SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
________________
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST EVENT REPORTED: JUNE 24, 1996
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-6352
TEXAS 74-1611874
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15835 Park Ten Place Drive 77084
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
713-492-2929
_______________
<PAGE>
PAGE 2
ITEM 5. OTHER EVENTS
On June 24, 1996, Atwood Oceanics, Inc. (the "Company") announced that
it has executed a term contract with British-Borneo Petroleum, Inc. for the
Atwood Hunter (one of its third-generation semisubmersible drilling units) to
conduct drilling operations under a firm two years plus option program. The
contract provides for the rig to be upgraded to 3,500 feet water depth
capacity and to commence operation in the Gulf of Mexico in 1997. The Company
will incur expenditures of approximately $40 million to upgrade the rig for
operations in water depths of up to 3,500 feet, and to relocate the rig from
Southeast Asia to the Gulf of Mexico. The contract has the potential of
providing gross revenues over the firm two year program of approximately $70
million. The operator has a right to extend the term of the contract to three
years.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATWOOD OCEANICS, INC.
(Registrant)
James M. Holland
Senior Vice President
Date: 8 July 1996
<PAGE>
EXHIBIT 10
DAYWORK DRILLING CONTRACT
BETWEEN
BRITISH-BORNEO PETROLEUM INC.
(OPERATOR)
AND
ATWOOD OCEANICS, INC.
(CONTRACTOR)
FOR ATWOOD HUNTER
(THE DRILLING UNIT)
<PAGE>
DAYWORK DRILLING CONTRACT
TABLE OF CONTENTS
SECTION PAGE SUBJECT
1.1 1 DATE AND PARTIES
2.1 1 SCHEDULES
3.1 1 CONTRACTOR'S PERSONNEL
4.1 2 CONTRACTOR'S EQUIPMENT
5.1 2 BASIC AGREEMENT
6.1 2 CONTRACTOR'S REPRESENTATIONS
7.1 2 OPERATOR'S EQUIPMENT
8.1 3 AREA OF OPERATIONS
8.2 3 DRILLING LOCATIONS
9.1 3 DRILLING PROGRAM
10.1 4 OTHER OPERATIONS
11.1 4 CASING PROGRAMS
12.1 4 CORING
13.1 4 TESTING
14.1 5 FORMATION CUTTINGS
15.1 5 MEASUREMENT OF WELL DEPTH
16.1 5 COURSE OF WELL
17.1 5 COMPLETION OR ABANDONMENT
18.1 6 BLOWOUT OR FIRE
19.1 6 COMPENSATION
19.2 6 OPERATING RATE
19.3 6 STANDBY RATE
19.4 8 EQUIPMENT REPAIR RATE
i
<PAGE>
19.5 8 STAND-BY WITHOUT CREW RATE
19.6 9 RATE ADJUSTMENT
19.7 10 REIMBURSABLE COSTS
19.8 10 MOBILIZATION AND
DEMOBILIZATION FEES
20.1 10 PAYMENT OF INVOICES; AUDIT
20.2 11 TIME AND PLACE OF INVOICE
PRESENTATION
20.3 12 PLACE AND METHOD OF PAYMENT
21.1 12 LIENS
22.1 12 TAXES OR LEVIES
23.1 12 INSURANCE
23.2 14 SUBCONTRACTOR'S INSURANCE
23.3 14 CONTRACTOR'S EQUIPMENT
23.4 15 OPERATORS EQUIPMENT
23.5 15 EMPLOYEES
23.6 17 THIRD PARTIES
23.7 17 LOSS OF HOLE
23.8 18 BLOWOUT OR CRATER
23.9 18 RESERVOIR LIABILITY
24.1 18 POLLUTION OR CONTAMINATION
24.2 21 PATENT LIABILITY
24.3 21 SOUND LOCATION AND ACCESS
24.4 22 GENERAL DEFENSE, HOLD HARMLESS
& INDEMNITY
24.5 23 CLAIMS
24.6 23 CONSEQUENTIAL DAMAGES
24.7 23 OPERATOR'S AUTHORIZED
REPRESENTATIVES
ii
<PAGE>
25.1 24 RECORDS AND REPORTS
25.2 24 CONFIDENTIAL NATURE OF RECORDS
26.1 24 DISCIPLINE AND SAFETY
27.1 25 RELATIONSHIP OF PARTIES
28.1 26 FORCE MAJEURE
29.1 27 REPRESENTATIVES FOR NOTICES
30.1 27 ASSIGNMENT
31.1 27 SPECIFIED CONTRACT TERM;
OPTION TO EXTEND
31.2 28 TERMINATION BY OPERATOR
31.3 29 TERMINATION BY CONTRACTOR
32.1 30 UNSATISFACTORY PERFORMANCE
33.1 31 CONFLICT OF INTEREST
34.1 32 SEVERABILITY; WAIVER; TITLE
HEADINGS; ENTIRE AGREEMENT;
MODIFICATION
35.1 32 REGULATIONS
36.1 33 BANKRUPTCY
iii
<PAGE>
DAYWORK DRILLING CONTRACT
1.1 DATE AND PARTIES: This Contract is
made as of June 20, 1996 between British-Borneo Petroleum Inc.
(hereinafter called "OPERATOR") and Atwood Oceanics, Inc.
(hereinafter called "CONTRACTOR").
2.1 SCHEDULES: This Contract consists
of this writing, signed by the parties, and each of the following
Schedules:
SCHEDULE "A": CONTRACT SUMMARY
SCHEDULE "B": CONTRACTOR'S PERSONNEL AND COMPENSATION SCHEDULE
SCHEDULE "C": CONTRACTOR'S RIG AND RELATED
EQUIPMENT
SCHEDULE "D": EQUIPMENT, SERVICES AND FACILITIES FURNISHED
SCHEDULE "E": INSURANCE
SCHEDULE "F": FEDERAL CONTRACT PROVISIONS
SCHEDULE "G": SEARCH AND SEIZURE POLICY
SCHEDULE "H": HUNTER UPGRADE DESIGN CRITERIA
3.1 CONTRACTOR'S PERSONNEL: CONTRACTOR shall furnish, at
CONTRACTOR's cost, personnel in the numbers, classifications and
work schedules set forth in Schedule "B", Category "A." All such
personnel shall be employed directly by CONTRACTOR and are
referred to in this Contract as "CONTRACTOR's Personnel". At the
request of OPERATOR, CONTRACTOR shall furnish additional
personnel as OPERATOR may designate to be part of CONTRACTOR's
Personnel and OPERATOR shall reimburse CONTRACTOR for the direct
costs and expenses such as hiring benefits, social security,
wages and other direct payroll burdens of furnishing all such
additional CONTRACTOR's Personnel as set forth in Schedule "B".
1
<PAGE>
If, at OPERATOR's request and with CONTRACTOR's consent,
CONTRACTOR's Personnel is reduced, OPERATOR shall be credited
with the savings thereby effected. CONTRACTOR shall have a full
drilling crew, as set forth in Schedule "B", working at all times
when receiving pay at any of the day rates set forth in Schedule
"A" calling for a full drilling crew. If circumstances beyond the
control of CONTRACTOR temporarily prevent CONTRACTOR from having
a full drilling crew working, CONTRACTOR shall receive the full
applicable rate only if OPERATOR determines in its sole
discretion that there is no delay in the progress of work.
Otherwise, the applicable rate shall be reduced by the daily rate
of pay and benefits for each man that a crew is short.
4.1 CONTRACTOR'S EQUIPMENT: CONTRACTOR
shall furnish, at CONTRACTOR's cost, the drilling unit, equipment
and facilities and as set forth in Schedule "C". Such unit,
equipment and facilities are hereinafter called "CONTRACTOR's
Equipment".
5.1 BASIC AGREEMENT: CONTRACTOR shall
furnish and operate CONTRACTOR's Equipment and shall furnish
CONTRACTOR's Personnel for the purpose of drilling the term as
set forth in Schedule "A" on the terms and conditions set forth
in this Contract. In the performance of the work contemplated by
this contract, time is of the essence.
6.1 CONTRACTOR'S REPRESENTATIONS:
CONTRACTOR represents that all of the CONTRACTOR's Equipment
including the drilling unit and all supplies furnished by
CONTRACTOR in connection therewith shall be in good condition and
suitable for the uses intended and that all of CONTRACTOR's
2
<PAGE>
Personnel shall be fully qualified and fit for their respective
assignments, both in accordance with good oilfield practice and
such governmental regulation affecting CONTRACTOR's operations
that may, at any time during the life of this Contract, exist.
7.1 OPERATOR'S EQUIPMENT: OPERATOR
shall furnish at its cost (or shall reimburse
CONTRACTOR for furnishing as set forth in Section 19.7) the
equipment and facilities described in Schedule "D". All equipment
and facilities supplied under this Section are referred to in
this Contract as "OPERATOR's Equipment". CONTRACTOR shall
visually examine OPERATOR's Equipment on the drilling unit and
shall report to OPERATOR any visible defects in such equipment.
