The development period shall continue for a period of up to 20 years with the opportunity for two extensions of up to a total of 10 years (in addition to the exploration period of 9 years)
Etude sur l'impact environnemental et plan de gestion
Storm Cat Energy Corporation (Storm Cat) shall conduct an environmental impact assessment in accordance with the applicable laws prior to the beginning of Storm Cat's activities.
Storm Cat Energy Corporation (Storm Cat) shall take the following measure necessary to protect human, animals, nature, national resource, land surface:
1. to prevent hazards to environment, human life or health and property of others during the conduct of operations;
2. prior to the contract expiration or termination, or relinquishment or abandonment of any part of the contract area, remove all equipment and installations from the area in a manner acceptable to the government, and perform all necessary site restoration activities in accordance with applicable laws and regulations of Mongolia;
3. include in the annual budget estimates of the anticipated abandonment and site restoration costs for each exploratory well;
4. if the contract area is located near forbidden for coal bed methane operations area take the necessary precautions for protection of ecological systems, and prevent pollution of the contract area.
The government shall have the right to inspect and audit Storm Cat Energy Corporation's books of account and other supporting documents in respect of coal bed methane operations.
Auditors have to right to have inspection of financial accounts, financial reports, inventory and goods, voucher, salary payment, invoice, a contract directly and indirectly related to this contract, sub-contractor contract, other agreements, and all documents related to operation. Also, auditors have the right to inspect sites, in Mongolia and abroad, related to operation, facilities, storages, offices, and to meet relative persons.
Storm Cat Energy Corporation (Storm Cat) shall pay to the government:
1) US$ 60,000 as a contract signature bonus;
2) US$ 250,000 as a production bonus upon the first sale of coal bed methane (CBM);
3) US$ 500,000 as the production bonus after average daily quantity of CBM for any calendar month
exceeds 1,000,000 meter cubic (m3);
4) US$ 750,000 as the production bonus after average daily quantity of CBM for any calendar month exceeds 2,000,000 m3;
5) US$ 1,000,000 as the production bonus after average daily quantity of CBM for any calendar month exceeds 3,000,000 m3; and
6) US$ 1,250,000 as a production bonus after average daily quantity of CBM for any calendar month exceeds 4,000,000 m3.
Bonus payments are not cost recoverable.
Partage de production - Eléments de "Profit Oil" (critères pour la modification du partage, - TRI, facteur "r", niveau de production, etc.)
After subtracting the royalty and cost coal bed methane (CBM) the remaining quantity of CBM will be allocated between the government and Storm Cat Energy Corporation (Storm Cat) as follows:
Less than 1 million meter cubic (m3) of daily CBD: government 20%, Storm Cat 80%
Between 1 million and 2 million m3 of daily CBD: government 25%, Storm Cat 75%
Between 2 million and 3 million m3 of daily CBD: government 30%, Storm Cat 70%
Between 3 million and 4 million m3 of daily CBD: government 35%, Storm Cat 65%
More than 4 million m3 of daily CBD: government 40%, Storm Cat 60%
Partage de production - Eléments de "Cost Oil" (base de calcul, limites sur le recouvrement des coûts, e.g. comme % des revenues ou de la production, crédit d'investissement, etc.)
Storm Cat Energy Corporation (Storm Cat) shall have the right to take and dispose of a certain quantity of coal bed methane (CBM) for the purpose of recovering its costs and expenses incurred in CBM operations. Storm Cat shall take a quantity equal in value to the aggregate of all CBM costs incurred to a maximum of 40% of all CBM for any calendar month. All costs that remain unrecovered shall be carried forward until fully recovered in succeeding calendar months.
Storm Cat Energy Corporation (Storm Cat) shall pay a royalty based on the price of the contract coal bed methane of equal to 7.5% of the total production. Royalties are not cost recoverable.
Storm Cat Energy Corporation (Storm Cat) give preference in employment to Mongolian nationals provided they are suitably qualified and provided, further, that Storm Cat has the right to employ its own personnel in key positions. Storm Cat shall have appropriate approval from the government to place its own workers on important positions. It is recognized that Storm Cat may require the assistance of the government in order to identify any such prospective Mongolian subcontractors,
locally manufactured items, and Mongolian employees.
Storm Cat Energy Corporation (Storm Cat) and its subcontractors shall give preference to Mongolian subcontractors so long as their prices and performance are comparable with international prices and performance. Storm Cat and its subcontractors shall also give preference to material, equipment, machinery and consumables manufactured in Mongolia so long as their prices, qualities and times of delivery are comparable to internationally available materials, equipment, machinery and consumables.
Storm Cat Energy Corporation (Storm Cat) shall pay to the government US$ 40,000 per year as a training bonus annually.
Storm Cat shall assist the government in preparing and carrying out plans and programs for training and education of Mongolian nationals.
Storm Cat Energy Corporation shall have a right to construct pipelines, bridges, roads, storage facilities, houses, landing fields, radio towers and communication facilities.
Within 60 days after the effective date and at least 45 days prior to the beginning of each contract year, Storm Cat Energy (Storm Cat) Corporation shall prepare detailed exploration work programs and budgets setting out the exploration operations Storm Cat proposed to conduct.
The minimum work obligations and expenditures of Storm Cat Energy Corporation are: US$ 820,000 in phase 1; US$ 1.28 million in phase 2; and, US$ 2.7 million in phase 3.
Any property dispute arising out of the course of operations shall be settled by Mongolian arbitration in accordance with the laws of Mongolia. Upon request of either party, any dispute related to this contract, such as modification of its terms or its cancellation may be settled in accordance with the UNCITRAL Arbitration Rules.
The parties shall maintain all documents and reports referred to in this contract as confidential and shall not divulge them to any third party without the consent of the other party. This obligation shall not apply to:
(i) disclosure by either party to its employees, affiliates, consultants, prospective assignees, prospective lenders or subcontractors to the extent required for the conduct of operations; or
(ii) disclosure by either party to the extent required to comply with applicable laws, or the rules or regulations of any stock exchange on which a party’s, or its affiliate’s, shares are listed.
(iii) disclosure to Storm Cat Energy Corporation (Storm Cat)’s investors or shareholders. The receiving side shall agree to keep such information confidential.
The government shall have title to all original data, including but not limited to geological, geophysical, petrophysical, geochemical, all well completion reports, drilling, petrologic, completion status reports and all other original data that Storm Cat may compile, provided, however, that the data shall not be disclosed to third parties without informing Storm Cat and giving Storm Cat the opportunity to discuss the disclosure of such data.