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: JULY 1, 1997
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:
281-492-2929
_______________
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PAGE 2
ITEM 5. OTHER EVENTS
On July 1, 1997, Atwood Oceanics, Inc. (the "Company")
announced that Shell Philippines Exploration B.V., pursuant to an
Offshore Drilling Contract dated January 29, 1997 between
Occidental Philippines, Inc. and Atwood Oceanics Pacific Limited (a
wholly owned subsidiary of the Company) gave notice to extend
drilling operations for the ATWOOD FALCON for three years beyond
its current commitment of a two well drilling program which is
currently expected to commence in the fourth quarter of 1997. This
contract extension provides for the rig to be upgraded to 3500 feet
water depth capacity and to commence operation in the Philippines,
which the Company anticiaptes to be in the fourth quarter of 1998,
following completion of the inital two well program and the
upgrade. The Company expects to spend approximately $50 million
for the upgrade. This contract should produce gross revenues of
approximately $125 million, including mobilization fees.
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: 10 July 1997
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EXHIBIT 10
AGREEMENT
BETWEEN
OCCIDENTAL PHILIPPINES, INC.
AND
ATWOOD OCEANICS PACIFIC LIMITED
FOR THE PROVISION OF
THE "ATWOOD FALCON"
MOBILE OFFSHORE DRILLING UNIT
CONTRACT NO. MODU/
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TABLE OF CONTENTS
SECTION I - GENERAL CONDITIONS OF CONTRACT
PART 1 - PRELIMINARY CONDITIONS
1.1 Definitions
1.2 Object of Contract
1.3 Term of Contract
1.4 Termination
1.5 Contract Documents
PART 2 - ROLE AND OBLIGATIONS OF CONTRACTOR
2.1 Independent CONTRACTOR
2.2 CONTRACTOR's Representative
2.3 CONTRACTOR's Personnel
2.4 CONTRACTOR's Items
2.5 Confidentiality
2.6 Safety
2.7 CONTRACTOR Permits and Authorizations
2.8 Cleaning Up
2.9 Use of Local Supplies
2.10 CONTRACTOR's General Responsibilities
2.11 Company Management System
PART 3 - PERFORMANCE OF OPERATIONS
3.1 Operational Management
3.2 Reports
3.3 Operating Requirements
3.4 Extra Supplies, Services and Additional Equipment at COMPANY's Request
PART 4 - ROLE AND OBLIGATIONS OF COMPANY
4.1 COMPANY's Representative
4.2 COMPANY's Items and Services
4.3 COMPANY's General Obligations
4.4 COMPANY's Permits and Authorizations
PART 5 - RIGHTS AND PRIVILEGES OF COMPANY
5.1 Inspection of Drilling Unit
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PART 6 - FINANCIAL CONDITIONS
6.1 Day Rates and Lump Sums
6.2 Adjustment of Rates
6.3 Currency of Payment
6.4 Invoicing
6.5 Payments
6.6 Taxes and Duties
6.7 Right to Audit
PART 7 - LIABILITY AND INDEMNITIES
7.1 Liabilities for Equipment and Personnel
7.2 Insurance
PART 8 - MISCELLANEOUS
8.1 Unsatisfactory Performance
8.2 Force Majeure
8.3 Bankruptcy or Abandonment of Operations by CONTRACTOR
8.4 Nonwaiver
8.5 Governing Law and Disputes
8.6 Assignment of Contract; Subcontracting
8.7 Notices
8.8 Conflict of Interest
8.9 Waiver; Title Headings; Entire Contract
8.10 Special Provisions
Appendix A - Company Management System
ANNEXES
ANNEX A - Description of CONTRACTOR's Equipment
ANNEX B - CONTRACTOR Personnel
ANNEX C - Equipment and Services Furnished by CONTRACTOR (C) or COMPANY (CO)
ANNEX D - Offshore Contract Summary
D-1 - Primary Term Only
D-2 - Primary Term And
Extension Period If
Extension Period Is
Exercised
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MOBILE OFFSHORE DRILLING CONTRACT
THIS CONTRACT, is made and entered into this 29th day of January, 1997, for the
conduct of petroleum operations under Service Contract 38 by the unincorporated
Joint Venture of Occidental Philippines, Inc. and Shell Phillippines Exploration
B.V., by and between OCCIDENTAL PHILLIPINES, INC., a California corporation,
hereinafter referred to as "COMPANY", and ATWOOD OCEANICS PACIFIC LIMITED, a
Caymand Islands corporation, hereinafter referred to as "CONTRACTOR".
WHEREAS, COMPANY has a contractual right under Service Contract 38 with the
government of the Philippines to search for hydrocarbons and pursuant to that
right desires to have offshore well(s) drilled and completed or abandoned.
WHEREAS, CONTRACTOR represents that it is engaged in the business of drilling,
completing and abandoning offshore wells; that it has a drilling unit and all
necessary spare parts and supplies required to perform this work and that its
equipment is in good working order; and has fully trained and knowledgeable
personnel capable of performing the work required of it under this Contract.
WHEREAS, CONTRACTOR is willing to drill and complete or, as necessary, plug and
abandon such well(s) with its equipment and personnel according to good oil
field practices and pursuant to all applicable treaties, laws, rules and
regulations in return for compensation to be paid it by COMPANY.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter provided, the Parties agree as follows:
PART 1 - PRELIMINARY CONDITIONS
1. 1 Definitions
In this Contract, including the Annexes, unless the context otherwise
stipulates, the following words and phrases shall have the following meanings:
1.1.1 "Air Operations Base" or "AOB" means the COMPANY's onshore
location located at Manila Airport, Manila, the Republic
of the Philippines.
1.1.2(a) "First Commencement Date" means the time of day and the
Date when the Drilling Unit has dropped its first anchor at
COMPANY's first well location of the Primary Term, with
CONTRACTOR's Items available in accordance with Annex A-1
and in good operating condition, as certified by
CONTRACTOR, meets all Government regulations, rules, laws,
orders and other requirements and, having obtained all
relevant approvals and certificates, is in class and ready
to commence Operations. This date shall not be before
November 1, 1997.
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1.1.2(b) "Second Commencement Date" means the time of day and
the date when the Drilling Unit has dropped its first
anchor at COMPANY's first well location of the
Extension Period, with CONTRACTOR's Items available
in accordance with Annex A-2 and in good operating
condition, as certified by CONTRACTOR, meets all
Government regulations, rules, laws, orders and other
requirements and, having obtained all relevant
approvals and certificates, is in class and ready to
commence Operations.
1.1.3 "COMPANY's Items" means equipment and services (other than
CONTRACTOR's Items) specified in Annex C and furnished by
COMPANY or CONTRACTOR at the expense of COMPANY.
1.1.4 "COMPANY's Personnel" means each individual and
the collective group of COMPANY's employees who are
provided by COMPANY.
1.1.5 "CONTRACTOR's Items" means the equipment and services
specified in Annex A and Annex C that are to be provided
by CONTRACTOR or COMPANY, at the expense of the
CONTRACTOR.
1.1.6 "CONTRACTOR's Personnel" means each individual and the
collective group of CONTRACTOR's employees who are
provided by CONTRACTOR.
1.1.7 "Country of Operations" means the Republic of the
Philippines.
1.1.8 "Day Rate" or "Day Rates" means the rate or various rates
of compensation earned for a twenty-four (24) hour period
during the Drilling Period.
1.1.9 "Drilling Period" means the time between Commencement Date
and Termination Date.
1.1.10 "Drilling Unit" means the CONTRACTOR's equipment
complete with all supplies and services, in
compliance with Annex A of the Contract.
1.1.11 "Extension Period" is defined in Annex D and means
the period of time commencing upon the conclusion of
the Primary Term and continuing until the Termination
Date, if COMPANY exercises its option under Articles
1.3.2. The Primary Term and any Extension Period
comprise the Drilling Period.
1.1.12 "Force Majeure" has the meaning provided in Article
8.2.
1.1.13 "Government" means the government of the Republic of
the Philippines or, as the case may be, its agencies
and representatives having control over the Operating
Area.
1.1.14 "Marine Operations Base" or "MOB" means the COMPANY's
support facilities located on Mabini Base, Batangas,
Republic of the Philipines.
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1.1.15 "Operating Area" means those offshore areas covered
by an executed agreement between COMPANY and the
Government and in which COMPANY is authorized to
conduct exploration.
1.1.16 "Operations" means all activities to be performed
under this Contract.
1.1.17 "Primary Term" means the time from the First
Commencement Date necessary to drill, complete, test
and evaluate or abandon the two (2) wells as
specified in Annex D, including any substitute
well(s), as may be required, or upon delivery of the
Drilling Unit to Western Anchorage at Singapore
pursuant to Article 1.3.2 and as specified in Annex
D-2, D-25.
1.1.18 "Termination Date" means the time of day and date
when the Drilling Unit is released by COMPANY and the
last anchor of the Drilling Unit has been bolstered
and the Drilling Unit has been cleared to depart the
Country of Operations, or when this Contract is
terminated by the COMPANY or CONTRACTOR, in
accordance with its terms, whichever occurs first.
1.1.19 "U.S. Dollars" or "U.S.D." means the currency of the
United States of America.
1.1.20 "Work" means all the activities necessary to drill,
complete or abandon the wells in compliance with all the
requirements under this Contract.
1.2 OBJECT OF CONTRACT
CONTRACTOR shall drill, complete or abandon the well(s) in compliance
with all the requirements under this Contract. In return for such
compliance, COMPANY shall compensate CONTRACTOR in accordance with
the provisions of this Contract. Each Party shall execute and deliver
the documents and give the assurances necessary to give effect to the
provisions of this Contract.
1.3 Term of Contract
1.3.1 This Contract shall become binding on the Parties when
signed by both Parties and shall continue until the end of
the Primary Term, unless extended pursuant to Article
1.3.2 below.
1.3.2 By giving written notice on or before June 30, 1997,
COMPANY has the option to enter an Extension Period upon
conclusion of the Primary Term for a length of time to
upgrade the Drilling Unit to 3,500 feet water depth
capability then drill wells offshore the Philippines for
an additional firm drilling period of three (3) years. It
is understood and agreed by the Parties that if the work
contemplated by the COMPANY for the Extension Period is
actually performed, such work will be done by CONTRACTOR
with the Drilling Unit as specified in Annex A-2.
1.3.3 This Contract shall expire on the Termination Date,
subject to the rights and obligations accrued before the
Termination Date, including, without limitation, earned
compensation and discharge of equipment.
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1.4 TERMINATION
1.4.1 COMPANY's Right To Terminate
COMPANY may terminate the CONTRACT, in whole or in part,
at any time, by giving CONTRACTOR written notice thereof
and without assigning any reason therefor. Such notice
shall specify the effective date of termination should it
be different from the date of the notice, except for WORK
as may be necessary and approved by COMPANY to preserve
and protect the WORK, COMPANY provided items, and other
equipment, materials, temporary works and other items
related to the WORK until hand over to COMPANY is
effected. Upon such termination, all data, plans,
specifications, reports, estimates, summaries, completed
WORK and any WORK or reports in progress and all other
information and materials as may have been accumulated by
CONTRACTOR in carrying out the WORK shall be, in the
manner and to the extent determined by COMPANY, become the
property of and promptly be delivered to COMPANY.