OPERATOR's Equipment on the drilling unit shall be maintained in
good condition and repair by CONTRACTOR insofar as such equipment
may be reasonably so maintained utilizing CONTRACTOR's Personnel.
Upon completion of operations under this Contract, those items of
OPERATOR's Equipment then on the drilling unit shall be delivered
by CONTRACTOR (unless it has been lost or destroyed) to OPERATOR
in as good condition as when received by CONTRACTOR, ordinary
wear and use excepted, at such location as may be designated by
OPERATOR. In delivering same, OPERATOR shall reimburse CONTRACTOR
for additional shipping costs incurred and paid.
8.1 AREA OF OPERATIONS: The area of
Operations is set forth in Item A-11, Schedule "A". Subject to
CONTRACTOR's consent, which shall not be unreasonably withheld,
OPERATOR may change said Area of Operations by giving CONTRACTOR
reasonable notice. OPERATOR shall also pay or reimburse
CONTRACTOR for all CONTRACTOR's added costs and expenses incurred
3
<PAGE>
in connection with any change in Area of Operations. Such added
costs and expenses shall be documented to OPERATOR's
satisfaction.
8.2 DRILLING LOCATIONS: OPERATOR shall
designate the locations of wells to be drilled under this
Contract within the Area of Operations.
9.1 DRILLING PROGRAM: OPERATOR shall
prepare and shall deliver to CONTRACTOR a drilling program for
the wells contemplated to be drilled under this Contract, and may
amend such drilling program or programs at any time. OPERATOR
shall provide CONTRACTOR with copies of same in sufficient time
for CONTRACTOR to comply. All drilling shall be performed by
CONTRACTOR in accordance with OPERATOR's drilling program, and in
a diligent, skillful and workmanlike manner in accordance with
good oilfield practice, OPERATOR's drilling program(s) and the
written and/or verbal instructions of OPERATOR's authorized
representatives. CONTRACTOR shall conduct all operations
hereunder on a twenty-four (24) hour day/seven (7) day per week
basis.
10.1 OTHER OPERATIONS: CONTRACTOR shall
repair, redrill, deepen, maintain, rework, perform remedial
operations or other operations in any well or wells designated by
OPERATOR. Such work shall be performed upon the request of
OPERATOR and at the applicable day rate.
The drilling of relief wells under this Contract
shall be subject to the mutual agreement of OPERATOR and
CONTRACTOR depending on the particular facts and circumstances of
any such relief well and the blowout or other cause necessitating
4
<PAGE>
same.
11.1 CASING PROGRAMS: CONTRACTOR shall
drill each well to the depth and shall land, set, cement and test
casing of the size and at the depth and using methods specified
by OPERATOR.
12.1 CORING: CONTRACTOR shall core
between such depths as shall be specified by OPERATOR and shall
deliver all cores to OPERATOR or OPERATOR's authorized
representative in containers provided by OPERATOR. No one except
OPERATOR or OPERATOR's authorized representative shall have
access to the core.
13.1 TESTING: If at any time during the
course of drilling or upon completion of drilling, OPERATOR
desires a test to be made to determine the productivity of any
formation(s) encountered, OPERATOR shall designate the testing
methods and procedures and CONTRACTOR shall make such test(s) as
designated by and under the direction of OPERATOR provided that
in the opinion of OPERATOR and CONTRACTOR, there is no
unreasonable hazard to personnel and equipment posed by the
conduct of such test(s).
14.1 FORMATION CUTTINGS: CONTRACTOR
shall save, wash, sack and identify formation cuttings free from
contamination and shall place them in separate containers
furnished by OPERATOR properly labeled with well name, number and
depth.
15.1 MEASUREMENT OF WELL DEPTH:
CONTRACTOR shall measure total length of drill string in service
to determine well depth with a steel tape by methods and at times
5
<PAGE>
designated by OPERATOR (such as before logging, coring, setting
casing or liner upon reaching final depth or at any other time
when requested by OPERATOR).
16.1 COURSE OF WELL: CONTRACTOR shall
use its best efforts, according to the standard provided in
Section 9.1, to drill holes which will not deviate from the
limits specified by OPERATOR. Measurement of hole angle from
vertical shall be made by CONTRACTOR by methods acceptable to
OPERATOR at times and intervals as may be directed by OPERATOR.
When such measurements show a greater deviation from vertical
than that specified by OPERATOR, CONTRACTOR, at OPERATOR's
request, shall re-drill the hole to an angle from vertical which
is acceptable to OPERATOR. During such re-drilling, CONTRACTOR
shall be paid at the applicable day rates as provided in this
Contract. CONTRACTOR shall deliver to OPERATOR the data
pertaining to all deviation measurements made by CONTRACTOR and
all records resulting therefrom. Special services and equipment
for such surveying shall be supplied as set forth in Schedule
"D".
17.1 COMPLETION OR ABANDONMENT: If
OPERATOR directs a well to be completed as a producing well,
CONTRACTOR shall complete said well in the manner and using
methods specified by and under the direction of OPERATOR.
OPERATOR may at any time elect to plug or abandon said well at
any depth. CONTRACTOR, upon notice from OPERATOR of such
election, shall cease drilling operations and shall proceed to
abandon or plug the well in the manner specified by and under the
direction of OPERATOR.
6
<PAGE>
18.1 BLOWOUT OR FIRE: CONTRACTOR shall
observe OPERATOR's and CONTRACTOR's fire and safety regulations,
shall maintain its well control equipment in good operating
condition at all times and shall use all reasonable means to
prevent fires, explosions and blowouts and to protect the hole.
Such efforts shall be in accordance with good oilfield practice.
During drilling operations, CONTRACTOR shall use blowout
prevention equipment as described in Schedule "C." CONTRACTOR
shall examine and shall test all blowout prevention devices in
accordance with OPERATOR's drilling or testing program and shall
record the results of such test on the drilling reports. In the
event of fire or blowout, CONTRACTOR shall use all reasonable
means to protect the hole and to keep said fire or blowout under
control and CONTRACTOR shall cooperate with any third party
services employed by OPERATOR to keep the well under control.
19.1 COMPENSATION: OPERATOR shall pay
CONTRACTOR certain amounts as provided below at the applicable
rate of compensation for work performed hereunder. The applicable
rate shall be determined in accordance with Sections 19.2, 19.3,
19.4, 19.5, 19.6 and 19.8 hereunder and shall be calculated to
the nearest one-half (l/2) hour.
19.2 OPERATING RATE: Unless the Contract
is terminated prior to the end of the specified Contract Term (as
defined in Section 31.1) the Operating Rate as specified in Item
A-22 of Schedule "A" shall apply during the Contract Term, except
for periods during which other rates are applicable or no payment
by OPERATOR is required.
19.3 STANDBY RATE: The Standby Rate as specified in Item A-23 of
7
<PAGE>
Schedule "A" shall apply to periods during which a full
complement of CONTRACTOR's Personnel is on the drilling unit
(except that the Standby Rate shall also apply to periods as
provided in Section 19.3(d)) but no operations are being
conducted for any one or more of the following reasons:
(a) OPERATOR has instructed CONTRACTOR not to proceed with
operations, and CONTRACTOR is not in default of any of its
obligations regarding CONTRACTOR's Equipment or
CONTRACTOR's Personnel;
(b) CONTRACTOR's Equipment is being moved or is
waiting to be moved to or from a well location
including movement to the first well location
following upgrades to CONTRACTOR's
Equipment at a Gulf of Mexico shipyard or
between well locations from the last well
location to a mutually agreed port in the U.S.
Gulf of Mexico at the end of this
Contract and no mobilization or demobilization
fee is due;
(c) Delay caused by OPERATOR or its subcontractors
including any delay necessary for repair of
damage to CONTRACTOR's Equipment caused by OPERATOR or its
subcontractors;
(d) Weather conditions or rough water which shall
include any period of evacuation of
CONTRACTOR's Personnel from the drilling unit
due to threat and/or occurrence of storm or
hurricane and CONTRACTOR's Personnel are held
8
<PAGE>
on standby with pay at the nearest available
safe point until conditions permit return to
the drilling unit;
(e) Failure of OPERATOR to deliver any item of
CONTRACTOR's Equipment (after CONTRACTOR has
made same available at OPERATOR's shore base with
reasonable notice of its requirements) which results in
delays or in breakdown of CONTRACTOR's Equipment or delays
in repairing same, notwithstanding the provisions of
Section 19.4;
19.4 EQUIPMENT REPAIR RATE: In the event it is necessary to
shut down CONTRACTOR's Equipment for repairs, excluding routine servicing
which CONTRACTOR is performing hereunder, CONTRACTOR shall be allowed the
EQUIPMENT REPAIR RATE set forth in Item A-24 of Schedule "A" for each period
of shutdown time up to a maximum of twelve (12) hours for any one repair job
and a total of twenty-four (24) hours for all periods of shutdown time during
each thirty (30) day period for all repairs which are not related to subsea
or mooring repairs. Additionally, in the event it is necessary to shut down
CONTRACTOR's Equipment for subsea or mooring repairs, CONTRACTOR shall be
allowed the Equipment Repair Rate set forth in Item A-24 of Schedule "A" for
each period of shutdown time for repairs related to subsea and mooring up to
a maximum of twenty-four (24) hours for any one repair job and a total of
forty-eight (48) hours for all such periods of shutdown time during each
thirty (30) day period. Except as provided above in this Section 19.4,
CONTRACTOR shall receive no compensation during periods when
9
<PAGE>
CONTRACTOR's Equipment is shutdown due to a breakdown or repair.
