Exhibit 10.1
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CONTRACT
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CONTRACT OF
SALE OF HARKEN CRUDE
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VALUE
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UNDETERMINED.
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TOTAL TERM
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1 MAY 2005
TO APRIL 30, 2006
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The following contracting parties: On the one
hand, PETROBRAS COLOMBIA LIMITED , a corporation
incorporated under the laws of the U.K. with a branch office duly
constituted in Colombia and represented in this act by JOSE
RAIMUNDO BRANDAO PEREIRA, of legal age, and alien I.D. No. 307.839
issued in Bogotá in his capacity as General Manager,
hereinafter referred to as THE BUYER , and on the other
hand, HARKEN DE COLOMBIA LTD, a corporation incorporated
under the laws of the Cayman Islands, with a branch office
established in Colombia in accordance with Public Deed No. 406
dated 19 February 1993, issued by the Eleventh Notary Public of the
Bogotá Circle, whose main business address is in Bogotá
D.C., hereinafter referred to for all purposes as THE SELLER
, represented by GUILLERMO SÁNCHEZ B., as certified in the
Certificate of Existence and Legal Representation of the
Bogotá Chamber of Commerce, of legal age, resident in the city
of Bogotá, identified with U.S. Passport No 132457597, have
agreed to execute this contract of oil purchase/sale subject to the
following clauses:
WHEREAS:
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a)
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On 29 December
2003, ECOPETROL S.A . and THE SELLER entered into the
Alcaraván Association Contract.
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b)
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THE
SELLER maintains in
production under the Alcaraván Association Contract the Estero
and Cajaro wells located in the Paloblanco Field and the Canacabare
well, located in the Anteojos field, in the municipalities of
Maní and Orocué, province of Casanare.
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c)
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On 14 September
2004, the AGENCIA NACIONAL DE HIDROCARBUROS and THE
SELLER entered into the Rio Verde exploration and explication
contract.
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d)
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THE
SELLER maintains in
production under the Rio Verde Field Contract the Macarenas and
Tilodiran wells. The Paloblanco, Anteojos and Rio Verde Fields
shall hereinafter be referred to as The Fields.
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e)
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That THE
SELLER maintains in production the Olivo well within the
Bolivar Association Contract and the Catalino-Olivo Field. Palo
Blanco, Anteojos and Rio Verde shall hereinafter be referred to as
the “Fields”.
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f)
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That THE
SELLER maintains in production the Torcaz 2 and Torca 3 wells
within the Bocachico Association Contract and the Torcaz Field.
Palo Blanco, Anteojos, Rio Verde, Catalina-Olivo and Torcaz fields
shall hereinafter be referred to as the
“Fields”.
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CONTRACT VRP – 005 –
2004 Page 2 of
7
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g)
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In performance
of such contracts, 100% of their production belongs to THE
SELLER , after discounting the nation’s royalties,
excluding production from the Cajaro well in the Alcaravan
Association Contract, whose Commerciality was declared and,
consequently, 50% of the production, discounting the nation’s
royalties, belongs to ECOPETROL.
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h)
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By means of
communication UN-COL/GEAL 0052/2005, THE SELLER presented a
proposal to THE BUYER for the purchase of Oil from the
aforementioned fields owned by THE BUYER .
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i)
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THE SELLER by
means of communication GG-095-05 accepted the above-mentioned offer
in the conditions indicated in such letter.
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j)
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THE
BUYER and THE
SELLER hereby agree on the sale of the oil owned by THE
SELLER produced in the Fields.
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Based on the above, THE BUYER and THE
SELLER
AGREE:
CLAUSE ONE.—PURPOSE AND QUANTITIES: THE
SELLER is hereby bound
to sell and deliver to THE BUYER and THE BUYER is
bound to receive and pay for, in the conditions provided herein,
the oil corresponding to the Fields, corresponding to the share it
owns, as follows:
Alcaravan Association Contract, Sole Risk
Modality:
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Production
equivalent to 100% after royalties.
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Alcaravan Association Contract, Cajaro
Commercial Area:
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Production
equivalent to 50% after royalties
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Rio Verde Exploration and Exploitation
Association Contract:
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Production
equivalent to 100% after royalties.