If COMPANY exercises its right to terminate under this
Article 1.4.1 and 1.4.2(b), COMPANY shall pay to
CONTRACTOR all amounts payable and due in accordance with
the CONTRACT for WORK performed up to termination
including payment of the Early Termination Rate the
Initial Mobilization Fee and Second Mobilization Fee, if
not already paid, and the Demobilization Fee set out in
Annex D. Such amounts due shall be established in
accordance with Annex D hereto, and no other amounts shall
be payable. In the event that termination is exercised
prior to commencement of
mobilization of the Drilling Unit prior to the Primary
Term, and the Extension Period has not been excerised,
then only the Early Termination Rate shall be payable.
1.4.2 Either Party shall have the right to immediately terminate
this Contract upon written notice to the other Party:
(a) If the Drilling Unit is declared by the insurers
thereof as an actual, constructive, compromised
or arranged total loss and, except for
compensation properly earned up to the time of
day of that loss, no further remuneration shall
be owed by COMPANY, except reimbursement for
actual cost of demobilizing its personnel to the
AOB and remaining equipment, if any, to the MOB.
(b) In the event of Force Majeure, provided that
CONTRACTOR shall not have the right to early
termination hereunder if and for so long as
COMPANY continues to timely pay CONTRACTOR the
Force Majeure Rate. COMPANY may exercise its
right to early termination hereunder subject to
the provisions of Article 1.4.1.
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1.4.3 Subject to the conditions contained herein COMPANY shall
have the right to terminate this Contract by written
notice to CONTRACTOR:
(a) If the Drilling Unit does not meet the specifications
defined in this Contract (i) at any time during the
Drilling Period, or (ii) at the time of inspection by
COMPANY, as stipulated in Article 5.1.1; if CONTRACTOR
fails to remain in compliance with its covenants; or if
COMPANY becomes dissatisfied with CONTRACTOR's conduct
of the Operations hereunder (due to, but not limited
to, slow progress or negligent or insufficiently
skilled crew) and COMPANY has decided not to exercise
its right of taking over as per Article 8.1 CONTRACTOR
shall be entitled to no compensation, other than the
Day Rates properly earned prior to the termination
under this Article 1.4.3 (a) and payment of the
Demobilization Fee.
(b) If CONTRACTOR does not procure or maintain the
insurance policies specified in Article 7.2 of
this Contract. CONTRACTOR shall be entitled to no
compensation, other than the Day Rates properly
earned prior to the termination under this
Article 1.4.3 (b) and payment of the
Demobilization Fee.
(c) If COMPANY sends written notification to
CONTRACTOR exercising its termination rights
under paragraphs (a) or (b) above, CONTRACTOR
shall have five (5) days to remedy or commence to
remedy the condition giving rise to the
notification. Failure to remedy or commence to
remedy such condition shall result in termination
at the end of such five (5) days without further
notice.
(d) On the occurrence of any one or more of the
events specified in Article 8.3. CONTRACTOR shall
be entitled to no compensation, other than the
Day Rates properly earned prior to the
termination under this Article 1.4.3 (a).
1.4.4 Except as otherwise provided in this Article 1.4, no other
remuneration or compensation shall be payable to
CONTRACTOR on termination of this Contract.
1.4.5 On or after the Termination Date, CONTRACTOR shall allow
COMPANY to remove, at a mutually agreeable time and place,
any COMPANY Items and third party equipment and materials
in the possession of CONTRACTOR, subject to Article 6.1.3
below.
1.5 CONTRACT DOCUMENTS
1.5.1 The following documents are attached to the main body of
this Contract and are by this reference incorporated into
and made a part of this Contract:
ANNEX A-1 - Description of CONTRACTOR's Equipment - 2,500
ft. water depth
A-2 - Equipment Furnished by CONTRACTOR
- 3,500 ft. water depth
ANNEX B - CONTRACTOR Personnel
<PAGE>
ANNEX C - Equipment and Services Furnished by
CONTRACTOR (C) or COMPANY (CO)
ANNEX D-1 - Contract Summary - Primary Term Only
ANNEX D-2 - Contract Summary - Primary Term and Extension
Period
ANNEX E - Insurance
1.5.2 In the event of any discrepancies or inconsistencies between the main
body of this Contract and the Annexes, the provisions of the main
body of this Contract shall control.
PART 2 - ROLE AND OBLIGATIONS OF CONTRACTOR
2.1 INDEPENDENT CONTRACTOR
CONTRACTOR is an independent contractor under this Contract and shall
possess all the rights and responsibilities of an independent
contractor. As an independent contractor, CONTRACTOR shall have,
inter alia, the right to control the manner and means of
accomplishing the Operations. The obligations and liabilities of
CONTRACTOR as an independent contractor under this Contract or in law
shall not be waived, impaired or diminished.
Neither CONTRACTOR nor CONTRACTOR's Personnel shall be considered
employees, agents or servants of COMPANY.
2.2 CONTRACTOR'S REPRESENTATIVE
CONTRACTOR shall nominate among its personnel on board the Drilling
Unit a representative ("CONTRACTOR's Representative") who shall be in
charge of all CONTRACTOR's Personnel on board and shall have full
authority to represent CONTRACTOR in all daily matters. CONTRACTOR's
Representative shall be empowered to bind the CONTRACTOR and to
acknowledge events in writing. When not on board, CONTRACTOR's
Representative shall nominate an on-board delegate who also shall
have full authority to act as the CONTRACTOR's Representative.
2.3 Contractor's Personnel
(a) CONTRACTOR agrees and undertakes:
(i) To supply the competent and qualified personnel
specified in Annex B. The shift schedule of its
Personnel shall be in accordance with Annex B.
(ii) To maintain, at its own expense, on board the
Drilling Unit, a certified medic
to COMPANY's satisfaction.
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(iii) To require its personnel to observe local
administrative rules, customs and laws.
(iv) To require its personnel to observe all technical
and safety instructions given by COMPANY and
CONTRACTOR, as well as COMPANY's instructions
concerning security and pollution.
(v) To replace, at its own expense, upon COMPANY's
request, any of CONTRACTOR's Personnel who, in
COMPANY's reasonable judgement, are incompetent
or unwilling or unable to render the services or
fulfill or carry out the contractual obligations
assigned to them under this Contract or whose
conduct or behavior is not acceptable to COMPANY.
(vi) To carry out all administrative formalities in
due time with respect to obtaining visas and/or
residence and work permits for its personnel in
the Operating Area and Country of Operations.
(vii) To be responsible for the hiring, salaries,
insurance, accommodations, food and all
expenses pertaining to CONTRACTOR's
Personnel and to hold harmless COMPANY
against all claims, costs and expenses
concerning CONTRACTOR's Personnel, including
but not limited to, taxes (including
personal income taxes), holidays and social
benefits.
(viii) To organize and transport, at its expense,
its personnel between the AOB and point of
origin in accordance with the instructions
given by COMPANY and the normal shift
schedule as defined in Annex B.
(ix) To maintain, at all times, adequate discipline
and good order among its personnel on board the
Drilling Unit and in the Country of Operations.
(b) Except as otherwise expressly provided, the selection,
replacement, hours of labor, remuneration and level of
supervision of CONTRACTOR's Personnel shall be determined
by CONTRACTOR.
(c) At the request of COMPANY, CONTRACTOR shall, subject to
its approval, decrease or increase the number of
CONTRACTOR's Personnel. Day Rates shall be adjusted to
reflect the resulting increase or decrease.
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2.4 CONTRACTOR'S ITEMS
2.4.1 CONTRACTOR declares, warrants and represents that during
the Drilling Period:
(a) The Drilling Unit and CONTRACTOR's Items shall be
fit to perform the Operations contracted for
herein with efficiency and in accordance with
good oil field practices.
(b) The Drilling Unit and other CONTRACTOR's Items
shall meet the specifications set out in Annex A
as appropriate.
(c) The Drilling Unit shall be able to safely conduct
Operations in the minimum and maximum water
depths specified in COMPANY's Drilling program.
(d) The Drilling Unit shall be able to perform
Operations continuously and safely in sea
conditions as specified in Annex A.
(e) The Drilling Unit shall be able to drill to a
depth of at least five thousand (5,000) meters
below the rotary table or as specified in Annex
A.
2.4.2 CONTRACTOR agrees and undertakes during the Drilling
Period, at its expense:
(a) To Provide the Drilling Unit and all other
CONTRACTOR's Items in good working condition.
(b) To maintain, at all times, first class
housekeeping conditions onboard the Drilling Unit
and to provide accommodations, limited to four
(4) persons per room, for all its personnel on
board, plus up to an additional thirty (30)
persons total from service companies and COMPANY.
(c) To retain and maintain on board the Drilling
Unit, an adequate and customary supply of spare
parts for the Drilling Unit and CONTRACTOR's
Items with additional spares located at the
Operations Base. Replenishment of spares to the
Operations Base shall occur in order to maintain
adequate stock levels.
(d) To install, operate, test and maintain in good
working condition all CONTRACTOR's Items and, in
particular, its well control equipment, marine
equipment and safety equipment in accordance
with:
(1) manufacturer's instructions and
recommendations;
(2) COMPANY's instructions; and
(3) good oil field and marine practices.
<PAGE>
(e) To promptly notify COMPANY in the event of
failure or malfunction of any piece of equipment
or material which may impair or reduce the
efficient performance of Operations and to
diligently proceed with the correction of such
failure or malfunction. It is understood that
replacement or repair of any equipment which is
out of order shall be carried out within the
shortest possible time. This shall mean using
airfreight for replacement equipment.
(f) To have all its equipment, especially down-hole
equipment, checked from time to time by a
mutually agreed service company. A full
inspection of the complete drill string (drill
pipe, drill collars, subs, etc.), using
magnaflux, sonic or other inspections acceptable
to COMPANY shall be performed prior to spud of
first well and, thereafter, at every six hundred
(600) rotation hours for drill collars and subs
and every two thousand (2,000) rotation hours for
drill pipe.
(g) To beacon the limits of the Drilling Unit, where
applicable, with suitable light identification
panels, sound signals and beacons installed in
accordance with applicable Government regulations
and COMPANY's requirements.
(h) To supply on board the Drilling Unit,
electricity, piping for the supply of fresh water
and compressed air (excluding breathing air for
diving bell and air fir well testing) for COMPANY
and service companies working for COMPANY as
specified in Annex C.
(i) To transport CONTRACTOR's Items and spare parts
from the points of origin to the MOB.