Shutdown time shall be considered as the duration from time of
failure until CONTRACTOR has returned to that particular stage of
operations where the repair, breakdown, loss or failure of
CONTRACTOR's Equipment occurred. Changing swivel packing, cutting
drill line, servicing the rig, testing BOP's, changing pump
lines, recalibrating instrumentation, cleaning tanks and
repairing OPERATOR furnished equipment shall not be included in
computing the number of hours of shutdown time.
19.5 STAND-BY WITHOUT CREW RATE: The Stand-By
Without Crew Rate as specified in Item A-25 of Schedule "A" shall
apply in the event an extended period of suspended operations
occurs hereunder, and OPERATOR requests CONTRACTOR to release all
of CONTRACTOR's Personnel not required for the protection and
maintenance of CONTRACTOR's Equipment or for the orderly
resumption of operations.
19.6 RATE ADJUSTMENT: At the end of the Specified
Contract Term (as defined in Section 31.1), if OPERATOR has the
option to extend the term of this Contract and exercises such
option, the rates set forth in Items A-22, A-23, A-24 and A-25 of
Schedule "A" shall be adjusted, if necessary, to reflect the
mutual agreement of OPERATOR and CONTRACTOR with respect to such
rates as provided in Section 31.1. Additionally, CONTRACTOR's
labor and the repairs and maintenance components of the rates
shall be subject to review and adjustment after every twelve (12)
months period of the Contract. These costs components shall be
reviewed in comparison to the Producer Price Index for Oil
Equipment and Machinery for the repairs and maintenance
10
<PAGE>
components (having a base amount of $3,500 per day) and the US
Bureau of Labor Statistics' index of Average Weekly Earnings of
Crude Petroleum and Gas Production Workers, SIC Code 131 for the
labor components (having a base amount of $8,200 per day).
Alternatively, day rate adjustments related to labor cost changes
could be made based on an actual documented basis as mutually
agreed by the parties.
OPERATOR and CONTRACTOR also agree that should a
change in U.S. federal, state or local law or regulation
(excluding income tax) be proclaimed after commencement of
mobilization of the drilling unit which impacts CONTRACTOR's cost
of operations related to the Contract, CONTRACTOR shall document
to OPERATOR's reasonable satisfaction the net cost increase or
decrease to CONTRACTOR and also that the change is being enacted
industry-wide in the Gulf of Mexico in the time frame considered.
To the extent that such documented cost increase or decrease
exceeds an aggregate amount of US$50,000 for any and all
occasions, OPERATOR shall reimburse or be credited by CONTRACTOR
for any amount exceeding U.S.$50,000. The estimated upgrade costs
meet current statutory and classification requirements for
operating in the U.S. Gulf of Mexico, including any APIRP75
standards currently being voluntarily met by CONTRACTOR in
accordance with its safety manual.
19.7 REIMBURSABLE COSTS: OPERATOR shall reimburse
CONTRACTOR for CONTRACTOR's costs of material, equipment, work or
services which are designated to be furnished by OPERATOR as
provided in Schedule "D" but which for convenience are agreed to
be furnished by CONTRACTOR at OPERATOR's request plus the
11
<PAGE>
handling charge set forth in Item A-26 of Schedule "A".
19.8 MOBILIZATION AND DEMOBILIZATION FEES: OPERATOR
shall pay CONTRACTOR the mobilization and demobilization fees set
forth in Items A-20 and A-21 of Schedule "A" in accordance with
the provisions of Sections 20.1 and 20.2 herein below.
20.1 PAYMENT OF INVOICES; AUDIT: CONTRACTOR will
upon OPERATOR's request furnish OPERATOR with satisfactory
evidence of the validity and prior payment by CONTRACTOR of all
labor and material claims incurred by CONTRACTOR in connection
with this CONTRACT. OPERATOR shall have the right to withhold
payment of any invoice or part of invoice wherein there is a bona
fide question or dispute as to propriety and/or amount. Subject
to this right, (and except for Mobilization Fees "A" and "B"),
OPERATOR shall pay undisputed invoices or the undisputed portions
of invoices to CONTRACTOR within 30 days of receipt of a proper
invoice. Mobilization Fee "A" invoice shall be paid thirty (30)
days after receipt by OPERATOR or within five (5) days of when
the drilling unit arrives at a Gulf of Mexico shipyard, whichever
is later. Mobilization Fee "B" invoice shall be paid thirty (30)
days after receipt by OPERATOR or within five (5) days of when
the drilling unit is ready to commence operations and is ready to
be towed to OPERATOR's first well location, whichever is later.
Undisputed invoices not paid within this time frame shall bear
interest at one-and-one-half (1-1/2) percent per month until
paid.
Payment of any invoice shall not prejudice the right
of OPERATOR to question the propriety of any charges thereon and
OPERATOR, prior to or subsequent to making any payments to
12
<PAGE>
CONTRACTOR, shall have the right to audit the books, records and
invoices of CONTRACTOR which are involved in the performance of
this Contract to verify any and all charges so made by
CONTRACTOR; provided, however, OPERATOR, within two (2) years
following the calendar year in which it receives any such
invoice(s), delivers to CONTRACTOR written notice of objections
to or question of the propriety of any item or items thereon.
Such notice shall specify the reasons for objections or details
of questions regarding the propriety of any item or items
thereon. Should OPERATOR within such two (2) year period so
notify CONTRACTOR, adjustment shall be made between the parties
accordingly as the propriety or impropriety of such items shall
be determined. Failure to notify CONTRACTOR within said two (2)
year period shall be deemed final approval of said invoice(s).
CONTRACTOR shall retain all records pertinent to its invoices for
at least two (2) years following the calendar year during which
any such invoice(s) are received by OPERATOR.
20.2 TIME AND PLACE OF INVOICE PRESENTATION: Day
rate and reimbursable invoices, accompanied by copies of the
original vouchers, IADC reports, or other such records as are
necessary to properly support them, may be presented to
OPERATOR's office as set forth in Item A-5 of Schedule "A", in
the original and three (3) copies, on or before the tenth (l0th)
day of each month succeeding the month during which the work was
performed or the expense incurred. The invoice for Mobilization
Fee "A" as referred to in Section A-20 of Schedule A may be
prepared by CONTRACTOR and submitted to OPERATOR following the
departure of the drilling unit from the last well location in
13
<PAGE>
Southeast Asia pursuant to Section A-27 in Schedule A. The
invoice for Mobilization Fee "B" as referred to in Section A-20
of Schedule A may be prepared by CONTRACTOR and submitted to
OPERATOR while the drilling unit is at a Gulf of Mexico shipyard
being upgraded to 3,500 feet water depth capability, but not
until at least thirty (30) days prior to the estimated completion
date of the upgrades.
20.3 PLACE AND METHOD OF PAYMENT: All payments
hereunder shall be made in accordance with Item A-10 of Schedule
"A".
21.1 LIENS: CONTRACTOR shall release, defend,
indemnify and hold OPERATOR and its co-lessees harmless from, and
shall keep OPERATOR's Equipment, the well(s), license and
interest therein of production therefrom and work free and clear
of all liens, claims, assessments, fines and levies created or
committed by CONTRACTOR or by subcontractors of CONTRACTOR.
OPERATOR may post on CONTRACTOR's Equipment such notices as it
may desire to protect itself against such liens, claims,
assessments, fines and levies.
22.1 TAXES OR LEVIES: CONTRACTOR shall bear and pay
all income taxes, social security taxes, and social insurance
organization charges which may be applicable to or arise from its
operations hereunder, shall withhold from wages and salaries of
CONTRACTOR's Personnel all sums required by law to be withheld,
shall pay the same promptly when due to the proper authorities
and shall furnish OPERATOR satisfactory evidence of such payments
when required, and, to the satisfaction of OPERATOR. CONTRACTOR
shall, at CONTRACTOR's own cost, comply with all accounting and
14
<PAGE>
reporting required by any government or governmental agency
having jurisdiction.
