BUENAVISTA ASSIGNMENT AGREEMENT BETWEEN UTI, PETROSOUTH ENERGY CORPORATION BVI, PETROLEUM EQUIPMENTAssignment Agreement |
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ASSIGNMENT
AGREEMENT
This
Assignment Agreement is entered into this 30 th day
of August, 2007, by and between:
PetroSouth
Energy Corporation – Sucursal Colombia, (hereinafter
PetroSouth) the Colombian branch office of a foreign
corporation duly incorporated by Public Deed No. 00657 or 2007
of Notary 35 of Bogota, acting herein through its legal
representative Mr. Felipe Pimienta Barros with C.C.79.785.924;
and
Petroleum
Equipment International Ltda. – PEI
Ltda. (hereinafter PEI) a Colombian Company duly
incorporated by Public Deed No. 4.533 or 1989 of Notary 25 of
Bogota, acting herein through its legal representative Mr.
Omar Leal Quiroz with C.C.91.241.011.
WHEREAS
A
Contract for the Exploration and Exploitation of the
Buenavista Sector was entered into by Tecnicontrol S.A. and
PEI (with a joint and several liability by reason of an
“Union Temporal” agreement- Union Temporal Omega
Energy) with the Agencia Nacional de Hidrocarburos (the ANH)
on November 8, 2004 (the Buenavista Contract).
The
Buenavista Contract is actually in the Third Exploration
Phase, and the actual Parties thereto have committed to
continue with the exploration obligations under the Minimum
Exploration Program at least through the year
2008.
Under
the Buenavista contract the Bolivar -1 well was drilled with
it a Discovery was made causing Contractor to apply for an
Exploitation Area and the presentation of a Development Plan
currently under consideration of the ANH.
Bolivar
-1 well is currently producing 19.1° API crude at an
average monthly rate of approx. 3,725 Bbls, and production is
currently being sol domestically.
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Through
successive assigns and changes in ownership the Participating
Interests in the Buenavista Contract, in front of the ANH,
today appear to be distributed as follows:
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Tecnicontrol
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50%
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Bohemia
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25%
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PEI
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25%
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Through
private agreements to be effective among the Parties, the
Participating Interests in the Buenavista Contract today
appear to be:
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TC
Oil and Services, S.A. (TCOil)
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50%
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Quality
Services and Investments – QSI
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12.5%
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PEI
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37.5%
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On
April 20, 2007, TCOil and PEI (as Members of the UTOE) have
entered into a Heads of Agreement with the officers of Burgan
Energy PTY, Ltd (hereinafter “Burgan”), a company
of Australia, whereby these investors agree to certain
financial and operational obligations, (as described in the
Annex 1 to this MoU) namely to pay in full the AFE’s for
the drilling, completion and short tests of:
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(i)
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1
exploration well in the Bolivar structure (inside the Exploitation
Area)
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(ii)
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1
exploration well to satisfy the 4 th Phase of
the Minimum Exploration Program under the Buenavista
Contract.
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(iii)
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1
development well.
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On
June 7, 2007, PEI and PetroSouth entered into a Memorandum of
Understanding (the MoU), whereby PEI agreed to sell and assign
16% of its unencumbered Participating Interests in the
Buenavista Contract to PetroSouth, provided PetroSouth had
complied with its payment obligations
thereunder. This MoU was also executed by TCOil in
its capacity as Operator for the Buenavista Contract and as
creditor and titleholder of encumbrances upon PEI’s
Participating Interest.
On
June 7, 2007, PetroSouth paid PEI as good and valuable
consideration, the amount of Five hundred thousand US dollars
(USD 500,000).
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On
July 2 nd ,
2007, PetroSouth paid PEI or its designated beneficiaries, as
good and valuable consideration, the amount established on the
MoU; thus earning the right to begin to receive sixteen
percent (16%) of distributable production originated in the
Bolivar -1 well accrued as July 1 st ,
2007, and in any other wells within the Buenavista contract
Area as of that date.
On
July 10, 2007, TCOil issued a certification indicating that
“as of July 2 nd ,
2007, PEI has paid in full any and all liabilities for TC Oil
“…and” as of that date there is no
hindrance, limitation, lien nor any other form of encumbrance
on the 16% Participating Interest that PEI is assigning to
PetroSouth”.