2.5 CONFIDENTIALITY
2.5.1 CONTRACTOR agrees and undertakes to keep confidential any
information obtained in the conduct of Operations,
including, but not limited to, formations penetrated,
results of coring, testing and surveying of the well and
to take all steps necessary to ensure that CONTRACTOR's
Personnel likewise keep such information confidential.
This obligation shall remain in force after the
Termination Date and until such information is publicly
disclosed by COMPANY or any third party so authorized by
COMPANY.
2.5.2 At the Termination Date, CONTRACTOR shall immediately hand
over to COMPANY all documents, instruments and records,
whether final or in draft form, concerning Operations
carried out under this Contract which are still in
CONTRACTOR's possession.
2.5.3 CONTRACTOR shall forbid access to the Drilling Unit to (a)
those persons not involved in the Operations, or (b) those
persons unable to show a written authorization issued by
COMPANY to go on board to Drilling Unit, provided that
CONTRACTOR shall not forbid access to authorized
Government or police representatives.
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2.6 SAFETY
2.6.1 During the Drilling Period, CONTRACTOR shall, at its
expense:
(a) Provide a Drilling Unit with a valid Certificate
of Class. The Certificate shall be issued by an
industry recognized classification society. It is
understood that no dry docking of the Drilling
Unit are scheduled during the drilling period,
except during the scheduled shipyard upgrade
period.
(b) Furnish and keep current a safety register book
that records the following:
(1) The essential characteristics of the
Drilling Unit with the major
modifications and repairs;
(2) The regulations in force on the Drilling
Unit; and
(3) The incidents and/or accidents which occur
on board;
(c) Furnish and keep up to date the operating manual
of the Drilling Unit.
(d) Furnish, install, control and maintain in good
working condition all installations or equipment
needed for the safety, first aid, fire fighting,
rescue and evacuation of all personnel on board
the Drilling Unit and for the safety of the
Drilling Unit itself in compliance with:
(1) The regulations of the authorities having
jurisdiction and/or control over
the Operating Area;
(2) CONTRACTOR's regulations;
(3) Classifying authority requirements;
(4) Manufacturer's regulations and
instructions;
<PAGE>
(5) COMPANY's regulations; and
(6) Good oil field practices.
(e) Ensure that all personnel on board the Drilling Unit
observe and comply with the safety regulations of
CONTRACTOR and COMPANY, applicable laws and, at all
times, exercise necessary care and attention to avoid
fire, explosions and blowout. CONTRACTOR's Personnel
shall be competent to organize evacuation and
abandonment of the Drilling Unit and shall maintain
permanently, in first class working condition, the
detection, fire fighting and well control equipment
used for fire fighting, blowout prevention and well
protection.
CONTRACTOR's Personnel shall be certified for safety,
if required by Government regulation. CONTRACTOR shall
conduct safety drills and tests on prevention devices
in compliance with well control regulations of
CONTRACTOR, and CONTRACTOR's Personnel shall be trained
in efficient fire and explosion prevention and in the
use of fire fighting equipment. CONTRACTOR shall
maintain all detection equipment and carry out
improvements to same in order to minimize the
occurrence of accidents and/or incidents already
experienced on board the Drilling Unit during previous
operations.
(f) Furnish, display and distribute a station bill
that includes the following information:
(i) the alarm definition:
fire : discontinuous sound
abandon : continuous sound
(ii) the exact place of rescue embarkation and
access.
All new personnel boarding the Drilling
Unit shall be informed by CONTRACTOR of
the muster station and the name of the
rescue boat.
(g) Keep COMPANY informed, without delay, of any
circumstances which may indicate a dangerous
situation and maintain the appropriate emergency
measures in compliance with safety rules and good
oil field practices.
(h) Ensure the evacuation of any injured personnel
from the Drilling Unit to hospital, with COMPANY
providing assistance to CONTRACTOR in obtaining
the necessary emergency means. The cost of
evacuation of such injured personnel from the
Drilling Unit to the Operations Base, including
cost of helicopter, shall be borne by COMPANY.
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(i) Keep COMPANY informed, without delay, of any
bodily injury occurring on board the Drilling
Unit and complete all necessary forms as directed
by regulations.
(j) Immediately advise COMPANY if CONTRACTOR
considers it necessary to suspend Operations at
any time for safety reasons and shall provide its
reasons therefor.
2.6.2 In the face of impending adverse weather or hazardous
conditions, COMPANY's and CONTRACTOR's Representatives on
board the Drilling Unit shall jointly decide the
precautionary measures to be taken in order to safeguard
personnel, well equipment, Drilling Unit and the well.
CONTRACTOR and COMPANY shall each ensure that their
respective representatives on board will not act
unreasonably under this Article. In the event the two
representatives cannot reach mutual agreement, the
decision of CONTRACTOR's Representative shall prevail.
2.6.3 CONTRACTOR shall carry out all Operations with due
diligence, in a safe, workmanlike manner and in accordance
with accepted oil field practices in the Operating Area.
2.7 CONTRACTOR's PERMITS AND AUTHORIZATIONS
Prior to the Commencement Date, CONTRACTOR shall obtain all
approvals, permits and authorizations required by laws and
governmental regulations or orders, for labor, material, services and
supplies to be furnished by CONTRACTOR as specified herein. This
compliance shall be maintained during the Drilling Period. COMPANY
may assist CONTRACTOR to the extent necessary to obtain proper
approvals.
2.8 Cleaning Up
CONTRACTOR shall use its best efforts, at all times, to ensure that
no toxic or hazardous substances, materials, garbage or scraps are
deliberately discharged or accidentally dropped from the Drilling
Unit to the sea.
In case such occurrences result from CONTRACTOR's negligence,
CONTRACTOR shall bear all costs for cleaning up the location, if so
requested by Government or COMPANY.
2.9 USE OF LOCAL SUPPLIES
CONTRACTOR shall use materials, equipment and consumables produced in
the country having jurisdiction and/or control over the Operating
Area, provided that the prices, qualities and delivery dates are
competitive in accordance with specified Government requirements.
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2.10 CONTRACTOR's GENERAL RESPONSIBILITIES
(a) The performance, operation, management and direction of
CONTRACTOR's Items and of CONTRACTOR's Personnel shall be under
the control, command and direction of CONTRACTOR, who shall bear,
at all times, the duty to determine whether Operations can be
safely continued or undertaken. These duties include, without
limiting the generality of the foregoing, the duty to determine
that all cargo and items of equipment are loaded and stored
aboard the Drilling Unit in a proper and seaworthy manner, that
proper precautions are taken for the safety of CONTRACTOR's
Personnel, COMPANY's Personnel and third party personnel and that
the Drilling Unit is, in all respects, seaworthy to undertake any
Operations under existing or reasonably foreseeable conditions.
(b) CONTRACTOR shall comply with those instructions of COMPANY that
are in accordance with accepted oil field practice.
2.11 COMPANY MANAGEMENT SYSTEM
COMPANY's Quality, Occupational Safety and Health, and Environmental
Policies are contained in Appendix A of the General Conditions of
Contract and CONTRACTOR shall comply therewith. It is important that
COMPANY and CONTRACTOR management systems are compatible and
CONTRACTOR shall notify COMPANY of any apparent conflicts between
COMPANY and CONTRACTOR systems.
In the event that CONTRACTOR management system parallels, duplicates
or interfaces with COMPANY's management system, a summary of this
shall be provided to COMPANY and CONTRACTOR shall ensure that
adequate bridging documents are developed and that these are
implemented and maintained during the period of the Contract.
PART 3 - PERFORMANCE OF OPERATIONS
3.1 OPERATIONAL MANAGEMENT
CONTRACTOR agrees and undertakes:
(a) To fully assume its responsibilities pursuant to the
Contract and to assist the service companies working on
board the Drilling Unit and ensure that Operations are
performed in accordance with good (i) oil field practices,
(ii) marine practices, and (iii) safety regulations.
CONTRACTOR shall afford COMPANY and COMPANY's authorized
representatives every facility for checking that
Operations are being properly performed.
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(b) To carry out all of COMPANY's orders, consistent with
CONTRACTOR's independent contractor's status, as defined
in Article 2.1 hereinabove, pertaining to the performance
of the Operations such as, but not limited to, orders
concerning sampling, issuing progress reports, suspension
of drilling Operations for fluid/mud circulation, coring
and those Operations required for the study of the
formations being drilled.
(c) To conduct Operations twenty-four (24) hours a day, seven
(7) days a week, under a permanent supervision of the
CONTRACTOR's Representative.
(d) To check and advise COMPANY on the volume of fuel and
water on board the Drilling Unit as of the Commencement
Date and from time to time thereafter, including the
Termination Date. Payment for fuel and water shall be at
COMPANY's current contract price in Singapore at the
Commencement Date and Termination Date.
(e) To handle transshipment of supplies and equipment between
the supply vessels and the Drilling Unit.
(f) To inform COMPANY of the required buoy pattern for the
correct approach and positioning of the Drilling Unit on
location, if applicable.
3.2 REPORTS
CONTRACTOR agrees to furnish for retention by COMPANY:
(a) Any report or ticket required by COMPANY.
(b) A daily drilling report on a form acceptable to COMPANY.
(c) Delivery tickets covering any COMPANY's Items furnished by
CONTRACTOR, which shall be provided each day with the
daily drilling report. The quantities and specifications
of materials and supplies so furnished shall be checked
and certified by CONTRACTOR's and COMPANY's
Representatives.
(d) Any other documents that are useful or necessary with
respect to special circumstances and/or required by
administrative authorities having jurisdiction or control
over the Operating Area, such as, but not limited to,
regulations, relevant drawings and diagrams of the
Drilling Unit.
(e) Records of COMPANY's Items on board the Drilling Unit,
giving quantities, specifications and conditions.
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(f) Computer analysis, as available to CONTRACTOR, simulating
the anticipated environmental conditions and yielding
optimal riser and mooring system designs. This analysis
shall be provided to COMPANY prior to Commencement Date.
Receipt of the analysis by COMPANY shall not be deemed
acceptance or approval of the analysis by COMPANY. COMPANY
shall provide the anticipated environmental conditions
required to perform the computer analysis.
(g) Upon completion of the well all forms, job tickets,
reports and charts relating to the different Operations
still held by CONTRACTOR shall be delivered to Company.
3.3 Operating Requirements
3.3.1 CONTRACTOR agrees and undertakes to maintain the drilling
fluids (mud) in accordance with the specifications of
COMPANY's drilling program, as provided by the Mud company
representative furnished by COMPANY.
3.3.2 CONTRACTOR shall use its best endeavors, in accordance with
good oil field practices, to maintain deviation of the well
within the limits specified by COMPANY in the drilling
program. As often as COMPANY requires, measurement of
deviation shall be made by CONTRACTOR with its equipment and
by methods acceptable to COMPANY. Should deviation from the
vertical exceed the limits specified by COMPANY, CONTRACTOR,
at COMPANY's request, shall redrill the well so that the
deviation from vertical shall not exceed the express limits.
