<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1996
REGISTRATION NO. 333-2680
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORMS S-4/S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
DIAMOND OFFSHORE DRILLING, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 1381 76-0321760
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
DIAMOND OFFSHORE DRILLING, INC. RICHARD L. LIONBERGER, ESQ.
15415 KATY FREEWAY, SUITE 400 VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
HOUSTON, TEXAS 77094 15415 KATY FREEWAY, SUITE 400
(713) 492-5300 HOUSTON, TEXAS 77094
(Address, Including Zip Code, and Telephone (713) 492-5300
Number, (Name, Address, Including Zip Code and
Including Area Code, of Registrant's Telephone Number, Including Area
Principal Executive Offices) Code, of Agent For Service)
</TABLE>
Copies to:
<TABLE>
<S> <C>
JAMES L. RICE III, ESQ. MORRIS J. KRAMER, ESQ.
WEIL, GOTSHAL & MANGES LLP ROBERT M. CHILSTROM, ESQ.
700 LOUISIANA, SUITE 1600 SKADDEN, ARPS, SLATE, MEAGHER & FLOM
HOUSTON, TEXAS 77002 919 THIRD AVENUE
(713) 546-5000 NEW YORK, NEW YORK 10022
(212) 735-3000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the amalgamation (the "Acquisition") of AO Acquisition Limited
with Arethusa (Off-Shore) Limited pursuant to the Plan of Acquisition described
in the enclosed Prospectus/Joint Proxy Statement have been satisfied or waived.
If any of the securities being registered on these Forms are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Post-Effective Amendment No. 2 to Registration Statement No. 333-2680
is being filed for the sole purpose of adding the following exhibit to the
Registration Statement: Term Drilling Contract dated March 29, 1996 between
Diamond Offshore and Chevron U.S.A. Production Company with respect to the Ocean
Quest.
II-1
<PAGE> 3
FORM S-4 ITEM 21/FORM S-1 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
1.1 Form of U.S. Purchase Agreement*
1.2 Form of International Purchase Agreement*
2.1 Plan of Acquisition*
2.2 Amendment No. 1 to Plan of Acquisition*
2.3 Amalgamation Agreement*
3.1 Restated Certificate of Incorporation of Diamond Offshore (incorporated
by reference herein to Exhibit 3.1 of Diamond Offshore's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995)
3.2 Amended By-laws of Diamond Offshore*
3.2.1 Amendment of the Company's By-laws on November 8, 1995*
3.2.2 Amendment of the Company's By-laws on April 3, 1996*
5.1 Opinion of Weil, Gotshal & Manges LLP regarding validity of the
securities being registered*
8.1 Opinion of Weil, Gotshal & Manges LLP regarding certain tax matters*
10.1 Fee Agreement*
10.2 Amendment No. 1 to Fee Agreement*
10.3 Loews Stockholder's Agreement*
10.4 Amendment No. 1 to Loews Stockholder's Agreement*
10.5 Shareholders Agreement*
10.6 Amendment No. 1 to Shareholders Agreement*
10.7 Termination and Settlement Agreement dated October 10, 1995 between
Loews and Diamond Offshore (incorporated by reference herein to Exhibit
10.1 of Diamond Offshore's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995)
10.8 Registration Rights Agreement dated October 16, 1995 between Loews and
Diamond Offshore (incorporated by reference herein to Exhibit 10.2 of
Diamond Offshore's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.9 Services Agreement dated October 16, 1995 between Loews and Diamond
Offshore (incorporated by reference herein to Exhibit 10.3 of Diamond
Offshore's Annual Report on Form 10-K for the fiscal year ended December
31, 1995)
10.10 Agreement ("Rose Employment Agreement"), dated November 1, 1992, between
Diamond Offshore and Robert E. Rose (incorporated by reference herein to
Exhibit 10.7 of Diamond Offshore's Registration Statement No. 33-95484
on Form S-1)
10.11 Amendment, dated December 27, 1995, to the Rose Employment Agreement
(incorporated by reference herein to Exhibit 10.5 of Diamond Offshore's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995)
10.12 Credit Agreement among Diamond Offshore, Diamond Offshore Limited,
various lending institutions, Bankers Trust Company and Christiania Bank
og Kreditkasse, New York Branch, as Co-Arrangers and Bankers Trust
Company, as Administrative Agent dated as of February 8, 1996 and
amended and restated as of March 27, 1996*
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.13 Diamond Offshore Management Bonus Program (incorporated by reference
herein to Exhibit 10.9 of Diamond Offshore's Registration Statement No.
33-95484 on Form S-1)
10.14 Form of Diamond Offshore Executive Deferred Compensation Plan
(incorporated by reference herein to Exhibit 10.10 of Diamond Offshore's
Registration Statement No. 33-95484 on Form S-1)
10.15 Term Drilling Contract dated March 29, 1996 between Diamond Offshore and
Chevron U.S.A. Production Company with respect to the Ocean Quest
10.16 Letter of Intent entered into September 6, 1995 between Diamond Offshore
and Texaco Exploration and Production Inc. with respect to the Ocean
Star (formerly named Ocean Countess) (incorporated by reference herein
to Exhibit 10.12 of Diamond Offshore's Registration Statement No.
33-95484 on Form S-1)
10.17 Diamond Offshore Drilling, Inc. Nonqualified Stock Option Plan for
Certain Former Directors of Arethusa*
10.18 Diamond Offshore Drilling, Inc. Stock Option Plan for Certain Former
Employees of Arethusa*
21.1 List of Subsidiaries of Diamond Offshore*
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Arthur Andersen & Co.*
23.3 Consent of Klynveld Peat Marwick Goerdeler*
23.4 Consent of Weil, Gotshal & Manges LLP. Reference is made to Exhibit 5.1
23.5 Consent of Weil, Gotshal & Manges LLP. Reference is made to Exhibit 8.1
23.6 Consent of CS First Boston Corporation*
23.7 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated*
24.1 Powers of Attorney*
99.1 Fairness Opinion of CS First Boston Corporation*
99.2 Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated*
99.3 Excerpts from The Companies Act of 1981 of Bermuda, as amended*
99.4 Form of Diamond Offshore proxy card*
99.5 Form of Arethusa proxy card*
</TABLE>
- ---------------
* Previously filed.
(b) Financial Statement Schedules
Not applicable.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Post-Effective Amendment No. 2 to Registration
Statement on Forms S-4/S-1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on May 24th,
1996.
DIAMOND OFFSHORE DRILLING, INC.
