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AMENDING AGREEMENT
DHAROOR VALLEY - PUNTLAND
THIS AMENDING AGREEMENT is dated for reference the 25th day of November, 2009
BETWEEN:
THE GOVERNMENT OF PUNTLAND, as represented by the
Puntland Petroleum and Mineral Agency, Garowe, Puntland
(“State”)
AND:
CANMEX HOLDINGS (BERMUDA) II LTD., a company
incorporated under the laws of Bermuda and having an office at
Canon’s Court, 22 Victoria Street, Hamilton, HM 12, Bermuda
(and a wholly owned subsidiary of AFRICA OIL CORP. a
company incorporated under the laws of the Province of British
Columbia and having an office at Suite 2101, Vancouver, BC,
Canada, V6C 3E8)
(“Canmex”)
AND:
RANGE RESOURCES LTD., a company incorporated under the
laws of Victoria, Australia and having an office at Level 3, 1
Havelock Street, West Perth, WA, 6005, Australia
(“Range”)
WHEREAS:
A.
State, Canmex and Range (the “Parties”) are parties to a Production Sharing
Agreement (the “PSA”) dated January 17, 2007, relating to the exploration and development of
the Dharoor Valley Exploration Area;
B.
The Parties wish to amend certain provisions of the PSA and wish to enter into
this agreement (the “Agreement”) to confirm their agreement in respect of the amendments to
the PSA; and
THEREFORE in consideration of the mutual covenants and agreements in this Agreement, the
Parties hereto agree as follows:
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-21.
DEFINITIONS
Any capitalized terms not otherwise defined in this Agreement shall have the same meanings
ascribed to those terms in the PSA.
2.
INTERPRETATION
2.1
Governing Law
This Agreement, and any modification, will be governed and interpreted according to the Laws of
the Province of British Columbia and the federal laws of Canada applicable therein except the laws
that are inconsistent with this Agreement.
2.2
Severability
If any one or more of the provisions contained in this Agreement is found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby.
2.3
Parties In Interest
This Agreement enures to the benefit of and is binding on the Parties hereto and their respective
successors and permitted assigns.
3.
AMENDMENTS TO PSA
3.1
Amendments
(a)
The fourth Preamble clause is deleted in its entirety and replaced with the following:
“WHEREAS, this Agreement replaces and supersedes the Puntland Contract of Work which
expired, in accordance with its terms, effective August 31, 2009; and”
(b)
Section 1.20 is deleted in its entirety and replaced with the following:
“1.20 "Effective Date" means January 17, 2007.”
(c)
Section 1.53 is deleted in its entirety and replaced with the following:
“1.53 “Puntland Contract of Work” means the Contract of Work entered into between the
STATE, Range Resources and Consort Private Limited dated April 2006 and which expired, in
accordance with its terms, effective August 31, 2009.”
(d)
The second paragraph of section 3.1 is amended by deleting the reference to “and the
Puntland Contract of Work”;
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-3(e)
(f)
Section 3.3.1 is amended by:
(i)
deleting the initial reference to “[REDACTED - TERMS CONSTITUTE
SENSITIVE BUSINESS INFORMATION]” and replacing it with “[REDACTED
- TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION]”; and
(ii)
deleting the subsequent reference to “[REDACTED - TERMS CONSTITUTE
SENSITIVE BUSINESS INFORMATION]” and replacing it with “[REDACTED
- TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION]”;
Section 3.3.2 is amended by deleting the reference to “[law]” and replacing it with “law”;
(g)
Section 4.5 is amended by deleting the reference to “Statement of Exploration activity”
and replacing it with “Statement of Expenditures”;
(h)
Section 5.1 is deleted in its entirety and replaced with the following:
“5.1
Mandatory Relinquishments
5.1.1 On or before [REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS
INFORMATION], the CONTRACTOR shall relinquish [REDACTED - TERMS CONSTITUTE
SENSITIVE BUSINESS INFORMATION] of the original Agreement Area.