The redrilling to correct the deviation shall be at the
Operating Rate. COMPANY, at its option, may furnish any
special equipment and/or services to make such corrective
measures. CONTRACTOR shall deliver to COMPANY the data
pertaining to all meseaurments made by CONTRACTOR and all
records resulting therefrom.
3.3.3 Before running casing, CONTRACTOR agrees to condition the
well, if necessary, so that the well will be free from all
obstructing particles which might impede running of the
casing. CONTRACTOR agrees to keep thread protectors on the
casing stands until they are run and to grease the threads
with a suitable thread compound.
3.3.4 If, during drilling Operations, CONTRACTOR encounters a
formation which reasonably appears to be oil or gas
bearing, CONTRACTOR shall stop drilling and allow
COMPANY's Representative to examine the formation to
decide what further Operations, if any, should be
conducted.
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3.3.5 CONTRACTOR, at COMPANY's request, shall conduct formation
test at any time during the drilling of the well.
3.3.6 CONTRACTOR shall carry out all Operations, including, at
COMPANY's request, completing or abandoning the well.
3.3.7 At COMPANY's request, CONTRACTOR shall take cores of a
specified length. CONTRACTOR shall save the cores, free
from contamination, and place them in separate containers
which shall be furnished by COMPANY.
3.3.8 Should loss or gain of circulation, partial loss of
circulation, water flow, abnormal pressures, heaving
shales or similar formation, salt, or other special
conditions, be encountered which make drilling abnormally
difficult hindering normal drilling Operations, CONTRACTOR
shall, without delay, take all reasonable steps to
overcome such difficulties and shall immediately inform
COMPANY's Representative.
3.3.9 CONTRACTOR shall be responsible for knowing the depth of
the well at all times. CONTRACTOR shall measure and keep
records of the dimensions and length of drill pipe, casing
and other tools run in the well. Furthermore, CONTRACTOR
shall measure and record main sizes and keep drawings of
all drilling, coring, fishing, logging and testing tools
run in the well.
3.3.10 CONTRACTOR shall ensure that the mud system (including
choke manifold) shall conform to the drawings delivered to
COMPANY's Representative and shall be first approved by
COMPANY. CONTRACTOR shall, at all times, keep the mud
system in good working condition.
3.3.11 CONTRACTOR shall ensure that the Blow-out preventer stack
system conforms to the specifications listed in Annex A
and is kept in good working condition.
3.3.12 CONTRACTOR shall furnish drill string equipped with
nonabrasive tool joints. Upon written acceptance by
COMPANY, smooth banding fine particle tool joints may be
submitted.
3.4 EXTRA SUPPLIES, SERVICES AND ADDITIONAL EQUIPMENT AT OPERATORS
REQUEST
3.4.1 The costs of catering for COMPANY's Personnel or anyone
acting on its behalf in excess of COMPANY's daily number
(specified in Annex C, Part III), shall be reimbursed to
CONTRACTOR by COMPANY.
3.4.2 Subject to CONTRACTOR's prior approval CONTRACTOR agrees
to furnish, upon COMPANY's request, all casual labor,
appliances, materials, supplies and services normally
furnished by COMPANY in connection with the drilling and
completing or abandoning of the well(s). COMPANY shall
reimburse CONTRACTOR for such items if furnished, plus the
handling charge set forth in Annex D.
<PAGE>
PART 4 - ROLE AND OBLIGATION OF COMPANY
4.1 COMPANY'S REPRESENTATIVE
COMPANY shall nominate a representative ("COMPANY's Representative")
who shall be empowered to represent the COMPANY on board the Drilling
Unit in all matters relating to Operations. COMPANY's Representative
shall be empowered to bind COMPANY and to acknowledge events in
writing.
Before departing the Drilling Unit, COMPANY's Representative shall
indicate to CONTRACTOR the name of his delegate on board who shall,
in his absence, have the full authority of the COMPANY's
Representative.
COMPANY's Representative(s) and COMPANY's Personnel shall, at all
times, have access to the Drilling Unit for the purposes of
inspecting the Operations performed by CONTRACTOR, in order to verify
that Operations are being performed in accordance with the provisions
of this Contract.
4.2 COMPANY'S ITEMS AND SERVICES
4.2.1 COMPANY shall, at its own cost (subject to the provisions
of Article 4.2.3), supply, on board the Drilling Unit,
COMPANY's Items.
4.2.2 CONTRACTOR shall exercise the same care with COMPANY's
Items and service companies' equipment and material as it
does with its own. CONTRACTOR shall visually inspect all
equipment furnished by COMPANY and service companies on
board the Drilling Unit before using same and shall notify
COMPANY of any apparent defects therein.
4.2.3 Subject to CONTRACTOR's prior approval CONTRACTOR agrees
to furnish, in accordance with COMPANY's request, any of
COMPANY's Items at the expense of COMPANY, plus the
handling charge set forth in Annex D.
4.2.4 CONTRACTOR agrees to maintain COMPANY's Items in good
working condition, to the extent of the capability and
capacity of CONTRACTOR's Personnel and equipment on board
the Drilling Unit. COMPANY shall furnish or reimburse
CONTRACTOR for all spare parts and materials to repair or
maintain COMPANY's Items.
4.3 COMPANY'S GENERAL OBLIGATIONS
COMPANY shall:
4.3.1 Define the location of each well and assist CONTRACTOR in
ensuring proper positioning of the Drilling Unit. COMPANY
will be responsible for selecting, marking and clearing
the drilling location(s) and for notifying CONTRACTOR of
any impediments or hazards to operations at each drilling
location, including any pipelines or cable in the area.
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4.3.2 Advise CONTRACTOR, in writing, within a reasonable period
prior to the spud date, of its requirements pertaining to
the drilling of the well, including, but not limited to,
general drilling program, well sizes, casing setting
depths, mud type and characteristics, deviation limits,
cementing methods, casing and blow out prevention testing
procedures.
4.3.3 Give all necessary written instructions regarding
Operations to be performed by CONTRACTOR. From time to
time, COMPANY's Representative or other authorized
individual of COMPANY may issue written or oral
instructions to CONTRACTOR concerning Operations.
4.3.4 Have the right to supply to CONTRACTOR additional
equipment and personnel as required for certain
specialized Operations.
4.3.5 Ensure geological supervision of the well(s).
4.3.6 Not be allowed to alter the status of CONTRACTOR as an
independent contractor. It is hereby clarified and agreed
that should the instructions given to CONTRACTOR by
COMPANY, with respect to Operations hereunder or the
performance by CONTRACTOR of such instructions, in any
way, derogate the status of CONTRACTOR as an independent
contractor, CONTRACTOR shall be entitled to refuse the
instruction on this basis. CONTRACTOR shall immediately
inform COMPANY of its refusal on this ground.
4.4 COMPANY'S PERMITS AND AUTHORIZATIONS
4.4.1 COMPANY represents that it is entitled to carry out the
Operations provided for in this Contract within the
specified Operating Area.
4.4.2 COMPANY shall, with the exception of the requirements of
Article 2.7, obtain and hold valid, at COMPANY's expense,
the permits, licenses and other Government authorizations
which may be required of COMPANY by the Government in
order to allow Operations to be performed.
4.4.3 COMPANY, upon CONTRACTOR's request, will assist CONTRACTOR
in obtaining customs clearances and licenses for importing
and/or re-exporting CONTRACTOR's Items.
<PAGE>
PART 5 - RIGHTS AND PRIVILEGES OF COMPANY
5.1 Inspection Of Drilling Unit
COMPANY shall have the right to:
5.1.1 Inspect and verify the working condition of the Drilling Unit
and CONTRACTOR's Items prior to Initial or Second Mobilization.
If significant items which would impact the start of operations
for an extended period are found not to be in good efficient
working order, COMPANY may suspend this Contract upon giving
written notice and proper documentation. COMPANY shall allow
CONTRACTOR additional time to remedy its breach. Failure to
immediately terminate by COMPANY shall not constitute a waiver of
the right to terminate without payment, unless waiver by written
instrument executed by both Parties. After the Commencement Date,
this right, if applicable, is waived by COMPANY.
5.1.2 Change the drilling program, discontinue Operations or
complete or abandon any well, at any time.
5.1.3 Approve the choice of supply contractors, if any,
concerning material, equipment, personnel and services to
be supplied by CONTRACTOR. Such approval shall not
diminish the responsibilities of CONTRACTOR under this
Contract or, in any way, nor release CONTRACTOR from any
subsequent liability.
5.1.4 Check CONTRACTOR's stock levels and inspect CONTRACTOR's
Items, at any time and from time to time, and order its
repair or replacement, at CONTRACTOR's expense, if found
in poor condition or not conforming to manufacturer's
specifications. Actual or implied approval of CONTRACTOR's
Items by COMPANY shall not diminish the responsibilities
of CONTRACTOR under the Contract or, in any way, release
CONTRACTOR from any subsequent liability.
5.1.5 Order a shutdown of Operations upon notification and
proper documentation whenever and during such times as:
(a) CONTRACTOR's Personnel are deemed by COMPANY to
be unsatisfactory; or
(b) CONTRACTOR's Items do not conform to
manufacturer's specifications or to
the specifications defined in Annex A; or
(c) CONTRACTOR's Items unreasonably endanger
any person in the Operating
area.
In such cases, CONTRACTOR's remuneration shall be
reduced to Long Repair Rate for a period of up to
seventy-two (72) hours or until CONTRACTOR has
remedied such default, whichever occurs first. If
CONTRACTOR does not remedy such default within
seventy-two (72) hours, excess time shall be at
Zero Rate.
5.1.6 Order suspension of Operations at any time.
<PAGE>
PART 6 - FINANCIAL CONDITIONS
6.1 DAY RATES AND LUMP SUMS
6.1.1 General
COMPANY shall pay CONTRACTOR the amounts due, from time to
time, and calculated according to the applicable day rates
or lump sums set forth in this Article 6.1 and in
accordance with the other provisions of Part 6 and Annex
D. No other charge, whatsoever, shall be due for payment
by COMPANY unless specifically provided for in this
Contract or agreed to, in writing, between the Parties.
Day Rates shall be calculated pro rata to the nearest
one-half (1/2) hour and based on a twenty-four (24) hour
day.
6.1.2 Mobilization
As otherwise provided in this Contract, COMPANY shall pay
CONTRACTOR the Initial Mobilization Fee and Second
Mobilization Fee, if applicable, as set forth in Annex D.
The Initial Mobilization Fee shall cover all expenses
incurred by CONTRACTOR prior to the First Commencement
Date (except tow vessel costs as provided by COMPANY) and
shall include CONTRACTOR's personnel costs, insurance,
lubricants, hire of the Drilling Unit for moving the
Drilling Unit directly from its last location to Company's
first well location of the Primary Term.
The Second Mobilization Fee shall cover all expenses
incurred by CONTRACTOR prior to the Second Commencement
Date (except for vessel costs as provided by COMPANY) and
shall include CONTRACTOR's personnel costs, insurance,
lubricants, hire of the Drilling Unit for moving the
Drilling Unit directly from a Southeast Asia shipyard to
COMPANY's first well location of the Extension Period.