By: /s/ RICHARD L. LIONBERGER
--------------------------------
Name: Richard L. Lionberger
Title: Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 2 to Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -----------------
<C> <S> <C>
/s/ ROBERT E. ROSE* President, Chief Executive May 24, 1996
-------------------------------------- Officer and Director
Robert E. Rose (principal executive
officer)
/s/ LAWRENCE R. DICKERSON* Senior Vice President and May 24, 1996
-------------------------------------- Chief Financial Officer
Lawrence R. Dickerson (principal financial
officer)
/s/ GARY T. KRENEK* Controller (principal May 24, 1996
-------------------------------------- accounting officer)
Gary T. Krenek
/s/ JAMES S. TISCH* Chairman of the Board May 24, 1996
--------------------------------------
James S. Tisch
/s/ HERBERT C. HOFMANN* Director May 24, 1996
--------------------------------------
Herbert C. Hofmann
*By: /s/ RICHARD L. LIONBERGER
--------------------------------------
Richard L. Lionberger
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- ------------
<S> <C>
1.1 Form of U.S. Purchase Agreement*
1.2 Form of International Purchase Agreement*
2.1 Plan of Acquisition*
2.2 Amendment No. 1 to Plan of Acquisition*
2.3 Amalgamation Agreement*
3.1 Restated Certificate of Incorporation of Diamond Offshore
(incorporated by reference herein to Exhibit 3.1 of Diamond Offshore's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995)
3.2 Amended By-laws of Diamond Offshore*
3.2.1 Amendment of the Company's By-laws on November 8, 1995*
3.2.2 Amendment of the Company's By-laws on April 3, 1996*
5.1 Opinion of Weil, Gotshal & Manges LLP regarding validity of the
securities being registered*
8.1 Opinion of Weil, Gotshal & Manges LLP regarding certain tax matters*
10.1 Fee Agreement*
10.2 Amendment No. 1 to Fee Agreement*
10.3 Loews Stockholder's Agreement*
10.4 Amendment No. 1 to Loews Stockholder's Agreement*
10.5 Shareholders Agreement*
10.6 Amendment No. 1 to Shareholders Agreement*
10.7 Termination and Settlement Agreement dated October 10, 1995 between
Loews and Diamond Offshore (incorporated by reference herein to
Exhibit 10.1 of Diamond Offshore's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995)
10.8 Registration Rights Agreement dated October 16, 1995 between Loews and
Diamond Offshore (incorporated by reference herein to Exhibit 10.2 of
Diamond Offshore's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995)
10.9 Services Agreement dated October 16, 1995 between Loews and Diamond
Offshore (incorporated by reference herein to Exhibit 10.3 of Diamond
Offshore's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.10 Agreement ("Rose Employment Agreement"), dated November 1, 1992,
between Diamond Offshore and Robert E. Rose (incorporated by reference
herein to Exhibit 10.7 of Diamond Offshore's Registration Statement
No. 33-95484 on Form S-1)
10.11 Amendment, dated December 27, 1995, to the Rose Employment Agreement
(incorporated by reference herein to Exhibit 10.5 of Diamond
Offshore's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995)
10.12 Credit Agreement among Diamond Offshore, Diamond Offshore Limited,
various lending institutions, Bankers Trust Company and Christiania
Bank og Kreditkasse, New York Branch, as Co-Arrangers and Bankers
Trust Company, as Administrative Agent dated as of February 8, 1996
and amended and restated as of March 27, 1996*
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.13 Diamond Offshore Management Bonus Program (incorporated by reference
herein to Exhibit 10.9 of Diamond Offshore's Registration Statement
No. 33-95484 on Form S-1)
10.14 Form of Diamond Offshore Executive Deferred Compensation Plan
(incorporated by reference herein to Exhibit 10.10 of Diamond
Offshore's Registration Statement No. 33-95484 on Form S-1)
10.15 Term Drilling Contract dated March 29, 1996 between Diamond Offshore
and Chevron U.S.A. Production Company with respect to the Ocean Quest
10.16 Letter of Intent entered into September 6, 1995 between Diamond
Offshore and Texaco Exploration and Production Inc. with respect to
the Ocean Star (formerly named Ocean Countess) (incorporated by
reference herein to Exhibit 10.12 of Diamond Offshore's Registration
Statement No. 33-95484 on Form S-1)
10.17 Diamond Offshore Drilling, Inc. Nonqualified Stock Option Plan for
Certain Former Directors of Arethusa*
10.18 Diamond Offshore Drilling, Inc. Stock Option Plan for Certain Former
Employees of Arethusa*
21.1 List of Subsidiaries of Diamond Offshore*
23.1 Consent of Deloitte & Touche LLP*
23.2 Consent of Arthur Andersen & Co.*
23.3 Consent of Klynveld Peat Marwick Goerdeler*
23.4 Consent of Weil, Gotshal & Manges LLP. Reference is made to Exhibit
5.1
23.5 Consent of Weil, Gotshal & Manges LLP. Reference is made to Exhibit
8.1
23.6 Consent of CS First Boston Corporation*
23.7 Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated*
24.1 Powers of Attorney*
99.1 Fairness Opinion of CS First Boston Corporation*
99.2 Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith
Incorporated*
99.3 Excerpts from The Companies Act of 1981 of Bermuda, as amended*
99.4 Form of Diamond Offshore proxy card*
99.5 Form of Arethusa proxy card*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
TERM DRILLING CONTRACT
"OCEAN QUEST"
THIS AGREEMENT, dated March 29, 1996, by and between CHEVRON
U.S.A. INC., a Pennsylvania corporation, hereinafter referred to as "OPERATOR,"
and DIAMOND OFFSHORE COMPANY hereinafter referred to as "CONTRACTOR."
W I T N E S S E T H:
OPERATOR is desirous of having a well or wells for
hydrocarbons drilled on its offshore leases in the Gulf of Mexico. CONTRACTOR
is willing to drill such well or wells upon the terms and conditions herein
contained.
N O W, T H E R E F O R E:
For the considerations hereinafter stated, CONTRACTOR hereby
agrees to drill for OPERATOR with CONTRACTOR's drilling unit "Ocean Quest", for
a term period of three (3) years.
SECTION I
NATURE OF CONTRACT
This is a contract for drilling services and is not to be
construed as a charter of a vessel to OPERATOR. Except when and to the extent
that OPERATOR assumes control and supervision under the provisions of Section X
hereof,
<PAGE> 2
CONTRACTOR shall remain in complete control of all operations and all personnel
engaged by it hereunder at all times. Nothing herein stated is to be construed
as a charter, demise or lease of the drilling unit, the CONTRACTOR to remain
responsible for the management, operations, navigation, manning, control,
insurance, all local, state and federal taxes related to CONTRACTOR's equipment
and personnel, and all other matters incident to the operations herein provided
and the performance of this contract, the same as when operating or trading for
its own account.
SECTION II
COMMENCEMENT DATE AND TERM
CONTRACTOR shall, on or about August 15, 1996, commence
drilling operations. The term of this contract is three (3) years from
commencement of mobilization from the shipyard dock at Texas Drydock in Sabine
Pass to the first designated location. OPERATOR shall have the right to extend
the term of this contract upon mutually agreeable terms, rates, and conditions
between the parties, provided that written notice of the election to extend is
given ninety (90) days prior to the end of the primary term. OPERATOR shall
further have the option to terminate this contract at any time subsequent to
completion of the well then in progress at the end of the second year of the
primary term, subject to payment by OPERATOR to CONTRACTOR of the Operating
Rate then in effect, less any Daywork Rate received
2
<PAGE> 3
by CONTRACTOR resulting from operations for a third party, per 24-hour day
remaining in year three (3) of the primary term.
EARLY TERMINATION
1) ACTUAL OR CONSTRUCTIVE TOTAL LOSS
In the event of actual or constructive total loss of
the drilling unit (as determined by CONTRACTOR's
underwriters) termination shall be immediate with
CONTRACTOR having no recourse against OPERATOR other
than amounts earned up to such loss.
2) UNSATISFACTORY PERFORMANCE
In the event of OPERATOR's dissatisfaction with the
safety practices or operating performance of
CONTRACTOR's personnel, OPERATOR shall provide
CONTRACTOR with written notice as to the
circumstances of its dissatisfaction. CONTRACTOR
shall be allowed seven (7) days to commence good
faith efforts to remedy such circumstances. In the
event such circumstances are not remedied to
OPERATOR's satisfaction within thirty (30) days,
OPERATOR shall have the option to terminate this
contract subject only to payment of amounts earned up
to such termination, and demobilization of the
drilling unit pursuant to Section V, Item 1) hereof.
3) DAMAGE TO, LOSS OF OR FAILURE OF CRITICAL DRILLING
UNIT SYSTEM OR EQUIPMENT
In the event critical drilling unit systems or
equipment fails or is damaged or lost as a result of
operations hereunder, the provisions of Section V,
Item 6), a) b) and d) shall apply until such time as
CONTRACTOR determines the period of time necessary to
make repairs and/or replace such equipment.
Subsequent to such determination, the term of this
contract and payment of applicable dayrates shall be
suspended until such time as the affected equipment
is repaired or replaced after which the contract term
and payment of applicable dayrates shall recommence.
Mobilization and demobilization to support this
operation is for CONTRACTOR's account.
3
<PAGE> 4
Notwithstanding the above, OPERATOR shall have the
option to terminate this contract at any time during
such suspension subject to demobilization of the
drilling unit pursuant to Section V, Item 1) hereof
and to a lump sum payment to a Contractor calculated
as follows:
<TABLE>
<CAPTION>
Percentage of Remaining
Days of Suspension Investment Principal
------------------ --------------------
<S> <C>
Less than 90 100%
90 to 108 75%
181 to 360 50%
Over 360 25%
</TABLE>
For purposes of computing the remaining investment
principal, the gross amount, before applying the
appropriate percentage, shall be calculated by
multiplying $47,500.00 by the number of days
remaining under the primary three (3) year term.
SECTION III
EQUIPMENT, MATERIALS & SUPPLIES
(1) CONTRACTOR shall furnish on location at its own
expense for drilling under this agreement:
Complete semi-submersible drilling unit "Ocean Quest" with all
the tools, machinery, equipment and appurtenances as
stipulated in Exhibit "A" attached hereto. CONTRACTOR shall
furnish adequate roustabouts and crane operators to load and
off-load OPERATOR and CONTRACTOR material and supplies and
catering personnel and services adequate for CONTRACTOR,
OPERATOR and third party personnel.
It being understood that the enumeration above of specific items of rig
supplies and appurtenances to be furnished by CONTRACTOR shall not be deemed to
relieve CONTRACTOR from furnishing at its own expense such other items as may
be required for diligent, skillful and workmanlike drilling, including
connections and
4
<PAGE> 5
equipment necessary to control such pressures as may be encountered. Moreover,
OPERATOR shall have the right to inspect and reject for cause any machinery,
equipment, tools, appliances, materials, supplies or instruments furnished by
CONTRACTOR, and CONTRACTOR shall be required to replace any rejected equipment
or material with equipment or material acceptable to OPERATOR. The acceptance
or rejection, or failure to accept or reject, any items shall neither diminish
the warranty or liability of CONTRACTOR nor enlarge the liability or
responsibility of OPERATOR.
