Drilling Contract for Marlin Rig 8 - Harken de Colombia Ltd. and Marlin Colombia Drilling Co. Inc.
DRILLING CONTRACT
BETWEEN
HARKEN DE COLOMBIA, LTD.
("OPERATOR")
AND
MARLIN COLOMBIA DRILLING COMPANY, INC.
("CONTRACTOR")
FOR
MARLIN RIG 8
MAY 15, 1997
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TABLE OF CONTENTS
PART I: SCOPE OF THE CONTRACT
1. The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. The Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Contract Duration . . . . . . . . . . . . . . . . . . . . . . . . 1-2
4. Drilling Operations . . . . . . . . . . . . . . . . . . . . . . . . 3
4.1 CONTRACTOR'S Standard of Performance . . . . . . . . . . . 3
4.2 The Rig . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.3 Drilling Program . . . . . . . . . . . . . . . . . . . . . . 4
4.3A Abandonment of Well . . . . . . . . . . . . . . . . 4
4.3B Completion of Well . . . . . . . . . . . . . . . . 4
4.4 Well Control . . . . . . . . . . . . . . . . . . . . . . . . 5
4.5 Cuttings and Cores . . . . . . . . . . . . . . . . . . . . . 5
4.6 Measurements and Tests . . . . . . . . . . . . . . . . . . . 5
4.7 Safety Precautions . . . . . . . . . . . . . . . . . . . . . 5
4.8 OPERATOR Taking Complete Control Over Drilling Operations . 6
5. Personnel Assigned to the Operations . . . . . . . . . . . . . . . . 6
6. Equipment and Supplies Furnished by the Parties . . . . . . . . . . 7
7. Travel of Personnel . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Transport of Equipment and Supplies . . . . . . . . . . . . . . . . 7
PART II: ADMINISTRATION OF THE CONTRACT
9. Import and Export of Drilling Rig, Ancillary Equipment,
Materials and Supplies . . . . . . . . . . . . . . . . . . . . . . . 8
10. Responsibility as to Records, Reports, Inspections, Etc. . . . . . . 8
10.1 Reports and Inspections . . . . . . . . . . . . . . . . . . 8
10.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 9
11. Invoicing and Paying . . . . . . . . . . . . . . . . . . . . . . . . 9
11.1 Invoice Presentation . . . . . . . . . . . . . . . . . . . . 9
11.2 Currency and Time of Payment . . . . . . . . . . . . . . . . 9
11.3 Disputed Invoices. . . . . . . . . . . . . . . . . . . . . . 9
11.4 IVA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12. Notices and Designation of Representatives . . . . . . . . . . . . . 10
PART III: LIABILITIES OF THE PARTIES
13. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
14. Responsibility for Loss or Damage to CONTRACTOR Items . . . . . . . 11
15. Responsibility for Loss or Damage to OPERATOR Items . . . . . . . . 12
16. Reciprocal Indemnities . . . . . . . . . . . . . . . . . . . . . . . 12
17. Responsibility for the Condition of the Hole . . . . . . . . . . . . 13
18. Risk of Damage to or Loss of Underground Mineral Deposits . . . . . 13
19. Responsibility for Insurance . . . . . . . . . . . . . . . . . . 13-14
20. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21. Pollution or Contamination . . . . . . . . . . . . . . . . . . . . . 15
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PART IV: LAW OF THE CONTRACT
22. Assignment of Contract . . . . . . . . . . . . . . . . . . . . . . . 15
23. Exhibits as Part of Contract . . . . . . . . . . . . . . . . . . . . 15
24. Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . 16
25. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
26. Prior Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 16
27. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
28. Patents and Rights . . . . . . . . . . . . . . . . . . . . . . . . . 16
29. CONTRACTOR's Obligation To Comply with Laws . . . . . . . . . . . . 17
PART V: COMPENSATION TO CONTRACTOR
30. Rates of Compensation . . . . . . . . . . . . . . . . . . . . . . . 17
30.1 Mobilization Fee . . . . . . . . . . . . . . . . . . . . . . 17
30.2 Operating Day Rate . . . . . . . . . . . . . . . . . . . . . 17
30.3 Moving Rate . . . . . . . . . . . . . . . . . . . . . . . . 17
30.4 Standby With Crews Rate . . . . . . . . . . . . . . . . . . 18
30.5 Standby Without Crews Rate . . . . . . . . . . . . . . . . . 18
30.6 Mechanical Breakdown Rate . . . . . . . . . . . . . . . . . 18
30.7 Negligence Remedial Rate . . . . . . . . . . . . . . . . . . 18
30.8 Force Majeure Rate . . . . . . . . . . . . . . . . . . . . . 19
30.9 Demobilization Fee . . . . . . . . . . . . . . . . . . . . . 19
30.10 Application of Rates . . . . . . . . . . . . . . . . . . . . 19
31. Reimbursable Items . . . . . . . . . . . . . . . . . . . . . . . . . 19
31.1 Materials, Services and Personnel. . . . . . . . . . . . . . 19
31.2 Oil-Based Drilling Fluid Incentives. . . . . . . . . . . . . 20
32. Daily Rate Increases . . . . . . . . . . . . . . . . . . . . . . . . 20
33. Signatures of the Parties . . . . . . . . . . . . . . . . . . . . . 20
EXHIBITS:
"A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Page
"B" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 thru 24
"C" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Page
"D" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 thru 6
"E" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 thru 3
ATTACHMENT "A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Page
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DRILLING CONTRACT
MARLIN RIG 8
PART I: SCOPE OF THE CONTRACT
1. THE PARTIES
This agreement is entered into this 15th_ day of May, 1997, by and
between HARKEN DE COLOMBIA, LTD. (HDC), a Cayman Islands corporation
("OPERATOR"), and MARLIN COLOMBIA DRILLING COMPANY, INC., a Cayman
Islands corporation ("CONTRACTOR").
2. THE WORK
CONTRACTOR shall drill all wells by the rotary method (inclusive of
downhole motor operations and directional wells) for OPERATOR to
depths specified by OPERATOR, but not to exceed 13,500 feet with 5"
drill pipe unless with CONTRACTOR's agreement. These wells shall be
at locations selected by OPERATOR within Operator's Association
Contract areas (the" Block(s)") located in Colombia, South America.
CONTRACTOR represents that it possesses well-skilled employees and
proper equipment as specified herein for performance of all its work
under this Contract. CONTRACTOR has knowledge of the social,
environmental, physical, health and climatic conditions existing in
the Blocks where the drilling operations will be undertaken.
CONTRACTOR shall perform all operations with diligence and skill,
applying sound engineering principles and good oil field practices,
CONTRACTOR shall conduct operations on a full twenty-four hour day,
seven day week basis.
