Exhibit 10.13
AMENDED
TEXT OF THE AREA “BAJADA DEL PALO” JOINT VENTURE
CONTRACT
PETROLERA
ENTRE LOMAS S.A.
APCO
ARGENTINA INC., ARGENTINE BRANCH
PETROBRAS
ENERGÍA S.A.
JOINT
VENTURE CONTRACT FOR THE EXECUTION OF JOINT OPERATIONS IN THE AREA
“BAJADA DEL PALO” (PROVINCE OF
NEUQUÉN)
ARTICLE 2
– UTE’S TRADE NAME, DOMICILE, REPRESENTATIVE
AND
ARTICLE 3
– SUBJECT MATTER AND CONTRACT TERM
ARTICLE 4
– PARTICIPATING INTEREST
ARTICLE 5
– OPERATING COMMITTEE
ARTICLE 6
– OBLIGATIONS OF THE PARTIES
ARTICLE 7
– ABOUT THE OPERATOR
ARTICLE 8
– ANNUAL BUDGET
ARTICLE 9
– CONTRIBUTIONS – EXPENSES AND INCOME
ARTICLE 10
– DEFAULT PAYMENT
ARTICLE 11
– OWNERSHIP OF ASSETS
ARTICLE 12
– SOLE RISK OPERATIONS
ARTICLE 13
– ALLOCATION OF NET PRODUCTION
ARTICLE 14
– ASSIGNMENT OF RIGHTS
ARTICLE 15
– INSURANCE AND LITIGATIONS
ARTICLE 16
– CONFIDENTIAL INFORMATION
ARTICLE 17
– EXCLUSION AND ACCEPTANCE OF PARTIES
ARTICLE 18
– RELATIONSHIP AMONG PARTIES
ARTICLE 19
– TAX REGULATIONS
ARTICLE 21
– ACT OF GOD OR FORCE MAJEURE
ARTICLE 22
– APPLICABLE LAW, JURISDICTION AND ARBITRATION
ARTICLE 23
– LEGAL DOMICILES AND NOTICES
ARTICLE 24
– TERMINATION OF CONTRACT
ANNEX A
– ACCOUNTING PROCEDURE
ANNEX B
– INSURANCE COVERAGE
AREA
“BAJADA DEL PALO” JOINT VENTURE
CONTRACT
PETROLERA ENTRE
LOMAS S.A., a company registered and doing business pursuant to the
laws of the Argentine Republic, domiciled at H. Bouchard 680, floor
18, of the City of Buenos Aires, Argentine Republic, registered in
the Public Register of Traders on April 14, 1954 under number 378,
leaf number 405, Volume A of Domestic By-laws,
APCO ARGENTINA
INC., ARGENTINE BRANCH, a company registered and doing business
pursuant to the laws of the Cayman Islands, domiciled at del
Libertador Ave. 498, floor 26, of the City of Buenos Aires,
Argentine Republic, registered in the Public Register of Traders,
General Inspection Board of Legal Entities, on September 20, 1973
under number 25, leaf number 144, Book number 51, Volume B of
Foreign By-laws, and
PETROBRAS
ENERGÍA S.A., a company registered and doing business
pursuant to the laws of the Argentine Republic, domiciled at
Maipú 1, floor 22, of the City of Buenos Aires, Argentine
Republic, registered in the Public Register of Traders on November
17, 1947 under number 759, leaf number 569, Book number 47, Volume
A of Domestic By-laws.
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The
Adjudication of the Area CNQ -11 “BAJADA DEL PALO”
offered in the International Public Bidding number 1/90 was
approved by Executive Order of the National Executive Branch
(Argentine Republic) number 1769/90 granting the exploitation
license over said area pursuant to the provisions of Article 98 of
Act number 17319 to the Shipping Company PEREZ COMPANC
S.A.C.F.I.M.F.A., currently named PETROBRAS ENERGÍA
S.A.
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Pursuant to
several rights and assets assignment agreements entered into by the
PARTIES, the exploitation rights over the area CNQ – 11
“BAJADA DEL PALO” are currently owned by the PARTIES
according to the participating interests stated in article 4.01 of
this JOINT VENTURE CONTRACT.
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The PARTIES
have authorized the execution of this CONTRACT in accordance with
what was resolved by each of their competent domestic business
organs.
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The PARTIES
with the purpose of defining their respective assets and
liabilities in relation with their operations in the AREA enter
into this JOINT VENTURE CONTRACT.
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To that effect
the PARTIES agree:
For the purpose
of this CONTRACT the following definitions shall apply:
1.01. CALENDAR
YEAR: shall mean the period of twelve (12) months going
from
January 1 st to
December 31 st of any year.
1.02.
CONTRACTUAL YEAR: shall mean a period of three hundred sixty-five
(365)
consecutive
days as from the DATE OF LEGAL EFFECT OF THE CONTRACT.
1.03. BUDGET
YEAR: shall mean those periods of three hundred and sixty-five
(365)
consecutive
days as from September 1 st of
each year, except the first BUDGET YEAR which shall mean the period
between the DATE OF LEGAL EFFECT OF THE CONTRACT and the following
August 31 st
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1.04. OPERATING
COMMITTEE: it is the organ of highest authority of the
JOINT
VENTURE
(U.T.E.) resulting from the association of the PARTIES in relation
with the JOINT OPERATIONS ruled by this CONTRACT.