(2) CONTRACTOR shall arrange for welding supplies
required for welding on OPERATOR-furnished material, and any extra labor
requested by OPERATOR, but CONTRACTOR shall be reimbursed by OPERATOR for the
actual cost of such items.
(3) OPERATOR shall arrange for, secure, and furnish at
its own expense: Caisson for well protection;
Casing shoes and other necessary casing appliances;
Cement and any necessary services of third parties for
cementing casing;
Bits;
Drilling Water;
Potable Water;
Power Casing & Tubing Tongs;
5
<PAGE> 6
Mud and any other necessary weighting materials. OPERATOR to
have the right to specify the quality and type of mud and
weighting materials to be used. CONTRACTOR agrees to keep an
orderly inventory of mud materials in order that an inventory
may be made at any time and to keep an accurate record of mud
deliveries and mud usage by tours;
Devices and services of third parties for surveys and tests;
Casing tools, tubing tools, and casing crews not provided in
Exhibit "A";
Casing, liner, tubing and necessary fittings for completion;
Drill pipe, drill collars and related equipment, other than as
provided by CONTRACTOR as specified in Exhibit "A";
Necessary marine and air transportation between shore and well
location for labor, equipment and supplies;
Fuel.
(4) It is recognized by CONTRACTOR and OPERATOR that
various items of equipment, materials, supplies and labor, in addition to those
referred to herein, may be required for drilling and completing or abandoning
the well. In the event additional items are required, such items shall be
arranged for, secured and paid for from time to time as mutually agreed upon by
CONTRACTOR and OPERATOR.
SECTION IV
CONDUCT OF OPERATIONS
CONTRACTOR will conduct its operations in such a manner that
safety of all personnel on the drilling location is a primary operating
principle. The CONTRACTOR's operating procedures will be directed to
maintaining a work place
6
<PAGE> 7
that eliminates personal injury, equipment damage and downtime, and damage to
the environment. Operating procedures not covered by specific legal
regulations will be conducted in accordance with standard industry practice, as
contained in the publications of the International Association of Drilling
Contractors, the American Petroleum Institute, or as otherwise specified by the
OPERATOR in its drilling programs and similar written documents.
The use, possession, distribution, purchase, or sale of any
controlled substance and/or alcohol by any person while on OPERATOR premises,
engaged in OPERATOR business or while operating OPERATOR equipment is
prohibited. Any use of a controlled substance which causes or contributes to
unacceptable job performance or unusual job behavior is also prohibited.
Any person violating this policy will be removed from OPERATOR
premises.
The OPERATOR reserves the right at any time to inspect or
search any person, place, or thing on OPERATOR premises.
The OPERATOR reserves the right to require CONTRACTOR to
search and/or screen its employees before entering upon OPERATOR premises,
engaging in OPERATOR business or operating OPERATOR equipment. CONTRACTOR is
required to have controlled substance and/or alcohol procedures which allow the
CONTRACTOR to search and/or screen their employees who are on OPERATOR
premises, engaged in OPERATOR business or operating OPERATOR equipment. Prior
to conducting a search and/or screen of their employees on
7
<PAGE> 8
OPERATOR premises, CONTRACTOR must notify the local OPERATOR facility manager.
Unless prohibited by applicable law, OPERATOR reserves the
right to conduct or require a controlled substance screen on any person on
OPERATOR premises, engaged in OPERATOR business, or operating OPERATOR
equipment. Prior written consent must be obtained from any person who is to be
screened.
CONTRACTOR agrees, upon receipt of OPERATOR, at any time and
from time to time, prior to completion or abandonment of said well, to perform,
or assist in performing any and all tests, measurements and special services,
including the following: coring, determining deviation of the hole from
vertical, sidetracking, and other tests and services.
CONTRACTOR agrees, if and when requested by OPERATOR, properly
to land and cement casing, of the sizes, weights, grades and at the depths set
forth as instructed by OPERATOR.
After cement has set, casing and cement job shall be tested in
a manner satisfactory to OPERATOR. If any defect shall be disclosed,
CONTRACTOR shall take immediate steps to remedy it as directed by OPERATOR and
continue such efforts until results satisfactory to OPERATOR are secured.
OPERATOR may, at any time, elect to have said well abandoned
at any depth. Upon notice of such election, CONTRACTOR shall promptly remove
from the hole and lay down all recoverable casing and tubing and plug and
abandon
8
<PAGE> 9
hole in a manner satisfactory to OPERATOR and in compliance with applicable
rules and regulations promulgated by all duly constituted Federal and State
authorities.
OPERATOR may, at any time, elect to have said well completed,
and in that event, CONTRACTOR shall perform the work of completing the well to
the extent desired by OPERATOR, including the running of casing, liner and
tubing and installing casingheads and Christmas tree.
SECTION V
PAYMENTS TO CONTRACTOR
(1) MOBILIZATION: CONTRACTOR shall provide the
supervision and engage the tugs to mobilize CONTRACTOR's drilling unit, "Ocean
Quest," to OPERATOR's initial designated location. OPERATOR shall reimburse
CONTRACTOR for the actual cost of tugs, fuel, and related towing charges during
mobilization. OPERATOR shall be responsible, at its cost, for the anchor
handling vessels and services. CONTRACTOR shall be paid at the rate of
Seventy-Five Thousand ($75,000.00) and No/100 Dollars per 24-hour day
commencing when the drilling unit departs the dock at Texas Drydock in Sabine
Pass for the initial designated well location.
DEMOBILIZATION: Upon completion of drilling activities on the
well in progress at the end of the primary three (3) year term and being
released by OPERATOR's representative at such location, OPERATOR will pay
CONTRACTOR at a rate of Seventy-Five Thousand ($75,000.00) and No/100 Dollars
per 24-hour day to demobilize the drilling unit to Grand Island Block 70, or
other mutually agreed
9
<PAGE> 10
demobilization site. Demobilization is complete when the drilling unit is
moored and safely secured at such demobilization site, with all OPERATOR and
OPERATOR furnished equipment offloaded. In the event CONTRACTOR's drilling
unit goes immediately to work for a third party after completion of OPERATOR's
well and being released by OPERATOR, then the obligation by OPERATOR to
CONTRACTOR for compensation stated above shall end when the drilling unit is
deballasted, the last anchor is bolstered, the drilling unit is completely
ready for tow and all OPERATOR and OPERATOR furnished equipment is offloaded.
(2) DAYWORK RATE
OPERATOR shall pay CONTRACTOR at the rate of Seventy-Five
Thousand ($75,000.00) and No/100 Dollars per 24-hour day commencing when the
first anchor is dropped on OPERATOR's location and ending when the last anchor
is bolstered and the drilling unit is completely ready for tow. The Daywork
Rate shall apply at all times during the term of the contract, except for such
times as another rate provided in this contract is expressly applicable.
(3) MOVING RATE
OPERATOR shall pay CONTRACTOR at the rate of Seventy-Five
Thousand ($75,000.00) and No/100 Dollars per 24-hour day during the term of
this contract for moves between well locations commencing when the last anchor
is bolstered at the previous location until the first anchor is dropped at the
next designated location.
10
<PAGE> 11
CONTRACTOR shall provide the supervision and engage the tugs,
at all times during the term of the contract, and OPERATOR shall reimburse
CONTRACTOR for the actual cost of tugs, fuel, and related towing services.
OPERATOR shall be responsible, at its cost, for anchor handling vessels and
related anchor handling services during the term of this contract.
(4) STANDBY RATE (With Crews)
Notwithstanding the provisions of Section XII, Force Majeure,
in the event that drilling operations with the drilling unit are shut down as a
result of weather or sea conditions (including but not limited to eddy
currents), or waiting on OPERATOR or OPERATOR furnished equipment and/or
services, OPERATOR shall make payments at the Standby Rate of Seventy-Five
Thousand ($75,000.00) and No/100 Dollars per 24-hour day.
(5) STANDBY RATE (On Location Without Crews)
Notwithstanding the provisions of Section XII, Force Majeure,
in the event that drilling operations with the drilling unit are shut down and
the drilling unit is evacuated as a result of weather or sea conditions
(including eddy currents), OPERATOR shall make payments at the full Standby
Rate of Seventy-Five Thousand ($75,000.00) and No/100 Dollars per 24-hour day,
for the first fifteen (15) days. Should the suspension continue for a period
of time more than fifteen (15) consecutive days, the Standby Rate would be
reduced to ninety-five (95%) percent, for the next fifteen (15) day standby
period, and eighty (80%) percent, less savings realized through mutually agreed
crew reductions, thereafter.