The
same TC Oil certification warrants that “Because of the
assignment by PEI to PetroSouth, the Participating Interests
in the Buenavista Contract shall be distributed as
follows:
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TC
Oil
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50%
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PEI
LTDA
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21.5%
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Quality
Services and Investors S.A.
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12.5%
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PetroSouth
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16%
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PetroSouth
desires to acquire sixteen percent (16%) of the total
Participating Interests in the Buenavista Contract, actually
belonging to PEI, and to have full, clear and unencumbered
title to such 16%, including 16% of any production, under any
public and private agreements.
NOW
THEREFORE, in consideration of the premises and of the
payments, mutual covenants and agreements set forth in the MoU
and under this Assignment Agreement and other good and
valuable consideration, the receipt and sufficiency of which
is acknowledged hereby, the Parties hereto agree as
follows:
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DEFINITIONS
AND INTERPRETATION
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1.1
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Definitions
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When used in this
Assignment Agreement, the following terms and expressions
shall have the following meanings:
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(a)
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“Accounting
Procedure” means the procedure attached as exhibit
“A” to the Joint Operating Agreement;
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(b)
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“AFE”
means Authority for Expenditure to include all costs, surface and
down-hole related to the drilling, completion and short term tests
of a given well; and “Drilling AFE” means
for the purpose of this Assignment Agreement, the Authorization for
Expenditure regarding only the down hole costs including the
drilling, completion and short term tests for a given
well. This definition will apply to the obligations
under the “Heads of Agreement” entered into with the
Burgan Energy.
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(c)
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“Agreed
Interest Rate” means the maximum interest rate allowable
under Colombian law (maxima tasa de interes
moratorio).
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(d)
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“Agreement”
means this Assignment Agreement.
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(f)
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“Applicable
Law” means, the Laws of Colombia.
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(e)
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“Assignment
Approval” means the consent by ANH required for the
assignment of the Earned Interest by PEI to
PetroSouth;
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(f)
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Burgan
means Burgan Energy PTY Ltd. a company of Australia, in the process
of establishing its Colombian branch office which has agreed to
perform the obligations and responsibilities described in Annex 1
hereto. Should Burgan sell or assign or change its name
or change of control, when used in this Assignment Agreement or in
the JOA the term shall be construed to apply to any successor,
purchaser, and assignee or Burgan.
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(g)
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“Business
Day” means any day on which banks are open to transact
commercial business generally in both Houston, Texas and bogota,
D.C., Colombia, but specifically excluding any Saturday, any Sunday
or any other day of the week that is a legal or statutory holiday
in either Houston, Texas USA or Bogota, D.C.,
Colombia;
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(h)
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“Claim”
means any claim, demand, lawsuit, proceeding, hearing, arbitration
or governmental investigation;
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(i)
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“Contract”
or ‘Buenavista Contract” means the Contract executed on
November 8, 2004, Tecnicontrol S.A. and PEI, jointly as Union
Temporal Omega Energy with the “Agencia Nacional de
Hidrocarburos – ANH – “, for the Exploration and
Exploitation of Hydrocarbons for the Buenavista Sector,
(hereinafter the Buenavista Contract) which is currently valid and
enforceable;
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(j)
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“Earned
Interest” means and undivided 16% Participating Interest
calculated as of the Earning Date
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(k)
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“Earning
Date” has the meaning given thereto in Section
2.1.
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(l)
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“Earning
Obligations” has the meaning given thereto in Section
2.1;
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(m)
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“Encumbrance”
means any lien, pledge, option to sale or purchase, or agreement in
favour of a third party, guaranteeing payment obligations and
impeding the free and clear transfer of the participation
interests. In the context of this Assignment Agreement
and without prejudice to any other cases, Encumbrance shall mean
the penalties and guarantees offered by PEI to TC Oil as collateral
for its investment and as described in the “Convention Unico
de Pages, and any amendments thereto, or to any
“Fiduciaria” in regard to its share of
production.
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(n)
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“Joint
Property” means any of the facilities, property, equipment,
materials and other assets, rights and interests that would be
“Joint Property” under the Operating Agreement if the
Operating Agreement were to have come in to effect and governed
operations on the Contract Area from and after the date of this
Agreement;
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(o)
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“Liabilities”
means all liabilities and obligations, under other Applicable Law,
under contract or otherwise, whether contractual, statutory or
otherwise, whether absolute or contingent and whether based on
fault, strict liability or otherwise;
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(p)
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“Minimum
Exploration Program” has the me
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