3. CONTRACT DURATION
This Contract shall become effective upon signing by the parties and
shall continue in effect for one year from and after the Commencement
Date (as defined in Section 30.2 hereof). The parties contemplate
that the operation will commence on or about August 1, 1997.
OPERATOR shall have a renewable option to extend this contract for a
period or periods, each period being not less than 6 months nor more
than 12 months. OPERATOR shall notify to CONTRACTOR in writing of its
election to extend this Contract as soon as practicable BUT NOT LATER
THAN SIXTY (60) DAYS BEFORE THE END OF THE INITIAL TERM or subsequent
extension period term of the Contract . OPERATOR may terminate this
contract effective any time after the date of spudding of the first
well, subject to the early termination provisions herein.
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3.1 Contract Extension - In the event OPERATOR exercises its
option to extend this Contract during one or more extension
periods, OPERATOR and CONTRACTOR shall meet to negotiate
mutually acceptable rates and Contract modifications agreeable
to both parties. It is understood that market rates shall
prevail and shall be determined by the then standard rates for
similar class rigs. Operator will not be invoiced for any
capital recovery related to the 5" Drill Pipe or Top Drive
Unit in the first or subsequent extension periods.
Contractor's cost of operation, maintenance and repair of the
5" Drill Pipe and Top Drive Unit will be included as costs to
be recovered in the Operating Day Rate for all contract
periods.
3.2 Early Termination
3.2.1 Either party may immediately terminate this Contract
upon written notice to the other Party, if the Rig is
declared by either Party as a total loss except that
compensation properly earned up to the time of day of
that loss shall be owed by OPERATOR to CONTRACTOR.
3.2.2 Notwithstanding anything contained herein to the
contrary, OPERATOR shall, at any time, have the right
to terminate this Contract, upon thirty (30) days
written notice, even though CONTRACTOR has not
defaulted hereunder, and, in such event, CONTRACTOR
shall be entitled to compensation properly earned
through the end of that thirty (30) day notice
period, including the Early Termination Fee as
defined by 30.11.
3.2.3 Notwithstanding anything herein to the contrary,
CONTRACTOR shall have the right to terminate this
Contract, upon thirty (30) days written notice
stating that, in CONTRACTOR's reasonable opinion, it
is uneconomical for CONTRACTOR to continue operations
under this Contract, and certifying that one of the
following conditions applies:
3.2.3.1 OPERATOR has failed to pay CONTRACTOR
undisputed amounts and such amounts remain
unpaid following notice and a seven day grace
period, in which case the Demobilization
and Early Termination Fees shall be payable,
or;
3.2.3.2 New government edict, decree, rule,
regulation or law has been applied to
CONTRACTOR or his entitlement under this
Contract.
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4. DRILLING OPERATIONS
4.1 CONTRACTOR'S STANDARD OF PERFORMANCE - CONTRACTOR warrants
that all work will be performed safely and in good and
workmanlike manner in accordance with accepted international
oilfield practices and in compliance with all applicable laws,
rules and regulations; that CONTRACTOR's equipment shall be in
good working order and its personnel fully trained and capable
of safely operating such equipment and performing services
required herein for OPERATOR; that CONTRACTOR regularly
conducts training and safety programs; that all materials,
equipment, goods, supplies or manufactured articles furnished
by CONTRACTOR in the performance of the work or services shall
be of suitable quality and workmanship for their intended
purposes, in accordance with specifications, and shall be free
from defects; and that CONTRACTOR will not employ any employee
whose employment violates applicable labor or other laws.
CONTRACTOR further covenants, warrants and represents that all
work performed by it hereunder shall be conducted in
accordance with accepted international safety regulations (as
used in the country of Colombia), environmental laws and
regulations, precautions and procedures in effect as of the
effective date and by employing the necessary protective
equipment and devices described in the attached inventory.
Any breach of this safety covenant shall be grounds for
immediate termination of this Contract by Operator.
4.2 THE RIG - CONTRACTOR shall furnish its' MARLIN RIG 8 which is
a complete drilling rig as described in Exhibit "B".
CONTRACTOR shall operate the rig and ancillary equipment at
eighty five (85) percent of manufacturer's rated operating
specifications. Contractor shall provide 12,000 of new S-135
grade, 5" Drill Pipe, 1800 of 5" heavy weight Drill Pipe,
rig conversions to operate with 5" Drill Pipe, a new top drive
system with sufficient torque capacity to drill Operator's
horizontal wells, rig modifications (at OPERATOR's expense,
the cost for which shall be amortized over the initial term of
the contract) as necessary, to accommodate underbalanced
drilling equipment (so long as any modifications are mutually
agreed between OPERATOR and CONTRACTOR) and one additional mud
pump independently powered and compatible with the existing
drilling rig equipment. The Drilling Tubulars (Drill Pipe,
Heavy Weight Drill Pipe, Collars, Cross-Overs, Stabilizers,
Subs, etc.) will be subject to Exhibit E, "Tubular Standards".
In special circumstances, at OPERATOR request, CONTRACTOR in
its sole discretion may operate the rig and ancillary
equipment at manufacturer's rated operating specifications.
CONTRACTOR shall maintain the rig and ancillary equipment in
good working order.
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The rig will maintain a current inspection certificate for all
major load bearing components. The inspection will be
performed by a third party inspection contractor.
OPERATOR shall notify CONTRACTOR of the location of the
initial well. CONTRACTOR shall mobilize the rig, the
equipment described herein, and its personnel to the location
of the initial well and shall make all necessary preparations
for spudding the initial well within 25 days following
OPERATOR's notification of the location of the initial well.
4.3 DRILLING PROGRAM - Before any drilling begins on any well,
OPERATOR shall deliver the drilling program to CONTRACTOR
which Contractor shall give notice to Operator of its'
receipt. Contractor shall also certify in writing to Operator
that "rigging-up" is satisfactorily completed. CONTRACTOR
shall use reasonable diligence to conduct all drilling
operations in conformance with OPERATOR's drilling program.
OPERATOR may modify the drilling program so long as any
modifications which materially increases CONTRACTOR's hazards
or costs of performance bears CONTRACTOR's approval and
provides for an appropriate rate increase as mutually agreed
by the parties. Except as otherwise provided herein,
CONTRACTOR SHALL NOT BEGIN TO DISMANTLE ITS RIG AND EQUIPMENT
FOR DEMOBILIZATION UNTIL AUTHORIZED TO DO SO BY OPERATOR IN
WRITING.