5.1.2 On or before [REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS
INFORMATION], the CONTRACTOR shall relinquish [REDACTED - TERMS CONSTITUTE
SENSITIVE BUSINESS INFORMATION] of the original Agreement Area.
5.1.3 If the CONTRACTOR does not elect to enter into the Second Exploration Period or any
extension set forth in Article 3, then the CONTRACTOR shall relinquish [REDACTED TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION] not then converted to a
Development Area or (Areas) or for which approval for conversion to a Development Area is not
then pending.
5.1.4 At the end of the Second Exploration Period, including any extension thereof, the
CONTRACTOR shall relinquish [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION], not then converted to a Development Area or Development
Areas pursuant to this Agreement or for which approval for conversion to a Development Area is
not then pending.”
(i)
Section 5.3 is deleted in its entirety and replaced with the following:
“5.3.1 Other than in respect of the relinquishment provided for under section 5.1.1, the size and
shape of the relinquishments made under this Article shall be determined by mutual agreement.
5.3.2 Unless otherwise agreed, all areas to be relinquished shall, at a minimum, be contiguous
and reasonably accessible for, and capable of, further Exploration and Development by one or
more third parties. Any part of the Agreement Area shall be considered subject to
relinquishment, including any such part corresponding to a geological feature in which
Petroleum may be present or has been determined to be present after drilling a well, provided
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-4that notwithstanding the foregoing the CONTRACTOR shall not be obliged to relinquish any
part of the Agreement Area corresponding to a Development Area(s) or to the surface area of any
geological feature in which a Commercial Oil Well has been established, unless the time
provided for establishing a Commercial Discovery has expired pursuant to Article 3 of this
Agreement.”
(j)
Article 8 is amended by deleting the title “TITLE TO ASSETS” and replacing it with the
title “TITLE TO, AND ABANDONMENT AND DISPOSAL OF, ASSETS”;
(k)
Section 8.3 is amended by deleting the reference to “Petroleum Industry” and replacing it
with “international petroleum industry”;
(l)
Article 8 is further amended by adding the following sections immediately following
section 8.3:
“8.4 The CONTRACTOR shall not, except where there is danger to the safety and health of
human life or a risk of significant damage to the environment or a risk of significant economic
loss, abandon a well or withdraw casing, tubing or down-hole pumps or other down-hole
equipment therefrom or remove surface equipment used or useful in production therefrom, if
any, prior to giving the DEPARTMENT (a) [REDACTED - TERMS CONSTITUTE
SENSITIVE BUSINESS INFORMATION] written notice of such action with respect to a well
that is or has been producing within a Development Area and (b) [REDACTED - TERMS
CONSTITUTE SENSITIVE BUSINESS INFORMATION] written notice of such action with
respect to any other well.
8.5
The CONTRACTOR shall securely plug and clearly mark any well that it abandons in
accordance with generally accepted international petroleum industry practice to prevent
pollution, or damage to underground strata through the entry of water or otherwise.
8.6
The CONTRACTOR shall state in its notice of abandonment of a well whether the well
is capable of providing a fresh water supply and if required by the DEPARTMENT, the
CONTRACTOR shall complete such well and render it operational for producing water at its
own cost and expense.
8.7
Where the CONTRACTOR intends to permanently abandon an exploratory well in which
Petroleum of potentially commercial significance has not been found, the DEPARTMENT may
request the CONTRACTOR to deepen, sidetrack or test that well subject to the following
provisions:
Any such additional Petroleum Operations shall be at the sole cost, risk and
expense of the STATE and the STATE shall advance to the CONTRACTOR the
funds necessary to conduct the drilling operations;
The CONTRACTOR shall not be obligated to undertake such additional work if it
will materially interfere with the conduct of the CONTRACTOR’s Petroleum
Operations or if it is not technically or operationally feasible; and
The STATE shall keep the CONTRACTOR informed about such additional work
and in the event that the operations undertaken under this Article result in a
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-5discovery which the CONTRACTOR elects to evaluate and/or develop as a
Commercial Discovery, the CONTRACTOR shall reimburse the STATE
[REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS
INFORMATION] of the costs and expenses incurred by the STATE for the
conduct of the operations and such sum shall be paid within [REDACTED TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION] of such
election made by the CONTRACTOR. If the CONTRACTOR does not make
such election, the STATE may require the CONTRACTOR to surrender all its
rights over such discovery.