The Moving Rate shall commence at the First Commencement
Date and Second Commencement Date and shall continue until
completion of mobilization as specified in Article 6.1.6
(a).
6.1.3 Demobilization
Except as otherwise provided in this Contract, the
Demobilization Fee set forth in Annex D shall be payable
at or after the Termination Date upon the full completion
of discharge of third party equipment and materials and
COMPANY's Items at the nearest Philippine port or other
mutually agreeable place.
<PAGE>
This lump sum payment shall cover, all expenses incurred
by CONTRACTOR for demobilization and shall include,
without limitation, insurance, hire of the Drilling Unit,
moving costs of the Drilling Unit (together with such
third parties' equipment and materials and COMPANY's
Items, as COMPANY may leave on the Drilling Unit, until
they are discharged as provided above), hire and movement
of CONTRACTOR's Personnel, pilot fees, port dues and any
other fees payable to the relevant port authorities. This
payment shall also allow twenty-four (24) hours (beginning
at a mutually agreeable time and place as provided above)
for COMPANY to discharge, using CONTRACTOR's Drilling Unit
and on-board machinery and equipment, any third party
equipment and materials and COMPANY's Items from the
Drilling Unit. Any additional time required for such
discharge shall be payable at the Standby Rate.
No rate or payment shall be payable by COMPANY, except for
this Demobilization Fee, provision of tow vessel(s) and
fuel, the Standby Rate referred to in Article 6.1.3 above,
if applicable, and the other payments properly payable by
COMPANY under this Contract for demobilization of the
Drilling Unit.
6.1.4 Operating Rate
The Operating Rate shall apply from the first Commencement
Date to the Termination Date, except whenever any other
Day Rate, including, without limitation, Zero Day Rate,
shall apply.
6.1.5 Standby Rate
The Standby Rate shall apply:
(a) For any period during which COMPANY orders
suspension of Operations, pursuant to
Article 5.1.6.
(b) For any period during which CONTRACTOR is unable
to proceed with the Operations as a direct result
of an act or omission of COMPANY or COMPANY's
other contractors, including, without limitation,
the failure of any of COMPANY's Items or the
failure of COMPANY to issue instructions or to
provide COMPANY's Items.
(c) During any period of delay when CONTRACTOR is
unable to proceed with Operations because of
adverse sea or weather conditions (including time
to secure the well and equipment) for a maximum
of forty-eight (48) hours per occurrence, after
which the rate shall be the Force Majeure Rate.
CONTRACTOR shall endeavor to avoid any suspension
of Operations due to adverse sea and weather
conditions and shall use its best efforts to
proceed with the Operations so long as reasonable
safety can be maintained.
(d) For any period during which Operations are
suspended due to repairs to the Drilling Unit
and/or CONTRACTOR's Items caused by a blow out,
fire, cratering or shifting of subsea surface.
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<PAGE>
(e) For any period before or after the Initial
Mobilization and Second Mobilization for COMPANY
inspections of the Drilling Unit and loading of
COMPANY's Items, where such inspection or loading
causes a delay to CONTRACTOR.
(f) For any period beyond twenty-four (24) hours
after the mutually agreed time for the discharge
of equipment and materials, as provided in
Article 6.1.3 above.
6.1.6 Moving Rate
COMPANY shall pay the Moving Rate to CONTRACTOR during
moves of the Drilling Unit to the first location, between
locations and as otherwise specified.
This Rate shall be applicable:
(a) from the Commencement Date until the first bit is
run through the rotary table
at COMPANY's first location,
(b) from the time the B.O.P. and or wellhead is
retrieved and secured on board the
Drilling Unit until the first bit for the next
well is run through the rotary table
on the COMPANY's next location, and
(c) from the time the B.O.P. and or wellhead
is retrieved and secured on board the
Drilling Unit at COMPANY's last location
until the Demobilization is commenced.
(d) In the event that COMPANY exercises
its option to perform the Extension
Period pursurant to Article 1.3.2, from
the time the B.O.P. and or wellhead is
secured on board the Drilling Unit at
COMPANY's last well location of the Primary Term
until the Shipyard Demobilization is completed
and the Drilling Unit arrives at Western
Anchorage, Singapore, or other mutually agreed
location.
CONTRACTOR shall be responsible for safety on
board the Drilling Unit and the provisions of
Article 7.1 shall apply with regard to any loss,
damage or injury to its equipment, material and
personnel during any moving period.
6.1.7 Repair Rate
The Repair Rate shall apply:
For any period of shutdown during which Operations are
suspended due to electrical, mechanical or hydraulic
failure.
For any such period not related to subsea or mooring
equipment the application of the Repair Rate shall be
limited to a maximum of twelve (12) hours for any one
occurrence and a total of twenty-four (24) hours for all
periods of shutdown time during each thirty (30) day
period. After which the Zero Rate shall apply.
However, for any such period related to subsea and mooring
equipment the application
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<PAGE>
of the Repair Rate shall be limited to a maximum of
thirty-six (36) hours for any one occurrence and a total
of seventy-two (72) hours for all such periods of shutdown
time during each thirty (30) day period. After which the
Zero Rate shall apply.
The CONTRACTOR shall use due diligence in effecting all
repairs and in inspecting its equipment. If a
certification or inspection by other authorities or
agencies are required, those costs shall be for the
account of CONTRACTOR.
6.1.8 Force Majeure Rate
Force Majeure Rate shall apply from the moment that
Operations have been suspended for Force Majeure and shall
continue throughout the period of Force Majeure.
6.1.9 Long Repair Rate
Long Repair Rate shall apply for a scheduled special
survey or UWILD not to exceed five days during the period
of this Contract and as expressly provided in this
Contract.
6.1.10 Early Termination Rate
Upon termination of this Contract pursuant to Articles
1.4.1, 1.4.2 (b) and 6.1.9 (a) the Early Termination Rate
as set out in Annex D-1 or Annex D-2 shall apply.
6.1.11 Zero Day Rate
Zero Rate (U.S.D. 0) shall apply:
(a) For any period during which, in order to comply
with the requirements of the competent
authorities exercising jurisdiction or control
over the Drilling Unit, it becomes necessary to
suspend Operations in order to repair or restore
the Drilling Unit due to failure of CONTRACTOR to
maintain the Drilling Unit in
good working condition or class. Provided,
however, that no compensation shall be due to
CONTRACTOR for any period in excess of the time
limit provided in Article 6.1.7 above, until
Operations are resumed at the same point
as when Operations were suspended.
(b) Where other Day Rates have reached a maximum
allowable period and this Rate is expressly
provided to apply.
(c) For the period of time commencing upon arrival of
the Drilling Unit at Western Anchorage at
Singapore (or other mutually agreed location)
until the Second Commencement Date, except when
the Standby Rate shall apply as specified herein.
6.2 Adjustment Of Rates
6.2.1 Except as provided below, rates and fees are firm and not
subject to escalation during the Drilling Period.
<PAGE>
6.2.2 If the costs that CONTRACTOR pays for the Operations with
respect to any of the individual items listed below in
Paragraph (a) through (e) inclusive shall vary by five
percent (5%) or more from the date of this Contract, then
the Day Rates shall be adjusted to reflect the actual
amount of increase or decrease in such costs. Any such
adjustment shall be effective after thirty (30) days after
the date that either CONTRACTOR or COMPANY notifies the
other that such rate adjustment is applicable, together
with reasonable details thereof.
(a) Adjustment in labor cost, wages, salaries and
benefits paid employees engaged
in the Operations;
(b) Increase or decrease in the number of
CONTRACTOR's Personnel engaged in
the Operations;
(c) Change in CONTRACTOR's work schedule for the
Operations;
(d) Change in the cost of insurance premiums
applicable to the Operations,
provided any increase is not due to CONTRACTOR's
poor safety record;
(e) Change in CONTRACTOR's costs for the Operations
resulting directly from new laws and regulations,
or interpretation or application of existing laws
and regulations, of the Country of Operations; or
(f) Adjustment in the equipment and maintenance
portion of the day rates based on
movements in the U.S. Producer Price Index
for Oilfield Machinery and Equipment.
6.3 Currencies
6.3.1 The accounting currency and payment of the Contract shall
be United States Dollars.
6.3.2 Reimbursements to CONTRACTOR for expenditures incurred in
local currency shall be calculated by COMPANY at a fair
market, legal rate of exchange existing on the actual date
of expenditure.
<PAGE>
6.4 INVOICING
CONTRACTOR shall invoice COMPANY on a monthly basis for all amounts
due for the preceding month. Invoice for the Demobilization Fee shall
be sent after full completion of the discharge of third parties'
equipment and materials and COMPANY's Items in Singapore.
All invoices should be accompanied by documents showing that the
relevant costs were actually incurred and approved by COMPANY's
representative.
CONTRACTOR shall send separate invoices in duplicate, for:
(a) Lump Sum(s), (Mobilization and Demobilization Fee);
(b) Day Rates; and
(c) Reimbursable expenses.
All invoices shall be rendered in U.S. Dollars, and invoices for
expenses incurred in other currencies shall show the currency(ies) in
which the expense was incurred and the rate of exchange used to
convert the amount to U.S. Dollars.
All invoices must be submitted to COMPANY not later than sixty (60)
days after the Termination Date; COMPANY shall have the right to
reject any invoice submitted after said date.
6.5 PAYMENTS
COMPANY shall pay all undisputed invoices within thirty (30) days
after the date of receipt of invoice:
If COMPANY, acting in good faith, disputes an invoiced item, COMPANY
shall notify CONTRACTOR of the item in dispute, specifying the reason
therefor, and payment of the disputed item shall be withheld, without
interest, until settlement of the dispute, but payment of the
undisputed balance of the invoice shall be effected within the period
provided for hereinabove.
Payment of any invoice hereunder shall not prejudice the right of
COMPANY to question the correctness of any charges thereon. Within
twenty-four (24) months from its receipt of any such invoices,
COMPANY shall be entitled to audit and make objections to any item or
items thereon by delivering to CONTRACTOR written notice specifying
the reasons for objections. Should COMPANY so notify CONTRACTOR
within twenty-four (24) months, adjustments shall be made between the
Parties as to the correctness or incorrectness of such item(s) in
dispute.
<PAGE>
6.6 TAXES AND DUTIES
6.6.1 CONTRACTOR shall assume full and exclusive liability for the
payment of all taxes, including local taxes, by way of
illustration and not limitation, corporation tax, income tax and
personal income taxes and value added tax now or hereafter levied
or impose and related to or assessed upon the profits or assumed
profits of CONTRACTOR, arising directly or indirectly out of
performance of this Contract. CONTRACTOR indemnifies and holds
harmless COMPANY from all responsibility, liability and risk for
the payment of these taxes and any interest or penalty arising
due to a failure to pay by CONTRACTOR.