4.3A ABANDONMENT OF WELL: OPERATOR at any time may elect
to have a well abandoned. Upon notice of such
election, CONTRACTOR shall promptly remove in
compliance with all government rules and regulations
from the hole and lay down all recoverable casing and
tubing and plug and abandon the hole in accordance
with the program provided by OPERATOR in a manner
satisfactory to OPERATOR and in compliance with all
government rules and regulations including
environmental laws and permits and CONTRACTOR shall
also remove in compliance with all government rules
and regulations all its equipment, machinery, tools,
supplies and materials furnished and all its debris
and refuse from the location resulting from its
activities under this agreement. Should CONTRACTOR
fail to timely and in a responsible manner fail to
remove the same, then all loss, delay or other
related liability shall be at the sole risk of
CONTRACTOR.
4.3B COMPLETION OF WELL: OPERATOR may at any time elect to
have a well completed or recompleted, and in that
event, CONTRACTOR shall perform the work of
completing the well in accordance with the program
provided by OPERATOR in a manner and to the extent
desired by OPERATOR, including but not limited to the
running of liner and tubing, making permanent well
head connections and installing Christmas trees.
4
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4.4 WELL CONTROL - CONTRACTOR shall maintain their provided well
control equipment in good operating condition at all times,
and shall in addition make such further checks as OPERATOR
shall direct and shall use reasonable means to control and
prevent fires, blowouts and other damage, to protect the hole
and to protect OPERATOR equipment.
4.5 CUTTINGS AND CORES - When requested by OPERATOR, CONTRACTOR
shall save and identify the cuttings and cores free from
contamination and place them in separate containers furnished
by OPERATOR. Such cuttings and cores shall be made available
to a representative of OPERATOR at the site.
4.6 MEASUREMENTS AND TESTS - Routinely and in addition whenever
requested by OPERATOR, CONTRACTOR shall measure and record the
total length of all in-hole tubulars in service with a steel
tape.
4.7 SAFETY PRECAUTIONS - OPERATOR and CONTRACTOR shall take
measures to provide safe working conditions and shall comply
with safety procedures promulgated by OPERATOR and/or by
applicable governmental agency, ministry or authority and
incorporated with this contract and without limiting the
generality of the foregoing, shall maintain proper barriers,
guard rails and other safety devices to lessen hazards during
the performance of work under this Contract. Any safety
equipment required by OPERATOR and provided in addition to
that listed in Exhibit "B" shall be for OPERATOR account.
CONTRACTOR shall not permit smoking, hot work or any open
flames at the wellsite (except in OPERATOR designated areas).
Smoking, hot work and open flames will be controlled via
permits issued by OPERATOR and may be canceled or reinstated
by OPERATOR due to site conditions. CONTRACTOR shall equip
the rig with vapor proof lights and shall equip the drilling
engines' exhaust with a water injection device so as to reduce
the hazard of fire. CONTRACTOR shall install on each well
worked on hereunder blowout prevention devices of the type
shown in Exhibit "B" and shall operate such devices at all
times the rig is operating or otherwise on a well. Contractor
is aware that use of underbalanced drilling techniques are
expected during the term of this contract. If required,
CONTRACTOR shall, within the capabilities of the equipment and
personnel required to be furnished by CONTRACTOR hereunder,
take precautions to prevent the well from igniting.
CONTRACTOR shall report to OPERATOR as soon as practicable all
accidents or occurrences resulting in injuries to CONTRACTOR's
employees or third parties or damage to the property of
CONTRACTOR, OPERATOR or any third parties arising out of or
in the course of the operations hereunder.
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4.8 OPERATOR TAKING COMPLETE CONTROL OVER DRILLING OPERATIONS
4.8A Should any well blow-out, ignite, or in any manner
get out of control, OPERATOR may assume complete
control and supervision of the work of bringing the
well under control or putting out the fire. Unless
and until OPERATOR so elects in writing to assume
such complete control, CONTRACTOR shall be in
complete control and supervision of the same.
4.8B Should CONTRACTOR at any time fail to conduct its
operations in compliance with applicable laws, rules
and regulations, with skill and diligence, in
conformance with accepted oilfield practice and sound
engineering principles, and in accordance with the
terms of this Contract, then OPERATOR shall notify
CONTRACTOR in writing of the specific deficiency.
After having received such notice, CONTRACTOR shall
have five days in which to fulfill its contractual
responsibilities by taking measures to rectify the
deficiency. Should CONTRACTOR fail to correct the
deficiency OPERATOR may assume control of the rig and
ancillary equipment and continue the drilling
operations on that well until CONTRACTOR is proven
capable and accepted by the operator to resume full
performance of its contractual duties.
4.8C For all time during which OPERATOR is in control of
the drilling operations pursuant to Articles 4.8A or
4.8B. OPERATOR shall have full use of CONTRACTOR's
rig, equipment, machinery, facilities, material,
supplies and personnel at the location with
remuneration to CONTRACTOR at the Operating Day Rate,
Article 30.2, and all operations shall be conducted
at the sole risk of OPERATOR and CONTRACTOR's
indemnity obligations shall be suspended.
5. PERSONNEL ASSIGNED TO THE OPERATIONS
CONTRACTOR shall provide the personnel listed in Exhibit "C" at its
expense, Should CONTRACTOR provide additional personnel at OPERATOR
request for brief periods, remuneration shall be at cost plus ten
percent (10%). At OPERATOR's written notice, specifying the
deficiency, CONTRACTOR shall withdraw from the operations any employee
OPERATOR reasonably requests. CONTRACTOR shall pay any costs incurred
in withdrawing and replacing the unsuitable individual. CONTRACTOR
shall conduct all industrial relations matters in conformance with
applicable laws and customs.
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6. EQUIPMENT AND SUPPLIES FURNISHED BY THE PARTIES
6.1 BY OPERATOR - At its expense, OPERATOR shall furnish the
equipment, machinery, tools, supplies, materials and services
listed in Exhibit "D".
6.2 BY CONTRACTOR - At its expense, CONTRACTOR shall furnish the
equipment, machinery, drill strings, tools, supplies and
personnel as listed in Exhibits "B", "C", and "D" (subject to
the requirements of Exhibit E). The parties deem these items
to be necessary items for the full performance of CONTRACTOR
duties.
6.3 INSPECTION AND USE OF OPERATOR EQUIPMENT - Before using
OPERATOR furnished items, CONTRACTOR representative shall
visually inspect same with reasonable diligence and shall
advise OPERATOR of any defect observed. All such equipment,
machinery, tools, and materials in CONTRACTOR's possession
shall remain OPERATOR's property and shall be returned to
OPERATOR at the end of operations in the same good state of
repair and operating conditions as when received, subject to
reasonable deterioration due to use. OPERATOR shall not be
entitled to any compensation for normal wear and tear
resulting from CONTRACTOR's use of such items. Liability for
damage to OPERATOR equipment is subject to Clause 15.
