or
install any equipment in the permit area except with and in
accordance with the approval in writing of the Designated
Authority or a person authorised in writing by the Designated
Authority to give that approval.
5. The permittee shall not abandon, suspend or complete any
well except with and in accordance with the approval of the
Designated Authority or of a person authorised by the Designated
Authority to give that approval.
<PAGE> 274
6. The permittee shall at all times comply with -
(a) the provisions of the Act and of any regulations for the
time being in force under the Act; and
(b) all directions given to him under the Act or the regulations
for the time being in force under the Act; and
(c) the provisions of the "Schedule - Specific Requirements as
to Offshore Petroleum Exploration and Production - 1990".
7. In carrying out its operations in the permit area the
permittee shall take adequate measures for the protection of the
environment and shall comply with all Directions of the
Designated Authority in relation thereto.
8. The permittee shall, as required by, and within a time
specified by, the Designated Authority, submit to the Designated
Authority or such other person as the Designated Authority may
nominate, any data and field seismic magnetic tapes relating to
the relinquished part of the original permit area.
Dated at Perth this 16th day of April 1992
MADE under the Petroleum (Submerged Lands) Act, 1967 of the
Commonwealth of Australia on behalf of the Commonwealth - Western
Australian Offshore Petroleum Joint Authority.
/s/ Gordon Leslie Hill
DESIGNATED AUTHORITY
I certify this to be a true and correct copy of the original and
which has been sighted by me.
Margaret Beall
/s/ M. Beall
Petroleum Division, W.A. Dept. of Mines
<PAGE> 275
EXHIBIT 10.28
COMMONWEALTH OF AUSTRALIA
Petroleum (Submerged Lands) Act 1967
RENEWAL OF EXPLORATION PERMIT FOR PETROLEUM NO. WA-199-P
I, GORDON LESLIE HILL, the Designated Authority in respect of the
area specified as being adjacent to the State of Western
Australia acting for and on behalf of the Commonwealth - Western
Australian Offshore Petroleum Joint Authority, hereby, subject to
the conditions set out hereunder, grant to
LASMO OIL (AUSTRALIA) LIMITED
of 4th Floor
40 Kings Park Road
WEST PERTH WA 6005
NORCEN INTERNATIONAL LIMITED
of Level 12
50 Berry Street
NORTH SYDNEY NSW 2060
BRIDGE OIL LIMITED
of Level 9
255 Elizabeth Street
SYDNEY NEW 2000
PETROZ NL
of GPO Box 1010
BRISBANE QLD 4001
a renewal of the exploration permit for petroleum -
(a) in respect of each of the blocks that is constituted by a
graticular section, or by part of the graticular section,
described hereunder; and
(b) where, at any time during the renewal term of this permit, a
graticular section, or part of a graticular section, so described
constitutes a block
in respect of each block so constituted.
This renewal of permit has effect for a period of five (5) years
from the date hereof.
INTERPRETATION
In this permit "the Act" means the Act under which the permit is
granted and includes any Act with which that Act is incorporated
and words used in this permit have the same respective meanings
as in the Act.
<PAGE> 276
DESCRIPTION
A. BLOCKS
(The reference hereunder are to the names of map sheets of the
1:1 000 000 series published by the Designated Authority and to
the numbers of graticular sections shown thereon).
KUPANG MAP SHEET
Block No. Block No. Block No. Block No.
2592 2663 B 2664 2735 A
2736 2806 B 2807 2808
2878 A 2879 2880 2949 B
2950 2951 2952 3021 A
3022 3023 3024 3093
3094 3095 3165 3166
3167 3168 3239 3240
3311 3312 3379 3450 A
3451
Assessed to contain 33 blocks
CONDITIONS
1. (1) Subject to sub-clause (2), during a year of the term of
the permit set out in the first column of the following table,
the permittee:
(a) shall carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, the work
specified in the minimum work requirements set out opposite that
year in the second column of the table;
(b) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, all or part of
the work specified in the minimum work requirements of a
subsequent year or years of that term set out opposite that year
or those years in the second column of the table; and
(c) may carry out in or in relation to the permit area, to a
standard acceptable to the Designated Authority, work in addition
to the work specified in the minimum work requirements set out
opposite that year and in the subsequent year or years, if any,
of that term in the second column of the table.
(2) The permittee shall not commence any works or petroleum
exploration operations in the permit area except with, and in
accordance with the approval in writing of the Designated
Authority or of a person authorised by the Designated Authority
to give that approval.
<PAGE> 277
(3) For the purposes of this clause, any work carried out in
accordance with paragraph (1) (b) shall, if the Designated
Authority in his discretion by instrument in writing so approves,
be treated as if it had been carried out in the subsequent year
or years of the term of the permit specified by the Designated
Authority in that instrument.
Year of Term Minimum Work Estimated Expenditure
of Permit Requirements in Constant Dollars
(indicative only)
First 500 km Reprocessing 428,000
Geological and Geophysical Studies
Second 200 km Seismic 500,000
Geological and Geophysical Studies
Third 300 km Seismic 650,000
Geological and Geophysical Studies
Fourth One Well 6,400,000
Geological and Geophysical Studies
Fifth One Well 6,400,000
Geological and Geophysical Studies
2. The permittee shall not recover any petroleum from the
permit area except as a result of production testing of a well.
3. The permittee shall -
(a) furnish to the Designated Authority, in such form as the
Designated Authority may from time to time require, full
particulars of the quantity of petroleum recovered by the
permittee; and
(b) permit a person authorised in writing for the purpose by the
Designated Authority, or an inspector, to test or examine any
measuring device installed that has been, is being or is to be
used by the permittee to measure the quantity of any petroleum
recovered in the permit area.