1.05. CONTRACT:
shall mean the agreement that rules the relationship among
the
PARTIES for the
execution of JOINT OPERATIONS in the AREA CNQ – 11
“BAJADA DEL PALO”.
1.06. SOLE RISK
ACCOUNT: it is the accounts plan carried out by the OPERATOR
in
order to debit
and credit all the financial allotments related to the SOLE RISK
OPERATIONS.
1.07. JOINT
ACCOUNT: it is the accounts plan carried out by the OPERATOR
in
order to debit
and credit the financial allotments related to the JOINT
PROPERTY.
1.08. DOLLAR/S:
it is the legal currency in use in the United States of
America.
1.09. DATE OF
LEGAL EFFECT OF THE CONTRACT: it is the date on which
the
PARTIES sign these presents.
1.10. EFFECTIVE
DATE: shall mean the DATE OF LEGAL EFFECT of this
CONTRACT from
which the terms and time periods set forth in the CONTRACT shall be
counted.
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A person
capable of holding legal rights who in a direct or indirect way
controls any of the PARTIES.
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A person
capable of holding legal rights who in a direct or indirect way is
controlled by any of the PARTIES.
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A person
capable of holding legal rights shall be deemed controlled by
another person capable of holding legal rights when any of the
provisions set forth in subsections 1) and 2) of Article 33 of Act
number 19550 apply.
1.12.
HYDROCARBONS: CRUDE OIL, NATURAL GAS AND LIQUIFIED
GASES
in any of the conditions and relations referred to.
1.13. INDIRECT
TAXES: the V.A.T., any tax replacing or supplementing
V.A.T.
in the future
as well as any other tax, right, duty or contribution established
or to be established by the municipal, provincial and/or national
government created or to be created with the purpose of
transferring it to be borne by the buyer or borrower with respect
to general supplies, particular supplies, etc., either calculated
as a percentage of the price or sales amount or collected as a
fixed amount. Under no conditions shall the term
Indirect Tax mean income tax or tax on the minimum presumptive
income or on bank debits and credits, nor shall do any other tax
that replaces or supplements V.A.T. in the future.
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1.14. DIRECT
TAXES: it is the income tax and the tax on the minimum presumptive
income and/or said tax, right, duty or contribution established by
the municipal, provincial and/or national
government, created with the purpose of laying its economic burden
on the payer, excluding the tax on bank debits and
credits.
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1.15. NON-
RECOVERABLE TAXES: all taxes, rights, duties or
contributions
established by
the municipal, provincial and/or national government
which
cannot be: a)
taken as payment on account or credited against themselves or any
other tax, right, duty or contribution and/or, b) paid back to
payer, and/or c) allowed to be transferred to third
parties.
1.16. V.A.T.:
shall mean the value added tax or any other tax to be created in
the
future
to supplement or replace V.A.T., either fixed or variable, or to
be
established
on supplies, withdrawals, uses or sales, of a general or
particular
nature,
and which is added to the price of the transaction so that
its
economic
burden be transferred to the buyer, employer or
borrower.
1.17.
MATERIAL/S: personal property, equipment or supplies acquired to be
used
1.18. SOLE RISK
OPERATION: it is the set of activities tending to
explore
and/or extract
HYDROCARBONS which one PARTY or any of the PARTIES carries out at
their exclusive expense, in accordance with the CONTRACT, and which
is not included in an ANNUAL PROGRAMME.
1.19. JOINT
OPERATIONS: shall mean all the necessary activities carried out
upon
the common
agreement of the PARTIES in order to perform the
CONTRACT.
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1.20. OPERATOR
shall be the PARTY appointed to carry out the
JOINT OPERATIONS
pursuant to article 7 of the CONTRACT.
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1.21. PARTY or
PARTIES: shall mean one party or all the parties to this
CONTRACT
and
their successors by any title whatsoever.
1.22.
PARTICIPATING INTEREST: shall mean the share each of the PARTIES
has
in
the assets and liabilities arising from this CONTRACT.
1.23.
DELINEATION WELL: any oil well drilled with the purpose of defining
the
production
boundaries of a hydrocarbon geologic trap
previously discovered
by an EXPLORATION WELL.
1.24.
DEVELOPMENT WELL: any well that, at the moment of deciding
its
drilling,
is located within the limits of a OIL FIELD in which one or
more
wells
ready to produce HYDROCARBONS in commercial quantities
have
1.25.
EXPLORATION WELL: any well whose objective is to determine
the
existence
of commercial hydrocarbon geographic trap separated
from
those already existing and within which no other well is located or
may be
1.26. COST
PRICE: shall mean the value of an asset or service which shall
include the
invoiced
price after discounts have been deducted and increased by all
the
direct
expenses that its purchase or hiring originated.
1.27. ANNUAL
BUDGET: shall mean a detailed estimate of the income and
expenses
corresponding
to an ANNUAL PROGRAMME approved by the OPERATING
1.28.
ACCOUNTING PROCEDURE: it is the accounting system stated in
Annex
1.29. NET
PRODUCTION: volumes of HYDROCARBONS produced under
quality and purity standards agreed upon to be
delivered at the MEASURING AND DELIVERY POINT, after discounting
those used as supplies in the AREA.