7. TRAVEL OF PERSONNEL
CONTRACTOR shall mobilize its personnel to the initial wellsite for
the beginning of operations at no extra cost to OPERATOR, other than
the mobilization fee. CONTRACTOR shall furnish transportation to each
wellsite for all of CONTRACTOR's personnel in connection with initial
personnel mobilization, crew changes and final personnel
demobilization. CONTRACTOR shall demobilize its personnel from each
wellsite at the end of operations at no extra cost to OPERATOR, other
than the demobilization fee.
8. TRANSPORT OF EQUIPMENT AND SUPPLIES
CONTRACTOR shall prepare its rig and equipment and supplies for
mobilization at the beginning of operations as consideration for
OPERATOR's payment of the lump sum Mobilization Fee in Exhibit A. The
same Mobilization Fee will also include in total the transportation
of CONTRACTOR's rig and equipment to OPERATOR's wellsite, rigged up
ready to spud the well to be drilled hereunder. The rig shall be ready
to commence operations when CONTRACTOR has tested all necessary
equipment and is ready to spud the well or run in the hole with the
initial tools. In the event OPERATOR is not ready to commence
operations once CONTRACTOR is rigged up and ready, the Standby with
Crews Rate provided in Article 30.5 shall commence and continue from
day to day
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thereafter until such time as the OPERATOR has authorized the
CONTRACTOR to commence drilling operations. The Moving Rate shall
apply during all time after the rig is released from one drilling
location to move and rig up on another location. During
demobilization, the Demobilization Fee in Exhibit A will apply while
CONTRACTOR'S equipment is being moved from OPERATOR's wellsite to
CONTRACTOR's yard. CONTRACTOR shall furnish transportation for
CONTRACTOR's operating supplies and materials from point of origin to
the wellsite. OPERATOR shall furnish transportation for OPERATOR's
operating supplies and materials to each wellsite and for
Contractor's rig and equipment to the second and subsequent wellsites.
PART II: ADMINISTRATION OF THE CONTRACT
9. IMPORT AND EXPORT OF DRILLING RIG, ANCILLARY EQUIPMENT, MATERIALS AND
SUPPLIES
CONTRACTOR's drilling rig, MARLIN RIG 8, has been completely imported
into Colombia and includes at least all of the equipment listed in
Exhibit "B" and CONTRACTOR shall assume all fees, duties and taxes in
connection therewith. OPERATOR shall pay all import and export
expense, including without limitation, fees, duties, taxes, port
charges, storage charges and documentary taxes for other equipment
required by OPERATOR not included in Exhibit "B". CONTRACTOR's
obligation shall be limited to arranging for the transporting,
importing and clearing of spare parts and supplies for CONTRACTOR's
equipment to support its operations under this Contract.
All costs incident to the transport, importation/exportation, and
clearing of equipment, materials and supplies, which OPERATOR
requests CONTRACTOR to provide, will be for OPERATOR account. Special
amortized equipment such as the top drive unit, drilling tubulars and
third mud pump, requested by operator, is the responsibility of
Contractor
10. RESPONSIBILITY AS TO RECORDS, REPORTS, INSPECTIONS, ETC.
10.1 REPORTS AND INSPECTIONS - CONTRACTOR shall at all times permit
OPERATOR and its authorized employees and representatives to
inspect all work performed hereunder and to witness and check
all measurements and tests made in connection with said work.
CONTRACTOR shall keep an authentic and accurate history and
log of said wells, including all measurements required for
fishing operations with a record of all down-hole equipment
which shall be open at all reasonable times to inspection by
OPERATOR and its authorized employees and representatives.
CONTRACTOR shall furnish each of OPERATOR's designated
representatives (pursuant to the Notice provision in Section
13) with a copy of the daily written I.A.D.C. drilling report
showing depths and work performed during the preceding twenty-
four (24) hours and any other information relative to said
well requested by OPERATOR.
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10.2 CONFIDENTIALITY - Recognizing the confidential nature of the
work, CONTRACTOR shall not, without OPERATOR's prior written
consent, allow any third person access to the well, nor give
out to any third person any information concerning the well,
or give out to third persons, nor permit any third person to
examine, any samples from the well. Upon completion of the
work on the well, the original history and log book, as well
as any copies and all other data, records and reports (except
one copy of the daily drilling report) of any nature
pertaining to CONTRACTOR's operations, shall be delivered to
OPERATOR, it being understood that neither CONTRACTOR nor any
of its employees shall retain any records or data relative to
any well which has reference to geologic information. This
ability to maintain such confidentiality shall extend beyond
any termination of this contract for an additional period of
two years beyond the remaining term of that specific Harken de
Colombia, Ltd. Association Contract.
11. INVOICING AND PAYING
11.1 INVOICE PRESENTATION - CONTRACTOR shall prepare invoices at
the end of each calendar month and after the rig is released
from each well and after each rig move. The invoices shall be
stated in U.S. Dollars. CONTRACTOR shall deliver the
invoices to OPERATOR's representative in Bogota, Colombia,
with copy to its Houston, Texas, office.
11.2 CURRENCY AND TIME OF PAYMENT - OPERATOR shall pay invoices in
U.S. Dollars, provided that CONTRACTOR may request payment of
a portion of the invoices in local currency by so specifying
at the time of invoice presentation. The exchange rate for
local currency payments shall be the Tasa Representativa del
Mercado (TRM) effective on date of invoice. OPERATOR shall
pay CONTRACTOR the approved amount of invoices within thirty
(30) days of receipt of the invoices. OPERATOR shall deliver
local currency payments to CONTRACTOR's office in Colombia.
If OPERATOR fails to pay the undisputed portion of any invoice
within thirty days of receipt, interest shall accrue from the
thirty-first day at the prime rate in effect from time to time
at Citibank, plus two percent (2%) until payment is received,
but the rate of interest shall not exceed the maximum rate
permitted by applicable law.
11.3 DISPUTED INVOICES - If OPERATOR disputes an item invoiced,
OPERATOR shall notify CONTRACTOR in writing of the item
disputed, specifying the reason and payment of the disputed
item shall be withheld until settlement of the dispute, but
PAYMENT SHALL BE MADE OF ANY UNDISPUTED PORTION. Payment of
any invoice shall not prejudice the right of OPERATOR to
question the correctness of any such invoice, provided that
within twenty-four (24) months of the date of any such invoice
OPERATOR shall make objection to any item or items thereof by
delivering CONTRACTOR written notice specifying the reasons
for its objection. Should OPERATOR within such a twenty-four
(24) month
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period so notify CONTRACTOR, adjustments shall be made between
the parties as the correctness of such item shall be
determined. Any invoice not objected to by OPERATOR within
such twenty-four month period shall be deemed final and not
subject to review. OPERATOR upon written notice to
CONTRACTOR, within the twenty-four (24) month period an
invoice is received shall have the right to audit CONTRACTOR's
accounts and records relating to operations hereunder.