23.1 INSURANCE: During the life of this CONTRACT,
CONTRACTOR shall at CONTRACTOR's expense secure and maintain,
with an insurance company or companies authorized to do business
in the Area of Operations as set forth in Section 8.1 above and
satisfactory to OPERATOR, or through a self-insurance program
approved by OPERATOR, insurance coverages of the kind and in the
amounts as set forth in Schedule "E".
CONTRACTOR's insurance shall be primary to the
extent CONTRACTOR has assumed specific risks, liabilities,
responsibilities and obligations hereunder and OPERATOR's
insurance policies shall not be called upon for contribution in
such instances nor shall OPERATOR have any obligation for "sue
and labor" in such instances. In each policy under which
CONTRACTOR is required to provide hereunder, CONTRACTOR agrees to
waive and agrees to have its insurers waive any rights of
subrogation they may have against OPERATOR or its officers,
directors, employees, or representatives to the extent CONTRACTOR
has assumed specific risks, liabilities, responsibilities and
obligations hereunder with the exception of federal and state
statutory compensation coverages. It is further agreed that all
such policies, other than Worker's Compensation policies, shall
name OPERATOR as an additional Insured to the extent CONTRACTOR
has assumed specific risks, liabilities, responsibilities and
obligations hereunder. CONTRACTOR shall be solely responsible for
any deductibles required under each such policy. The parties
hereto do not intend, however, by such naming of OPERATOR to
15
<PAGE>
limit in any way the indemnities provided elsewhere in this
contract and CONTRACTOR further agrees that it is the intention
of the parties that the insurance coverages herein shall not be a
defense to the indemnity obligations of the indemnitor.
CONTRACTOR shall furnish, at OPERATOR's request and
to OPERATOR's satisfaction, evidence of insurance coverage prior
to beginning work hereunder and any material changes thereafter.
Each insurance policy shall contain a provision to give OPERATOR
written notice of cancellation not less than thirty (30) days
prior to the effective date of such cancellation.
It is expressly agreed that the amounts of insurance
set forth in Schedule "E" of this Contract are minimums only and
in no way limit CONTRACTOR's obligations and liabilities with
respect to all defense, hold harmless and indemnity obligations
assumed by CONTRACTOR under the terms of this Contract. Each of
the parties hereto agrees to carry adequate liability insurance
to support the indemnities outlined in this Contract.
OPERATOR agrees to waive and agrees to have its
insurers waive any rights of subrogation they may have against
CONTRACTOR or its officers, directors, employees, or
representatives to the extent OPERATOR has assumed specific
risks, liabilities, responsibilities and obligations hereunder
with the exception of federal and state statutory compensation
coverages.
23.2 SUBCONTRACTOR'S INSURANCE: CONTRACTOR and
OPERATOR shall require their subcontractors to secure and
maintain the insurance coverages set forth in Schedule "E" which
are deemed necessary and any deficiencies in the coverage or
16
<PAGE>
policy limits of such subcontractors' insurance coverages shall
be the responsibility of the party engaging such subcontractor.
23.3 CONTRACTOR'S EQUIPMENT:
23.3.1 Equipment on the Surface. CONTRACTOR,
except as otherwise specifically provided in this Section 23 and
Section 24.3, shall assume liability at all times for damage to
or loss or destruction of its surface equipment, including but
not limited to the drilling unit, all drilling tools, machinery
and appliances for use above the surface and in-hole, subsea and
mooring equipment when such equipment is not in the hole or in
use below the surface of the water, irrespective of whether such
damage, loss or destruction is occasioned, brought about or
caused in whole or in part by the negligence of OPERATOR, and
CONTRACTOR shall release, defend, indemnify and hold OPERATOR
harmless from and against all claims, demands and causes of
action of every kind for damage to or loss or destruction of
CONTRACTOR's surface equipment and OPERATOR shall be under no
liability whatsoever to reimburse CONTRACTOR for such damage,
destruction or loss.
23.3.2 Equipment in the Hole or Below the
Surface of the Water. OPERATOR assumes responsibility and agrees
to replace or to reimburse CONTRACTOR at replacement cost, to the
extent not covered by CONTRACTOR's insurance, either F.O.B. the
drilling unit or other location designated by CONTRACTOR at no
greater shipping/handling cost than F.O.B. the drilling unit, for
any loss, damage or destruction to CONTRACTOR's in-hole
equipment, subsea and mooring equipment when said equipment is in
the hole or in use below the surface of the water, less
17
<PAGE>
accumulated depreciation on the basis of two percent (2%) per
operating month on drill pipe and 3/4ths (three quarters) of one
percent (1%) per operating month on drill collars, subsea and
mooring equipment, with maximum allowable depreciation to be
deducted to be 50% and the period of depreciation shall commence
on the term commencement date of this contract. If such loss,
damage or destruction is caused by the sole negligence or willful
misconduct of CONTRACTOR, OPERATOR shall have no liability under
this section.
Property of subcontractors of CONTRACTOR shall be
considered CONTRACTOR's Equipment for the purposes of this
Section.
23.4 OPERATOR'S EQUIPMENT: OPERATOR shall assume
liability at all times and shall release, defend, indemnify and
hold CONTRACTOR harmless from and against all claims, demands and
causes of action of every kind for damage to or loss or
destruction of OPERATOR's property and equipment, including but
not limited to any well, platform or structure of OPERATOR, and
including removal of wreck or debris.
Property of subcontractors of OPERATOR shall be
considered OPERATOR's Equipment for the purposes of this Section.
23.5 EMPLOYEES: CONTRACTOR agrees to release,
protect, defend, indemnify and hold OPERATOR, its co-lessees,
partners, joint ventures, agents, drilling consultants onboard
the drilling unit, officers, directors, employees,
representatives, insurers, and parent, subsidiary, and affiliated
companies, and its and their employees, representatives, agents,
officers, directors, insurers, (hereinafter referred to
18
<PAGE>
collectively as "Indemnified Parties") harmless from and against
all claims, demands, and causes of action, including reasonable
attorney's fees, of every type and character, without limit and
without regard to the cause or causes thereof, which arise out of
or are related in any way to the subject matter of this Contract
and which:
(a) are asserted by or arise in favor of any
of CONTRACTOR's or its subcontractors, invitees, agents,
representatives, or employees and/or their spouses or relatives
due to bodily injury, personal injury, death, or loss or damage
of property or;
(b) are asserted for any damage to or
destruction of CONTRACTOR's, its subcontractors', its invitees'
or employees property or other materials from any cause;
whether or not caused by the sole, joint, and/or
current negligence of the Indemnified Parties and/or any claim
of strict liability and/or the unseaworthiness of any vessel
and/or any cause whatsoever, whether predating this Contract or
not.
OPERATOR agrees to release, protect, defend,
indemnify, and hold CONTRACTOR, its officers, directors,
employees, representatives, insurers and parent, subsidiary and
affiliated companies and their employees, representatives,
officers, directors and insurers harmless from and against all
claims, demands, and causes of action, including reasonable
attorney's fees, of every type and character, without limit and
without regard to the cause or causes thereof, which arise out of
or are related in any way to the subject matter of this Contract
19
<PAGE>
and which:
(a) are asserted by or arise in favor of any OPERATOR's
or its subcontractor's, agents, representatives,
invitees, or employees, and/or their spouses or
relatives, due to bodily injury, personal injury, or
death, or loss or damage of property; or
(b) are asserted for any damage to or destruction of
OPERATOR's or its subcontractor's employees, or its
invitees property, or other materials from any cause;
whether or not caused by the sole, joint, and/or
concurrent negligence of CONTRACTOR and/or any claim
of strict liability and/or the unseaworthiness of any
vessel and/or any cause whatsoever, whether predating
this Contract or not.
23.6 THIRD PARTIES: CONTRACTOR shall defend,
indemnify and hold OPERATOR, and its subcontractors harmless from
and against all claims, demands and causes of action of every
kind and character, without limit and without regard to the
cause(s) thereof or the negligence of any party or parties
(including OPERATOR) arising in connection herewith, for injury
to the person or property of, or death or illness of CONTRACTOR's
contractors and subcontractors and/or employees of its
contractors and subcontractors, or its invitees or visitors.
OPERATOR shall defend, indemnify and hold CONTRACTOR harmless
from and against all claims, demands and causes of action of
every kind and character, without limit and without regard to the
cause(s) thereof or the negligence of any party or parties
(including CONTRACTOR) arising in connection herewith, for injury
to the persons or property of, or illness or death of OPERATOR's
20
<PAGE>
contractors (other than CONTRACTOR) and subcontractors, or its
invitees or visitors.