4. The permittee shall not construct any installation or
install any equipment in the permit area except with and in
accordance with the approval in writing of the Designated
Authority or a person authorised in writing by the Designated
Authority to give that approval.
5. The permittee shall not abandon, suspend or complete any
well except with and in accordance with the approval of the
Designated Authority or of a person authorised by the Designated
Authority to give that approval.
<PAGE> 278
6. The permittee shall at all times comply with -
(a) the provisions of the Act and of any regulations for the
time being in force under the Act; and
(b) all directions given to him under the Act or the regulations
for the time being in force under the Act; and
(c) the provisions of the "Schedule - Specific Requirements as
to Offshore Petroleum Exploration and Production - 1990".
7. In carrying out its operations in the permit area the
permittee shall take adequate measures for the protection of the
environment and shall comply with all Directions of the
Designated Authority in relation thereto.
8. The permittee shall, as required by, and within a time
specified by, the Designated Authority, submit to the Designated
Authority or such other person as the Designated Authority may
nominate, any data and field seismic magnetic tapes relating to
the relinquished part of the original permit area.
Dated at Perth this 16th day of April 1992
MADE under the Petroleum (Submerged Lands) Act, 1967 of the
Commonwealth of Australia on behalf of the Commonwealth - Western
Australian Offshore Petroleum Joint Authority.
/s/ Gordon Leslie Hill
DESIGNATED AUTHORITY
I certify this to be a true and correct copy of the original and
which has been sighted by me.
Margaret Beall
/s/ M. Beall
Petroleum Division, W.A. Dept. of Mines
<PAGE> 279
EXHIBIT 10.29
WA-199-P FARMIN AGREEMENT
DATED NOVEMBER 28, 1997
BORAL ENERGY RESOURCES LIMITED
(ACN 007 845 338)
AND
INDO-PACIFIC ENERGY (AUS) LTD.
CONTENTS
RECITALS 1
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 2
1.2 Interpretation Rules 3
1.3 Entire Agreement 3
1.4 Amendments 3
1.5 Headings 3
1.6 Recitals 3
2. APPROVALS 3
3. ASSIGNMENT 4
4. CONSIDERATION 4
5. VOTING 4
6. DEFAULT 4
7. BORAL ENERGY'S REPRESENTATIONS 5
8. INDO-PACIFIC'S REPRESENTATIONS 5
9. FURTHER ASSURANCES 6
10. TAX CONSIDERATIONS 6
11. COSTS AND STAMP DUTY 6
12. GOVERNING LAW 6
13. NOTICES 6
14. WAIVER 8
15. REMEDIES 8
16. SEVERANCE 8
17. EXECUTION 8
18. CONFIDENTIALITY 8
Agrement dated November 28, 1997
Between:
BORAL ENERGY RESOURCES LIMITED (ACN 007 845 338) of 60 Hindmarsh
Square, Adelaide, South Australia ("BORAL ENERGY")
And;
INDO-PACIFIC ENERGY (AUS) PTY. LTD. of 284 Karori Road,
Wellington, New Zealand ("INDO-PACIFIC")
RECITALS
A Boral Energy together with Petroz NL and Santos (BOL) Pty.
Ltd. are the registered holders of the Permit issued pursuant to
the Act and are parties to the WA-199-P Joint Venture.
<PAGE> 280
b Pursuant to a letter agreement dated September 15, 1997
Boral Energy agreed to assign to Indo-Pacific the Assigned
Interest, which Indo-Pacific agreed to acquire and the parties
have set out the terms and conditions of the assignment in this
Agreement.
OPERATIVE PART
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement (including the Recitals), unless the context
otherwise requires:
1.1.1 Act means the Petroleum (Submerged Lands) Act 1967 (Cwth);
1.1.2 Affiliate has the meaining ascribed to the term under the
Corporations Law;
1.1.3 Agreement means this agreement between Boral Energy and
Indo-Pacific;
1.1.4 Assigned Interest means a 5% Participating Interest in the
Permit;
1.1.5 Authority means, as the context required, the Joint
Authority or the Designated Authority;
1.1.6 Deed of Assumption means the deed referred to in clause 9;
1.1.7 Designated Authority has the meaning ascribed to that term
in the Act;
1.1.8 Effective Date means September 15, 1997;
1.1.9 Joint Authority has the meaning ascribed to that term in
the Act;
1.1..10 Permit means petroleum exploration licence WA-199-Por any
renewal or extension thereof and any producction licence or title
or other licence granted pursuant thereto;
1.1.11 Operator means the operator of the WA-199-P Joint Venture
appointed pursuant to the WA-199-P JOA;
1.1.12 Participating Interest means a particiapting interest of a
party under the WA-199-P JOA;
1.1.13 Transfer means the transfer referred to in clause 9;
1.1.14 WA-199-P Joint Venture means the joint venture constituted
by the parties referred to in recital A;
1.1.15 WA-199-P JOA means the joint venture operating agreement
dated 22 May 1984 which governs the joint vnture relationship
between the WA-199-P Joint Venture parties in relattion to the
Permit;
1.1.16 Kittiwake-1 Well means the well to be drilled by the
Southern Cross rig in or around november, 1997. The well is to
penetrate the potential reservoirs in the Plover Formation.
1.1.17 Kittiwake-1 Well Costs means in respect of the Kittiwake-1
Well, all direct and indirect costs incurred in the planning and
drilling of the Kittiwake-1 Well, including but not limited to
the following operations and costs:
(a) site surveys;
(b) mobilisation and demobilisation of the drilling unit and
associated vessels;
(c) running and setting surface and intermediate casing,
cementing, wireline logging, coring and repeat formation testing;
<PAGE> 281
(d) the remeying of any blow out or mechanical failure of the
well including redrilling the well;
(e) plugging and abandoning or suspending; and
(f) analysis of results required for the preparation of
completion reports.