11
<PAGE> 12
(6) REPAIR RATE
(a) Equipment Repair Rate (SURFACE) - In the event
operations on any well are shut down by reason of replacement, breakage of or
failure of CONTRACTOR's drilling unit or mechanical equipment above the surface
of the water, (as distinguished from routine inspection, lubrication, change of
pump liners, repacking swivel, slipping and cutting of drill line, servicing
top drive, etc.), CONTRACTOR shall be paid at the rate prevailing for the
particular operation in which the drilling unit is engaged at the time. The
cumulative time consumed in replacing or repairing equipment shall be limited
to a maximum of twenty-four (24) hours in any calendar month. After
twenty-four (24) hours, the Repair Rate shall be reduced to Zero (0) and No/100
Dollars per 24-hour day until the drilling unit is ready for work.
(b) Equipment Repair Rate (SUBSURFACE) - If it becomes
necessary to shut down the drilling unit for subsurface repairs (defined as
anything normally in use below the surface of the water, including those
portions of the riser above the surface of the water, the telescoping joint,
the diverter system, the guideline and riser tensioners and the mooring
equipment), CONTRACTOR will be paid at the rate prevailing for the particular
operation in which the drilling unit is engaged at the time for the first
forty-eight (48) hours per two (2) consecutive calendar month period. Should
the suspension continue for a period of more than forty-eight (48) hours per
two (2) consecutive calendar month period,
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CONTRACTOR will be paid eighty percent (80%) of such rate for the next
forty-eight (48) hours, and ZERO rate thereafter.
(c) Regulatory Inspection - It is recognized that during
the three (3) year term of this contract, it may become necessary to
temporarily suspend operations to perform necessary regulatory inspections to
the drilling unit. In the event of such suspension, OPERATOR shall pay
CONTRACTOR at the Operating Rate for a maximum of forty-eight (48) hours per
calendar year to accomplish such inspections. Excess hours are payable at zero
rate. This inspection time is not cumulative from one year to the next.
(d) Notwithstanding the provisions of a. and b. above,
and in recognition of the scope and magnitude of the contemplated upgrade, any
equipment repair time which occurs during the first forty-five (45) days of the
primary term of this contract shall be payable at Zero rate.
(7) FORCE MAJEURE RATE
In the event of an occurrence of Force Majeure, as defined in
Section XII hereof, the then prevailing daywork rate shall apply regardless,
until such time as the circumstances causing such occurrence are over come and
operations resume. Such time shall apply towards the primary term hereunder
and OPERATOR may, at its option, extend the primary term for the number of days
under Force Majeure at a daywork rate equivalent to CONTRACTOR's then
prevailing operating costs plus Ten Thousand ($10,000.00) and No/100 Dollars
per day. For the purposes of computing then prevailing operating costs, it is
agreed that operating costs shall be
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established as Twenty Thousand ($20,000.00) and No/100 Dollars per day on the
contract commencement date and shall be subject to revisions as provided in
Item 11 hereunder and as may otherwise be mutually agreed.
In the event the primary contract term is extended pursuant to
Section II hereof, the provisions of this Item 7 shall be revised to reflect
mutually agreed language to apply to such extension.
(8) OPERATOR shall reimburse CONTRACTOR for the actual
cost to CONTRACTOR of all equipment, materials, supplies and services procured
and furnished by CONTRACTOR that are specified herein to be furnished by
OPERATOR or at OPERATOR's expense, including any cost of transporting such
items incurred by CONTRACTOR.
(9) CONTRACTOR shall have a toolpusher on duty and a
drilling crew as specified in Exhibit A, on duty at the location of the well
being drilled hereunder at all times during the periods covered by these
payments provided for daywork rates. The per diem compensation provided
hereinabove contemplates that CONTRACTOR will use reasonable diligence to
assure the employment of complete crews (as per Exhibit "B" attached) during
full twenty-four (24) hour periods, except upon the request or approval of
OPERATOR. It is recognized, however, by OPERATOR and CONTRACTOR that there may
be occasions when CONTRACTOR is unable to maintain a complete crew. When such
occurs, for each man crew is short, CONTRACTOR's per diem rate shall be reduced
by the daily rate of pay plus burden of such man.
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It shall be the responsibility of CONTRACTOR to arrange for
the day to day management, labor, and maintenance of the galley, dining room,
and living quarters for employees, subcontractors, and third parties of
CONTRACTOR and OPERATOR. Employees, subcontractors, and third parties of
CONTRACTOR and three (3) employees, subcontractors or invitees of OPERATOR
shall be at CONTRACTOR's expense. OPERATOR's additional personnel,
subcontractors, and third parties shall be for OPERATOR's account, and
CONTRACTOR will be reimbursed by OPERATOR for such personnel.
(10) On or before the end of each calendar month,
CONTRACTOR shall invoice OPERATOR for per diem compensation due CONTRACTOR
under Paragraphs (1), (2), (3), (4), (5), (6), and (7) above, and for any
amounts due to be reimbursed CONTRACTOR under Paragraph (8) and (9) above,
supporting the latter by invoices of the suppliers, all for the preceding
calendar month, and OPERATOR shall pay CONTRACTOR the total amount due under
such invoices within twenty-five (25) days from the receipt thereof; provided
that in the event any liens or claims for labor and material have not been
satisfied and discharged by CONTRACTOR at the time OPERATOR receives any of
CONTRACTOR's invoices hereinabove referred to, OPERATOR may withhold payment to
CONTRACTOR of any compensation or reimbursement payable hereunder until such
liens or claims have been satisfied and discharged by CONTRACTOR; or OPERATOR
itself may satisfy and discharge such liens or claims and deduct the amount
thereof from any sums payable to CONTRACTOR. Any undisputed invoices not paid
within the time frame
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noted above, shall bear interest at 1% per month or the maximum allowed by law,
whichever is less.
(11) The rates and payments herein set forth due to
CONTRACTOR from OPERATOR shall be revised to reflect the change in costs if the
costs of any of the items hereafter listed shall vary equal to or greater than
five (5%) percent from the costs thereof not earlier than one (1) year from the
commencement of this contract and not more frequent than one (1) year after the
date of any revision pursuant to this Section V.
a. Labor costs, including all benefits, of CONTRACTOR's
personnel listed in Exhibit "B";
b. CONTRACTOR's cost of insurance premiums;
c. CONTRACTOR's cost of catering;
d. CONTRACTOR's cost of spare parts and supplies vary
and that the parties shall use the United States
Department of Labor Producer Price Index Commodity
Code No. 1191.02 - Oil Field and Gas Field Drilling
Machinery - to determine what extent a price variance
has occurred in said spare parts and supplies.
Base figures from which such revisions (either upward or
downward) will be determined shall be provided prior to the
commencement date of this contract.
SECTION VI
INSURANCE
CONTRACTOR shall obtain and maintain the following insurance
in connection with CONTRACTOR's operations hereunder;
(a) Workmen's Compensation insurance and employer's liability
insurance;
(b) Comprehensive General Liability insurance, including, without
limitation, public liability and property damage coverage,
premises coverage, and contractual liability coverage, water
craft exclusions must be deleted;
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(c) Standard form (SP23 or equivalent) Protection and Indemnity
insurance, "as owner of" clause deleted;
(d) Comprehensive Automobile Liability insurance, including,
without limitation, all owned, hired and non- owned vehicles;
(e) Any other insurance required by the laws of any location where
CONTRACTOR is performing work under this contract.
The policies of insurance obtained and maintained by
CONTRACTOR shall include specific endorsements of the insurer so that such
policies cover and include in addition to any other coverage, any liability and
responsibility under:
1. The Workmen's Compensation Laws of the Sate of Texas;
2. The Act of Congress of March 4, 1927, 44 stat. 1424
et seq., 33 U.S.C.A., Sections 901 et seq. (Federal Longshoremen's and Harbor
Workers' Compensation Act);
3. Section 20 of the Act of Congress of March 4, 1915,
38 stat. 1185, as amended by Section 33 of the Act of Congress of June 5, 1920,
41 stat. 1007, 46 U.S.C.A. Section 688 (the Jones Act);
4. The Act of Congress of March 30, 1920, 41 stat. 537
et seq. 46 U.S.C.A. Sections 761 et seq. (Death on the High Seas Act);
5. Voluntary compensation for maritime employment under
admiralty jurisdictions;
6. The general maritime law;
7. The general common law.
The policies of insurance secured by the CONTRACTOR under
items (a), (b), (c) and (e) of this section shall include specific endorsements
of the insurer extending the territorial limits of the insurance afforded
thereby so as to include operations conducted in the Gulf of Mexico.
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CONTRACTOR shall at all times remain responsible for, and
shall sustain any loss of CONTRACTOR's drilling unit and CONTRACTOR's equipment
as provided in Sections VIII and IX hereof (and except as provided in Section
VIII with respect to certain downhole, subsea, and mooring equipment losses).