8.8
The CONTRACTOR shall, within [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] after termination or expiration of the Agreement or the surrender
of part of the Agreement Area, deliver to the DEPARTMENT in good repair and working order,
each well within the area covered by the termination, expiration, or surrender, then producing or
capable of producing Petroleum, together with all casing, tubing and surface or sub-surface
equipment used or useful in the conduct of producing operations, unless the DEPARTMENT
requires the CONTRACTOR to plug the well.
8.9
In the case of termination or expiration of this Agreement or the surrender of an area
within the Agreement Area pursuant to the terms hereof, if the area, or part thereof, subject to the
termination, expiry or surrender has been determined to be capable of production or is currently
producing or has previously produced Petroleum commercially, the CONTRACTOR shall
transfer at no cost to the STATE the plants, appliances and installations in the area subject to the
termination, expiry or surrender. The DEPARTMENT may decline the transfer and require the
CONTRACTOR to remove, in accordance with generally accepted international petroleum
practice, all or some of the plants, appliances and installation at no cost to the STATE.”
(m)
Section 9.1.1(a) is deleted in its entirety and replaced with the following:
“9.1.1(a)
The CONTRACTOR (for and on its own behalf and on behalf of Range
Resources) shall pay a fixed percentage tax ("fixed tax") equivalent to [REDACTED - TERMS
CONSTITUTE SENSITIVE BUSINESS INFORMATION] percent of all of its actual
Exploration Expenditures incurred and paid in conducting its Exploration Operations. This fixed
tax shall be paid quarterly, within [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] after the end of each Calendar Quarter in which the relevant
Exploration Expenditures are incurred and paid. Each quarterly payment will be adjusted for
over payments or shortfalls, if any, that were made in respect of the payment for the immediately
prior period. Such payments shall be made to the DEPARTMENT and shall be accompanied by
statements authenticated by the CONTRACTOR setting out the relevant Exploration
Expenditures in reasonable detail. Within [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] after its receipt of each payment, the DEPARTMENT shall
furnish to the CONTRACTOR an official receipt evidencing its receipt of the payment of such
tax.
Expatriate employees of the CONTRACTOR, its contractors and its subcontractors working in
Exploration Operations shall be exempt from all personal income taxes and similar taxes in
PUNTLAND during Exploration Operations on all income or reimbursements paid by the
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-6CONTRACTOR, its contractors and subcontractors on all income from any sources outside or
inside of PUNTLAND.”
(n)
The following section is added as a new section 9.2.4(i), and the subsequent sections are
renumbered accordingly:
“9.2.4(i)
[REDACTED
TERMS
CONSTITUTE
SENSITIVE
BUSINESS
INFORMATION] United States Dollars [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] within [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] after the date of the CONTRACTOR providing written notice of
a Commercial Discovery of Oil to the DEPARTMENT in accordance with section 3.1.”
(o)
The third and fourth paragraphs of Article 10 are deleted in their entirety and replaced with
the following:
“All matters and notices shall be deemed to be validly served on the DEPARTMENT which are
delivered to the DEPARTMENT’s office in Basasso, or to such other government office or
agency that CONTRACTOR is notified of from time to time, during regular office hours or
which are sent to it, or to the other government office or agency that the CONTRACTOR is
notified of from time to time, by registered mail, fax, or telex.
Any changes in the address of the CONTRACTOR’S office shall be notified to the
DEPARTMENT at least ten (10) Days prior to the changing date and any change in the
individual empowered as General Manager shall be notified to the DEPARTMENT within ten
(10) Days of such changing date. Any changes in the address of the DEPARTMENT’s office or
to the address of the other government office or agency that the CONTRACTOR is notified of
from time to time, shall be notified to the CONTRACTOR at least ten (10) Days prior to the
changing date.”