1.30. ANNUAL
PROGRAMME: shall mean all those works, investments and
expenses
approved by the OPERATING COMMITTEE for a BUDGET
1.31. JOINT
PROPERTY: shall mean the things and rights acquired in relation
with
1.32. MEASURING
AND DELIVERY POINT: it shall be that one designated by
the
PARTIES
where each one of them shall have the NET PRODUCTION
available
in accordance with their PARTICIPATING INTERESTS.
1.33.
REVERSION: shall mean that one PARTY not participating in SOLE
RISK
OPERATIONS has
the free availability of the NET PRODUCTION and acquires assets and
liabilities in proportion to its PARTICIPATING INTEREST in the SOLE
RISK OPERATIONS.
1.34. TAX: all
public resource payable under demand of the National,
Provincial
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1.35. OILFIELD:
shall mean an underground accumulation
of HYDROCARBONS,
or two or more of those accumulations placed one on top of the
other in horizons or reserves connected or separated, related to
one or several entrapments agreed upon which shall be considered as
a unit for the purposes of their rational exploitation.
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UTE’S TRADE NAME, DOMICILE, REPRESENTATIVE
AND COMMON
OPERATING FUND
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2.1 TRADE NAME:
U.T.E.’s trade name is “PETROLERA ENTRE LOMAS S.A. APCO
ARGENTINA INC., ARGENTINE BRANCH – PETROBRAS ENERGÍA
S.A. – “BAJADA DEL PALO” – JOINT
VENTURE”
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2.2 DOMICILE:
for all effects arising from the CONTRACT with respect to third
parties, the PARTIES establish their domicile for special legal
purposes at H. Bouchard 680, floor 18, of the City of Buenos Aires,
Argentine Republic, or at any other domicile which may be
established in the future.
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2.3.1 For the
purposes provided for in Articles 378, subsection 7, and 379 of Act
number 19550 (Amended Text 1984), PETROLERA ENTRE LOMAS S.A. is
appointed as UTE’s Representative with domicile at H.
Bouchard 680, floor 18, of the City of Buenos Aires, Argentine
Republic, with powers to exercise the rights and assume the
obligations inherent to the development and execution of the
operations under the CONTRACT.
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2.3.2. Should it be necessary, for
representation purposes, the PARTIES shall
grant the
corresponding powers in favor of PETROLERA ENTRE LOMAS S.A., who
shall be entitled to replace and/or grant them in favor of one or
more persons dependant on PETROLERA ENTRE LOMAS S.A.
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2.3.3. All the
activities of the LEGAL REPRESENTATIVE carried out either in a
direct way or with the intervention of third parties shall be
executed in its capacity of agent of the PARTIES and all operations
shall be carried out on their behalf and at their
expense.
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2.4. COMMON
OPERATING FUND
The common
operating fund is established with a hundred thousand Argentine
pesos ($100,000) that the PARTIES shall pay in cash in proportion
to their respective PARTICIPATING INTERESTS within seven (7) days
as from the EFFECTIVE DATE.
Establishing
the common operating fund does not imply any limitation whatsoever
to the powers of the OPERATOR to submit requests for funds nor to
the obligation of the PARTIES to comply with their
contributions.
SUBJECT
MATTER AND CONTRACT TERM
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3.01 This
CONTRACT shall rule the relationship among the PARTIES and the
exploitation, supplementary exploration and hydrocarbons
development works that the PARTIES carry out jointly in the AREA
CNQ – 11 “BAJADA DEL PALO” (“AREA”)
for the term of twenty-five (25) years as from the date of
adjudication plus any extensions that may apply under the
provisions of article 35 of Act number 17319.
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4.01 The
PARTIES shall share in the assets and liabilities derived from
this CONTRACT according to the following
participating interests:
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PETROLERA ENTRE
LOMAS S.A.: 73.15% (SEVENTY-THREE POINT FIFTEEN per
cent);
APCO ARGENTINA
INC. ARGENTINE BRANCH: 23% (TWENTY-THREE (per cent), and
PETROBRAS
ENERGÍA S.A.: 3.85% (THREE POINT EIGHTY-FIVE per
cent).
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4.02 With the
exceptions of the provisions in 9.01, 9.02 and 9.03 all
obligations, costs, expenses and liabilities arising from or
generated by the JOINT OPERATIONS shall be borne by the PARTIES in
proportion to their respective PARTICIPATING INTERESTS.
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4.03 All rights
acquired pursuant to the CONTRACT shall be the PARTIES’
property in proportion to their respective PARTICIPATING
INTERESTS.
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4.04 The JOINT
PROPERTY shall belong to the PARTIES as undivided interests, in
proportion to their respective PARTICIPATING INTERESTS.
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4.05 Each PARTY
has automatically the ownership from wellhead and the free
availability of the HYDROCARBONS extracted in proportion to their
PARTICIPATING INTERESTS and the right to receive the percentages
established in 4.01 out of the NET PRODUCTION.
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5.01 The
OPERATING COMMITTEE shall be made up by one (1) regular and one (1)
alternate representative for each one of the
PARTIES. For representation purposes, within five (5)
days as from the EFFECTIVE DATE, each PARTY shall notify the other
PARTIES in writing the names and domiciles of the appointed
representatives.
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The regular and
alternate representatives may be changed at any moment by written
notification from the interested PARTY to the other
PARTIES. Each representative shall have enough powers to
decide and bind its represented party on all the subjects submitted
at each meeting.
Each regular or
alternate representative can have as many assistants as it is
reasonably necessary.