If required by law, rule or regulation, COMPANY shall
withhold from payments to CONTRACTOR any amounts necessary
to comply with Country of Operations taxes. Such payments
shall be considered paid to CONTRACTOR when paid to the
Government authorities.
6.6.2 Customs duties, excluding broker's and exemption document
fees, shall be borne by COMPANY, if CONTRACTOR has met all
required formalities for importing or reexporting its own
equipment and spare parts and provided that:
(a) CONTRACTOR has, before paying or incurring any
obligation to pay for such customs duties and
fees, advised COMPANY of the particulars and
amounts thereof in sufficient time to allow
COMPANY, if it so desires, to give instructions
regarding importation or exportation; and
(b) CONTRACTOR has fully complied with COMPANY's
instructions in connection with the importation
or exportation of its equipment and spare parts.
CONTRACTOR will be reimbursed, without handling
charge, upon presentation of receipts for the
amount which CONTRACTOR has been obliged to pay
for all such customs duties and fees.
COMPANY shall not be obligated to reimburse
CONTRACTOR:
(i) for any penalties or interest imposed on
CONTRACTOR for failure to pay, in due
time, said customs duties; and
(ii) in case CONTRACTOR has omitted to
secure locally such items of
comparable quality, quantity, price
and suitability as those imported as
per Article 2.9.
(iii) any import or export charges, duties,
taxes, penalties or interest for personal
effects, food, alcohol, tobaccos and other
goods of CONTRACTOR's Personnel.
CONTRACTOR shall hold COMPANY harmless from and against
any and all claims or liabilities which may arise from
CONTRACTOR's failure to comply with the requirements of
any Governmental agency having jurisdiction over the
custom duties.
<PAGE>
6.7 RIGHT TO AUDIT
CONTRACTOR shall keep proper books, records and accounts of the
Operations hereunder and shall allow COMPANY to inspect said books,
records and accounts at all reasonable times within a period of two
(2) years following the Termination Date of this Contract.
PART 7 - LIABILITY AND INDEMNITIES
7.1 LIABILITIES FOR EQUIPMENT
7.1.1 (a) Except as otherwise specified in this
Contract, CONTRACTOR shall not be liable for
damage to or loss or destruction of COMPANY's
Items or other property of COMPANY, and COMPANY
shall indemnify and hold CONTRACTOR harmless in
respect of any expense, loss or claim related to
or resulting from such damage, loss or
destruction regardless of the cause or causes of
such loss, damage or destruction.
(b) Except as otherwise specified in this Contract,
COMPANY shall not be liable for damage to or loss
or destruction of CONTRACTOR's Items, equipment
or other property of CONTRACTOR, and CONTRACTOR
shall indemnify and hold COMPANY harmless in
respect of any expenses, loss or claim related to
or destruction regardless of the cause or causes
of such loss, damage or destruction.
<PAGE>
7.1.2 In-Hole Equipment
(a) COMPANY will compensate CONTRACTOR for a rate of
wear in excess of the normal rate to be mutually
agreed upon, if it is established that the wear
was caused by exposure to unusually corrosive or
otherwise destructive elements to CONTRACTOR's
in-hole equipment or choke manifold and such was
outside the control of CONTRACTOR.
(b) COMPANY shall be responsible for damage to or
loss of CONTRACTOR's in-hole equipment below the
rotary table. COMPANY shall reimburse CONTRACTOR
a depreciated replacement cost F.O.B. at the Port
of Singapore which includes relevant importation
taxes, duties and fees. The depreciation on all
items shall be as follows:
FROM COMMENCEMENT DATE OF BOTH
THE PRIMARY TERM AND EXTENSION PERIOD
Years Percent
less than 1 90%
1 to 2 80%
2 to 3 70%
3 to 4 60%
over 4 50%
If the cost of repair is less than the
replacement cost, COMPANY will reimburse the cost
of repair. All reimbursements are reduced by all
proceeds from insurance on the item lost or
damaged. The COMPANY will not reimburse
CONTRACTOR where loss or damage is caused by
CONTRACTOR's sole negligence or use of damaged,
fatigued or abused equipment.
(c) Except as provided in Article 7.1.8, CONTRACTOR
shall be solely responsible for damage to or loss
of CONTRACTOR's mooring equipment, howsoever
caused.
7.1.3 CONTRACTOR's Personnel
CONTRACTOR agrees to protect, defend, indemnify and save
COMPANY harmless from and against all claims, demands and
causes of action, of every kind and character, without
limitation, including negligence, whether active or
passive and without regard to the cause or causes thereof,
arising in connection with the Operations by CONTRACTOR's
Personnel or CONTRACTOR's invitees, on account of bodily
injury, death or damage to or loss of their property.
7.1.4 COMPANY's Personnel
Except as provided in Article 7.1.3, COMPANY agrees to
protect, defend, indemnify
<PAGE>
and save CONTRACTOR harmless from and against all claims,
demand and causes of action, of every kind and character,
without limitation, including negligence, whether active
or passive, and without regard to the cause or causes
thereof, arising in connection herewith by COMPANY's
employees, or COMPANY's invitees, on account of bodily
injury, death or damage to or loss of their property.
7.1.5 Third Party Liability
(a) Except as may be otherwise provided in this Contract,
CONTRACTOR shall protect, indemnify and save harmless
COMPANY (and any company, firm or other entity
associated or affiliated with the Operations and the
parents, direct and indirect, subsidiaries and
affiliates of COMPANY) and, at COMPANY's request,
investigate and defend COMPANY (and the aforementioned
companies, firms and entities) from and against all
claims, demands and causes of action, of every kind and
character, without limitation and without regard to the
cause or causes therof, arising in favor of or made by
third parties, on account of bodily injury, death or
damage to or loss of their property resulting from any
negligent act or omission or willful misconduct of
CONTRACTOR or its subcontrator.
(b) Except as may be otherwise provided in this Contract,
COMPANY shall protect, indemnify and save harmless
CONTRACTOR and, at CONTRACTOR's request, investigate
and defend CONTRACTOR and all subsidiaries and
affiliates of CONTRACTOR from and against all claims,
demands and causes of action, of every kind and
character, wthout limitatino and without regard to the
cause or causes therof, arising in favor of or made by
third parties on account of bodily injury, death or
damage to or loss of their property resulting from any
negligent act or omission or willful misconduct of
COMPANY or its subcontractors.
(c) Notwithstanding the provisions of paragraph 7.1.5
(a) above, COMPANY shall assume liability for and
shall save CONTRACTOR harmless from and against
all claims by third parties against CONTRACTOR
arising from cratering or blowout of any well
drilled under this Contract.
(d) For the purposes hereof; "third party" means any
party other than COMPANY, CONTRACTOR and their
respective Personnel.
7.1.6 Loss of or Damage to the Well
In the event the well should be lost or damaged, COMPANY
shall be solely responsible for such damage or loss of the
well, including the casing therein, and shall bear the
costs thereof, and COMPANY shall protect, release, defend,
indemnify and save CONTRACTOR harmless in this regard.
Notwithstanding the foregoing, if any such loss or damage
to the well is caused by CONTRACTOR's sole negligence or
wilful misconduct, CONTRACTOR shall be obligated to
redrill the hole to the depth at which the original well
was lost, at the Day Rate(s) applicable under Article 6.1
herof,
discounted at thirty-five percent (35%), which shall be
COMPANY's sole remedy under this Article 7.1.6.
<PAGE>
7.1.7 Liability for Underground Damage
COMPANY agrees to protect, defend, indemnify and save
CONTRACTOR harmless from and against any and all claims
against CONTRACTOR, whether by COMPANY or a third party,
directly or indirectly related to Operations under this
Contract, on account of injury to, destruction of, or loss
or impairment of any underground property right in or to
oil, gas or other mineral substance and for any loss or
damage to any formations, strata or reservoir beneath the
seabed.
7.1.8 Control of Wild Well
COMPANY shall be liable for the cost of regaining control
of any wild well, as well as the cost of removal of debris
(excepting the Drilling Unit as provided in Article
7.1.12) caused by such wild well, and shall indemnify and
defend CONTRACTOR against any such cost, claim, demand or
cause of action, all other rights and indemnities provided
herein remain unchanged.
7.1.9 Pollution and contamination
Notwithstanding anything to the contrary contained herein:
(a) CONTRACTOR shall assume all responsibility for
and shall protect, defend, indemnify and save
COMPANY harmless from and against all claims,
demands and causes of action, of every kind and
character, arising for cleaning up and containing
pollution or contamination which originates above
the surface of the water from spills of fuels,
lubricants, motor oils, pipe dope, paints,
solvents, ballast, bilge and garbage in
CONTRACTOR's possession and control and
associated with CONTRACTOR's Items and
facilities.
<PAGE>
(b) COMPANY shall assume all responsibility for and shall
protect, defend and indemnify and save the CONTRACTOR
harmless from and against all claims, demands and
causes of action, of every kind and character, arising
from all pollution or contamination, other than that
described in (a) above, which may occur as a result of
Operations hereunder, including, but not limited to,
that which may result from fire, blowout, cratering,
seepage or any other uncontrolled flow of oil, gas,
water or other substance, as well as the use or
disposition of oil emulsion, oil base or chemically
treated drilling fluids, contaminated cuttings or
cavings, lost circulation and "fish" recovery materials
or fluids.
(c) In the event that a third person commits an act or
ommission which results in pollution or contamination
for which either CONTRACTOR or COMPANY is held to be
legally liable, the responsibility therefore shall be
considered, as between the CONTRACTOR and COMPANY to be
the same as if CONTRACTOR or COMPANY (for whichever one
such person was working when such act or omission
occurred) had committed such act or omission and all of
the rights and obligations respecting defense,
indemnity, holding harmless and limitation of
responsibility and liability, as set forth in (a) and
(b) above, shall be specifically applied.
7.1.10 Liability for Indirect and Consequential Damages
Notwithstanding any provision of this Contract, in no
event shall either Party be liable to the other or their
respective parents, subsidiaries of affiliates, for any
indirect or consequential damages which may be suffered by
the other in connection with the performance of this
Contract, including, but not limited to, loss of profits,
loss of product, loss of property or mineral rights or
business interruptions.
7.1.11 Patent Indemnity
(a) CONTRACTOR, at its own expense, shall defend COMPANY
against any and all suits and actions alleging that any
equipment or part thereof furnished by CONTRACTOR under
this Contract, or any operation of such equipment or
part thereof, constitutes an infringement of any
patents, and CONTRACTOR shall indemnify COMPANY against
and hold it harmless from all damages and cost,
including any costs or expenses incurred in defending
such actions, which may be adjudged or decreed against
COMPANY as the result of any such suit or action.
<PAGE>
(b) COMPANY, at its own expense, shall and defend CONTRACTOR against
any and all suits and actions alleging that any equipment or part
thereof furnished by COMPANY for use under this Contract or any
operation of any such equipment of part thereof, which operation
is specified or approved by COMPANY, constitutes an infringement
of any patents, and COMPANY shall indemnify CONTRACTOR and hold
it harmless from all damages and costs, including any costs or
expenses incurred in defending such actions, which may be
adjudged or decreed against CONTRACTOR as a result of any such
suit or action.