11.4 IVA - For purposes of invoicing IVA tax applicable to this
construction contract, according to Article 3 of Decree 1372
of August 20, 1992, the Contractor deems his profit calculated
to be eight per cent (8%) of the value of this Contract.
12. NOTICES AND DESIGNATION OF REPRESENTATIVES
All notices given by OPERATOR to CONTRACTOR shall be sent by
registered mail and telex or delivered to:
If to OPERATOR: HARKEN DE COLOMBIA, LTD.
Carrera 6, No. 115-65 Oficina 514F
Santafe de Bogota, Colombia
Attn: Alvaro Puerta
Ph: 57-1-214-3444
Fax: 57-7-619-2676
with copy to: HARKEN INTERNATIONAL, LTD.
2929 Briarpark, Suite 440
Houston, TX 77042
Attn: Stephen C. Voss
Ph: 713-789-9595
Fax: 713-789-9701
If to CONTRACTOR: MARLIN COLOMBIA DRILLING CO., INC.
Diagonal 88 No. 27-34 Barrio El Polo
Santafe de Bogota, Colombia
Attn: Mario Rodriquez
Ph: 011-57-1-635-9342 or /43 /45
Fax: 011-57-1-236-7101
With copy to: PRIDE INTERNATIONAL
1500 City West Blvd, Suite 400
Houston, Texas 77042
Attn: Robert E. Warren
Ph: (713) 789-1400
Fax: (713) 784-9568
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PART III: LIABILITIES OF THE PARTIES
13. DEFINITIONS
As used in this contract, "OPERATOR's personnel" shall mean the
employees, agents, personnel, invitees, etc. of OPERATOR and its
contractors (excluding CONTRACTOR).
"CONTRACTOR's personnel" shall mean the employees, agents, personnel,
invitees, etc. of CONTRACTOR and its subcontractors.
14. RESPONSIBILITY FOR LOSS OR DAMAGE TO CONTRACTOR ITEMS
CONTRACTOR shall assume the entire risk of and be solely responsible
for damage to or destruction or loss (by any means including blowout
and fire) of equipment, machinery, tools, (including but not limited
to CONTRACTOR's drill pipe, drill collars, subs, choke and kill lines,
flexible hoses, hydraulic hoses supplies and materials furnished by
CONTRACTOR in connection with the operations hereunder), except for
losses or damages to equipment resulting from the following: (1) all
occurrences when OPERATOR is in control of operations per Article 4.8;
(2) loss in any transportation furnished by or for account of
OPERATOR, (3) loss of or damage to equipment in the hole and (4) the
sole or gross negligence or willful misconduct of OPERATOR's
personnel. CONTRACTOR shall be responsible for equipment losses and
damages arising under (3) above resulting from negligence by
CONTRACTOR's personnel or lack of proper maintenance of Contractor's
equipment.
Based upon an inspection prior to spud of the initial well by a
mutually acceptable third party the percent wear of all downhole
equipment shall be established. This percent shall be applied to
original cost with the resulting product subtracted from the
replacement cost. The remainder will represent the amount of
liability Operator will assume for downhole equipment lost or damaged
beyond repair on the initial well. Subsequent adjustments to
replacement cost will be made on the basis of 12 1/2 % of original
cost per 365 day year for drill collars and 20 % of original cost per
365 day year for all other downhole equipment. Reimbursement for
equipment damaged in the hole, more than normal wear and tear, will be
at actual cost of repair including transportation. OPERATOR shall
have the option to replace lost or damaged equipment in-kind; provided
said replacement equipment is of a quality and condition acceptable to
CONTRACTOR.
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Reimbursement for loss or damage to CONTRACTOR's equipment, (1) when
OPERATOR is in control of operations per Article 4.8; or (2) during
transportation furnished by or for the account of OPERATOR; or (3) as
a result of the sole or gross negligence of willful misconduct of
OPERATOR'S personnel, will be at replacement cost on location without
any deduction for depreciation; provided that OPERATOR's liability
hereunder shall be reduced by the proceeds of insurance, if any,
maintained by CONTRACTOR.
15. RESPONSIBILITY FOR LOSS OR DAMAGE TO OPERATOR ITEMS
OPERATOR shall assume liability at all times for damage to or loss or
destruction of OPERATOR furnished items regardless of how, when or
where such damage, loss or destruction occurs and CONTRACTOR shall be
under no liability to reimburse OPERATOR for such damage, loss or
destruction except in the case where such damage, loss or destruction
results from the sole or gross negligence or willful misconduct by
CONTRACTOR's personnel.
16. RECIPROCAL INDEMNITIES
(A) CONTRACTOR agrees to indemnify and hold harmless OPERATOR from
and against any and all claims, costs, liabilities, or
expenses for death of, or injury to CONTRACTOR's personnel or
loss of or damage to property of CONTRACTOR's personnel,
except such death, injury, property loss or property damage as
may result from the sole or gross negligence or willful
misconduct of OPERATOR's personnel.
(B) OPERATOR agrees to indemnify and hold harmless CONTRACTOR from
and against any and all claims, costs, liabilities, or
expenses for death of, or injury to OPERATOR's personnel or
loss of or damage to property of OPERATOR's personnel, except
such death, injury, property loss or property damage as may
result from the sole or gross negligence or willful misconduct
of CONTRACTOR's personnel. Irrespective of the insurance
coverage provided by CONTRACTOR, OPERATOR'S status as an
additional insured shall not be applicable except to the
extent CONTRACTOR has specifically assumed liability for such
loss or damage under this Contract.
(C) Neither party shall be liable to the other for special,
indirect or consequential damages resulting from or arising
out of this Contract, including without limitation, loss of
profit or business interruptions, however caused.
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17. RESPONSIBILITY FOR THE CONDITION OF THE HOLE
OPERATOR shall be responsible for the condition of the hole and shall
defend, indemnify and hold CONTRACTOR harmless from and against any
claims arising from damage to or loss of the hole resulting from any
of the hazards of drilling or completion operations, including the
cost of regaining control of the hole. If the hole is lost solely
due to the gross negligence of CONTRACTOR or its' personnel,
CONTRACTOR shall redrill the hole or drill a new hole, to the depth at
which the hole was lost, at the negligence remedial rate, as
OPERATOR's sole and exclusive remedy. During any such period of
remedial drilling, the parties shall continue their respective
responsibilities under this Contract, including without limitation,
those responsibilities concerning furnishment of supplies and
materials.