If CONTRACTOR elects to obtain insurance covering loss of or damage to its
drilling unit and its equipment, then all such insurance policies shall be
endorsed to provide a blanket and unrestricted waiver of its underwriter's or
insurer's rights of subrogation against OPERATOR, and shall be endorsed to name
OPERATOR as an additional assured.
CONTRACTOR agrees that any insurance policies it is required
to obtain under this contract, or any insurance it otherwise elects to obtain,
except Workmen's Compensation insurance, shall be endorsed to provide a blanket
and unrestricted waiver of the underwriter's or insurer's rights of subrogation
against OPERATOR, and shall be endorsed to name OPERATOR as an additional
assured, but only to the extent of liabilities CONTRACTOR assumes under this
contract.
CONTRACTOR agrees that its Workmen's Compensation insurance
policies shall be endorsed to designate OPERATOR as an alternate and statutory
employer, and shall be endorsed to provide a blanket and unrestricted waiver of
its underwriter's or insurer's rights of subrogation, but only to the extent of
liabilities CONTRACTOR assumes under this contract.
All policies of insurance CONTRACTOR is required to obtain
pursuant to this contract shall be secured from insurance companies acceptable
to OPERATOR
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and in such limits or amounts as OPERATOR may consider adequate. However, in
no event is CONTRACTOR's liability or responsibility, under this contract or
otherwise, to be construed to be in any way limited to any amounts or policy
limits of insurance obtained by CONTRACTOR, whether or not the amounts or
policy limits of any such insurance or the types or categories of insurance
have been approved by OPERATOR.
All insurance policies obtained and maintained by CONTRACTOR
shall be endorsed to provide OPERATOR with (30) days written notice of
cancellation.
CONTRACTOR shall furnish, at OPERATOR's request, certificates
evidencing all insurance policies required to be obtained and maintained by
CONTRACTOR pursuant to this contract.
SECTION VII
COMPLIANCE WITH LAWS AND REGULATIONS
In conducting the operations contemplated by this contract,
CONTRACTOR shall abide by and comply with all applicable laws and regulations
of (i) the United States of America, its agencies, commissions, and other
regulatory bodies; (ii) state governments, their agencies, commissions, boards,
and other regulatory bodies; (iii) county, parish, municipal, or local
governmental authorities and their regulatory bodies; and (iv) any other
governmental body having jurisdiction over the activity performed hereunder.
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It is recognized that certain laws and regulations applying to
the type of operations to be conducted under this contract provide for the
imposition of liability and/or civil penalties on the OPERATOR, if operations
are not conducted in compliance with the provisions of those laws and
regulations without regard to the fact that all or part of the operations are
to be conducted by a party under contract to the OPERATOR. Further, it is
recognized that under these certain laws and regulations the OPERATOR may incur
liability or may be subjected to the imposition of civil penalties by virtue of
CONTRACTOR, while operating on behalf of OPERATOR, failing to comply, either on
behalf of itself or on behalf of OPERATOR, with certain laws or regulations
which govern the actions of CONTRACTOR or OPERATOR, or both.
In the event that OPERATOR is assessed a civil penalty due to
the failure of CONTRACTOR to adhere to a law(s) or regulation(s) governing the
activity being conducted, CONTRACTOR shall hold OPERATOR harmless and indemnify
OPERATOR for the amount of the civil penalty assessed.
SECTION VIII
LOSS OF PROPERTY, EQUIPMENT, MATERIALS;
LOSS OF HOLE; RESERVOIR DAMAGE; LOSS OF WELL CONTROL
A. Contractor's Equipment
CONTRACTOR shall assume liability at all times for damage to
or destruction of all CONTRACTOR or CONTRACTOR furnished equipment, including
but not limited to loss or damage to CONTRACTOR's drilling unit "Ocean Quest,"
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all drilling tools, machinery and appliances for use above the surface of the
water, regardless of when or how such damage or destruction occurs and OPERATOR
shall be under no liability to reimburse CONTRACTOR for any such loss except
damage or destruction under the provisions of B. Below.
B. Contractor's Subsurface Equipment
OPERATOR shall assume liability at all times for damage to or
destruction of CONTRACTOR or CONTRACTOR furnished in-hole and subsurface
equipment, while in the hole or in use below the surface of the water,
including but not limited to drill pipe, drill collars, tool joints, subsea
equipment (any equipment below the diverter housing including but not limited
to the slip joint, marine riser, pod hoses, BOP stack, connectors, etc.) and
mooring equipment (including but not limited to anchor chain, mooring wire,
connectors, anchors, etc.) unless such damage or destruction is caused by the
sole negligence of CONTRACTOR or its subcontractors. In the event OPERATOR is
liable hereunder, OPERATOR shall reimburse CONTRACTOR for repair costs for any
such damage or ninety (90%) percent of current replacement costs FOB the
drilling unit for drill pipe and ninety-five (95%) percent of current
replacement cost FOB the drilling unit for any other in-hole and subsurface
equipment for such destruction to the extent not compensated by CONTRACTOR's
insurance.
C. Operator's Equipment
OPERATOR shall assume liability at all times for damage to or
destruction of OPERATOR or OPERATOR furnished property, equipment, and
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materials regardless of when or how such damage or destruction occurs and
CONTRACTOR shall be under no liability to reimburse OPERATOR for any such
damage or destruction.
D. Loss of Hole
In the event the hole being drilled is damaged or lost,
OPERATOR shall be solely responsible for such damage or loss of hole, including
any OPERATOR or OPERATOR furnished property, equipment or materials therein,
and CONTRACTOR shall be under no liability to reimburse OPERATOR for any such
damage or loss. Notwithstanding the above, in the event such damage or loss
results from the sole fault or negligence of CONTRACTOR, CONTRACTOR shall, as
its exclusive liability, redrill the hole so damaged or lost at a rate
equivalent to eighty-five (85%) percent of the then prevailing Daywork Rate.
E. Reservoir Damage
OPERATOR agrees to defend, indemnify, release, and hold
CONTRACTOR harmless from any and all claims, demands, or liabilities arising
from subsurface damage to the reservoir or formation, regardless of cause or
the negligence of CONTRACTOR.
F. Loss of Well Control
Except as provided in Sections VIII and IX hereof, OPERATOR
shall assume the entire risk of, and be solely responsible for, and agrees to
defend, indemnify, release, and hold CONTRACTOR harmless from all costs and
expenses, by or in favor of anyone other than CONTRACTOR or a successor,
insurer or
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subrogee of CONTRACTOR regardless of cause or the negligence of CONTRACTOR,
resulting from blowout, well diversion, cratering, seepage, or other
uncontrolled flow of oil, gas or water, including the expense of controlling
such occurrence, except that CONTRACTOR shall be liable for up to Two Hundred
Fifty Thousand ($250,000.00) and No/100 Dollars of any such costs or expense
caused by CONTRACTOR's negligence. OPERATOR shall defend, indemnify, release,
and hold CONTRACTOR harmless from and against all such claims, demands or
causes of action in excess of such sum.
SECTION IX
LIABILITY FOR EMPLOYEES AND THIRD PARTIES
A. CONTRACTOR shall be responsible for and shall defend,
indemnify, release, and hold OPERATOR harmless from and against any and all
claims, demands or actions for injury, illness, disease, death, loss of
society, maintenance, cure, and wages to or on behalf of CONTRACTOR's
employees, agents or invitees or the employees of its subcontractors, arising
in connection with this contract without limit and without regard to cause or
causes thereof or the negligence of any party including the negligence, active
or passive, primary or secondary, of OPERATOR or the unseaworthiness or
defective condition of equipment or vessels furnished by OPERATOR hereunder.
OPERATOR shall be responsible for and shall defend, indemnify, release, and
hold CONTRACTOR harmless from and against any and all claims, demands or
actions for injury, illness, disease, death, loss of society, maintenance,
cure, and wages to or on behalf of OPERATOR's employees, agent or
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invitees or the employees of its subcontractors, arising in connection with
this contract without limit and without regard to the cause or causes thereof
or the negligence of any party including the negligence, active or passive,
primary or secondary, of CONTRACTOR or the unseaworthiness or defective
condition of equipment or vessels furnished by CONTRACTOR hereunder.
B. Except as otherwise expressly limited herein, it is
the intent of the parties hereto that all release and indemnity obligations
and/or liabilities assumed by such parties under the terms of this Contract
means that the indemnifying party or the party assuming liability shall
release, indemnify, hold harmless, and defend (including payment of reasonable
attorney's fees and costs of litigation) the indemnified party (or the other
party to this Contract in the case of an assumption of liability) from and
against any and all claims, losses, demands, penalties, causes of action,
damages, judgments, and awards of any kind or character, without limit and
without regard to the cause or causes thereof, including but not limited to
pre-existing conditions, the unseaworthiness of any vessel or vessels
(including the drilling unit), strict liability, breach of contract, or the
negligence of any party or parties, whether such negligence be sole, joint or
concurrent, active or passive.