7.1.12 Removal of Wreck
If the Drilling Unit becomes a total loss or a wreck or an
obstruction to navigation or operations of COMPANY, or is
otherwise abandoned, CONTRACTOR shall, if deemd necessary
by Company, or if required by applicable law or by the
government having jurisdiction or control over the
Operating Area, remove, at its own cost and expense, the
Drilling Unit from the Operating Area to the satisfaction
of COMPANY.
7.1.13 Notification of Claims
Each Party shall notify the other Party immediately of any
claim, demand or suit made or brought against it or any of
its personnel in connection with or arising out of the
subject matter of this Contract.
7.1.14 General Application Clauses
a) For purpose of this Part 7, COMPANY and Party
shall include Occidental Philipines, Inc. and his
coventurer Shelf Philippines Exploration B.V.,
their respective parent(s), subsidiaries and
affiliates and their officers, directors and
employees; and CONTRACTOR shall include its
parent(s), subsidiaries and affiliates and their
officers, directors and employees.
b) The basic philosophy intended to be reflected in this Part 7
is to have each party assume responsibilities and
liabilities, including cost, expense and legal fee incurred
in defending against asserted claims, for certain areas of
risk, thereby avoiding duplicaiton of insurance coverage
insofar as possible. Accordingly, where COMPANY or
CONTRACTOR has assumed liability or responsibility for a
claim, loss or damage or has undertaken to indemnify the
other party, the provision of this Contract will apply,
notwithstanding gross, sole and/or concurrent negligence or
fault of either COMPANY or CONTRACTOR, either active or
passive, unseaworthiness of vessels (whether or not
preexisting), and/or any theory of strick liability relating
to ruin or defective premises, equipment, facilities or
appurtenances of either party under any applicable code or
law, any other type of strict liability, whether or not such
preexists this Contract and/or is latent, patent or
otherwise.
<PAGE>
7.2 INSURANCES
7.2.1 CONTRACTOR's Insurance
Throughout the entire duration of this Contract,
CONTRACTOR shall, at CONTRACTOR's expense, procure and
maintain with an insurance company (or companies), to the
satisfaction of COMPANY, insurance policies to cover its
liabilities under this Contract as set forth in Article
7.1 hereinabove. Such insurance shall include at least the
insurance coverages and amounts thereof described in Annex
E hereto. CONTRACTOR will require each of its
subcontractors to provide such insurance coverages and
amounts thereof, set forth in Annex E, that CONTRACTOR
considers necessary; and deficiency in the coverages or
amounts or policy limits of such subcontractors insurance
coverages shall be the responsibility of CONTRACTOR.
CONTRACTOR shall furnish copies of the corresponding
insurance policies or Certificates of Insurance to COMPANY
before the Commencement Date. CONTRACTOR shall provide
thirty (30) days or more prior written notice to COMPANY
of any substantial change to or cancellation of its
insurance.
7.2.2 Waiver of Subrogation
For the risk assumed by each party hereunder, neither
the underwriters, insurers, nor insurance carriers of either
party hereto will have any right of subrogation against the
other party hereto, or its agents, labor, invitees, servants
or coventurers; or against underwriters, insurers or
insurance carriers of the other party; and such rights of
subrogation with respect to Operations under this Contract
are mutually waived. All policies of insurance possessed,
procured or maintained by either party will be suitably and
adequately endorsed to effectuate the waiver of subrogation.
Except for Worker's Compensation insurance, as provided in
Annex E, COMPANY and its coventurers, if any, shall for
the risk assumed by CONTRACTOR hereunder, be placed as an
additional insured on all coverages. All insurance
policies shall, for the risk assumed by CONTRACTOR
hereunder, state the underwriters' waiver of subrogation
and recourse against COMPANY, its coventurers, its
underwriters and its contractor and subcontractors.
All insurance provided by CONTRACTOR shall be primary and
not contributory to any other insurance available to
COMPANY, to the extent CONTRACTOR has expressly agreed to
be liable under this Contract.
7.2.3 OPERATOR's Insurance
COMPANY declares that it shall, for the duration of the
Contract, carry and maintain insurance policies required
to cover its own liabilities as per Article 7.1.
CONTRACTOR shall be named as coinsured in the COMPANY's
insurance policies, which shall state, in addition, the
underwriter's waiver of subrogation and recourse against
CONTRACTOR and CONTRACTOR's underwriters and
subcontractors.
<PAGE>
7.2.4 Payment of Insurance Premiums
The cost of the different policies contracted by
CONTRACTOR (including those that do not apply to this
Contract) is included in the Day Rates, and CONTRACTOR
shall be responsible for payment of the related premiums.
COMPANY may request CONTRACTOR to change the above
policies or the cover specified therein, provied the cover
to the benefit of CONTRACTOR thereby shall not
be reduced. The increase in premiums, resulting from
these changes, will be paid by COMPANY upon presentation
of corresponding vouchers.
PART 8 - MISCELLANEOUS
8.1 UNSATISFACTORY PERFORMANCE
COMPANY is entitled to take over the operation of CONTRACTOR's
equipment in the following circumstances and subject to the following
conditions:
In the event that COMPANY becomes dissatisfied with CONTRACTOR's
conduct of the Operations hereunder on account of slow progress or
incompetence in the performance of this Contract, as a result of
causes reasonably within the control of CONTRACTOR, COMPANY shall
notify CONTRACTOR, in writing, the detailed grounds of its
dissatisfaction. Should CONTRACTOR fail or refuse to remedy the
matters complained of or not take steps and diligently proceed to so
remedy such matters within two (2) days after the written notice is
received by CONTRACTOR, COMPANY shall have the right, at its option,
to either take over the operation of CONTRACTOR's equipment for the
purpose of completing the drilling of the well or to terminate this
Contract. Should Operations be taken over by COMPANY, the cost of
such Operations shall be paid for by the COMPANY, who shall
compensate CONTRACTOR for the use of CONTRACTOR's drilling tools,
machinery and appliances at the applicable Rate, less all expenses
and costs incurred by COMPANY in such Operations. COMPANY shall, on
the completion of the work, return such drilling tools, machinery and
appliances to CONTRACTOR in as good condition as when taken over,
normal wear and tear excepted. In the event of the drilling
Operations being taken over by COMPANY, as herein provided, all
Operations thereafter shall be conducted at the sole risk of COMPANY
and the liability provisions of this Contract intended for
CONTRACTOR's account shall become liabilities for COMPANY's account.
Subject to underwriter approval, CONTRACTOR shall transfer to COMPANY
benefit of all policies ensuring CONTRACTOR's operations.
8.2 FORCE MAJEURE
Each party to this contract shall be excused from complying with the
terms of this Contract (except for the payment of monies when due),
and neither party to this Contract shall be liable for failure to
perform under the term of this Contract if and for so long as such
performance is hindered or impeded by Force Majeure, which is defined
as civil or labor disturbances, riots, strikes (other than strikes
limited solely to CONTRACTOR's Personnel), wars (declared or
undeclared), military actions, insurrection, rebellion, terrorist or
anti-government acts, acts of any Governmental or military agency
under actual or assumed authority, action of elements (excluding
adverse sea and weather conditions), floods, storms or other acts of
nature, or any
<PAGE>
cause beyond the control of either party, whether or not similar to
the matters herein specifically enumerated; and, provided that, where
applicable, none of the above shall have been caused by action or
negligence of either of the parties. However, the party and/or the
parties shall take any steps under its and/or their control to remedy
the above circumstances.
Inability of either party to secure funds, arrange bank loans or
other financing or obtain credit shall not be regarded as Force
Majeure.
8.3 BANKRUPTCY OR ABANDONMENT OF OPERATIONS BY CONTRACTOR
Should CONTRACTOR becomes insolvent or enter into any arrangement
with or for the benefit of its creditors, or becomes unable or refuse
or neglect to carry out the Operations or any part thereof, or if
CONTRACTOR's equipment is seized or put in execution, COMPANY may, by
notice, in writing, to CONTRACTOR, terminate this Contract without
thereby affecting in other respects the obligations or liabilities of
CONTRACTOR. On such termination, all use by CONTRACTOR of the
equipment, implements and materials shall cease, and COMPANY may
employee other contractors or workmen to perform and complete the
work or may itself complete the same, and the costs, charges and
expenses of such completion in excess of that which COMPANY would
have paid had the event not occurred may be deducted by the COMPANY
from any monies due to or become due to the CONTRACTOR.
8.4 NON-WAIVER
No requirement hereof and, in particular, no breach of this Contract
hereunder, shall be considered as waived by either party unless the
same is specifically waived in writing and then only by the persons
executing this Contract or other duly authorized agent or
representative of the party.
8.5 GOVERNING LAW AND DISPUTES
8.5.1 This Contract shall be exclusively governed by and
construed in accordance with the substantive laws of
England, excluding any conflicts of law rules that would
cause the substantive law of another jurisdication to be
applied, and the same laws shall exclusively govern the
merits of any dispute as referred to in Article 8.5.2.
8.5.2 Any dispute between the COMPANY and the CONTRACTOR
whether resulting from a claim in contract, in tort or
based on any other legal doctrine which may arise out
of or in connection with this Contract or the
interpretation, application, implementation, validity,
breach or termination of this Contract or of any
provision hereof shall be exclusively referred to and
finally settled by arbitration in London, England in
accordance with the Rules of the London Court of
International Arbitration by three (3) arbritators
appointed in accordance with the said Rules. The
appointing authority shall be the London Court of
Internatinoal Arbitration. The arbitration proceedings
shall be conducted in the English language. The
arbitral award shall be final and binding upon the
Parties and enforceable by any court having
jurisdiction for that purpose. Any appeal to the High
Court shall be excluded in accordance with Section 3 of
the Arbitration Act 1979 of England.
37
<PAGE>
8.6 ASSIGNMENT OF CONTRACT; SUBCONTRACTING
8.6.1 Neither CONTRACTOR nor COMPANY willl have the right to assign this
Contract, in whole or in part, without the written consent of the
other Party, which consent will not be unreasonably withheld. This
restriction will not apply to an assignment to a parent, a subsidiary
corporation, a subsidiary of a parent or to COMPANY's coventurer Shell
Philippines Exploration B.V., which assignment may be made at any time
without the written consent of the other; however, written notice
shall be served to the other party. In the case of any assignment, the
assignor hereby guarantees to the other party full performance under
this Contract by the assignee.
8.6.2 Except in respect of routine repairs and maintenance of the Drilling
Unit CONTRACTOR shall not have the right to subcontract the Work to be
performed by it hereunder or any part thereof.