The
remuneration of the PARTIES’ representatives and of their
prospective assistants shall be paid by whoever appointed
them. The replacement of the regular representative
shall be automatic upon its absence due to any cause.
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5.02 A
representative of the OPERATOR shall act as President of the
OPERATING COMMITTEE.
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5.03 The
meetings of the OPERATING COMMITTEE shall take place in Buenos
Aires or in any other place the PARTIES agree on at least once
every year. They shall be convened at any moment by the
President, on his own initiative or upon the written request of any
of the PARTIES. The agenda of the meetings shall be
determined by the President except in the case of those meetings
convened at the written request of one of the PARTIES, in which
case the agenda shall include the subject or subjects that gave
rise to the request.
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The call shall
be notified in writing to each PARTY no later than ten (10) days in
advance, stating the day, time, place and agenda of the
meeting. Only upon the consent of all the PARTIES, it
shall be possible to call meetings with less time in advance, or
adopt decisions on questions not included in the agenda notified in
the call. Each one of the PARTIES shall have a number of
votes equivalent to their PARTICIPATING INTEREST.
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QUORUM : The meetings shall take place only if attended
by at least two PARTIES representing the majority of the
votes. If the quorum requested is not reached, after an
hour from the call, the meeting shall be arranged for at least one
(1) working day after the day of the call and in this case the
meeting shall take place no matter the number of PARTIES
attending. Except for the cases provided for in item (b)
hereinafter, all decisions, approvals and other actions of the
OPERATING COMMITTEE with respect to all the subjects submitted for
consideration shall be decided upon by the affirmative vote of at
least two PARTIES representing at least seventy per cent (75%) of
the whole PARTICIPATING INTERESTS.
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UNANIMOUS
DECISIONS : The
attendance of all the Parties and their unanimous consent shall be
required in order to resolve: (i) the termination of the CONTRACT
before the performance of its subject matter; (ii) the approval of
ANNUAL PROGRAMMES of works and their respective budgets; (iii) the
approval of ANNUAL PROGRAMMES of exploration works during the
Exploitation Stage and their respective budgets; (iv) the plugging
and abandonment of all wells drilled in compliance with a JOINT
OPERATION; (v) any revision of the approved ANNUAL BUDGETS AND
ANNUAL PROGRAMMES in what they exceed twenty per cent (20%) of any
of the items envisaged therein or ten per cent (10%) of the whole
ANNUAL BUDGET AND/OR ANNUAL PROGRAMME; (vi) the voluntary release
of the AREA in whole or in part, and (vii) any modification,
addition and/or revision of the CONTRACT.
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5.04 The
OPERATING COMMITTEE shall have the following powers:
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a) To determine
all those matters of administration policy necessary for carrying
out the JOINT OPERATIONS and so that the OPERATOR, on the basis of
its own procedural rules, comply with its function.
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b) To consider
and approve the ANNUAL PROGRAMMES, their modifications and
extension, which shall tend to obtain the highest profitability and
production being at the same time compatible with a rational and
economic exploitation of the OIL FIELDS, all of this pursuant to
the provisions in 5.03 (b).
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c) To consider
and approve the ANNUAL BUDGET expressed in United States dollars,
its modifications and extensions, pursuant to the provisions in
5.03 (b).
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d) To establish
a guideline so that the OPERATOR shall be entitled to underwrite
all contracts of service, for services, supply, purchase orders of
materials or equipment, or the direct execution of works or
rendering of services or supplies whose cost, in each disbursement,
exceeds the amount equivalent to a hundred thousand United States
dollars (U$S 100,000), or the amount set forth in each ANNUAL
BUDGET.
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e) To order, to
be charged to the JOINT ACCOUNT, the auditing of the account
statements submitted by the OPERATOR, and supervise the full
compliance with all its obligations carrying out the technical
inspections deemed necessary at reasonable moments in order to
verify the normal course of the activities without interfering with
their development.
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f) To establish
the regularity of the reports on operations and production and on
all other information that shall be submitted by the
OPERATOR. If any of the PARTIES requests the OPERATOR to
submit additional information apart from that stated by the
OPERATING COMMITTEE, the cost thereof shall be borne by the party
requesting it.
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g) To adopt or
have adopted all those decisions necessary for the compliance of
the obligations arising out of the PARTIES’ capacity as
licensees.
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h) To decide
the abandonment of any well, except when it is a DEVELOPMENT
WELL. In case no agreement is reached, the OPERATOR
shall decide about the abandonment of the well if there were no
PARTY interested in carrying out the SOLE RISK
OPERATION.
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i) To resolve
the setting up of the Subcommittees it may deem
necessary. Their functions and procedure shall be
established by the OPERATING COMMITTEE. Each PARTY shall
be entitled to appoint a representative in each Subcommittee, who
shall be entitled to have as many assistants as is reasonably
necessary.
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j) One of said
Subcommittees, of a technical character, shall have the main
mission of defining the location of the wells to be drilled, the
workover programs or the recompletion of wells and other aspects
related with the exploration and development of the AREA, as a step
prior to its execution.
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k) To set the
procedure to be followed for the receipt and distribution of
HYDROCARBONS.
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l) To appoint
and remove the OPERATOR of the CONTRACT.