(p)
Section 11.6 is deleted in its entirety and replaced with the following:
“11.6 The CONTRACTOR shall conduct Petroleum Operations in a safe and proper manner in
accordance with generally accepted methods in the international petroleum industry and shall not
cause damage to the general environment, including, inter alia, the surface, air, lakes, rivers,
marine life, animal life, plant life, crops, other natural resources and property, and shall forthwith
repair any damage caused to the extent reparable, and shall pay reasonable compensation for all
damage which is beyond repairs.
(q)
Article 11 is further amended by adding the following sections immediately following
section 11.6:
11.7 CONTRACTOR shall comply with the applicable laws, regulations, and directives
relating to the environment, to avoid the damages the Petroleum Operations may cause on the
human and natural environment. In the absence of applicable laws, the Contractor shall apply
environmental standards that are generally accepted in the international petroleum industry.
11.8 Without prejudice to the provisions of Article 11.6, the CONTRACTOR shall in
conducting its Petroleum Operations, pay strict attention to the prevention of pollution, the
{2814-004/01129157.DOC.}
-7treatment of wastes, the safeguarding of the natural environment, and the progressive
reclamation and rehabilitation of lands disturbed by the CONTRACTOR’S Petroleum
Operations.
11.9 The CONTRACTOR shall establish, and shall implement upon approval by the
DEPARTMENT, an active, continuing, and self monitoring Environmental Management
Program. CONTRACTOR shall ensure that all employees, subcontractors and the indigenous
community in the Agreement Area are fully aware of, and shall endeavor to ensure that they
assist in the implementation of, the CONTRACTOR’S environmental management program.
11.10 The CONTRACTOR shall bear all costs for clean-up, rehabilitation, and reclamation of
any and all environmental damage caused by the CONTRACTOR’S Petroleum Operations.
11.11 The CONTRACTOR shall submit to the DEPARTMENT bi-annual reports on the
implementation of the CONTRACTOR’S environmental management program.
11.12 In the event of any dispute arising relating to peoples occupying land in the Agreement
Area that is required for the CONTRACTOR’S Petroleum Operations, the CONTRACTOR shall
attempt to negotiate a compensation settlement with such occupants. If the CONTRACTOR is
not able to negotiate such a settlement on terms acceptable to the parties, the CONTRACTOR
and the DEPARTMENT shall meet to discuss and negotiate a resolution of the dispute on terms
acceptable to the CONTRACTOR and the DEPARTMENT (which shall be acting on behalf of
the peoples occupying the land).
11.13 In the event of a blowout, accident or other emergency, the CONTRACTOR shall take
immediate steps to bring the emergency situation under control and protect against loss of life
and property and prevent harm to natural resources and the general environment.
11.14 If the DEPARTMENT reasonably determines that certain of the CONTRACTOR’S
Petroleum Operations are threatening to endanger persons or property, or harm the natural
environment, or cause pollution, or harm animals, or cause irreparable damage to plant life, the
Minister may order the CONTRACTOR to discontinue Petroleum Operations at risk until such
time as the CONTRACTOR has taken remedial measures to eliminate the threat.
11.15 At least [REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS
INFORMATION] prior to the commencement of any seismic or drilling activity, the
CONTRACTOR will post a bond in cash with the DEPARTMENT, in a manner standard for
operations of this nature, in the amount of [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] in respect of seismic activity and [REDACTED - TERMS
CONSTITUTE SENSITIVE BUSINESS INFORMATION] in respect of drilling activity, which
bond will be repaid to the CONTRACTOR on completion of the reclamation, to the satisfaction
of the DEPARTMENT and the CONTRACTOR, acting reasonably, of the lands directly
impacted by the seismic or drilling activity. If such reclamation has not been completed to the
satisfaction of the DEPARTMENT within [REDACTED - TERMS CONSTITUTE SENSITIVE
BUSINESS INFORMATION] of the completion of the relevant activity, then the
DEPARTMENT may utilise the bond to complete the reclamation to a satisfactory standard.”