1.2 Interpretation Rules
In this Agreement, unless a contrary intention appears:
1.2.1 a reference to this Agreement is a reference to this
Agreement as amended, varied, novated or substituted from time to
time;
1.2.2 a reference to any legislation or any provision of any
legislation includes:
(a) all regulations, orders or instruments issued under the
legislation or provision; and
(b) any modification, consolidation, amendment, re-enactment,
replacement or codification of such legislation or provision;
1.2.3 a word:
(a) importing the singular includes the plural and vice versa;
(b) denoting an individual includes corporatons, firms,
unincorporated bodies, authorities and instrumentalities;
1.2.4 a reference to a Party to this Agreement or any other
instrument includes that party's executors, administrators,
successors and permitted assigns;
1.2.5 where a word or phrase is given meaning, any other part of
speech or grammatical form has a corresponding meaning; and
1.2.6 a reference to a clause number, schedule number or annexure
number (or letter) is a reference to a clause, schedule or
annexure of this Agreement; and
1.2.7 words and expressions used in this Agreement which are used
in the Act shall where the context admits have the same meaning
as they have in the Act.
1.3 Entire Agreement
This Agreement is the entire agreement between the Parties as to
its subject matter and supercedes all prior agreements,
representations and understandings.
1.4 Amendments
No amendment of, or addition to, this Agreement is binding unless
it is in writing and executed by the Parties.
1.5 Headings
Any heading, index, table of contents or marginal note is for
convenience only and does not affect the interpretation of this
Agreement.
1.6 Recitals
The Recitals of this Agreement form part of this Agremeent and
have effect as if set out in full in this Agreement.
2. APPROVALS
2.1 This Agreement (other than this clause 2 and clauses
4,5,6.1,9,12,13,14,15,16,17 and 18) is conditional upon:
2.1.1 this Agreement being approved and registered by the
Authority; and
<PAGE> 282
2.1.2 each of the Transfer and Deed of Assumption being approved
and registered by the Authority.
2.2 The Parties must use their best endeavours to ensure that the
conditions referred to in clause 2.1 are satisfied as soon as
practicable after execution of this Agreement.
2.3 If the conditions set out in clause 2.1 are not satisfied on
the date being 12 months after the date of this Agreement then
either Party may terminate this Agreement at any time after that
date by ggiving notice to that effect to the other Party and this
Agreement (except for this clause 2.3 and clauses 2.4 and 2.5)
will terminate upon receipt of that notice.
2.4 Upon termination of this Agreement under clause 2.3:
2.4.1 Boral Energy must indemnify Indo-Pacific for all amounts
which Indo-Pacific has paid pursuant to clause 4; and
2.4.2 the Parties must execute all documents and do all things
necessary or desirable to place each other in the same position
as they would have been in had this Agreement not been executed
or acted upon.
3. ASSIGNMENT
With effect on and from the Effective Date and subject to
Indo-Pacific complying with its obligations under this Agreement,
Boral assigns to Indo-Pacific the Assigned Interest free and
clear of all liens, encumbrances, rights and interests other than
those arising under the WA-199-P JOA, the Permit or the Act and
Indo-Pacific accepts the assignment of the Assigned Interest.
4. CONSIDERATION
4.1 In consideration of Boral Energy agreeing to assign the
Assigned Interest to Indo-Pacific, Indo-Pacific shall bear and
pay ten percent (10%) of the Kittiwake-1 Well Costs.
4.2 The obligation under clause 4.1 shall have been met on the
first to occur of any of the following:
(a) the WA-199-P Joint Venture decides in accordance with the
WA-199-P JOA to run production casing in the Kitiwake-1 Well; or
(b) the WA-199-P Joint Venture decides in accordance with the
WA-199-P JOA to plug and abandon the Kittiwake-1 Well; or
(c) the Kittiwake-1 Well Costs reach Aus$8.5 million.
and when the obligation under clause 4.1 has been met
Indo-Pacific shall be liable for the Assigned Interest share of
any costs in relation to the Kittiwake-1 Well.
4.3 In addition to its liability inder clause 4.1, Indo-Pacific
shall be liable on and from the Effective Date for all other
costs and expenses of the Assigned Interest in accordance with
the Wa-199-P JOA.
5 VOTING
During the period of time from the date of this Agreement to the
date upon which the conditions in clause 2 are satisfied, Boral
Energy shall vote the Assigned Interest in a manner that is
consistent with this Agreement.
6. DEFAULT
6.1 If Indo-Pacific fails to pay any of the costs as required
under clause 4.1 of this Agreement then Boral Energy may after
giving Indo-Pacific 5 days notice to remedy the default pay such
<PAGE> 283
costs and recover the sum (if applicable) not so paid as a
liquidated debt, together with interest on the amount outstanding
at the rate charged from time to time by Boral Energy's bankers
on overdrafts in excess of $100,000 such interest being
calculated on a daily basis from the date of payment by Boral
Energy until the date of recovery from Indo-Paccific, capitalised
on the last day of each month.
6.2 In the event that Indo-Pacific fails to remedy the default in
clause 6.1 after a further 5 days then Boral energy may require
Indo-Pacific to forthwith assign to Boral Energy the Assigned
Interest assigned to Indo-Pacific under this Agreement for no
consideration other than the complete discharge of all liability
of Indo-Pacific under, and in respect of, this Agreement.
6.3 The Parties acknowledge and agree that the provisions of
clauses 6.1 and 6.2 arise out of a genuine attempt to compensate
Borla Energy for any loss and damage sustained by the Parties to
be suffered by Boral Energy as a result of an unremediedd default
of Indo-Pacific.