18. RISK OF DAMAGE TO OR LOSS OF UNDERGROUND MINERAL DEPOSITS
OPERATOR assumes the entire risk of damage to or loss or destruction
of underground mineral deposits, reservoirs, or pools, and from any
loss of oil and gas resulting from operations under this Contract if
at the time of the act or omission causing such damage, loss or
destruction, the oil or gas had not been reduced to physical
possession above the surface of the earth. OPERATOR shall hold
CONTRACTOR harmless against any such damage to the mineral deposits,
reservoirs, or pools, and from any loss of oil and gas resulting from
operations under this Contract regardless of the cause of such loss or
damage if at the time of the act or omission causing such damage, loss
or destruction, the oil or gas had not been reduced to physical
possession above the surface of the earth.
19. RESPONSIBILITY FOR INSURANCE
CONTRACTOR shall at all times during the term of this agreement
purchase or provide insurance coverage in amounts no less than the
amounts provided in this Article 19. The insurance companies will be
reasonably acceptable to OPERATOR and CONTRACTOR shall provide
OPERATOR certificates evidencing the coverage. CONTRACTOR agrees that
all policies required shall include an endorsement waiving the rights
of subrogation against OPERATOR for liabilities specifically assumed
by CONTRACTOR under this Contract. OPERATOR will be named an
additional insured under CONTRACTOR's General Liability and Automobile
Liability policies to the extent of the liabilities specifically
assumed by CONTRACTOR under the terms of this Contract. Such policies
shall provide for thirty (30) days notice in writing to OPERATOR in
the event of cancellation or material change in coverage. In the
event subcontractors are used by CONTRACTOR, CONTRACTOR will require
such subcontractors to maintain Worker's Compensation and General
Liability Insurance commensurate with the work being subcontracted.
Any claim against Worker's Compensation or Liability Insurance shall
be defended or discharged by CONTRACTOR. The insurance coverage's
are:
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<PAGE> 17
Worker's Compensation Insurance sufficient to comply with the laws of
the State of Texas to cover Expatriate employees. CONTRACTOR shall
further comply with the laws of Colombia related to employment and
labor including any Worker's Compensation and Worker's Insurance or
other similar requirements regarding National employees, and shall
carry Employer's Liability Insurance with limits of U.S. $300,000 for
injury to or death of each person and U.S. $1,000,000 for injuries to
or death of more than one person by reason of each occurrence;
Comprehensive General Liability Insurance with limits of U.S. $300,000
for injury to or death of one person, U.S. $1,000,000 for injury to or
death of more than one person by reason of each occurrence and
property damage coverage for loss of or damage to the property of
third persons in the amount of U.S. $1,000,000 for any occurrence;
Comprehensive Automobile Liability Insurance with limits of U. S.
$250,000 per person with a limit of U.S. $1,000,000 each occurrence
and U.S. $1,000,000 property damage each occurrence;
Rig Casualty Insurance sufficient to protect CONTRACTOR against loss
or damage to the drilling equipment specified in Exhibit "B" to be
supplied by CONTRACTOR. Such Rig Casualty Insurance shall provide for
a waiver of subrogation as to OPERATOR, limited to the extent of the
specific liabilities assumed by CONTRACTOR in this Contract.
Excess Liability coverage in an amount of U.S. $5,000,000.
CONTRACTOR shall obtain any other coverage required by the laws of the
Colombia.
20. FORCE MAJEURE
Except for obligations for the payment of money, neither party shall
be liable for loss or damage arising out of any delay or failure of
performance caused by circumstances beyond its control, including but
not limited to earthquake, flood, hurricane, acts of God or public
enemies, war, national emergency, invasion, insurrection, riots,
strikes, picketing, boycott, interruption of services rendered by any
public utility or interference by any governmental agency or official
(whether legal or illegal) . Nor shall any delay or failure of
performance due to any of said causes be deemed a breach of or a
default in the performance of this Contract. The party prevented from
performing for any such cause shall promptly notify the other and
shall do all things reasonably possible to remove such cause and shall
resume performance hereunder as soon as such cause is removed. Should
any act of force majeure causing the suspension of operations
hereunder continue for a period of thirty (30) days or more, OPERATOR
shall have the right to terminate this agreement by giving CONTRACTOR
five (5) days prior notice of its intention to do so, subject to
payment in accordance with Articles 30.4 and 30.3 and 30.11.
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21. POLLUTION OR CONTAMINATION
OPERATOR shall assume all liability for and defend, indemnify, hold
CONTRACTOR harmless from any loss or damage arising from pollution or
contamination except if caused by CONTRACTOR's gross or willful
negligence, including but not limited to that which may result from
(1) blowout, fire, cratering, or any other uncontrolled flow of oil,
gas or water during the conduct of operations hereunder and (2) the
use or disposition of oil emulsion, oil base or chemically treated
drilling fluids, well cuttings, and cavings, lost circulation and
fishing operations, recovery of materials and fluids, as well as the
furnishing of transportation for and disposition of such materials
when required, and then in such event CONTRACTOR will be liable for up
to $1,000,000 in such pollution damages (the limit of CONTRACTOR's
insurance). Contractor shall assume liability for spills of pipe
dope, greases, solvents, or other similar surface materials under its
control. OPERATOR acknowledges that CONTRACTOR currently maintains
$1,000,000 of insurance coverage for pollution and contamination
liability. OPERATOR shall have the right to require CONTRACTOR to
carry additional insurance for pollution and contamination liability,
provided that OPERATOR shall be responsible of the costs of such
additional insurance.
PART IV: LAW OF THE CONTRACT
22. ASSIGNMENT OF CONTRACT
At any time after the effective date of this Contract, OPERATOR shall
have the right , for all or any portion of the initial or subsequent
term of this Contract, to assign its rights under this Contract and to
delegate its obligations under this Contract, provided that any such
assignee agrees in writing to be bound by the terms of this Contract
as if such assignee were OPERATOR hereunder. During the period of any
such assignment, CONTRACTOR agrees that CONTRACTOR shall look solely
to such assignee for performance of this Contract, including the
provisions of this Contract with respect to compensation of CONTRACTOR
and indemnification.
22.1 In the event of assignment of this Contract, all applicable
rates under this Contract, in addition to adjustments for
operations in assignee's area, shall become the
responsibility of such third party from date of release of rig
from OPERATOR until date of release of rig from the third
party except that nothing herein contained shall release
OPERATOR from CONTRACTOR's compensation during such assignment
in the event such party fails to pay CONTRACTOR all amounts
due under such assignment.