8.7 NOTICES
Notices, reports and other communications required or permitted by
this Contract to be given or sent by one (1) party to the other
shall, except where herein otherwise provided, be in writing and in
the English language, be effective upon receipt, and be delivered by
hand or registered mail, facsimile or telex, as the case may be, to
COMPANY's or CONTRACTOR's addresses as provided in Annex D.
<PAGE>
Notices and communications relating to day-to-day Operations may be
given by either party by delivery thereof to the other Party's
Representative on board the Drilling Unit.
Either party may, by notice to the other, change its address.
COMPANY
OCCIDENTAL PHILIPPINES, INC.
20th Floor, Pearlbank Centre
146 Valero Street, Salcedo Village
Makati City, Philippines 1227
Attention: J. Scofield
Telephone: 63-2-810-0292 or 840-0509
Facsimile: 63-2-816-4556
CONTRACTOR
ATWOOD OCEANICS PACIFIC LIMITED
332A-11A Eleventh Floor
Ampang City
Jalan Ampang
50450 Kuala Lumpur
MALAYSIA
Attention : Operations Manager
Telephone : 011-603-456-9714
Telex : MA 32023 CLRWAY
Facsimile : 011-60-3-456 8623
Also Copied To:
ATWOOD OCEANICS INC.
15835 Park Ten Place Drive
Houston, Texas 77084 USA
Attention : Mr. Glen Kelley
Telephone : 1-281-492-2929
Facsimile : 1-281-578-3253
8.8 CONFLICT OF INTEREST
CONTRACTOR shall not pay any fee, commission, rebate or anything of
value to or for the benefit of any employee of COMPANY. CONTRACTOR
shall use its best efforts to prevent any of its employees from
engaging in activities contrary to or detrimental to the best
interests of COMPANY.
<PAGE>
8.9 WAIVER: TITLE HEADINGS: ENTIRE CONTRACT; ETC.
Failure to enforce all or any of the terms or conditions of the
Contract shall not constitute a waiver of any other right of
enforcement. Each day of breach of the terms of this Contract shall
be considered a separate breach, renewing the right of each Party to
waive or enforce its rights.
Article headings are for identification and convenient reference only
and shall not be used in interpreting this Contract.
This Contract and its Annexes, listed and attached, constitute the
entire Contract of the parties, which can be modified only by written
instrument, properly executed by duly authorized representatives of
the respective parties.
References in this Contract to any statute, statutory provision or
instrument or contract shall refer to the same as, from time to time,
amended, extended or reenacted.
References to the singular include a reference to the plural and vice
versa.
In the event of one (1) or more clauses, sentences or Articles are
found to be unenforceable by a court of competent jurisdiction, the
remainder of this Contract shall continue in full force and effect.
Should any provision of this Contract conflict with any Annex hereto,
the parties shall seek a consistent and appropriate resolution;
provided that in the event no consistent resolution is determined,
the provisions of the Contract shall control over those of the
Annexes.
IN WITNESS THEREOF, the parties hereto have executed this Contract as of the day
and year first written above.
COMPANY:
OCCIDENTAL PHILIPPINES, INC.
By: CARLOS A. CONTRERAS
Title: Vice President & General Manager
CONTRACTOR:
ATWOOD OCEANICS PACIFIC LIMITED
By: MICHAEL A. CARDENAS
Title: Director
<PAGE>
ANNEX D-1
(Extension Period Not Exercised)
OFFSHORE
CONTRACT SUMMARY
D-1 COMPANY: OCCIDENTAL PHILIPPINES, INC.
D-2 COMPANY LOCAL ADDRESS: 20th Floor, Pearlbank Centre
146 Valero Street, Salcedo Village
Makati City, PHILIPPINES 1227
Telephone: 011-63-2-810-0292
Facsimile: 011-63-2-816-4556
D-3 COMPANY REPRESENTATIVE: Attention: J. Scofield
D-4 COMPANY ADDRESS FOR NOTICES: Same as above.
D-5 CONTRACTOR: ATWOOD OCEANICS PACIFIC LIMITED
CONTRACTOR's ADDRESS: 332A-11A Eleventh Floor
Ampang City
Jalan Ampang
50450 Kuala Lumpur
MALAYSIA
Telephone: 011-60-3-456-9714
Facsimile: 011-60-3-456-8623
D-6 CONTRACTOR's REPRESENTATIVE: Corey H. Beckman
D-7 PAYMENT INSTRUCTIONS: As Specified On Each Invoice
D-8 CURRENCY OF PAYMENT: U.S. Dollars
D-9 AREA/COUNTRY OF OPERATION: The Philippines
D-10 (A) MOB Mabini Base, Batangas
(B) AOB Manila Airport, Manila
D-11 PRIMARY TERM:
(01 November 1997) Two (2) Wells
D-12 EXTENSION PERIOD: See Annex D-2
D-13 WATER DEPTH: First Well : 1,200 ft. maximum
Second Well : 2,500 ft. maximum
D-14 DRILLING DEPTH: 20,000 ft. maximum
D-15 OPERATING RATE: USD 100,000 Per Day
<PAGE>
D-16 STANDBY RATE: USD 97,500 Per Day
D-17 MOVING RATE (WELL TO WELL): USD 97,500 Per Day
D-18 REPAIR RATE: USD 92,500 Per Day
D-19 LONG REPAIR RATE: USD 87,500 Per Day
D-20 FORCE MAJEURE RATE: USD 87,500 Per Day
D-21 EARLY TERMINATION RATE: USD 82,500 Per Day
(only applicable if two wells
are not drilled)
Primary Term: To continue for
ninety (90) days less the number of
day rate days prior to Early
Termination. The Mobilization Fee,
if not already paid, and the
Demobilization Fee remain payable.
D-22 BOARD AND LODGING RATE (IN
EXCESS OF TEN [10] ALLOWANCE): USD 40
D-23 COST OF A MEAL FOR INVITEES NOT
STAYING OVERNIGHT: USD 10
D-24 MOBILIZATION FEE: USD 1,200,000
Plus COMPANY to provide tow
vessel(s) from last location in
Malaysia to COMPANY'S first well
location.
D-25 DEMOBILIZATION FEE: USD 800,000
D-26 HANDLING CHARGE FOR COMPANY
ITEMS FURNISHED BY CONTRACTOR:
UP TO USD 10,000 5%
ABOVE USD 10,000 3%
D-27 GOVERNING LAW: English
D-28 COURTS: England
Philippines
D-29 WAIVER OF SUBROGATION: Yes
D-30 FULL VALUE OF CONTRACTOR's
DRILLING UNIT AND EQUIPMENT: USD 76,000,000
42
<PAGE>
ANNEX D-2
(Extension Period Excerised)
OFFSHORE
CONTRACT SUMMARY
D-1 COMPANY: OCCIDENTAL PHILIPPINES, INC.
D-2 COMPANY LOCAL ADDRESS: 20th Floor, Pearlbank Centre
146 Valero Street, Salcedo Village
Makati City, PHILIPPINES 1227
Telephone: 011-63-2-810-0292
Facsimile: 011-63-2-816-4556
D-3 COMPANY REPRESENTATIVE: Attention: J. Scofield
D-4 COMPANY ADDRESS FOR NOTICES: Same as above.
D-5 CONTRACTOR: ATWOOD OCEANICS PACIFIC LIMITED
CONTRACTOR's ADDRESS: 332A-11A Eleventh Floor
Ampang City
Jalan Ampang
50450 Kuala Lumpur
MALAYSIA
Telephone: 011-60-3-456-9714
Facsimile: 011-60-3-456-8623
D-6 CONTRACTOR's REPRESENTATIVE: Corey H. Beckman
D-7 PAYMENT INSTRUCTIONS: As Specified On Each Invoice
D-8 CURRENCY OF PAYMENT: U.S. Dollars
D-9 AREA/COUNTRY OF OPERATION: The Philippines
D-10 (A) MOB
(B) AOB
D-11 PRIMARY TERM: Two (2) Wells
(Commencement no
earlier than 01 November 1997)
D-12 EXTENSION PERIOD: Period To Upgrade the Drilling
Unit Plus Three (3) Years Firm
D-13 WATER DEPTH: Primary Period :
1,200/2,500 ft. maximum (see
sequence of wells in
Annex D-1)
Extension Period: 3,500 ft. maximum
D-14 DRILLING DEPTH: 20,000 ft. maximum
<PAGE>
D-15
OPERATING RATE: Primary Term Extension Period
USD 75,000 Per Day USD 101,200 Per Day
D-16
STANDBY RATE: Primary Term Extension Period
USD 73,500 Per Day USD 98,000 Per Day
D-17
MOVING RATE (DEMOBILIZATION TO
SHIPYARD FOLLOWING PRIMARY
TERM AND WELL TO WELL): Primary Term Extension Period
USD 73,500 Per Day USD 98,000 Per Day
D-18
REPAIR RATE:
Primary Term Extension Period
USD 69,500 Per Day USD 94,000 Per Day
D-19
LONG REPAIR RATE: Primary Term Extension Period
USD 65,500 Per Day USD 89,000 Per Day
D-20
FORCE MAJEURE RATE: Primary Term Extension Period
USD 65,500 Per Day USD 89,000 Per Day
D-21
EARLY TERMINATION RATE: USD 82,500 Per Day
Primary Term: To continue for ninety (90) days less the number of day
rate days prior to Early Termination. The Initial Mobilization Fee,
if not already paid, shall remain payable.
PLUS
Extension Period: Applicable from exercise
of the Extension Period for 1,095 days
less the number of day rate days performed
prior to Early Termination. The Second
Mobilization Fee, if not already paid, and
the Demobilization Fee remain payable.
D-22 BOARD AND LODGING RATE (IN
EXCESS OF TEN [10] ALLOWANCES): USD 40
D-23 COST OF A MEAL FOR INVITEES NOT
STAYING OVERNIGHT: USD 10
D-24 INITIAL MOBILIZATION FEE: USD 1,200,000
Primary Term Only.
D-25 SHIPYARD DEMOBILIZATION FEE: Moving Rate plus provision of tow
vessel(s) to Western Anchorage at
Singapore or other mutually agreed
location.
D-26 SECOND MOBILIZATION FEE: USD 10,200,000
Fifty percent (50%) payable upon arrival of the Drilling Unit at the
Southeast Asia shipyard. Fifty percent (50%) payable upon arrival in
the Philippines ready to commence Operations. Additionally, COMPANY
shall provide tow vessel(s) to move the Drilling Unit from the
Southeast Asia shipyard to the first well location of the Extension
Period.
D-27 FINAL DEMOBILIZATION FEE: USD 800,000
D-28 HANDLING CHARGE FOR COMPANY
ITEMS FURNISHED BY CONTRACTOR:
UP TO USD 10,000 5%
ABOVE USD 10,000 3%
D-29 GOVERNING LAW: English
D-30COURTS: England
D-31 WAIVER OF SUBROGATION: Yes
D-32 FULL VALUE OF CONTRACTOR's
DRILLING UNIT AND EQUIPMENT: USD 76,000,000 (Primary Term)
USD 116,000.00 (Extension Period)