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Bolívar Association Contract, Sole Risk
Modality:
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Production
equivalent to 100% after royalties.
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Bocachico Association Contract, Sole Risk
Modality:
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-
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Production
equivalent to 100% after royalties.
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PARAGRAPH 1: The volumes of oil purchased shall be those
included in each shipment of Vasconia blend, made by Petrobras, as
per the information provided by OCENSA or by the party acting as
the programmer of Vasconia Blend oil shipments.
PARAGRAPH 2: THE BUYER shall ask OCENSA to include the
oil in the volumetric compensation carried out by the Company to
establish the volume of Vasconia Mix crude oil that corresponds to
each barrel of oil produced in the Fields delivered by THE
SELLER in the Santiago Field.
PARAGRAPH 3: THE BUYER shall be in control of all the operations and
activities deemed necessary for an efficient technique and
economical operation of the oil management in the
Santiago
CONTRACT VRP – 005 –
2004 Page 3 of
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Station. THE BUYER shall not be held
responsible for losses caused on THE SELLER for delays in
receipt of the crude due to operational difficulties of the
Santiago Field production station.
PARAGRAPH 4: THE BUYER shall be responsible for any
damage caused to THE SELLER , provided these have been
caused due to negligence or willful misconduct of THE BUYER
, for not shipping the oil that is the subject matter of this
contract in accordance with Paragraph One.
PARAGRAPH 5: Oil from the Torcaz fields (Puerto Salgar,
Cundinamarca) and Olivo (Aguachica, Cesar), will be included in the
blend available for sale in the Estero Field, except that Harken de
Colombia Ltd., shall make use at any time of the crude blend from
Olivo, Torcaz, Macarenas and Cajaro to market it as it deems
convenient. To such end, THE SELLER shall so notify in
writing at least thirty (30) days in advance.
CLAUSE TWO.—QUALITY:
The typical quality of the oil to be
purchased shall have the following specifications: Minimum API
gravity 18° API, 0.5% of BS&W and less than 1% sulfur
content, with the specifications indicated in Attachment A to this
Contract, which forms a part of it.
PARAGRAPH 1: The quality referenced in this Clause
corresponds to that of the oil delivered to THE BUYER ,
produced in the Fields. When any of the specifications indicated
are not within those that have been pointed out, THE BUYER
reserves the right to receive the oil and purchase it. It is
understood that THE SELLER shall make his best effort to
deliver the crude oil contracted with the BSW and salt content
within the parameters agreed. Any variation regarding the quality
specifications indicated above that is accepted by both parties
shall be registered in a document signed by the representatives of
the parties.
PARAGRAPH 2: The quality mentioned in this Clause shall refer
to the CRUDE BLEND passing through the inlet flange of the LACT
unit described herein in Clause Three.
CLAUSE THREE.—DELIVERY SITE AND
OWNERSHIP: The oil that
is the subject matter of this purchase/sale contract shall be
delivered by THE SELLER to THE BUYER at the inlet
flange of the LACT unit, point of arrival of the Estero pipeline to
the Santiago Field Station, which belongs to the Upia
Association.
CLAUSE FOUR.—EFFECT:
This contract shall be in effect as
of 1 May 2005 to 30 April 2006. Notwithstanding the above, this
contract shall be extended automatically for a period equal to the
initial period, unless either of the Parties gives thirty days
notice of its intent not to renew the contract.
CLAUSE FIVE.—PRICES:
The oil price indicated in this
contract, placed at the delivery site agreed upon and mentioned in
Clause Three of this Contract, shall be that obtained by Petrobras
in its Vasconia Blend exports, deducting the following charges as
indicated below:
a) Commercialization charges of US$
0.05/barrel exported
b) Rate for third parties of the
Oleoducto de Colombia, minus a 10% discount.
c) Transportation fees from
Ocensa’s El Porvenir—Vasconia pipeline
d) Transportation fees to El
Porvenir through the pipeline of US$ 0.5708/barrel.
CONTRACT VRP – 005 –
2004 Page 4 of
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e)
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Transportation
taxes from the Santiago—El Porvenir, El PorvenirR
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