7 BORAL ENERGY'S REPRESENTATIONS
7.1 Boral Energy represents and warrants to Indo-Pacific that:
7.1.1 it has the necessary power and authority, and all other
necessary corporate and other action has or will be taken, to
enable it to enter into and perform its obligations under this
Agreement;
7.1.2 the Assigned Interest is free of all liens, encumbrances,
rights and other interests inposed under the Act, the WA-199-P
JOA or the Permit;
7.1.3 it is not engaged in any litigation or arbittration
proceeding in respect of the Permit, and to the best of its
knowledge and belief there are no actons, suits or other
proceedings pending or threatened against it in relation to the
Permit or which affects or may affect the validity of the Permit
or this Agreement;
7.1.4to the best of its knowledge and belief, the Permit is
valid, subsisting and in good standing and all the obligations
imposed by the Act in relation thereto have been duly performed
and complied with.
7.2 Boral Energy shall indemnify Indo-Pacific and keep
Indo-Pacific indemnified against all liability, cost, loss and
damage
which Indo-Pacific suffers or incurs as a result of a breach of
any representation and warranty contained in clause 7.1 provided
however that Boral Energy shall not be liable for any indirect or
consequential damages and Boral Energy's toal liability for any
and all breaches will not excee the consideration referred to in
clause 4.
7.3 No claim for any breach of any representation or warranty set
out in clause 7.1 shall be made more than one (1) year after the
date of this Agreement unless prior to the eexpiry of such period
written notice of the matter complained of (with such detail of
the matter as shall then be reasonably practicable) shall have
been given by Indo-Pacifc to Boral Energy.
<PAGE> 284
7.4 Subject to any law to the contrary and except as provided in
clause 7.1, all terms, conditions, warranties, statements,
representations, estimates or opinions whether express, implied,
written or oral are excluded and Boral Energy disclaims all
liability in relation to them to the maximum extent permitted by
law and Indo-Pacific has independently verified all nformation
made available by Boral Energy.
8 INDO-PACIFIC'S REPRESENTATIONS
8.1 Indo-Pacifc represents and warrants to Boral Energy that it
has the necessary power and authority and all necessary corporate
and other action has been taken to enable it to enter into and
perforrm its obligations under this Agrement and each further
document and assurance required under clause 9 hereof.
8.2 Indo-Pacific shall indemnify Boral energy and keep Boral
energy indemnified against all liability, cost, loss and damage
which Boral energy suffers or incurs as a result of any breach f
a representation and warranty contained in clause 8.1 provided
however that Indo-pacific shall not be liable for any indirect or
consequential damages.
9. FURTHER ASSURANCES
Indo-Pacific agrees that it will sign, execute and complete all
further documents and assurances (which included a Deed of
Assumption and Transfer) and do all further acts and things as
may be reasonably required to confirm or give effect to the
intent and object of this Agreement.
10. TAX CONSIDERATIONS
10.1 Resource Rent Tax
Boral energy agrees to provide to Indo-pacific relevant
information required to enable Inndo-Pacific to assume and obtain
the benefit of allowable deductions in respect of the Assigned
Interest pursuant to the Petroleum Resource Rent Tax Assessment
Act 1987.
10.2 Value of Assigned Interest
For the purposes of Part 111A of the Income Tax Assessment Act
1936 of the Commonwealtth of Australia, the Parties acknowledge
and agree that if the Permit is a wildcat exploration area with
no proven economic reserves of pertroleum and that the value of
the rights and interest assigned to it si nil.
11. COSTS AND STAMP DUTY
11.1 Each of the Parties shall bear its own costs and expenses
(including, without limitation, all legal costs and expenses) in
relation to the preparation, negotiation and exeecution of this
Agreement and each of the documents which this Agremeent requires
any of the parties to execute.
11.2 Indo-Pacific shall bear all stamp duty and registration fees
payable under the Act on this Agreement and each of the documents
which this Agreement requires any of the Parties to execute.
<PAGE> 285
12. GOVERNING LAW
This agreement shall be deemed to be a contract under, and shall
be governed by and interpreted in accordance with, the laws of
South Australia.
13. NOTICES
13.1 How Notices may be given
A notice, approval, direction, consent, offer, demand or other
communication in connection with this agreement must be:
13.1.1 in writing;
13.1.2 signed by an authorized officer of the relevant Party; and
13.1.3 given to the recipient Party:
(a) by hand delivery;
(b) by pre-paid mail or courier sent to that Party; or
(c) by facsimile transmissionto that Party.
13.2 Where notices must be sent
For the purposes of clause 13.1:
13.2.1 deliveries must be delivered to the address of the
recipient Party set out below;
13.2.1 mail must be sent to the address of the recipient Party
set out below;
13.2.3 facsimile messages must be transmitted to the facsimile
number of the recipient Party set out below; and in each case
13.2.4 mustt be marked for the attention of the person specified
below in relation to the recipient Party:
Name: Boral Energy Resources Limited
Address: Level 3, 60 Hindmarsh Square
Adelaide, South Australia 5000
Attention: Dr. R. Willink
Facsimile: (618) 8823 1851
Name: Indo-Pacific Energy (Aus) Pty. Ltd.
Address: 284 Karori Road
Wellington, New Zealand
Attention: Dr. D. Bennett
Facsimile: 64 4476 0120
13.3 Change of Details
13.3.1 A Party may from time to time change any of the details
specified in clause 13.2.4 by giving not less than 5 business
days notice to each other party.
13.3.2 If details are changed in accordance with clause 13.3.1,
clause 13.2.4 applies as if those changed details were set out in
clause 13.2.4.
13.4 Proof of Notices
13.4.1 Proof of posting by pre-paid mail is proof of receipt on
the second claerr business day after courier delivery or the
fourth clear business day in the case of posting.