For purposes of receipt of the benefit of indemnification
hereunder:
OPERATOR shall include Chevron U.S.A. Inc., its parent,
subsidiary and affiliated companies, its co- venturers and each of their
respective directors, officers, employees, servants and agents.
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CONTRACTOR shall include Diamond Offshore Company, its parent,
subsidiary and affiliated companies, and each of their respective directors,
officers, employees, servants and agents.
SECTION X
PROSECUTION OF WORK
Time is of the essence of this agreement. Notwithstanding the
provisions of Section II, Early Termination, Item 2), should CONTRACTOR, in
OPERATOR's opinion, fail to conduct its operations hereunder in a diligent,
skillful and workmanlike manner and in all respects in strict compliance with
the provisions hereof, and if CONTRACTOR fails to commence good faith efforts
to remedy such failure within a period of seven (7) days after written notice
thereof from OPERATOR to CONTRACTOR, OPERATOR shall have the right, at its sole
risk, to take possession of the well and all machinery, appliances, tools,
equipment, material, and supplies of CONTRACTOR and to use same for the purpose
of continuing the drilling and completion or abandonment of said well at the
applicable day rates hereunder, less costs incurred by OPERATOR, which would
otherwise have been borne by CONTRACTOR. CONTRACTOR's assumption of liability
and indemnity obligations in favor of OPERATOR, including CONTRACTOR's
obligation to provide insurance coverage hereunder, shall not apply under such
circumstances. Should OPERATOR so elect thus to take possession, OPERATOR
shall pay CONTRACTOR all sums due CONTRACTOR as of the date upon which
possession is taken by OPERATOR. In the event OPERATOR shall use any of
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CONTRACTOR's equipment and material, as aforesaid, OPERATOR shall return
CONTRACTOR's equipment in as good a condition as received, except that OPERATOR
shall not be liable to CONTRACTOR for ordinary wear and tear or action of the
elements on such equipment.
SECTION XI
FIRE PRECAUTIONS
If oil or gas is encountered in sufficient quantities to
create a fire hazard or endanger the well, derrick, or equipment, CONTRACTOR at
actual field cost shall adopt such precautions as are desirable or proper to
prevent the well catching fire. In the event said well shall blow out, catch
fire or in any manner get out of control, CONTRACTOR shall do everything that a
reasonably prudent drilling contract would do under the same or similar
circumstances to bring the well under control or put out the fire. CONTRACTOR
shall be compensated at the prevailing daywork rate while engaged in bringing
well under control. No smoking or open flames or the carrying of matches or
lighters shall be permitted on the exterior of the barge or rig. Smoking may
be permitted in authorized areas in the crew quarters.
SECTION XII
FORCE MAJEURE
Neither party hereto shall be liable, except that shall
CONTRACTOR be entitled to the per diem compensation (provided in Section V,
Item 7), for lost time or delay caused or occasioned by strikes, lockouts,
action of governmental authorities, or other causes beyond control of the
parties hereto, whether similar to
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the matters herein specifically enumerated or not, and any such delay shall not
be deemed a breach of, or a failure to perform this agreement or any part
hereof.
SECTION XIII
RECORDS, INSPECTION OF WORK
OPERATOR, its authorized employees and representatives, may at
all times inspect all work performed hereunder and witness and check all
measurements and tests made in connection with said work. CONTRACTOR shall
keep an authentic and accurate history and log of said well, with casing
records, which shall be open at all reasonable times to inspection by OPERATOR,
its authorized employees and representatives. CONTRACTOR shall furnish
OPERATOR's designated representatives with a daily written report, on forms
prescribed by OPERATOR, showing depth drilled, formations penetrated or
encountered, depth cored and footage of cores recovered during the preceding
twenty-four (24) hours, and any information relative to said well requested by
OPERATOR. CONTRACTOR shall lay out and save, for examination by OPERATOR,
samples of cuttings in containers furnished by OPERATOR whenever OPERATOR so
requests. CONTRACTOR shall not, without OPERATOR's consent, allow any third
person access to said well, or give out to any third person information in
connection therewith, or give out to any third person, or permit any third
person to examine any sample or core.
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SECTION XIV
RIGHT TO AUDIT
(1) CONTRACTOR shall maintain true and correct records in
connection with the work and all transactions related thereto and shall retain
all such records for at least 24 months after expiration of contract.
(2) No director, employee or agent of CONTRACTOR shall give
or receive any commission, fee, rebate, gift or entertainment of significant
cost or value in connection with the work, or enter into any business
arrangement with any director, employee or agent of OPERATOR or any affiliate
other than as a representative of OPERATOR or its affiliate, without prior
written notification thereof to OPERATOR, CONTRACTOR shall promptly notify
OPERATOR of any violation of this paragraph and any consideration received as a
result of such violation shall be paid over or credit to OPERATOR.
Additionally, if any violation of this paragraph occurring prior to the date of
the Agreement resulted directly or indirectly in OPERATOR's consent to enter
into this Agreement with CONTRACTOR, OPERATOR may, at OPERATOR's sole option,
terminate this Agreement at any time and, notwithstanding any other provision
of this Agreement, pay no compensation or reimbursement to CONTRACTOR
whatsoever for any work done after the date of termination. Any
representative(s) authorized by OPERATOR may audit any and all records of
CONTRACTOR's for the sole purpose of determining whether there has been
compliance with this Section 2.
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(3) OPERATOR may from time to time and at any time after the
date of this Agreement until 24 months after acceptance make an audit of all
records of CONTRACTOR in connection with payments made on a cost reimbursement
basis. Such audit may also cover CONTRACTOR's procedures and controls with
respect to such reimbursable costs. Upon completion of this audit, OPERATOR
shall pay CONTRACTOR any compensation due hereunder as shown by the audit. Any
amount by which the total payment by OPERATOR to CONTRACTOR exceeds the amount
due the CONTRACTOR as shown by the audit shall be returned to OPERATOR. If
CONTRACTOR disagrees with the results of the audit by OPERATOR, CONTRACTOR may
have an independent audit conducted, at CONTRACTOR's expense, by a third party
acceptable to OPERATOR and CONTRACTOR and pursuant to auditing instructions
acceptable to OPERATOR and CONTRACTOR. The findings of such audit shall be
binding upon OPERATOR and CONTRACTOR. Items of compensation such as fixed
percentages or fixed lump sums shall not be subject to audit under this Section
3.
(4) CONTRACTOR shall assist OPERATOR in making the above
audits.
(5) The term "Subcontracts" means any person, firm or
corporation, including vendors to whom a part of the work has been
subcontracted or sublet. CONTRACTOR shall require, and shall require all
Subcontractors to require, that:
(a) Subcontractor's records are maintained and
retained in accordance with subsection (1) as it applies to records of
CONTRACTOR;
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(b) The restrictions on commissions, fees, rebates,
gifts and entertainment, and on relations with directors, employees and agents
of OPERATOR which apply to directors, employees and agents of CONTRACTOR under
subsection (2) shall also apply to directors, employees and agents of
Subcontractor;
(c) Subcontractor shall permit any representative(s)
of OPERATOR to audit any and all records of Subcontractor for the purpose of
determining whether there has been compliance with the rules imposed pursuant
to subsection (5)(b). Subcontractor shall also permit any representative(s) of
OPERATOR to audit any and all records of Subcontractor in connection with all
payments for the work received by Subcontractor on a cost-reimbursement basis;
(d) If the audit(s) by OPERATOR pursuant to
subsection (5)(c) discloses that payment or reimbursement is due to OPERATOR,
CONTRACTOR or Subcontractor, such amount shall be promptly paid or reimbursed,
and
(e) Subcontractor shall assist OPERATOR in making
the above audits.
SECTION XVI
COMPLIANCE
I. CERTIFICATION (41 CFR 60-1)
CONTRACTOR hereby certifies that it will fully comply with Executive
Order 11246, as amended by Executive Order 11375, and the rules and
regulations issued thereunder, which are hereby incorporated by
reference as appropriate.
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CONTRACTOR commits itself to such compliance upon execution of this
agreement.
'II. EMPLOYMEE INFORMATION REPORTS (41 CFR 60-1.7)
CONTRACTOR agrees that if the amount of such contract is $50,000 or
more and he employs fifty (50) or more persons he shall:
File with the office of Federal Contract Compliance or agency
designated by it, a complete and accurate report on Standard Form 100
(EEO-1) within thirty (30) days after receiving an award of contract
(unless such a report has been filed in the last 12 months), and
continue to file such reports annually, on or before March 31st.
III. AFFIRMATIVE ACTION PROGRAM (41 CFR 60-1.40)
CONTRACTOR agrees that if the amount of such contract is $50,000 or
more and he employs fifty (50) or more persons he shall:
Develop and maintain a written affirmative action compliance program
for each of its establishments in accordance with the regulations of
the Secretary of Labor promulgated under Executive Order 11246, as
amended.