23. EXHIBITS AS PART OF CONTRACT
Exhibits "A", "B", "C", "D" and "E" (including Attachment "A")are
attached hereto and shall be considered to be part of this agreement
to the same extent
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as if incorporated in the body hereof. For better identification,
such exhibits shall be initialed by both parties.
24. RELATIONSHIP OF PARTIES
The work shall be performed by CONTRACTOR as an independent contractor
and CONTRACTOR's employees shall at all times be under the direction
and control of CONTRACTO. CONTRACTOR will receive directions from
OPERATOR as to the end results to be accomplished, and CONTRACTOR
shall be responsible for directing its employees as to the manner and
means of accomplishing the work to be performed by CONTRACTOR pursuant
to good and workmanlike practices. Compliance by CONTRACTOR, or its
employees, with engineering directions, safety practices, maintenance
instructions or change of orders issued by OPERATOR shall not affect
CONTRACTOR's status as an independent contractor and shall not relieve
CONTRACTOR of the obligations assumed by him under this Contract.
25. GOVERNING LAW
This agreement and interpretation hereof shall be governed by the laws
of the State of Texas, exclusive of the choice of law rules thereof,
as if therein to be wholly performed.
26. PRIOR AGREEMENTS
No prior stipulations, agreements or understanding by the parties or
any of their representatives shall be valid or enforceable unless
embodied in this Contract or covered by its provisions or added by
separate letter executed by both parties or their agents.
27. WAIVER
The waiver of or failure to require the performance of any covenant or
obligation contained in this Contract shall not be deemed to
constitute a waiver of a similar later breach.
28. PATENTS AND RIGHTS
OPERATOR shall not be liable or responsible for any damages or claims
of any kind arising out of real or alleged patent infringements,
design trademark or name or other protected rights which arise out of
or are caused by or are attributed, directly or indirectly, to any
work carried out and/or any equipment used by CONTRACTOR or its
subcontractors and CONTRACTOR shall indemnify, save and hold harmless
OPERATOR, its officers, employees, agents and servants from and
against such damages and claims. CONTRACTOR shall not be liable or
responsible for any damages or claims of any kind arising out of real
and alleged patent infringements, design trademark or name or other
protected rights which arise out of or are caused by or are
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attributed to, directly or indirectly, any work carried out and/or any
equipment, except the equipment of CONTRACTOR and its subcontractors,
used by OPERATOR and OPERATOR shall indemnify, save and hold harmless
CONTRACTOR, its officers, employees, agents and servants from and
against such damages and claims.
29. OBLIGATION TO COMPLY WITH LAWS
CONTRACTOR and OPERATOR agree to comply with all permits, concessions
and clearances provided to each other (and with all applicable laws
and regulations) that govern the performance of each party's
obligations under this Contract. Each party shall indemnify the other
party against any and all liabilities, damages, claims, fines,
penalties and expense of whatsoever nature resulting from either
party's failure to comply with this provision. CONTRACTOR represents
that it is qualified to do business and is established on a proper
legal basis to perform this Contract for OPERATOR in Colombia.
PART V: COMPENSATION TO CONTRACTOR
30. RATES OF COMPENSATION - None of the rates specified under this Clause
30 shall begin to accrue until the Commencement Date.
CONTRACTOR shall perform drilling operations and fulfill its
obligations according to this Contract. OPERATOR shall pay CONTRACTOR
as full compensation for the work performed and material, equipment
and supplies furnished as follows:
30.1 Mobilization Fee - Initial wellsite will be determined prior
to Mobilization Fee being quoted by CONTRACTOR and approved by
OPERATOR. OPERATOR shall pay CONTRACTOR in a lump sum the
amount set forth as Exhibit "A", Item 1, for CONTRACTOR
mobilizing its personnel which are located at Torcaz 2 and
its' rig and ancillary equipment and materials and supplies
from the Torcaz field area of the Middle Magdalena Valley to
Operator's wellsite. OPERATOR shall pay this amount within
thirty days of receiving CONTRACTOR's invoice bearing the date
of departure of the rig from the Torcaz Field.
30.2 Operating Day Rate - This rate is set forth as Exhibit "A",
Item 2. Unless superseded by another rate, beginning on the
day CONTRACTOR is ready to spud the first well (the
"Commencement Date") and continuing all the time until the rig
is released in preparation for rigging down to move.
30.3 Moving Rate - This rate is set forth as Exhibit "A", Item 3.
This rate shall apply during rigging up operations, during
dismantling operations and for all time spent moving the rig
from one wellsite to another wellsite. Operator and
Contractor shall, within 24 hours or earlier of rig release
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from Operator's wellsite, mutually agree to a single lump sum
transportation fee to transport all of Contractor's rig and
equipment to Operator's next wellsite. If mutual agreement
on a lump sum fee cannot be reached then Contractor's
equipment will be moved using Operator furnished
transportation and Contractor shall invoice Operator for all
moving days at the Moving Rate specified in Exhibit "A".
30.4 Standby With Crews Rate - This rate is set forth in Exhibit
"A", Item 4. Except for the situation set forth in Article
30.6, whenever the rig is shut down at OPERATOR's request, the
rig shall be considered to be standing by with crews. The
Operating Day Rate shall be payable for the first 24 hours
after Operator's request and thereafter the Standby With Crews
Rate shall be payable until the standby with crews status
ends.
30.5 Standby Without Crews Rate - This rate is set forth as
Exhibit "A", Item 5. Whenever in OPERATOR'S sole judgment the
estimated period of OPERATOR requested rig shut down is long
enough to warrant demobilization of personnel, cessation of
camp operations or other cost reductions, OPERATOR may place
the rig on the Standby Without Crews Rate upon five days
written notice to CONTRACTOR. OPERATOR shall reimburse
CONTRACTOR in demobilizing CONTRACTOR's personnel from point
of origin and remobilizing them in connection with a period of
Standby Without Crews status at cost plus ten percent (10%).
30.5.1 Following the completion of Torcaz 2 the then
standby without crew rate of $2340/day shall apply
following installation and successful testing of
Top Drive until mobilization commences from Torcaz
2 to Catalina 1.
30.6 Mechanical Breakdown Rate - This rate is set forth at Exhibit
"A", Item 6 and is applied as follows: if there is a work
stoppage due to mechanical failure not primarily caused by the
negligence of CONTRACTOR's personnel, payment shall be at the
full Operating Day Rate for any such stoppage up to
twenty-four hours per occurrence. Thereafter, CONTRACTOR
shall be entitled to receive the Mechanical Breakdown Rate
until the breakdown is repaired. Cumulative invoices by
CONTRACTOR to OPERATOR under this Clause 30.6 shall not
exceed $250,000 for any 365 day time period.