13.4.2 Proof of transmission of a facsimille message is proof of
receipt on the date of the transmission, but if a transmission is
not made on a business day or not made before 4:00 p.m., then it
<PAGE> 286
will be deemed to havebeenreceived at 10:00a.m. on the next
business day in the time zone of the recipient after
transmission.
14. WAIVER
A party's failure to exercise or delay in exercising a power or
right is not a waiver of that power or right, and the exercise of
a power or right does not preclude the future exercise of that or
any other power or right.
15. REMEDIES
15.1 All remedies, rights undertakings, obligations or agreements
of the Parties under this Agreement arising by law in respect of
this Agreement shall be cumulative and none thereof shall be in
limitation of any rights, remedies, undertakings, obligations or
agreements of the parties.
15.2 Each of the Parties may follow any such remedy to which it
is entitled by law or otherwise, either concurrently or
successively at its option.
16. SEVERANCE
Each provision of this Agreements shall be deemed to be separate
and severable from the others of them. If any provision of this
Agreement is determined to be invalid or unenforceable in any
jurisdiction, it shall be severed from this Agreement and not
invalidate the rest of this Agreement which shall remain in full
force and effect as if such provision had not been made a part
thereof. Such a determination of invalidity or enforceability
shall not affect the validity or enforceability of that
provvision in any other jurisdiaction.
17. EXECUTION
This Agreement may be executed by the separate eexecution and
delivery of counterparts and proof off execution and delivery of
those counterparts may be achievable by the transmission of
executed copies by facsimile.
18. CONFIDENTIALITY
The Parties agree and undertake to keep the terms of this
Agreement conffidential subject to their respective obligations
and rights to disclose to Affiliates as may be required by law or
rule of stock exchange.
EXECUTED AS an Agreement
THE COMMON SEAL OF BORAL ENERGY LIMITED was affixed in accordance
with its articles of association:
_______________________________
_______________________________
<PAGE> 287
THE COMMON SEAL OF INDO-PACIFIC ENERGY (AUS) PTY. LTD. was
affixed in accordance with its articles of association:
/s/ Dr. D. Bennett
President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the audited
consolidated financial statements as at December 31, 1996 and the unaudited
consolidated finanical statements as at September 30, 1997 and is qualified in
its entirety by reference to such financial statements. All items are stated in
Canadian dollars.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 14,518,863 12,941,964
<SECURITIES> 0 0
<RECEIVABLES> 196,325 144,316
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 13,154,012 14,787,738
<PP&E> 47,572 190,174
<DEPRECIATION> 133,879 365,242
<TOTAL-ASSETS> 14,719,342 17,735,477
<CURRENT-LIABILITIES> 199,291 23,962
<BONDS> 0 0
0 0
0 0
<COMMON> 19,275,707 22,819,985
<OTHER-SE> (4,675,656) (5,108,470)
<TOTAL-LIABILITY-AND-EQUITY> 14,719,342 17,735,477
<SALES> 222,501 500,267
<TOTAL-REVENUES> 580,715 807,385
<CGS> 52,300 98,589
<TOTAL-COSTS> 52,300 98,589
<OTHER-EXPENSES> 572,891 1,043,986
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (213,483) (335,190)
<DISCONTINUED> 51,303 0
<EXTRAORDINARY> 0 (97,624)
<CHANGES> 0 0
<NET-INCOME> (213,483) (432,814)
<EPS-PRIMARY> (0.01) (0.015)
<EPS-DILUTED> (0.01) (0.013)
</TABLE>
<PAGE> 302
EXHIBIT 99.1
ESCROW AGREEMENT
THIS AGREEMENT is dated for reference the 8th day of April, 1994
and made
AMONG:
PACIFIC CORPORATE TRUST COMPANY, a trust company having its
principal place of business in the City of Vancouver at 830 - 625
Howe Street, Vancouver, British Columbia; (the "Escrow Agent")
AND:
CONSOLIDATED NEWJAY RESOURCES LTD., a company incorporated under
the laws of British Columbia and having an office at 1200 - 1090
West Pender Street, Vancouver, British Columbia; (the "Issuer")
AND:
EACH SHAREHOLDER, as defined in this Agreement; (collectively the
"Parties").
WHEREAS the Shareholder has acquired or is about to acquire
shares of the Issuer;
AND WHEREAS the Escrow Agent has agreed to act as escrow agent in
respect of the shares upon the acquisition of the shares by the
Shareholder;
NOW THEREFORE in consideration of the covenants contained in this
agreement and other good and valuable consideration (the receipt
and sufficiency of which is acknowledged), the Parties agree as
follows:
1. INTERPRETATION
In this agreement:
(a) "Acknowledgement" means the acknowledgement and
agreement to be bound in the form attached as Schedule A to this
agreement;
(b) "Act" means the Securities Act, S.B.C. 1985, C. 183;
(c) "Exchange" means the Vancouver Stock Exchange;
(d) "Local Policy Statement 3-07" means the Local Policy
Statement 3-07 in effect as of the date of reference of this
agreement and attached, not including its appendices, as Schedule
B to this agreement;
(e) "Shareholder" means a holder of shares of the Issuer
who executes this agreement or an Acknowledgement;
(f) "Shares" means the shares of the Shareholder
described in Schedule C to this agreement, as amended from time
to time in accordance with section 9;
<PAGE> 303
(g) "Superintendent" means the Superintendent of Brokers
appointed under the Act; and
(h) "Superintendent or the Exchange" means the
Superintendent, if the shares of the Issuer are not listed on the
Exchange, or the Exchange, if the shares of the Issuer are listed
on the Exchange.
2. PLACEMENT OF SHARES IN ESCROW
The Shareholder places the Shares in escrow with the Escrow Agent
and shall deliver the certificates representing the Shares to the
Escrow Agent as soon as practicable.