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OBLIGATIONS OF THE PARTIES
The PARTIES
have the following obligations, among others:
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6.1.1 To comply
with the national, provincial and municipal legal rules and
especially with Act number 17319 and the Executive Orders of the
National Executive Branch number 1055/89, 1212/89, 1589/89 and
1216/90 and/or any other norm that modifies or replaces them in the
future.
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6.1.2 To
perform the CONTRACT subject to the most rational, modern and
efficient techniques corresponding to the characteristics and
extension of the reserves found in order to obtain the highest
production of HYDROCARBONS compatible with an adequate economic and
technical exploitation of the AREA.
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6.1.3 To adopt,
through the action of the OPERATOR, the measures of security and
prevention and control of environmental pollution imposed by the
applicable laws or advised by accepted practices in the subject
with the purpose of avoiding or reducing accidents of any kind and
harming the environment.
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6.1.4 To let
the APPLICATION AUTHORITY have access to the AREA with the purpose
of carrying out inspections and supervisions necessary for the
fulfillment of the laws in force.
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6.1.5 To submit
the information that the Province of Neuquén, through the
APPLICATION AUTHORITY, may request in order to facilitate a correct
assessment of the royalties that may correspond to it, as well as
the compliance with the provisions of Article 6.1.3.
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7.01 The
PARTIES herein appoint PETROLERA ENTRE LOMAS S.A. to act
as
7.02 The
OPERATOR shall have the following powers and
obligations:
a) To defend the common interest of the
PARTIES.
b) To carry out the decisions of the OPERATING
COMMITTEE.
c) To execute
the JOINT OPERATIONS, and comply with the obligations and exercise
the common rights arising out of the license.
d) To carry
out, hire, acquire and/or obtain all the assets, services, works or
materials, equipment, supplies, permits and rights related to the
JOINT OPERATIONS, under the provisions in 5.04 d). The
OPERATOR shall act with utmost diligence when obtaining said assets
and services in the technical, economic and financial conditions
that are most convenient for the PARTIES.
e) To represent
and be the official spokesperson of the PARTIES as regards their
relationship with the National, Provincial and Municipal
Authorities, the non-operating PARTIES being entitled to accompany
the OPERATOR when justified by the importance of the subject to be
dealt with. To these purposes the OPERATOR shall notify
the PARTIES enough time in advance and shall keep them informed
about the subjects dealt with in the meetings held.
f) To care, guard, keep and maintain the JOINT
PROPERTY.
g) To decide
what is necessary for the import of machines, equipment or any
other materials.
h) To incur all expenses related to the JOINT
OPERATIONS.
i) To comply with the measures and preventions
stated in 6.1.3.
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j) To adopt, in
case of explosion, fire, floods or any other similar emergency, the
necessary decisions in order to secure lives and
goods. The OPERATOR shall communicate the decisions
adopted to the PARTIES as soon as possible, the cost being charged
to the JOINT ACCOUNT.
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k) To ensure
the fulfillment of the obligations and the protection of the rights
arising from the LICENSE, as well as the effect and maintenance of
the latter.
l) To dispose,
in favor of the PARTIES, of any thing or right not necessary for
the JOINT OPERATIONS, the approval of the OPERATING COMMITTEE being
required when the value of the assets involved exceeds the
equivalent to a hundred thousand United States dollars (U$S
100,000). The operator shall be entitled to sell the
assets and rights above mentioned on behalf of the PARTIES and at
their expense.
m) To submit
before the OPERATING COMMITTEE the program for the winding up and
participation of the JOINT PROPERTY once the term of legal effect
of the license has elapsed.
n) To draw up
the minutes of the meetings of the OPERATING COMMITTEE, which shall
be delivered to the PARTIES within seven (7) running days as from
the date said meetings are held. The minutes shall be
deemed approved if there were no observations raised by the PARTIES
within seven (7) running days as from the moment of their
receipt.
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o) To provide
the non-Operators with a copy of all technical data, information,
interpretations and reports, together with all other material
concerning the AREAS of the LICENSE, including the following
without limitation:
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1) well logs
and surveys;
2) the daily
progress of drillings and geological reports;
3) all the
reports about drilling tests and core analysis;
4) the sealing
report in case any well is completed as a dry well or is abandoned
for other reason;
5) the final
geological report and the drilling time report of all the
wells;
6) all the
geological and geophysical formal reports and the maps related to
the work carried out by the OPERATOR or independent contractors for
the JOINT ACCOUNT;
7) data on
field and well and field performance;
8) all the
reports submitted by the OPERATOR to the Government in relation
with the operations in the AREA of the license;
9) a report on
the progress and operations when geological and/or drilling
programs are being carried out.
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7.03 All staff
effectively in charge of tasks related to the JOINT OPERATIONS
shall be employed by the OPERATOR, and the cost thereof shall be
debited from the JOINT ACCOUNT, in accordance with the provisions
of the ACCOUNTING PROCEDURE (Annex “A”).
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7.04 The
OPERATOR shall make its greatest effort to carry out with diligence
all the JOINT OPERATIONS in accordance with the techniques
generally followed in the oil industry and the good practices of
the oil engineering, tending to carry out tasks in an efficient and
economic way. In all cases, the OPERATOR’S common
sense and prudence, exercised in good faith, shall be the limit of
its responsibility, and in no case whatsoever shall it be held
responsible for decisions adopted or omitted in good faith within
the conditions before mentioned.