IV. CERTIFICATION OF NON-SEGREGATED FACILITIES (41 CFR 60-1.8)
CONTRACTOR certifies that it does not and will not maintain or provide
for its employees any segregated facilities at any of its
establishments, and that it does not and will not permit its employees
to perform their services at any location under its control, where
segregated facilities are maintained. CONTRACTOR agrees that a breach
of this certification is a violation of the
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Equal Employment Opportunity Clause in this contract. As used in this
certification, the term "segregated facilities" means any waiting
rooms, work areas, rest rooms, and wash rooms, restaurants and other
eating areas, time clocks, locker rooms and other storage or dressing
areas, parking lots, drinking fountains, recreation or entertainment
areas, transportation, and housing facilities provided for employees
which are segregated by explicit directive or are in fact segregated
on the basis of race, creed, color, or national origin, because of
habit, local custom or otherwise. It further agrees that (except
where it has obtained identical certifications from proposed
subcontractors for specific time periods) it will obtain identical
certifications from proposed subcontractors prior to the award of
subcontracts exceeding $10,000 which are not exempt from the
provisions of Equal Employment Opportunity Clause; that it will retain
such certification in its files; and that it will forward the
following notice to such proposed subcontractors (except where the
proposed subcontractors have submitted identical certifications for
specific time periods): NOTICE TO PROSPECTIVE SUBCONTRACTORS OR
REQUIREMENT FOR CERTIFICATIONS OF NON-SEGREGATED FACILITIES. A
Certification of Non-segregated Facilities, as required by the May 9,
1967 order on Elimination of Segregated Facilities by the Secretary of
Labor (32 Fed. Reg. 7439, May 19, 1967) must be submitted prior to the
award of subcontract exceeding $10,000 which is not exempt from the
provisions of the Equal Employment Opportunity Clause. The
certification
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may be submitted either for each subcontract or for all subcontracts
during a period (i.e., quarterly, semiannually, or annually). (Note:
The penalty for making false statements in offers is prescribed in 18
U.S.C. Section 1001.)
V. EQUAL OPPORTUNITY COMPLIANCE REPORT CERTIFICATION (41 CFR 60-1)
1. Has the undersigned participated in any
contractual agreement which contained the
Equal Opportunity Clause?
( ) Yes ( ) No (If "yes", answer question 3)
2. Was the undersigned required pursuant to the
regulations on Equal Opportunity (41 CFR
60-1) to file a compliance report as a result
of such contractual agreements?
( ) Yes ( ) No (If "yes", answer question 3)
3. Did the undersigned file the compliance
report as required?
( ) Yes ( ) No
Whoever knowingly and willfully makes any false, fictitious or
fraudulent representation may be liable to criminal prosecution under 18 U.S.C.
Section 1001.
VI. EQUAL OPPORTUNITY AFFIRMATIVE ACTION PROGRAM REPRESENTATION (41 CFR
60-1.8 - 60-2)
CONTRACTOR represents that:
1. ( ) He has developed and has on file;
( ) He has not developed and does not have on
file at each establishment, affirmative action
programs as required by the rules and regulations of
the Secretary of Labor (41 CFR 60-1 and 60-2);
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( ) He has not previously had a contract, lease
license, or permit subject to the affirmative action
program requirement of the rules and regulations of
the Secretary of Labor.
VII. AFFIRMATIVE ACTION FOR DISABLED VETERANS AND VETERANS OF THE VIETNAM
ERA (41 CFR 60-250)
The regulations issued under the Vietnam Era Veterans' Readjustment
Assistance Act of 1974 in Title 41, Chapter 60, Part 60-250 of the
code of Federal Regulations are incorporated herein by reference or
orders of the Secretary of Labor issued pursuant to said Vietnam Era
Veterans' Readjustment Assistance Act of 1974.
VIII. AFFIRMATIVE ACTION FOR HANDICAPPED WORKERS
The regulations issued under the Rehabilitation Act of 1973 in Title
41, Chapter 60, Part 60-741 of the Code of Federal Regulations are
incorporated herein by reference unless this Agreement is exempted by
Federal law, rules, regulations or orders of the Secretary of Labor
issued pursuant to said Rehabilitation Act of 1973.
IX. LISTING OF EMPLOYMENT OPENINGS (41 CFR 50-250)
CONTRACTOR agrees to comply with the rules and regulations of the
Department of Labor concerning the listing of employment openings,
including the contract clause set forth in 41 CFR 50-250.4, which
clause is incorporated herein by reference. CONTRACTOR also agrees to
place the foregoing provision in any subcontract directly under this
contract.
X. EMPLOYMENT OF THE HANDICAPPED (20 CFR 741.3)
(This clause applies to all nonexempt contracts and subcontracts which
exceed $2,500 as follows: (1) Part A applies to contracts and
subcontracts which provide for performance in less than 90 days, (2)
Parts A and B apply to contracts and subcontracts which provide for
performance in 90 days or more and the amount of the contract or
subcontract is less than $500,000, and (3) Parts A, B and C apply to
contracts and subcontracts which provide for performance in 90 days or
more and the amount of the contract or subcontract is $500,00 or
more).
PART A
(a) The CONTRACTOR will not discriminate against any employee or
applicant for employment because of physical or mental handicap in regard to
any
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position for which the employee or applicant for employment is qualified. The
CONTRACTOR agrees to take affirmative action to employ, advance in employment
and otherwise treat qualified handicapped individuals without discrimination
based upon their physical or mental handicap in all employment practices such
as the following: employment, upgrading demotion or transfer, recruitment or
recruitment advertising; layoff or termination, rates of pay or other forms of
compensation, and selection for training, including apprenticeship.
(b) The CONTRACTOR agrees that, if a handicapped individual files
a complaint with the CONTRACTOR that he is not complying with the requirements
of the Act, he will (1) investigate the complaint and take appropriate action
consistent with the requirements of 20 CFR 741.29 and (2) maintain on file for
three years, the record regarding the complaint and the actions taken.
(c) The CONTRACTOR agrees that, if a handicapped individual files
a complaint with the Department of labor that he has not complied with the
requirements of the Act, (1) he will cooperate with the Department in its
investigation of the complaint, and (2) he will provide all pertinent
information regarding his employment practices with respect to the handicapped.
(d) The CONTRACTOR agrees to comply with the rules and regulations
of the Secretary of Labor in 20 CFR Ch. VI, Part 741.
(e) In the event of the CONTRACTOR's non-compliance with the
requirements of this clause, the contract may be terminated or suspended in
whole or in part.
(f) This clause shall be included in all subcontracts over $2,500.
PART B
(g) The CONTRACTOR agrees (1) to establish an affirmative action
program, including appropriate procedures consistent with the guidelines and
the rules of the Secretary of Labor, which will provide the affirmative action
regarding the employment and advancement of the handicapped required by P.L.
93-112, (2) to publish the program in his employee's or personnel handbook or
otherwise distribute a copy of all personnel, (3) to review his program on or
before March 31 of each year and to make such changes as may be appropriate,
and (4) to designate one of his principal officials to be responsible for the
establishment and operation of the program.
(h) The CONTRACTOR agrees to permit the examination by appropriate
contracting agency officials or the Assistant Secretary for Employment
Standards or
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his designee, of pertinent books, documents, papers and records concerning his
employment and advancement of the handicapped.
(i) The CONTRACTOR agrees to post in conspicuous places, available
to employees and applicants for employment, notices in a form to be prescribed
by the Assistant Secretary for Employment Standards, provided by the
contracting officer stating CONTRACTOR's obligation under the law to take
affirmative action to employ and advance in employment qualified handicapped
employees and applicants for employment and the rights and remedies available.
(j) The CONTRACTOR will notify each labor union or representative
of workers with which he has a collective bargaining agreement or other
contract understanding, that the CONTRACTOR is bound by the terms of Section
503 of the Rehabilitation Act, and is committed to take affirmative action to
employ and advance in employment physically and mentally handicapped
individuals.
PART C
(k) The CONTRACTOR agrees to submit a copy of his affirmative
action program to the Assistant Secretary for Employment Standards within 90
days after the award to him of a contract or subcontract.
(l) The CONTRACTOR agrees to submit a summary report to the
Assistant Secretary for Employment Standards, by March 31 of each year during
performance of the Contract, and by March 31 of the year following completion
of the contract, in the form prescribed by the Assistant Secretary, covering
employment and complaint experience, accommodations made and all steps taken to
effectuate and carry out the commitments set forth in the affirmative action
program.
XI. MINORITY BUSINESS ENTERPRISES
A. Utilization of Minority Business Enterprises
(4) CFR 1-1.1310-2(a)
(a) It is the policy of the Government that minority
business enterprises shall have the maximum practicable opportunity to
participate in the performance of Government contracts.