3. VOTING OF SHARES IN ESCROW
Except as provided by section 4(a), the Shareholder may exercise
all voting rights attached to the Shares.
4. WAIVER OF SHAREHOLDERS' RIGHTS
The Shareholder waives the rights attached to the Shares
(a) to vote the Shares on a resolution to cancel any of
the Shares
(b) to receive dividends, and
(c) to participate in the assets and property of the
Issuer on a winding up or dissolution of the Issuer.
5. ABSTENTION FROM VOTING AS A DIRECTOR
A Shareholder that is or becomes a director of the Issuer shall
abstain from voting on a directors' resolution to cancel any of
the Shares.
6. TRANSFER WITHIN ESCROW
(1) The Shareholder shall not transfer any of the Shares
except in accordance with Local Policy Statement 3-07 and with
the consent of the Superintendent or the Exchange.
(2) The Escrow Agent shall not effect a transfer of the
Shares within escrow unless the Escrow Agent has received
(a) a copy of an Acknowledgement executed by the person
to whom the Shares are to be transferred, and
(b) a letter from the Superintendent or the Exchange
consenting to the transfer.
(3) Upon the death or bankruptcy of a Shareholder, the
Escrow Agent shall hold the Shares subject to this agreement for
the person that is legally entitled to become the registered
owner of the Shares.
(4) Should the Shareholder(s) Kim Morris or Lana Ko cease
to be a "principal" (as that term is defined in Local Policy
Statement 3-07) of the Issuer, die or become bankrupt, the
Shareholder or whatever other person is legally entitled to
<PAGE> 304
become the registered owner of the Shares shall, within 60 days
of the Shareholder(s) ceasing to be a principal, dying or
becoming bankrupt, either complete the transfer of Shares
pursuant to section 6 or surrender the Shares for cancellation
pursuant to section 8.
(5) Should the Shareholder 437581 B.C. Ltd.
(a) cease to be a "principal" (as that term is defined in
Local Policy Statement 3-07) of the Issuer or become bankrupt,
the Shareholder or whatever other person that is legally entitled
to become the registered owner of the Shares shall, within 60
days of the Shareholder ceasing to be a principal or becoming
bankrupt, either complete the transfer of Shares pursuant to
section 6 or surrender the Shares for cancellation pursuant to
section 8, or
(b) No longer be controlled by Peter Loretto by virtue of
the death of Peter Loretto then the benefits and obligations of
this Agreement shall pass to the estate of Peter Loretto.
7. RELEASE FROM ESCROW
(1) The Shareholder irrevocably directs the Escrow Agent
to retain the Shares until the Shares are released from escrow
pursuant to subsection (2) or surrendered for cancellation
pursuant to section 8.
(2) The Escrow Agent shall not release the Shares from
escrow unless the Escrow Agent has received a letter from the
Superintendent or the Exchange consenting to the release.
(3) The approval of the Superintendent or the Exchange to
a release from escrow of any of the Shares shall terminate this
agreement only in respect of the Shares so released.
8. SURRENDER FOR CANCELLATION
The Shareholder shall surrender the Shares for cancellation and
the Escrow Agent shall deliver the certificates representing the
Shares to the Issuer
(a) at the time of a major reorganization of the Issuer,
if required as a condition of the consent to the reorganization
by the Superintendent or the Exchange,
(b) where the Issuer's shares have been subject to a
cease trade order issued under the Act for a period of 2
consecutive years,
(c) 5 years from the date that the Exchange accepts this
Agreement for filing, or
(d) where required by sections 6 (4) (5) and (6).
9. AMENDMENT OF AGREEMENT
(1) Subject to subsection (2), this agreement may be
amended only by a written agreement among the Parties and with
the written consent of the Superintendent or the Exchange.
(2) Schedule C to this agreement shall be amended upon
<PAGE> 305
(a) a transfer of Shares pursuant to section 6,
(b) a release of Shares from escrow pursuant to section
7, or
(c) a surrender of Shares for cancellation pursuant to
section 8,
and the Escrow Agent shall note the amendment on the
Schedule C in its possession.
10. INDEMNIFICATION OF ESCROW AGENT
The Issuer and the Shareholders, jointly and severally, release,
indemnify and save harmless the Escrow Agent from all costs,
charges, claims, demands, damages, losses and expenses resulting
from the Escrow Agent's compliance in good faith with this
agreement.
11. RESIGNATION OF ESCROW AGENT
(1) If the Escrow Agent wishes to resign as escrow agent
in respect of the Shares, the Escrow Agent shall give notice to
the Issuer.
(2) If the Issuer wishes the Escrow Agent to resign as
escrow agent in respect of the Shares, the Issuer shall give
notice to the Escrow Agent.
(3) A notice referred to in subsection (1) or (2) shall
be in writing and delivered to
(a) the Issuer at its address stated above, or
(b) the Escrow Agent at its address stated above,
and the notice shall be deemed to have been received on
the date of delivery. The Issuer or the Escrow Agent may change
its address for notice by giving notice to the other party in
accordance with this subsection.
(4) A copy of a notice referred to in subsection (1) or
(2) shall concurrently be delivered to the Superintendent or the
Exchange.
(5) The resignation of the Escrow Agent shall be
effective and the Escrow Agent shall cease to be bound by this
agreement on the date that is 180 days after the date of receipt
of the notice referred to in subsection (1) or (2) or on such on
other date as the Escrow Agent and the Issuer may agree upon (the
"resignation date").
(6) The Issuer shall, before the resignation date and
with the written consent of the Superintendent or the Exchange,
appoint another escrow agent and that appointment shall be
binding on the Issuer and the Shareholders.
12. FURTHER ASSURANCES
The Parties shall execute and deliver all documents and perform
any acts necessary to carry out the intent of this agreement.