30.7 Negligence Remedial Rate
30.7.1 This rate is set forth at Exhibit "A", Item 7 and
is applied as follows: If there is a work stoppage
as a primary result of the negligence of
CONTRACTOR's personnel, OPERATOR shall pay the
Operating Day Rate for any such stoppage up to
twenty-four hours. Thereafter, the rate shall be
at the
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Negligence Remedial Rate until the breakdown is
repaired or for ten days whichever first occurs.
If a breakdown under this Article 30.7.1 continues
for more than ten days, CONTRACTOR shall earn zero
rate beginning with the eleventh day until the
breakdown is repaired. Total payments under this
Clause 30.7.1 shall not to exceed $100,000 during
the initial term of this contract and $50,000
during subsequent terms.
30.7.2 The Negligence Remedial Rate shall be payable for
all time, without limitation, spent at drilling
operations as provided in Article 17.
30.8 Force Majeure Rate - This rate is set forth at Exhibit "A",
Item 8. The Force Majeure Rate shall be payable whenever a
condition of force majeure exists as described in Article 20.
Total payments under this Clause 30.8 shall not exceed
$100,000 during the initial terms of this contract and $50,000
during subsequent terms.
30.9 Demobilization Fee - OPERATOR shall pay CONTRACTOR in a lump
sum the amount set forth as Exhibit "A", Item 9, as a
demobilization fee within thirty days of receiving
CONTRACTOR's invoice bearing the date the rig, ancillary
equipment and supplies departs OPERATOR's last wellsite.
30.10 Application of Rates - The rates set forth in this Article 30
apply for a full 24-hour day and shall be prorated when two or
more rates apply to parts of a single 24-hour day. Only one
rate or fee shall be payable at any one time. During rigging
up, dismantling and well to well movement operations, the full
daily rate shall be payable even if operations are conducted
only during the daylight portion of the day.
30.11 Early Termination Fee - In the event this Contract is
terminated by OPERATOR prior to the one year initial term,
CONTRACTOR will receive, in addition to the compensation
provided in Section 3.2.2, the Early Termination Fee. The
Early Termination Fee shall not exceed 90 days at the Standby
Without Crew Rate, the applicable Demobilization Fee and the
remaining unrecovered cost of the 5" Drill Pipe and Top Drive
Unit.
31. REIMBURSABLE ITEMS
31.1 Materials, Services and Personnel - If OPERATOR requests
CONTRACTOR to provide materials, services or personnel in
addition to those specified in this Contract. OPERATOR shall
reimburse CONTRACTOR for such materials and services as are
actually furnished at CONTRACTOR cost plus fifteen percent
(15%). If any additional personnel are furnished by
CONTRACTOR on a short term
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basis, OPERATOR shall reimburse CONTRACTOR at cost plus
fifteen percent (15%).
31.2 Oil-Based Drilling Fluid Incentives - For each day of the
Contract term during which oil base drilling fluid is in use,
OPERATOR shall reimburse CONTRACTOR at the rate of U.S. $10.00
per person for incentive payments to those staff personnel and
U.S.$4.00 per person for incentive payments to those non-staff
personnel assigned to the operation who are actually on a rig
tour on a day when oil base drilling fluid is in use.
CONTRACTOR shall invoice OPERATOR separately for this
reimbursement each month and shall support the invoice with a
schedule of incentive payments made.
32. DAILY RATE INCREASES
The rates established in the Contract are based on current costs as of
the date of this contract. If after the execution of this agreement,
CONTRACTOR shall demonstrate to the reasonable satisfaction of
OPERATOR that an increase has occurred in any component, or the sum of
several components of CONTRACTOR's costs that increases said costs in
excess of 5%, the daily rate shall be appropriately adjusted in an
amount equal to such cost changes. Daily Rate increases under this
Clause shall not exceed 10% of the Operating Day Rate during any 12
month period.
33. SIGNATURES OF THE PARTIES
IN WITNESS OF THE COVENANTS AND CONDITIONS OF THE FOREGOING THIRTY-
THREE ARTICLES OF THIS CONTRACT AND THE EXHIBITS HERETO, the parties
execute two (2) copies of this Contract, one of which shall be
retained by OPERATOR and one of which shall be retained by CONTRACTOR.
OPERATOR CONTRACTOR
HARKEN DE COLOMBIA, LTD. MARLIN COLOMBIA DRILLING
COMPANY, INC.
By: /s/ BRUCE N. HUFF By: /s/ ROBERT E. WARREN
------------------------------- --------------------------
Bruce N. Huff Robert E. Warren
Title: Sr. V.P. & Director Title: Vice President
--------------------------- -----------------------
Date: May 15, 1997 Date: May 15, 1997
---------------------------- ------------------------
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EXHIBIT A
MARLIN COLOMBIA DRILLING COMPANY - RIG 8
RATES OF PAYMENT
HARKEN DE COLOMBIA, LTDA.
--------------------------------------------------------------------------------
ITEM DESCRIPTION FEE RATE IN U.S. $
--------------------------------------------------------------------------------
1. Mobilization Fee
Torcaz 2 to Catalina No. 1 $ 210,000
--------------------------------------------------------------------------------
2. Operating Day Rate
with 3rd Pump $ 12,038 + $6,200
--------------------------------------------------------------------------------
3. Moving Rate $ 7,825 + $6,200
--------------------------------------------------------------------------------
4. Standby with Crews Rate $ 10,972 + $6,200
--------------------------------------------------------------------------------
5. Standy without Crews Rate $ 3,500 + $6,200
--------------------------------------------------------------------------------
6. Mechanical Breakdown Rate
1st 24 hrs. Per occurrence $ 12,038 + $6,200
After 24 hrs. Per occurrence $ 7,825 + $6,200
--------------------------------------------------------------------------------
7. Negligence Remedial Rate
1st 24 hrs. $ 12,038
After 24 hrs. thru 30 days $ 10,972
After 30 days $ 0
--------------------------------------------------------------------------------
8. Force Majeure Rate $ 10,972
--------------------------------------------------------------------------------
9. Demobilization Fee $ 280,000*
--------------------------------------------------------------------------------
10. Early Termination Fee (90 Days x $3500/day) +
Term remaining in days
x $6,200/day
--------------------------------------------------------------------------------
11. Catering and Lodging $ 12.00/meal
--------------------------------------------------------------------------------
12. Patio Hands $ 50.00/day each
--------------------------------------------------------------------------------
* Unless mobed to another client within 30 days, then 100,000.