23.7 LOSS OF HOLE: In the event the hole should be
lost or damaged, OPERATOR shall be responsible for any such loss
or damage unless such damage or loss is caused by CONTRACTOR's
gross negligence or willful misconduct. CONTRACTOR shall, at
OPERATOR's election, drill a new hole on the same location or
redrill such section of the hole as OPERATOR may require, in
either case subject to all the terms of this Contact, except that
in the case of CONTRACTOR's gross negligence or willful
misconduct, the Operating Rate shall be reduced to eighty (80)
percent of that set forth in Item A-22 of Schedule "A" for the
drilling of a new hole or redrilling of such hole section as
CONTRACTOR's exclusive liability.
23.8 BLOWOUT OR CRATER: In the event a well being
drilled shall blowout or crater from any cause, OPERATOR shall
bear the entire cost of killing the well or otherwise bringing it
under control, and shall release, hold harmless, indemnify and
defend CONTRACTOR for any such incident. This assumption applies
only to the actual blowout or crater and the cost of bringing the
well under control and has no application to the loss of
property, injuries or damage caused by such blowout, which are
covered elsewhere in this Contract. OPERATOR shall have the right
to use all CONTRACTOR's Equipment and CONTRACTOR's Personnel
during such times as OPERATOR, or both OPERATOR and CONTRACTOR,
are engaged in bringing a well under control. During such time
that CONTRACTOR is involved in such efforts to bring a well under
control, OPERATOR shall compensate CONTRACTOR under the
21
<PAGE>
applicable day rate(s) as determined under this Contract or any
other contract for the use of any other equipment of CONTRACTOR
23.9 RESERVOIR LIABILITY: OPERATOR assumes all
liability and shall release, indemnify, defend and hold harmless
CONTRACTOR for the loss of or damage to any geological formation,
strata, or oil, gas or other reservoirs beneath the surface of
the earth, which shall also include the loss of any such oil, gas
or other substance which escapes above or below the surface.
24.1.A POLLUTION OR CONTAMINATION: CONTRACTOR
shall assume all responsibility for, including control and
removal of, and shall release, defend, indemnify and hold
OPERATOR harmless against and from loss, cost or damage arising
from pollution or contamination which originates from the
drilling unit above the surface of the land or water:
(i) resulting from spills, leaks or dumping of
fuels, lubricants, motor oil, pipe dope,
paints, solvents, ballasts, bilge, garbage,
sewerage, debris, nonbiodegradable objects and
other materials exclusive of those covered by
section 24.1(ii) immediately below, in
CONTRACTOR's possession and control, whether
occasioned, brought about or caused in whole
or in part by negligence of OPERATOR.
(ii) resulting from spills, leaks or dumping of oil
emulsion, oil base or chemically treated
drilling fluids, contaminated cuttings and
lost circulation and fish recovery materials
and fluids, when said materials are in
22
<PAGE>
CONTRACTOR's possession, although their use or
disposition may be at OPERATOR's direction,
and such spill, leak or dumping is a result of
CONTRACTOR's sole negligence.
(iii) resulting from leakage or other uncontrolled
flow of oil, gas or water from pipelines,
including lines on or in submerged lands,
ruptured or damaged by CONTRACTOR's rig,
barge, anchors or other equipment, or by
CONTRACTOR's operations, whether or not
CONTRACTOR is negligent, except that
CONTRACTOR shall not be responsible for such
pollution when the pipeline rupture or damage
is caused by the correct positioning or
operation of CONTRACTOR's Equipment within a
radius of one thousand (1000) feet beyond the
longest deployed anchor leg at a specific
location, or on a specific route, designated
by OPERATOR, or by the actual positioning of
such equipment by OPERATOR, or where OPERATOR
fails to advise CONTRACTOR of any known
obstructions and mark same as set forth in
Section 24.3.
24.1.B POLLUTION OR CONTAMINATION OPERATOR shall
assume all responsibility for, including control and removal of,
and shall release, defend indemnify and hold CONTRACTOR harmless
against and from, any loss, cost or damage arising from pollution
or contamination:
23
<PAGE>
(i) resulting from fire, blowout, cratering,
seepage, or any other uncontrolled flow of
oil, gas or water during the conduct of
operations hereunder.
(ii) resulting, except as provided in section
24.1.A (ii) from possession, use or
disposition of oil emulsion, oil base or
chemically treated drilling fluids,
contaminated cuttings, and lost circulation
and fish recovery materials and fluids,
including such possession, use or disposition
by other contractors.
(iii) resulting, as stated in section 24.1 A (iii),
when caused by the correct positioning or
operation of CONTRACTOR's Equipment at a
specific location, or on a specific route,
designated by OPERATOR, or by the actual
positioning of such equipment by OPERATOR, or
where OPERATOR fails to advise CONTRACTOR of
any know obstructions and mark same as set
forth in Section 24.3.
Without relieving CONTRACTOR of any of its
obligations above provided, it is agreed that OPERATOR may take
part to any degree it deems necessary in the control and removal
of any pollution or contamination which is the responsibility of
CONTRACTOR under the foregoing provisions and CONTRACTOR shall
reimburse OPERATOR for the cost thereof. In addition, OPERATOR
reserves the right to perform subsea inspections for pollution
24
<PAGE>
and contamination which is the responsibility of CONTRACTOR
during operations conducted hereunder. In the event pollution or
contamination is discovered through such inspection which is the
responsibility of CONTRACTOR as set forth hereinabove, CONTRACTOR
agrees to reimburse OPERATOR for the cost of such inspection and
the reasonable cost of cleanup.
In addition, OPERATOR agrees to make application
with and obtain the U.S. Coast Guard for Certificate of Financial
Responsibility to cover the drilling unit in order to enable such
unit to operate in the U.S. Outer Continental Shelf
24.2 PATENT LIABILITY: CONTRACTOR agrees to
release, defend, indemnify and hold harmless OPERATOR against any
and all loss or liability arising from infringement or alleged
infringement of patents covering CONTRACTOR's Equipment,
property, methods or processes furnished by CONTRACTOR. OPERATOR
agrees to release, defend, indemnify and hold harmless CONTRACTOR
against any and all loss or liability arising from infringement
or alleged infringement of patents covering OPERATOR's Equipment,
property, methods or processes furnished by OPERATOR.
24.3 SOUND LOCATION AND ACCESS: OPERATOR shall be
responsible for a conductor pipe program adequate to prevent soil
and sub-soil washout. It is recognized that OPERATOR has
knowledge of the access routes to the location, and must
coordinate with CONTRACTOR to mutually decide the best access
routes to the location, and of any obstructions along such routes
or at the location. OPERATOR shall mark such obstructions which
CONTRACTOR might encounter while enroute to or from the location,
and of any obstructions along such routes or at the location. In
25
<PAGE>
the event OPERATOR fails to advise CONTRACTOR of known
obstruction(s) and mark same or if known seabed conditions prove
unsatisfactory to properly support CONTRACTOR's Equipment and
loss or damage to CONTRACTOR's Equipment results therefrom,
OPERATOR shall, without regard to other provisions of this
Contract, including Section 23.3 hereof, provide suitable tow
vessels (and fuel) at OPERATOR's expense to move the drilling
unit to a repair location (if required) and reimburse CONTRACTOR,
to the extent not covered by CONTRACTOR's insurance, such
reimbursement not to exceed $250,000.00, for all such loss or
damage. In addition, OPERATOR shall pay to CONTRACTOR during
periods of work stoppage or related repair due to such loss or
damage at the applicable day rates set forth in Sections 19.2
through 19.5 for a period not to exceed thirty (30) days.
24.4 GENERAL DEFENSE, HOLD HARMLESS & INDEMNITY: It
is the specific and expressed intent and agreement of OPERATOR
and CONTRACTOR that all release, defense, hold harmless and
indemnity obligations and/or liabilities assumed by OPERATOR and
CONTRACTOR respectively under terms of this Contract, unless
expressly limited or otherwise qualified in this Contract, shall
be without limit and without regard to the cause or causes of any
incident giving rise to any such obligations and/or liabilities,
including the gross, sole, joint or concurrent negligence or
fault of any party, breach of contract, the unseaworthiness of
any vessels or crafts (including the drilling unit), and/or by
ruin or defective premises, equipment, facilities, appurtenances
or location of any party under any code, law or other type of
strict liability whether or not such ruin or defect predates this
26
<PAGE>
Contract and/or is latent, patent or otherwise.
As used in sections 24.1 through 24.6, references to
"OPERATOR", when such word is used in the context of receiving
the benefit of an indemnitee, shall include OPERATOR, and its
Indemnified Parties as described in Section 23.5, and the
OPERATOR's affiliates (as such term is defined in Regulation C of
the Securities Act of 1993) including their respective officers,
agents, employees and insurers, and references to "CONTRACTOR"
when such word is used in the context of an indemnitee shall
include CONTRACTOR's parent and subsidiary companies, and their
owners, officers, agents, employees and insurers, and the
drilling unit, its owners and insurers.