<PAGE> 306
13. TIME
Time is of the essence of this agreement.
14. GOVERNING LAWS
This agreement shall be construed in accordance with and governed
by the laws of British Columbia and the laws of Canada applicable
in British Columbia.
15. COUNTERPARTS
This agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which shall
constitute one agreement.
16. LANGUAGE
Wherever a singular expression is used in this agreement, that
expression is deemed to include the plural or the body corporate
where required by the context.
17. ENUREMENT
This agreement enures to the benefit of and is binding on the
Parties and their heirs, executors, administrators, successors
and permitted assigns.
The Parties have executed and delivered this agreement as of the
date of reference of this agreement.
The Corporate/Common Seal of )
PACIFIC CORPORATE TRUST COMPANY )
was affixed in the presence of: )
)
/s/ illegible ) C/S
Authorized Signatory )
/s/ Yasmin Juma )
Authorized Signatory )
The Corporate/Common Seal of )
CONSOLIDATED NEWJAY RESOURCES )
LTD. was affixed in the )
presence of: )
/s/ Kim Morris ) C/S
Authorized Signatory )
/s/ Lana Ko )
Authorized Signatory )
<PAGE> 307
Signed, sealed and delivered by )
KIM MORRIS in the presence of: )
/s/ Nance McCollom )
Name )
838 Riverside Drive ) /s/ Kim Morris
Address ) KIM MORRIS
North Vancouver, B.C. )
Landman )
Occupation )
Signed, sealed and delivered by )
LANA KO in the presence of: )
/s/ Nance McCollom )
838 Riverside Drive ) /s/ Lana Ko
North Vancouver, B.C. )
Landman )
Occupation )
The Corporate/Common Seal of )
437581 B.C. LTD. was affixed )
in the presence of: )
) C/S
/s/ Peter Loretto )
Authorized Signatory )
SCHEDULE C TO ESCROW AGREEMENT
NAME OF SHAREHOLDER NUMBER OF SHARES HELD IN ESCROW
Kim Morris 10,000 Common
Lana Ko 5,000 Common
437581 B.C. Ltd. 453,750 Common
SCHEDULE D TO ESCROW AGREEMENT
UNDERTAKING REQUIRED FROM NON-REPORTING
OR CLOSELY HELD COMPANY
To: Superintendent of Brokers or Vancouver Stock Exchange
1100 - 865 Hornby Street 609 Granville Street
Vancouver, B.C. Vancouver, B.C.
V6Z 2H4 V7Y 1H1
(if the shares are not (if the shares are
listed on the Vancouver listed on the Vancouver
Stock Exchange) Stock Exchange)
<PAGE> 308
437581 B.C. LTD. (the "Company") undertakes, for the duration of
the time that the Company is the registered owner of escrowed
shares of CONSOLIDATED NEWJAY RESOURCES LTD. (the "Issuer"),
(a) to effect or permit transfer of ownership in the shares of
the Company, or
(b) to allot and issue further shares of any class of shares
of the Company only upon receipt of the written consent of the
Superintendent of Brokers, if the Issuer's shares are not listed
on the Vancouver Stock Exchange (the "Exchange"), or the
Exchange, if the Issuer's shares are listed on the Exchange.
Dated at Vancouver, B.C. on April 8, 1994.
The Corporate/Common Seal of )
437581 B.C. LTD. was affixed )
in the presence of: )
) C/S
/s/ Peter Loretto )
- - ------------------------------ )
Authorized Signatory )
<PAGE> 309
EXHIBIT 99.2
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the _____ day of ________, ___.
BETWEEN:
INDO-PACIFIC ENERGY LTD., of 1200 - 1090 West Pender Street,
Vancouver, British Columbia (the "Company")
OF THE FIRST PART
AND:
(the "Director")
OF THE SECOND PART
WHEREAS:
A. The Company's common shares are listed and posted for
trading on the Vancouver Stock Exchange;
B. The Company wishes to grant the Director an option to
purchase common shares in the capital stock of the Company;
C. The Director is a director of the Company.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of other good and valuable consideration and the sum of $1.00 now
paid by the Director to the Company, the receipt and sufficiency
of which is acknowledged by the Company, the parties agree as
follows:
1. In this Agreement, the term Share or Shares shall mean
one or more common shares without par value in the capital stock
of the Company as constituted at the date of this Agreement.
2. The Company hereby grants the Director an irrevocable,
non-transferable and non-assignable option, subject to the
provisions of Sections 4 and 9 hereof (the "Option"), to purchase
__________ Shares of the Company (the "Optioned Shares"), at a
price of $______ per Optioned Share.
3. The Director shall, subject to the terms hereof, have
the right to exercise the Option in its entirety for a term
ending at the close of business on ___________________ (the
"Expiry Date"). Immediately following the close of business on
the Expiry Date, the Option shall, subject to Section 4 hereof,
expire and terminate and be of no further force or effect
whatsoever.
<PAGE> 310
4. In the event of:
(a) the death of the Director on or prior to the Expiry
Date, the Option shall at the date of such death forthwith expire
and terminate and be of no further force and effect whatsoever;
(b) the resignation of the Director as a director of the
Company prior to the Expiry Date, the Option shall at the date of
such resignation forthwith expire and terminate and be of no
further force and effect whatsoever.
5. Subject to the provisions of Section 4, the Option
shall be exercisable by the Director or his legal personal
representatives tendering a notice in writing at the offices of
the Company in Vancouver, British Columbia, specifying the number
of Shares being purchased, together with a certified cheque in
favour of the Company in an amount equal to the full purchase
price of the number of Shares so specified. Upon any such
exercise of Option as aforesaid, the Company shall forthwith
cause the Transfer Agent and Registrar of the Company to deliver
to the Director or his legal personal representatives (or as the
Director may otherwise direct in the notice of exercise of
Option) a certificate or certificates in the name of the Director
or his legal personal representatives (or as the Director may
otherwise direct in the notice of exercise of Option)
representing in the aggregate such number of Shares as the
Director or his legal personal representatives shall have then
paid for.