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In no case
whatsoever shall the OPERATOR be held responsible for lost profits,
damage to the reservoir or loss of production.
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7.05 The
OPERATOR shall keep a detailed accounting and documentation in
relation with JOINT OPERATIONS and SOLE RISK OPERATIONS, whichever
be the case.
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7.06 In the
event there is no ANNUAL BUDGET approved, the OPERATOR shall carry
out all acts and operations necessary in order to ensure the best
performance of these presents and the adequate protection of the
JOINT PROPERTY. When adopting said measures and actions,
the OPERATOR shall act with utmost diligence and shall keep the
PARTIES informed about them immediately. The expenses
incurred or obligations assumed by the OPERATOR under these
circumstances shall be considered authorized
expenses. The payment of said amounts to the OPERATOR
shall be effected by the PARTIES under the terms and conditions set
forth in this CONTRACT. The payment of the corresponding
amounts shall not prejudice the PARTIES’ right to claim the
total or partial reimbursement thereof whenever the OPERATOR acted
in breach of the rules governing agents.
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7.07 The
OPERATOR shall cease acting as such or shall be removed for any of
the following causes:
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a) By written
renunciation, notified to the PARTIES no later than sixty (60) days
before the date it becomes effective.
b) By
OPERATOR’S dissolution, winding-up or court judgment of
bankruptcy.
c) In case of
repeated non-compliance with its contribution as PARTY,
notwithstanding the application of the provisions of Article 10
hereof.
d) In case of
repeated and serious non-compliance with the obligations laid upon
it, which shall be determined under the procedure of Article 22 of
this CONTRACT.
e) In case, due
to an assignment, the PARTICIPATING INTEREST of the OPERATOR in
addition to its BRANCH OFFICES’ participating interest
reaches an amount under thirty per cent (30%).
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7.08 In case
the OPERATOR ceases to act as such or were removed, the OPERATING
COMMITTEE shall appoint a new OPERATOR in the following
manner:
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a) In the case
of subsection a) of item 7.07, taking into account the right to
vote of the PARTICIPATING INTEREST corresponding to the
leaving OPERATOR.
b) In the case
of subsections b), c), d) or e) of item 7.07, without taking into
account the right to vote of the leaving OPERATOR.
7.09
ACQUISITIONS AND HIRINGS
When
acquisitions and/or hirings exceed U$S 250,000, the OPERATOR shall
send to the PARTIES for their information prior to the adjudication
the specifications established and the
quotations received.
The PARTIES and
their branch offices shall be entitled to bid in any Competitive
Bid, and a bid of one PARTY or its subsidiary equal or better than
any other bid shall be accepted with preference over a bid of a
third party. The PARTIES that made bids shall be
entitled to equal the best price obtained.
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8.01 Sixty (60)
days before the legal effect of an ANNUAL BUDGET elapses, the
OPERATING COMMITTEE shall meet to approve the ANNUAL BUDGET
corresponding to the next ANNUAL PROGRAMME.
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8.02 The OPERATOR shall serve on each
PARTY a draft ANNUAL BUDGET together with an explanatory Technical
Report no later than ninety (90) days before the legal effect of
the ANNUAL BUDGET elapses. Each PARTY shall be entitled
to offer modifications to the draft of ANNUAL BUDGET, which shall
be considered at the respective meeting.
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8.03 The
meetings on budget topics shall commence no later than the fifth
day following the day on which the draft of ANNUAL BUDGET was
received. Said meetings shall be held in two
stages:
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a) The first
stage shall take a maximum of fifteen (15) days and shall aim at
exchanging opinions so that the PARTIES express their points of
view and due harmonization of different criteria is
achieved.
b) The second
stage, which shall take a maximum of ten (10) days as from the
expiration date of the term of the previous stage, shall aim at
discussing and approving the ANNUAL BUDGET for the next
period.
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8.04 An
approved ANNUAL BUDGET could be modified at any moment by the
OPERATING COMMITTEE under the same conditions required for its
approval and taking into account the provisions of paragraph 5.04.
c) of Article 5.
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8.05 The
OPERATOR shall serve on the PARTIES the first ANNUAL BUDGET within
thirty (30) days after the EFFECTIVE DATE of this
CONTRACT. The first ANNUAL BUDGET shall be approved by
the OPERATING COMMITTEE within fifteen (15) days after its
submission.
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8.06 The
OPERATOR agrees to carry out each ANNUAL PROGRAMME within the limit
of the ANNUAL BUDGET, and shall not carry out any operation not
included in an ANNUAL PROGRAMME, nor shall it incur any expenses
during the budgeted period exceeding the amount stipulated in the
ANNUAL BUDGET, except in the following cases:
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a) If it were
necessary to carry out an ANNUAL PROGRAMME, the OPERATOR may exceed
any ANNUAL BUDGET up to a maximum of ten per cent (10%) of the
updated total budget or up to a maximum of twenty per cent (20%) of
each updated financial allotment, the amounts in excess not
exceeding ten per cent (10%) of the updated total
budget. The decision on this subject shall be notified
to the PARTIES as soon as possible.
b) In case of
emergency, the OPERATOR may make such disbursements as deemed
necessary for the performance of the CONTRACT and the protection of
life or JOINT PROPERTY. The OPERATOR shall notify said
emergency disbursements to the PARTIES as soon as
possible.