It is further agreed that if it is judicially
determined by any lawfully constituted tribunal with jurisdiction
over the parties and subject matter of the proceeding, beyond the
control of the parties hereto, that the monetary limits of
insurance carried by OPERATOR and CONTRACTOR (which shall also be
deemed to include any self insurance) or the monetary limits of
the hold harmless, defense and indemnity agreements voluntarily
and mutually assumed by OPERATOR and CONTRACTOR in this Contract,
exceed the maximum limits permitted under applicable law, then
said insurance (including self-insurance), release, hold
harmless, defense and indemnity agreements shall automatically be
amended to conform to the maximum monetary limits permitted under
such law.
24.5 CLAIMS: All claims against CONTRACTOR for
labor (including but not limited to social benefits, termination
pay or similar benefits), services and other items required or
27
<PAGE>
used hereunder by CONTRACTOR shall be paid promptly when due and
CONTRACTOR shall release, indemnify, defend and hold OPERATOR
harmless from and against all liability, demands and expenses
from all such claims.
24.6 CONSEQUENTIAL DAMAGES: Neither party shall be
liable to the other for special, indirect or consequential
damages resulting from or arising out of this Contract, its
performance or breach, which shall be deemed to include without
limitation, loss of profit, delay in or loss of production or
business interruptions, however same may be caused.
24.7 OPERATOR'S AUTHORIZED REPRESENTATIVES:
OPERATOR shall furnish CONTRACTOR a list of OPERATOR's
representatives and employees authorized to receive all
information pertaining to logs, records, reports, cores, core
data and any other information on wells drilled or any work
performed under this Contract. OPERATOR and its authorized
representatives and employees shall have the right at all times
to receive all information, to inspect all work performed
hereunder, to witness and to check all measurements and tests and
to have free access to the drilling unit.
25.1 RECORDS AND REPORTS: CONTRACTOR shall furnish
and shall prepare a complete and accurate record on the IADC-API
Daily Drilling Report form of all work performed under this
Contract on any well and shall furnish OPERATOR with two (2)
legible carbon copies of said report properly signed by
CONTRACTOR's and OPERATOR's representatives. One (1) of the
aforementioned copies shall be attached and made a part of
CONTRACTOR's invoice for the work hereunder. CONTRACTOR shall
28
<PAGE>
keep and provide OPERATOR, in the manner specified by OPERATOR,
with delivery tickets and any other warehouse records covering
any materials or supplies furnished to OPERATOR for which
CONTRACTOR shall be reimbursed by OPERATOR. The quantity,
description and condition of material and supplies shall be
properly recorded by CONTRACTOR.
25.2 CONFIDENTIAL NATURE OF RECORDS: All logs,
cores, core data, cuttings, reports and records pertaining to the
performance under the Contract shall be open at all times to the
inspection of OPERATOR and its authorized representatives and
employees and shall not be exhibited nor the contents divulged by
CONTRACTOR or CONTRACTOR's Personnel to any other person, without
OPERATOR's prior written consent.
26.1 DISCIPLINE AND SAFETY: CONTRACTOR shall, at
all times, maintain strict discipline and good order among its
employees in the use of hazardous/toxic chemicals, safety
equipment and proper work procedures for the purpose of doing
everything reasonably possible to prosecute the work contemplated
by this Contract in a good and workmanlike manner, and to protect
against personal injury and damage to equipment and the hole.
CONTRACTOR shall establish safety rules and procedures and
require that employees observe same as well as any that may be
issued by OPERATOR (to the extent they do not conflict with those
of CONTRACTOR) and any safety or other regulations issued by
agencies of any government having jurisdiction. Without limiting
the generality of the foregoing, CONTRACTOR agrees to comply with
the requirements contained in any "right to know" laws of any
state, which are now or may become applicable to operations
29
<PAGE>
caused by this Contract or arising out of the performance of such
operations, regarding hazardous/toxic chemicals.
CONTRACTOR shall take all measures necessary to
provide safe working conditions. No smoking or open flame or
matches or lighters shall be permitted on the drilling unit
except in areas designated by CONTRACTOR in consultation with
OPERATOR as areas wherein smoking or open flame are permitted.
CONTRACTOR as a matter of policy does not allow and shall use its
best efforts to prevent the existence of any alcoholic beverages,
drugs and firearms (or other weapons) aboard the drilling unit.
CONTRACTOR shall conduct safety drills aboard the drilling unit
for all personnel and shall report same on the IADC-API Daily
Drilling Report. CONTRACTOR shall furnish OPERATOR promptly with
a report of each accident which may occur, and shall notify all
Government agencies of accidents as required by law.
27.1 RELATIONSHIP OF PARTIES: CONTRACTOR is an
independent contractor; neither CONTRACTOR, its employees,
CONTRACTOR's subcontractors or their employees are agents or
employees of OPERATOR. The entire performance, including but not
limited to operation, management and control of the drilling unit
and other items of CONTRACTOR's Equipment, shall be under the
exclusive control and command of CONTRACTOR. It shall be the sole
and exclusive duty of CONTRACTOR to determine by CONTRACTOR's own
inspection that all supplies and items of equipment are loaded
and stored aboard said drilling unit in a proper manner and that
said drilling unit is in all respects able to undertake any
contemplated operation under then existing conditions in
accordance with Section 6.1. OPERATOR's prime interest is in the
30
<PAGE>
results to be obtained by CONTRACTOR's performance under this
Contract as an independent contractor.
28.1 FORCE MAJEURE: Except as otherwise provided in
this Section, each party to this Contract shall be excused from
performing under the terms of this Contract if and for so long as
such performance is hindered or prevented by occurrences, or the
resulting effects therefrom, such as, but not limited to, riots,
labor disputes, strikes, lock-outs, wars (declared or
undeclared), insurrections, rebellions, terrorist acts, civil
disturbances, dispositions or orders of governmental authority,
whether such authority be actual or assumed, acts of God (other
than adverse sea or weather conditions), inability to obtain
equipment, supplies or fuel, or by any other act or cause which
is reasonably beyond the control of such party, any such event
and the effect or results of such, being herein sometimes called
"Force Majeure". If performance is prevented by failure to comply
with any governmental law, rule, regulation, disposition or order
as aforesaid and the affected party is operating in accordance
with good oilfield practice in the Area of Operations and is
making reasonable efforts to comply with such law, rule,
regulation, disposition or order, the matter shall be deemed
beyond the control of the affected party. In the event that
either party hereto is rendered unable, wholly or in part, by any
such occurrence, or the resulting effects therefrom, to carry out
its obligations under this Contract, it is agreed that such party
shall give notice and details of Force Majeure and its resulting
effects in writing to the other party as promptly as possible
after its occurrence. In such cases, the obligations of the
31
<PAGE>
parties shall be suspended during the continuance of any
inability so caused. In the event of suspension of operations
under Force Majeure, this Contract shall extend beyond the
original Contract term for the pro-rata suspended period.
In the event that OPERATOR is the party giving
notice of a Force Majeure event, OPERATOR shall be required to
pay CONTRACTOR the Equipment Repair Rate, the Stand-By Rate or
the Stand-By Without Crew Rate provided for in this contract as
may be applicable and subject to any limitations associated until
the applicable rate for a period of thirty (30) days after such
notification. In order to protect the interests of CONTRACTOR, if
a Force Majeure event continues after the expiration of the
thirty (30) day period referred to above, CONTRACTOR shall
acquire a Business Interruption Insurance Policy (Policy) which
will provide no greater than $40,000,000.00 coverage for the
first year and no greater than $20,000,000.00 coverage the second
year with a daily indemnity payment, net of any coinsurance
payments by CONTRACTOR, of $52,000.00 per day . The effective
date of the Policy shall be identical to the effective date of
this Contract. The cost of the premium for such Policy shall be
reimbursed by OPERATOR to CONTRACTOR within fifteen (15) days
after receipt by OPERATOR of the Certificate of Insurance from
CONTRACTOR. In no event shall the premium be greater than
$600,000.00 for the first year of coverage and $300,000.00 for
the second year of coverage and OPERATOR and CONTRACTOR agree to
use their best efforts on a joint basis to acquire a reasonable
Policy at the lowest premium available on the market within the
premium limits stated in this Section 28.1. In the event that a
32
<PAGE>
Force Majeure event is not capable of being covered under a
Policy and that particular Force Majeure event occurs which
causes notification under this Article, OPERATOR agrees to pay
the sum of $52,000.00 per day until the earlier of 1) the
termination of the Force Majeure event and resumption of day rate
operations, 2) the end of the contract period or 3) ninety (90)
days in addition to the thirty (30) day period stated above or a
total of one hundred twenty (120) days after the notification of
the Force Majeure event. Furthermore, CONTRACTOR agrees not to
terminate this contract at any time during a Force Majeure event
while it is receiving payments either through Policy
reimbursements or directly from OPERATOR under this Article
subject to the time limitations stated below. Also at the point
in time when CONTRACTOR is no longer receiving payments during a
Force Majeure event, CONTRACTOR shall have the right to terminate
this contract. In the event of Force Majeure, OPERATOR and
CONTRACTOR agree to meet in an effort to reach a mutually
acceptable solution to the Force Majeure event and such meeting
shall occur prior to a period of one hundred fifty (150) days
after notification of the Force Majeure event or before zero (0)
rate occurs if earlier than one hundred fifty (150) days. In the
event that the parties cannot agree as to a date for resumption
of normal dayrate operations, then either party can terminate the
Contract after one hundred fifty (150) days or earlier if
CONTRACTOR is on zero (0) dayrate and CONTRACTOR shall continue
to receive any dayrate payments provided through the Business
Interruption Insurance Policy.