6. Nothing herein contained or done pursuant hereto shall
obligate the Director to purchase and/or pay for any Optioned
Shares except those Optioned Shares in respect of which the
Director shall have exercised his Option in the manner provided.
7. The number of common shares deliverable upon the
exercise of the Option shall be subject to adjustment in the
events and in the manner following:
(a) in the event of any subdivision or subdivisions of the
Shares of the Company as such Shares are constituted on the date
hereof, at any time while the Option is in effect into a greater
number of Shares, the Company will thereafter deliver at the time
of purchase of Shares hereunder, in addition to the number of
Shares in respect of which the right to purchase is then being
exercised, such additional number of Shares as result from said
subdivision or subdivisions without the Director making any
additional payment or giving any other consideration therefor;
(b) in the event of any consolidation or consolidations of
the Shares of the Company as such Shares are constituted on the
date hereof, at any time while the Option is in effect, into a
lesser number of Shares, the Company will thereafter deliver and
<PAGE> 311
the Director shall accept, at the time of purchase of Shares
hereunder, in lieu of the number of Shares in respect of which
the right to purchase is then being exercised, the lesser number
of Shares as a result from such consolidation or consolidations;
(c) in the event of any change of the Shares of the Company
as such Shares are constituted on the date hereof, at any time
while the Option is in effect, the Company will thereafter
deliver at the time of purchase of Shares hereunder the number of
Shares of the appropriate class resulting from the said change as
the Director would have been entitled to receive in respect of
the number of Shares so purchased had the right to purchase been
exercised before such change;
(d) in the event of any capital reorganization,
reclassification or change of outstanding equity shares (other
than a change in the par value thereof) of the Company or in the
event of any consolidation, merger or amalgamation of the Company
with or into any other company or in the event of any sale of the
property of the Company as or substantially as an entirety at any
time while the Option is in effect, the Director shall thereafter
have the right to purchase and receive, in lieu of the Shares
immediately theretofore purchasable and receivable upon the
exercise of the Option, the kind and amount of Shares and other
securities and property receivable upon such capital
reorganization, reclassification, change, consolidation, merger,
amalgamation or sale which the holder of a number of Shares equal
to the number of Shares immediately theretofore purchasable and
receivable upon the exercise of the Option would have received as
a result of such. The subdivision or consolidation of Shares at
any time outstanding into a greater or lesser number of Shares
(whether with or without par value) shall not be deemed to be a
capital reorganization or a reclassification of the capital of
the Company for the purposes of this paragraph (d);
(e) the adjustments provided for in this paragraph are
cumulative;
(f) the Company shall not be required to issue fractional
Shares in satisfaction of its obligations hereunder. Any
fractional interest in a Share that would, except for the
provisions of this paragraph (f), be deliverable upon the
exercise of the Option shall be cancelled and not be deliverable
by the Company; and
(g) if any questions shall at any time arise with respect
to the exercise price or number of Shares deliverable upon
exercise of the Option, such questions shall be conclusively
determined by the Company's Auditors, or, if they decline to so
act any other firm of Chartered Accountants, in Vancouver, that
the Company may designate and who shall have access to all
appropriate records and such determination shall be binding upon
the Company and the Director.
<PAGE> 312
8. The Director shall have no rights whatsoever as a
shareholder in respect of any of the Optioned Shares (including
any right to receive dividends or other distributions therefrom
or thereon) other than in respect of Optioned Shares in respect
of which the Director shall have exercised his Option and which
the Director shall have actually taken up and paid for.
9. The provisions of this Agreement and the exercise of the
rights hereinbefore granted to the Director are subject to the
approval of all relevant regulatory authorities (including the
Vancouver Stock Exchange) and, as an insider of the Company, of
the shareholders at a general meeting of the shareholders of the
Company. The expression "insider" as used herein, means
"insider" as defined in the Securities Act of British Columbia,
S.B.C. 1985, Chap. 83 (as amended).
10. The Company hereby covenants and agrees to and with the
Director that it will reserve in its treasury sufficient Shares
to permit the issuance and allotment of the Optioned Shares to
the Director in the event the Option or any part thereof is
exercised.
11. Any amendments to this Agreement shall be subject to the
approval of all relevant regulatory authorities and of the
shareholders at a general meeting of the shareholders of the
Company.
12. The Director represents to the Company that he is a
director of the Company.
13. A word used herein importing a particular gender includes
every other gender, a word in the singular includes the plural, a
word importing a corporate entity includes individuals, and vice
versa.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
THE COMMON SEAL OF )
INDO-PACIFIC ENERGY LTD. )
was hereunto affixed in )
the presence of: )
________________________ )
________________________ )
SIGNED, SEALED AND
DELIVERED by ___________ )
in the presence of: )
(name) )
(address) )
(telephone) )
<PAGE> 313
EXHIBIT 99.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Division of
Corporate Finance
3-7
October 29, 1997
G.A. MacDonald
Indo-Pacific Energy Ltd.
Suite 1200-1090 West Pender Street
Vancouver, British Columbia V6E 2N7
RE: Indo-Pacific Energy Ltd.
Incoming letter dated October 23, 1997
Dear Mr. MacDonald:
This letter is to inform you that you written request
for a continuing hardship exemption, as provided in Rul 202 of
Regulation S-T, has been
[ x ] Granted [ ] Denied
for the 10 Operating Agreements to Form 10, but not the future
Operating Agreements.
Sincerely,
/s/ Katie C. Nix
Office of Information
& Analysis