CONTRIBUTIONS – EXPENSES AND
INCOME
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9.01 The
PARTIES shall contribute, on a pro rata basis according to their
respective PARTICIPATING INTERESTS, the sums necessary to pay all
expenses of any kind that the OPERATOR must settle, in accordance
with the terms of each approved ANNUAL BUDGET and ANNUAL
PROGRAMME.
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The OPERATOR
shall keep a bank account exclusively for the operation, opened on
behalf of U.T.E. and under U.T.E.’s C.U.I.T.
number.
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9.02 All
expenses of any kind the OPERATOR must settle shall be charged to
the JOINT ACCOUNT.
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9.03 No later
than five (5) working days in advance, the OPERADOR shall serve on
each one of the PARTIES a monthly budget, opened every fortnight,
stating the expenses foreseen for the next month and requesting the
contribution corresponding to each one of the
PARTIES. This information may be sent by fax or email to
the PARTIES. The PARTIES shall pay this contribution no
later than the first working day of the fortnight to which it will
be charged.
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9.04 Together
with the detailed information of the expenses of the next month,
the OPERATOR shall send to the PARTIES a report of the
contributions and expenses paid during the preceding
month. In the event a positive balance resulted from the
report, the exceeding contributions shall be employed in the JOINT
OPERATIONS decreasing the requirements of contributions in the
following periods, except when one of the PARTIES requests the
reimbursement of the funds, within ten (10) days after receipt of
the report; the reimbursement shall take place within five days
after the request. The request for reimbursement by one
of the PARTIES shall bind the OPERATOR to pay back the excess to
all the PARTIES. In the event a negative balance
resulted from the report, the PARTIES shall cover the difference
within the banking hours on the first working day corresponding to
the month being budgeted.
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9.05 The
OPERATOR shall be entitled to request additional contributions of
funds from the PARTIES not provided for in the monthly budgets, but
included in the ANNUAL BUDGET. These contributions shall
be made effective within three (3) days after being
requested.
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9.06 All the
expenses to be paid by the OPERATOR in order to carry out the SOLE
RISK OPERATIONS shall be contributed by the PARTIES participating
in SOLE RISK OPERATIONS and entered in the SOLE RISK ACCOUNT
according to the provisions of Annex “A”.
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9.07 The
PARTIES’ contributions shall be paid in Argentine legal
currency, in DOLLARS or in any other currency requested for the
operations.
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10.01 In the
event any of the PARTIES does not pay its contribution within the
time limit fixed to that effect, the rest of the PARTIES shall
rectify the default payment at the request of the OPERATOR within a
term of five (5) working days after receipt of the notification and
on a pro rata basis according to their respective PARTICIPATING
INTERESTS. The PARTY which refuses to pay the share of
the default contribution corresponding to it shall be deemed in
breach of this CONTRACT for all its purposes, and its default shall
be rectified by the rest of the PARTIES on a pro rata basis
according to their PARTICIPATING INTERESTS. In all
cases, arrears shall be automatic.
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10.2 The
default in paying the contribution shall have the following
effects:
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a) The PARTY in
default shall not exercise the right to vote nor shall it attend
the meetings of the OPERATING COMMITTEE nor of the
subcommittees.
b) It shall not
receive any report, statement, book and/or information of any kind
related to the JOINT OPERATIONS.
c) It shall not
receive its participating share in the NET PRODUCTION, the fifty
per cent (50%) of which shall be used to pay off compensation to
the complying PARTIES in accordance with their participating
shares. The other fifty per cent (50%) of the NET
PRODUCTION shall be employed for the reimbursement provided for in
10.04.
d) It shall not
receive any payment and/or reimbursement, either in cash or in
kind, owed at the arrears date or owed while the default
continues.
The amounts
owed in Argentine legal currency shall be converted into DOLLARS
according to the sell exchange rate at the market price of Banco de
la Nación Argentina for transfers corresponding to the close
of the day on which said amount was to be paid. This
amount converted into DOLLARS and all other unpaid sum in DOLLARS
shall accrue interest able to be capitalized every thirty (30) days
equivalent to the “prime rate” with more than seven (7)
points quoted at the close of the date of default or at the close
of each capitalization period, whichever is the case, by the Chase
Manhattan Bank of New York, or other first class bank of the same
market if said bank ceases quoting, as from the date of default and
until the party in default pays the owed amount to the complying
PARTIES, together with the accrued interest, notwithstanding
greater damages caused by the default. In case it
corresponds, the Indirect Taxes levied on the interest and money
receipts and/or partial payments applicable shall be
added.
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10.03 The
complying PARTIES shall be paid the reimbursement of the
substitutive contributions they made on behalf of the party in
default out of: a) all income and credit that may be estimated in
pecuniary value which may correspond to the latter; b) fifty per
cent (50%) of the NET PRODUCTION that would have corresponded to
the party in default as from the date of arrears and until the
moment said party pays off the total amount of the
debt. The OPERATOR shall sell, at the request of the
complying PARTIES and on behalf of and at the expense of the
complying PARTY so requesting, the corresponding share of the fifty
per cent (50%) of the PARTICIPATING INTEREST the PARTY in default
has in the NET PRODUCTION, distributing among the complying PARTIES
that request said sale the sums of money derived from those
transactions, net of pertinent costs, expenses and
commissions. The appraisal of the crude oil that may
have corresponded to the PARTY in default shall be established by
the OPERATING COMMITTEE. Furthermore, the PARTY in
default shall acknowledge before the complying PARTIES the costs,
expenses and commissions related to the sale of said
production.