29.1 REPRESENTATIVES FOR NOTICES: OPERATOR and
33
<PAGE>
CONTRACTOR shall each designate a representative to receive
notices as set forth in Items A4 and A-7 of Schedule "A". Such
representatives may be changed by written notice to the other
party.
30.1 ASSIGNMENT: OPERATOR, at its option, may
assign this Contract, for all or any part of the term remaining,
to any entity qualified by the Minerals Management Service to
operate in the Outer Continental Shelf of the Gulf of Mexico, but
only with the prior written approval of CONTRACTOR which shall
not be unreasonably withheld. In order for this assignment to be
effective under the terms of this CONTRACT, OPERATOR must provide
CONTRACTOR with written notice of the assignment within ten (10)
days after the effective date of the assignment. CONTRACTOR, at
its option, may assign this Contract for all or part of term
remaining to any other party, but only with the prior written
approval of OPERATOR, which shall not be unreasonably withheld.
In order for this assignment to be effective under the terms of
this CONTRACT, CONTRACTOR must provide OPERATOR with written
notice of the assignment within ten (10) days after the effective
date of the assignment.
31.1 SPECIFIED CONTRACT TERM; OPTION TO EXTEND:
This Contract shall become effective upon signature by parties
hereto on the day set forth in Item A-1 of Schedule "A". Work
shall begin under this contract as outlined in item A-15 of
schedule "A" (Term Commencement Date). The Term of this contract
shall be for the minimum period set forth in Item A-16 of
Schedule "A". OPERATOR shall have the option of extending the
term of this Contract for the period set forth in Item A-33 of
34
<PAGE>
Schedule "A" upon OPERATOR giving CONTRACTOR written notice of
its desire to extend the Contract on or before the end of the
fifteenth (15th) month after the Term Commencement Date. The
fifteen (15) month option exercise deadline shall also include
the requirement for the mutual agreement of the parties
respecting dayrates for the option period.
The Specified Contract Term or any extension (if
such option is exercised by OPERATOR) shall be extended
automatically from day to day for the time necessary to complete
any particular well or related operations in progress upon
expiration of the specified contract term or any extension.
31.2 TERMINATION BY OPERATOR: Subject to the
fulfillment of all then existing obligations under this Contract
and except as hereinafter provided, OPERATOR may terminate this
Contract, effective upon delivery to CONTRACTOR of written notice
of such termination
(a) At any time after the drilling unit
becomes incapable of performing the work
contemplated by this Contract, for
reasons within CONTRACTOR's control and
cannot be made capable of performing such
work within twenty (20) days following
written notice of termination, or
(b) After thirty (30) days from notice
relating to Force Majeure and subject to
Section 28.1 above, or
(c) At any time if, in OPERATOR's sole
35
<PAGE>
opinion and after written notice and
opportunity for correction by CONTRACTOR
within ten (10) days of such notice,
CONTRACTOR has failed to commence to
conduct its operations under this
Contract in accordance with good oilfield
practice as a result of causes within the
control of CONTRACTOR, or CONTRACTOR has
failed to furnish or maintain
CONTRACTOR's Equipment in good condition
and/or suitable for the use intended for
under this Contract and as such is
detrimental to the normal operational
efficiency of OPERATOR's drilling program
or any of CONTRACTOR's Personnel or other
personnel engaged by CONTRACTOR which
OPERATOR considers to be incompetent or
otherwise detrimental to the normal
operational efficiency of OPERATOR's
drilling program, have not been replaced
by CONTRACTOR after receipt of the
appropriate written notice from OPERATOR
or
(d) At any time for any other reason after
the Term Commencement Date by prior
thirty (30) days written notice to
CONTRACTOR as per Item A-35 of Schedule
"A", provided that OPERATOR shall pay to
36
<PAGE>
CONTRACTOR for the Stand-By or
Stand-By-Without-Crew Rate, as
applicable, from the date of termination
for the remaining balance of unused days
of dayrate operations less than the firm
period as specified in Schedule "A", Item
A-16 of the Contract. In this event,
CONTRACTOR shall exert every reasonable
effort to find alternate employment for
the drilling unit.
In the event OPERATOR terminates this Contract in
accordance with section 31.2 (a),or (c), such termination shall
be without penalty to OPERATOR and CONTRACTOR shall not be
entitled to any early termination compensation. To the extent of
any conflict between the provisions of this Section and the terms
and provisions of the remainder of this Contract, the provisions
of this Section shall control.
31.3 TERMINATION BY CONTRACTOR: Subject to the
provisions of Section 20.1, in the event that any payments due
(except any invoices or portions of invoices that are in dispute
or in the process of being settled by arbitration) are not paid
when due, CONTRACTOR shall notify OPERATOR of nonpayment and
shall give OPERATOR twenty (20) days from receipt of said notice
to pay. In the event OPERATOR fails to pay within the said twenty
(20) day period, CONTRACTOR may terminate ten (10) days after
receipt of the latter notice, unless payment of all invoices then
overdue and not in dispute is received by CONTRACTOR prior to the
expiration of said ten (10) day period.
37
<PAGE>
In the event the Contract is terminated pursuant to
this Section, CONTRACTOR shall be under no obligation to finish
any well or work in progress and any actions taken by CONTRACTOR
pursuant to this Section 31.3 shall be without prejudice to any
of CONTRACTOR's other legal rights or remedies.
32.1 UNSATISFACTORY PERFORMANCE: If, in the sole
opinion of OPERATOR, CONTRACTOR has failed to conduct its
operations under this Contract in accordance with good oilfield
practice as a result of causes within the control of CONTRACTOR,
or CONTRACTOR has failed to furnish or to maintain CONTRACTOR's
Equipment in good condition and/or suitable for the use intended,
or members of CONTRACTOR's Personnel or other personnel engaged
by CONTRACTOR are considered by OPERATOR to be incompetent or
otherwise detrimental to OPERATOR's drilling program, OPERATOR
may give CONTRACTOR written notice in which the causes of
dissatisfaction shall be specified. Should CONTRACTOR fail,
refuse or not commence to remedy the matters complained of within
ten (10) days after written notice is received by CONTRACTOR,
OPERATOR may (i) terminate this Contract with no penalty or early
termination compensation as provided in Section 31.2(c) above or
(ii) take over the exclusive operation of CONTRACTOR's Equipment
and Personnel for the purpose of conducting operations hereunder
notwithstanding anything to the contrary contained in this
Contract. In the event operations are taken over by OPERATOR:
(a) OPERATOR shall pay CONTRACTOR the
Stand-By-Without-Crew Rate set forth in Item
A-25 of Schedule "A" plus the value of any
drilling supplies belonging to CONTRACTOR and
38
<PAGE>
used by OPERATOR for the period of such
operations by OPERATOR.
(b) OPERATOR shall pay all costs and wages (but
not handling charges) in connection with
CONTRACTOR's Equipment and Personnel.
(c) OPERATOR shall return CONTRACTOR's Equipment
to CONTRACTOR in as good a condition as when
taken over by OPERATOR, however, normal wear
and use shall be excepted.
(d) All operations shall be at OPERATOR's risk,
and any representations and indemnity
provisions of this Contract whereby CONTRACTOR
undertakes to protect, to indemnify or to hold
harmless OPERATOR, in any respect (other than
Patent Liability set forth in Section 24.2
above) shall be suspended; provided, however,
that such protection, indemnity or hold
harmless provisions shall survive and be
applicable to the extent that any loss, harm
or damage occurring during the period when
operations have been taken over by OPERATOR is
caused, in whole or in part, by acts or events
which transpired before operations were taken
over by OPERATOR. OPERATOR shall release,
defend, indemnify and hold harmless
CONTRACTOR, its parent, subsidiary and
affiliated companies, and their respective
officers, directors, employees and agents
39
<PAGE>
harmless from and against any and all claims,
damages, expenses (including reasonable
attorneys' fees) and judgements, arising from
personal injury, death or property damage
suffered or incurred by any person (including
CONTRACTOR's employees) in any way related to
such operations conducted by OPERATOR,
CONTRACTOR's insurance shall not apply during
such period with all provision hereof
regarding primary insurance, additional named
insured and waiver of subrogation having no
effect.