{2814-004/01129157.DOC.}
-8(r)
Section 18.1 is amended by deleting the reference to “(including the Puntland Contract of
Work to the extent that it is not inconsistent with this Agreement)”;
(s)
Article 26 is amended by deleting the title “LOCAL CONTRACTORS AND LOCALLY
MANUFACTURED MATERIALS” and replacing it with “SECURITY FORCES, LOCAL
CONTRACTORS AND LOCALLY MANUFACTURED MATERIALS”;
(t)
Article 26 is further amended by adding the following section immediately following
section 26.1.2
“26.2 The CONTRACTOR will be responsible for costs associated with the provision of
security for its Petroleum Operations and will make a contribution of logistical support (e.g. fuel
and tents) for such security. The procedure, total cost, and timing of payment of such costs will
be the subject of a security plan to be agreed upon between the CONTRACTOR and the
DEPARTMENT prior to the deployment of any security guards or soldiers for such security.”
(u)
Article 33 is deleted in its entirety and replaced with the following:
“ARTICLE 33
DEPARTMENTAL APPROVAL
33.1 This Agreement, signed by the DEPARTMENT, Canmex and Range Resources, is
binding upon the Parties hereto as a consequence of the issuance by the Representative Council
of the STATE, on December 23, 2006, of a declaration approving this Agreement and giving the
provisions of this Agreement, including the Annexes, full force and effect of law
notwithstanding any countervailing DEPARTMENT enactment.”
(v)
Annex “C” is amended by deleting section “v” in its entirety and replacing it with the
following:
“v.
Drilling as follows:
1.
[REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION]
2.
[REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION]”
(w)
Section 10(C)(5) of Annex D is amended by deleting the reference to “sub-paragraph 6B”
and replacing it with “sub-paragraph 5B”; and
(x)
The following is added as a new Article to Annex D:
“ARTICLE V
AUDIT REQUIREMENTS
{2814-004/01129157.DOC.}
-9The DEPARTMENT, consistent with Clause 4.5 of this Agreement, shall have a period of
[REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION] from the
receipt of any Statement of Expenditures in which to audit and raise objections to any such
statement. Supporting documents and accounts will be available to the DEPARTMENT during
the [REDACTED - TERMS CONSTITUTE SENSITIVE BUSINESS INFORMATION] period.
Any exception raised by the DEPARTMENT should be provided to the CONTRACTOR in
writing. Should written exceptions occur, the CONTRACTOR and the DEPARTMENT shall
confer with each other in a timely manner and attempt to reach a settlement on any required
adjustments as a result of such audit. For the avoidance of doubt, the Parties here state their
intention that, consistent with the accepted accounting practices generally used in the
international petroleum industry each suspended cost that subsequently becomes an approved
cost or rejected cost (whether by settlement or by arbitration under the Agreement) shall not
again be subject to audit under the Agreement.”
4
PRODUCTION SHARING AGREEMENT
4.1
No Further Amendment
Other than as amended herein, all terms of the Production Sharing Agreement between the
Parties remain in full force and effect.
5.
EFFECTIVE DATE
This Agreement shall be effective on the date (the “Effective Date”) that the terms of this
Agreement are ratified and approved by the Government of Puntland, as evidenced by a signed
and stamped declaration of approval issued by the Office of the Speaker of the Puntland State of
Somalia or a similar official confirmation that the Agreement has been ratified and approved by
the Government of Puntland.
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- 10 6.
COUNTERPARTS
This Agreement may be signed in several counterparts and by facsimile transmission, each of
which so executed will be deemed to be an original and such counterparts together will constitute
one and the same agreement.
IN WITNESS WHEREOF the Parties hereto have executed and delivered this Amending
Agreement.
GOVERNMENT OF PUNTLAND / DEPARTMENT OF MINERALS AND PETROLEUM
Authorized Signatory
CANMEX HOLDINGS (BERMUDA) II LIMITED
Authorized Signatory
RANGE RESOURCES LIMITED
Authorized Signatory
{2814-004/01129157.DOC.}