(b) The CONTRACTOR agrees to use his best efforts to
carry out this policy in the award of his subcontracts to the fullest extent
consistent with the efficient performance or this contract. As used in this
contract, the term "minority business enterprise" means a business, at least 50
percent of which is owned by minority group members or, in case of publicly
owned businesses, at least 51 percent of the stock of which is owned by
minority group members. For the purposes of this
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definition, minority group members are Afro-American, Spanish-speaking American
persons, American-Orientals, American-Indians, American-Eskimos, and American
Aleuts. Contractors may rely on written representations by subcontractors
regarding their status as minority business enterprises in lieu of an
independent investigation.
B. Minority Business Enterprises Subcontracting Program
(41 CRF 1.1.1310-2(b)
(a) The CONTRACTOR agrees to establish and conduct a
program which will enable minority business enterprises (as defined in the
clause entitled "Utilization of Minority Business Enterprises") to be
considered fairly as subcontractors and suppliers under this contract. In this
connection, the CONTRACTOR shall:
(1) Designate a liaison officer who will
administer the CONTRACTOR's minority business enterprises program.
(2) Provide adequate and timely consideration of
the potentialities of known minority business enterprises in all "make-or-buy"
decisions.
(3) Assure that known minority business
enterprises will have an equitable opportunity to compete for subcontracts,
particularly by arranging solicitations, time for preparation of bids,
quantities, specifications, and delivery schedules so as to facilitate the
participation of minority business enterprises.
(4) Maintain records showing (i) procedures which
have been adopted to comply with the policies set forth in this clause,
including the establishment of a source list of minority business enterprises,
(ii) awards to minority business enterprises on the source list, and (iii)
specific efforts to identify and award contracts to minority business
enterprises.
(5) Include the Utilization of Minority Business
Enterprises clause in subcontracts which offer substantial minority business
enterprises subcontracting opportunities.
(6) Cooperate with the Contracting Officer in any
studies and surveys of the CONTRACTOR's minority business enterprises
procedures and practices that the Contracting Officer may from time to time
conduct.
(7) Submit periodic reports of subcontracting to
known minority business enterprises with respect to the records referred to in
subparagraph (4), above, in such form and manner and at such time (not more
often than quarterly) as the Contracting Officer may prescribe.
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(b) The CONTRACTOR further agrees to insert, in and subcontract
hereunder which may exceed $500,000, provisions which shall conform
substantially to the language of this clause, including this paragraph (b), and
to notify the Contracting Officer of the names of such subcontractors.
XII. CERTIFICATE OF ENVIRONMENTAL COMPLIANCE
CONTRACTOR, to the extent required by law, agrees as follows:
(1) To comply with all the requirements of Section 11.4 of the
Clean Air Act, as amended (42 U.S.C. Sec. 1857, et seq., as
amended by Pub. L. 91-604) and Section 308 of the Federal
Water Pollution Control Act (33 U.S.C. Sec. 1251, et seq., as
amended by Pub. L. 92-500), respectively, relating to
inspection, monitoring, entry, reports and information, as
well as other requirements specified in Section 114 and
Section 308 of the Air Act and the Water Act, respectively,
and all regulations and guidelines issued thereunder.
(2) That no portion of the work required in the performance of its
contracts with or in the filling of purchase orders from
Chevron U.S.A. Inc., will be performed in a facility listed on
the Environmental Protection Agency List of Violating
Facilities.
See Executive Order No. 11738 of September 10, 1973, and 40
CFR Sec. 15.20.
(3) Prompt written notification shall be given by CONTRACTOR to
Chevron U.S.A. Inc., of any communication indicating that any
facility is under consideration to be included on such list.
(4) To use its best efforts to comply with clean air standards and
clean water standards at the facility in which the contract is
being performed.
(5) The criteria and requirements listed in this Certificate of
Environmental Compliance, including the provisions of this
paragraph (5), shall be included in all CONTRACTOR's
subcontracts, and CONTRACTOR will take such action as the
Government may direct as a means of enforcing such provisions.
(6) The terms "Air Act," "Water Act," "clean air standards,"
"clean water standards," "compliance" and "facility" used
herein shall have the meanings ascribed thereto in 41 CFR Sec.
1-1.2302-2(b).
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SECTION XVI
NOTICE
Mr. J. Combes, 935 Gravier Street, New Orleans, Louisiana
70112, or any person designated by him, is hereby designated OPERATOR's
representative to receive all notices herein provided to be given by CONTRACTOR
to OPERATOR (and any such notices may be given verbally or by letter or
telegram to him at said address) and to give all notices herein provided to be
given by OPERATOR to CONTRACTOR until OPERATOR shall designate a different
representative. Any notices to CONTRACTOR hereunder may be given verbally or
in writing to Mr. V. T. Greene at 111 Veterans Blvd., Suite 1030, Metairie,
Louisiana, 70005. Any notices given by either party to the other pursuant to
the provisions of this Section XVI shall be deemed sufficient for all purposes,
and both parties hereby waive any necessity of formal putting in default of
either party by the other.
SECTION XVII
INDEPENDENT CONTRACTOR RELATIONSHIP
CONTRACTOR agrees that all of its operations hereunder are
those of an independent contractor and that it is not and none of its employees
are employees of OPERATOR.
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SECTION XVIII
QUALIFICATIONS OF EMPLOYEES
CONTRACTOR agrees that no person of whose loyalty, integrity,
and character CONTRACTOR is not reasonably assured shall be employed by
CONTRACTOR at the site of the work.
CONTRACTOR certifies that none of its employees who perform
work pursuant to this contract are unauthorized aliens as defined in the
Immigration Reform and Control Act of 1986.
CONTRACTOR agrees to obtain a substantially similar
certification from its contractors performing work related to this contract.
SECTION XIX
POLLUTION
In its operations under this agreement, CONTRACTOR shall take
all reasonable steps to prevent pollution and shall comply with Federal, State
and Local laws and regulations relating to pollution. CONTRACTOR shall notify
OPERATOR immediately with respect to any pollution loss, damage, claim, or
demand (or occurrence which may give rise to same) resulting from operations
hereunder and shall immediately undertake reasonable remedial and protective
measures indicated under the circumstances pending consultation with OPERATOR.
Claims, demands, and liabilities arising from pollution of
lands, beaches, or waters (including destruction of marine life), and
responsibility therefor shall be defended and borne by CONTRACTOR and OPERATOR
as follows:
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1. If such pollution is caused by CONTRACTOR's negligent act or
omission in its operations hereunder, CONTRACTOR shall release, defend,
indemnify and save harmless OPERATOR from, and against, all such claims,
demands, and liabilities up to the sum of U.S. $250,000.00; and provided that
if CONTRACTOR has notified OPERATOR and has undertaken remedial and protective
measures as provided above, OPERATOR shall release, defend, indemnify and save
harmless, CONTRACTOR from and against all such claims, demands, and liabilities
in excess of such sum.
2. If such pollution is due to causes other than CONTRACTOR's
negligent act or omission, OPERATOR shall release, defend, indemnify and save
harmless, CONTRACTOR from and against all such claims, demands and liabilities.
As used in this Section, the phrase "liabilities", includes
expenditures for controlling and removing pollutants; expenditures for cleaning
up any polluted areas; sums paid on account of injury to or death of persons;
and sums paid on account of damage to or destruction of property, public or
private.
SECTION XX
SEVERABILITY
In the event any court should hold any part or parts of this
contract including, without limitation, the insurance and indemnity sections
hereof are unenforceable or void or voidable, then it is the express intent of
the parties that the remaining or otherwise enforceable provisions are to be
deemed nevertheless operative and effective, and the parties agree to be bound
to such provisions.
SECTION XXI
CHOICE OF LAW
This contract shall be governed by and interpreted under the
General Maritime Laws of the United States.
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SECTION XXII
ASSIGNMENT
CONTRACTOR may not transfer, sublet or assign all or any part
of its obligations under this Contract without the written consent of the
OPERATOR, except to an affiliated or subsidiary company.
OPERATOR may, with written notice of proposed assignment and
written consent of CONTRACTOR, sublet or assign its rights and obligations
under this Contract for portions of the term hereof, but in such event OPERATOR
will remain primarily responsible for the duties and obligations, including
payment of any amounts due CONTRACTOR hereunder, so assigned or transferred.
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IN WITNESS WHEREOF, the parties hereto have executed this
agreement.
WITNESSES:
CHEVRON U.S.A. INC., (Operator)
[SIGNATURE]
__________________________________ [SIGNATURE]
________________________________________
Assistant Secretary
[SIGNATURE]
__________________________________
DIAMOND OFFSHORE COMPANY
(Contractor)
[SIGNATURE]
__________________________________
[SIGNATURE]
________________________________________
[SIGNATURE]
______________________________________
Its____________________________________
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