33.1 CONFLICT OF INTEREST: CONTRACTOR shall not pay
any fee, commission, rebate or anything of value to or for the
benefit of any employee or representative of OPERATOR. CONTRACTOR
shall use its best efforts not to permit any of its employees to
engage in any activities contrary or detrimental to the best
interests of OPERATOR.
34.1 SEVERABILITY; WAIVER; TITLE HEADINGS; ENTIRE
AGREEMENT; MODIFICATION: No failure or failures on the part of
either party to enforce, from time to time, all or any portion of
the terms or conditions of this Contract shall be interpreted as
a waiver of such terms or conditions. Title headings contained in
this Contract are for identification and reference only, and
shall not be used in interpreting any part of this Contract. This
Contract, together with the Schedules incorporated and made a
part of this Contract by reference, constitute the entire
agreement of the parties; no other writings or conversations
40
<PAGE>
shall be considered a part of this Contract. No promises,
representations or inducements not expressed in this Contract
were made or relied upon by any party hereto. This Contract can
only be modified by written instrument properly executed by duly
authorized representatives of the respective parties. This
Contract shall be construed and the relations between the parties
determined in accordance with the laws as set forth in Item A-31
of Schedule "A".
If any word, phrase, clause, paragraph or other
provision of this Contract is now or deemed, adjudicated or
otherwise found to be against public policy, void or otherwise
unenforceable, then said provision shall be deleted or modified,
in keeping with the express intent of the parties hereto, as
necessary to render all the remainder of this Contract valid and
enforceable. All such deletions or modifications shall be the
minimum required to effect the foregoing.
35.1 REGULATIONS: CONTRACTOR represents that all of
CONTRACTOR's Equipment shall comply with design criteria and
specification of all governmental authorities having
jurisdiction. CONTRACTOR agrees to comply with all laws, rules
and regulations, Federal, State or municipal, which are now or
may become applicable to operations covered by this Contract or
arising out of the performance of such operations including
OPERATOR's Search and Seizure policy (Schedule G). The terms or
Schedule "F", attached hereto, where applicable shall apply to
this Contract. In the event that a change of law(s) or
regulation(s) should occur after the commencement of mobilization
hereunder, it shall be documented in accordance with Section
19.6.
41
36.1 BANKRUPTCY: Should CONTRACTOR or OPERATOR
become insolvent or make an assignment for the benefit of
creditors or be adjudicated as bankrupt or admit in writing its
inability to pay its debts generally as the same become due, or
should any proceedings be instituted by CONTRACTOR or OPERATOR
under any State or Federal Law for relief of debtors or for the
appointment of a receiver, trustee or liquidator of CONTRACTOR or
OPERATOR, or should a voluntary petition in bankruptcy or for a
reorganization or for an adjudication of CONTRACTOR or OPERATOR
as an insolvent or a bankrupt be filed, or should an attachment
be levied upon the CONTRACTOR's or OPERATOR's Equipment and not
removed within ten (10) days therefrom, then upon the occurrence
of any such event, OPERATOR or CONTRACTOR shall thereupon have
the right to cancel this Contract and to terminate immediately
all work then being performed thereunder.
42
<PAGE>
OPERATOR
British-Borneo Petroleum, Inc.
WITNESS: By: /s/ Ian A. Thornley
/s/ D. M. Adams Name: Ian A. Thornley
/s/ Glen P. Kelley Title: President
CONTRACTOR
Atwood Oceanics, Inc.
WITNESS:
/s/ D. M. Adams By: /s/ John R. Irwin
/s/ Glen P. Kelley Name: John R. Irwin
Title: President
43
<PAGE>
SCHEDULE "A"
CONTRACT SUMMARY
A-1 Contract Dated as of (1.1) June 20, 1996
A-2 OPERATOR British-Borneo Petroleum, Inc.
A-3 OPERATOR's Address 1000 Louisiana, Suite 1200,
Houston, Texas 77002-5009
Facsimile Number 713/650-1053
Telephone Number 713/650-8292
A-4 OPERATOR's Representative (29.1) Mike Adams
A-5 OPERATOR's Address For Invoice 1000 Louisiana,
Presentation (20.2) Suite 1200, Houston,TX
77002-5009
A-6 CONTRACTOR Atwood Oceanics, Inc.
A-7 CONTRACTOR's Representative (29.1) Glen Kelley or Larry Till
A-8 Facsimile Number 713/578-3253
Telephone Number 713/492-2929
A-9 CONTRACTOR's Address 15835 Park Ten Place Drive,
Suite 200
Houston, TX 77084
A-10 CONTRACTOR's Address or Bank FIRST NATIONAL BANK OF
and Account Number and Method CHICAGO
for Invoice Payments (20.3) Chicago, Illinois
for the account of
ATWOOD OCEANICS; INC.
Acct. No. 57-18163
ABA No. 071000013
A-11 Area of Operations (8.1) Federal waters,
O.C.S., U.S. Gulf of
Mexico unless
otherwise agreed.
A-12 Location of Well or Wells (8.2) Blocks to be advised
by OPERATOR.
A-13 Name of Drilling Unit ATWOOD HUNTER
1
<PAGE>
A-14 Type of Drilling Unit Semisubmersible
Drilling Unit
A-15 Term Commencement Date (31.1) Last anchor bolstered
at [the drilling
unit's then
existing location] a
Gulf of Mexico
shipyard following
upgrade of the
drilling unit to 3,500
feet water depth
capability, and the
drilling unit is ready
for tow to Operator's
initial designated
location.
A-16 Specified Contract Term: (31.1) Two (2) years firm at
rates specified herein
Minimum of:
A-17 Number of Wells N/A
A-18 Maximum Water Depth 3,500 feet
A-19 Maximum Well Depth 20,000 feet (nominal
design)
A-20 Mobilization Fee (19.8) A. Four and one-half
million dollars
(US$4,500,000) payable
upon the entry of the
drilling unit into a
shipyard for water
depth upgrade to 3,500
feet.
B. Five and one-half
million dollars
(US$5,500,000) payable
when the drilling unit
is ready to leave the
shipyard and is ready
to commence operations
hereunder.
A-21 Demobilization Fee (19.8) $
In the event the drilling unit continues to be on
contract for OPERATOR for the subsequent one (1) or two (2) year
operation, or the unit is released directly to another operator,
for immediate ongoing work, the demobilization fee will be Zero
(0). Otherwise, OPERATOR shall be obligated to provide
appropriate boats and fuel at its own cost to move the drilling
2
<PAGE>
unit at the Standby Rate to a mutually agreed port in the U.S.
Gulf of Mexico."
A-22 Operating Rate: $/Day (19.1 & 19.2) $ 88,400 if the
drilling unit is
ready to commence
drilling operations
after June 1, 1997,
or. $88,900 if the
drilling unit is
readv to commence
drilling operations
on or before June 1,
1997.
A-23 Stand-By Rate: $/Day (19.1 & 19.3) $ 86,600
A-24 Equipment Repair Rate: $/Day $ 79,560
(19.1 & 19.4)
A-25 Stand-By-Without-Crew Rate: $/Day $78,400
(19.1 & 19.5)
A-26 Handling Charge on Items Supplied five percent (5%)
By CONTRACTOR (19.7)
A-27 Port or Place at which the Mobilization (A):
mobilization of the Drilling Southeast Asia
Unit shall commence
Mobilization (B):
U.S. Gulf of Mexico
shipyard
A-28 Commencing of Day Rates When the last anchor
is bolstered at a
Gulf of Mexico
shipyard following
upgrade of the
drilling unit to
3,500 feet water
depth capability and
is ready for tow to
OPERATOR's first
designated location.
A-29 Cessation of Day Rates After completion of
the work, when the
drilling unit has
been moved and is
safely moored and
3
<PAGE>
properly secured at
a mutually agreeable
port location in the
Gulf of Mexico with
all British-Borneo &
British-Borneo third
party equipment and
supplies offloaded.
In the event the
drilling unit is
released directly to
another operator,
cessation of
dayrates will be the
time when the last
anchor is bolstered
with all British-
Borneo and British-
Borneo third party
equipment and
supplies are
offloaded, and the
rig is ready for tow
to the next
operator's drilling
location.
A-30 Redrilling Penalty (23.7) See Section 23.7
A-31 Governing Law (34.1 & 37.1) U.S. General
Maritime
A-32 Location of shore base port As designated by
facilities OPERATOR
A-33 Term of Contract Extension, One (1) option of
Operator's option (31.1) one (1) or two (2)
years at mutually
agreed rates
A-34 Time of Notice to Exercise Within fifteen (15)
months of the Term
Commencement Date
A-35 OPERATOR Notice for Early Thirty (30) days
Termination (31.2(d)
4
<PAGE>