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10.04
Assignment of PARTICIPATING INTEREST
In case the
default continues for a period of a hundred and eighty (180) days
and the amounts set forth in Article 10.04 are not enough for the
complying PARTIES to recover the sums owed plus interest, each one
of the complying PARTIES shall have the option to demand that the
PARTY in default immediately assign to them its whole PARTICIPATING
INTEREST. Should said option be exercised by more than
one complying PARTY, the PARTY in default shall immediately assign
its PARTICIPATING INTEREST to each one of them in proportion to the
PARTICIPATING INTERESTS they respectively have in the total amount
of PARTICIPATING INTERESTS of all the complying PARTIES that have
exercised the option. In any case, the value of the
assignment shall be the amount of the debt being paid off
thereby. The complying PARTY or PARTIES that decide to
exercise the option before mentioned shall notify their decision to
the PARTY in default and to all the other PARTIES expressly stating
that their intention to have access to the PARTICIPATING INTEREST
of the PARTY in default is exercised pursuant to the provisions of
this Article 10.05. The assignment shall take place free
from all charge, encumbrance and/or lien on the PARTICIPATING
INTEREST and at the expense of the PARTY in default. The
assignment shall have full legal effect when the complying PARTY
notifies the PARTY in default that this option was
exercised.
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10.06
Rectification of the default payment
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The PARTY in
default shall have the right to rectify its default at any moment
by paying directly to each complying PARTY all the sums owed,
including the corresponding interest. Should said
rectification take place before the period of a hundred and eighty
(180) running days mentioned in Article 10.05 elapses, the former
shall be under no duty to assign its PARTICIPATING
INTEREST.
Notwithstanding
the provisions of this article 10, the PARTY in default shall bear
the cost of royalties corresponding to its share in the NET
PRODUCTION.
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11.01 The
assets acquired by the OPERATOR with relation to JOINT OPERATIONS
shall be the JOINT PROPERTY of the PARTIES in proportion to their
PARTICIPATING INTERESTS.
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11.02 The
assets acquired by the OPERATOR with relation to the execution of
SOLE RISK OPERATIONS shall be the property of the PARTY or PARTIES
participating in SOLE RISK OPERATIONS. Once reversion
took place, said assets shall be the PARTIES’ JOINT PROPERTY,
pursuant to the provisions of paragraph 11.01.
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12.01. SOLE
RISK OPERATIONS shall comprehend those works for which the approval
provided for in order to include them in an ANNUAL PROGRAMME was
not obtained; said works may include without limitation: the
drilling, completion, workover or deepening of a new well, or of
any well that does not produce or which does not produce in
convenient commercial quantities.
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The proposed
SOLE RISK OPERATIONS shall not be carried out when they affect the
rights of the non-participating PARTIES, disrupt the execution of
JOINT OPERATIONS or affect, directly or indirectly, the proven
reserves under the JOINT OPERATIONS.
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12.02 If one
PARTY wishes to carry out a SOLE RISK OPERATION, it shall notify so
in writing to the other PARTIES, attaching thereto the relevant
project. Within sixty (60) days after receiving this
notification, the PARTIES shall communicate their intention to
participate in the SOLE RISK OPERATION. The absence of
an answer within the stated period of time shall be considered as a
refusal to participate in the project.
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In the event
all the PARTIES decide in time to participate in the SOLE RISK
OPERATION, this operation shall be carried out as a JOINT
OPERATION.
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12.03 The PARTY
participating in a SOLE RISK OPERATION shall commence the execution
of the works within a hundred and eighty (180) days after the time
period for notification set forth in 12.02 elapses and it shall
continue said works without interruption until they are
finished. If said works are not commenced within the
term established, the question shall be subjected again to the
procedure provided for in the previous paragraph.
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12.04 The SOLE
RISK OPERATIONS shall be conducted by the OPERATOR on behalf of and
at the expense of the participating PARTIES and in accordance with
the relevant provisions of this AGREEMENT.
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The PARTIES
participating in SOLE RISK OPERATIONS shall bear in proportion to
their participation in said SOLE RISK OPERATIONS all the expenses
arising from said operations until REVERSION takes
place. To that effect, the OPERATOR, in its capacity of
intermediary, shall make the relevant investments and expenses on
behalf of and at the expense of the participating PARTIES, who
shall act as principals to that effect.
If the SOLE
RISK OPERATIONS are profitable, the participating PARTY shall be
entitled to the repayment of:
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The total
investment incurred in the SOLE RISK OPERATIONS.
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The accumulated
cost of the operating and production expenses incurred by virtue of
said operations.
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The highest tax
on the gross income that may correspond due to the
commercialization of the NET PRODUCTION derived from the SOLE RISK
OPERATIONS and, in general, any other non-recoverable Tax borne by
the participating PARTY as a consequence of the SOLE RISK
OPERATIONS.
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The V.A.T. paid
on the investments and expenses related to said
operations.
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The repayment
shall be effected according to the share ascribed to the
PARTICIPATING INTERESTS corresponding to the non-participating
PARTIES.
The
reimbursement shall be collected exclusively through the share in
the NET PRODUCTION that corresponds to the non-participating PARTY,
and in consequence, said right is conditional upon the existence of
the production referred to before.
