Sample Business Contracts

China-Chongqing-Yudong Block Joint Study Agreement - PetroChina Co. Ltd. and Sunwing Energy Ltd.

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                             JOINT STUDY AGREEMENT


                           PETROCHINA COMPANY LIMITED


                              SUNWING ENERGY LTD.

                                   TO CONDUCT
                            A JOINT FEASIBILITY STUDY
                               OF THE YUDONG BLOCK
                            IN CHONGQING MUNICIPALITY
                               FOR THE PURPOSES OF


                              JOINT STUDY AGREEMENT

                           PETROCHINA COMPANY LIMITED
                               SUNWING ENERGY LTD.

                                   TO CONDUCT
                            A JOINT FEASIBILITY STUDY
                               OF THE YUDONG BLOCK
                            IN CHONGQING MUNICIPALITY
                               FOR THE PURPOSES OF

Surwing Energy Ltd. (Sunwing) sent a team of technical experts to visit the
Southwest Oil and Gasfield Company in Chengdu, Sichuan (SWOG) in November 2000.
SWOG is a subsidiary of PetroChina Company Limited (PetroChina). Technical
experts from SWOG presented overviews on the potential of six (6) exploration
blocks. After further evaluation of the preliminary data presented to Sunwing,
Sunwing has recommended to PetroChina that further detailed study of the Yudong
block is required prior to any negotiations of a Production Sharing Contract.
Following additional discussion in January and February 2001, PetroChina and
Sunwing have agreed to sign this Joint Study Agreement (JSA).

                              ARTICLE 1 - OBJECTIVE

Sunwing and PetroChina will form a Joint Study Team (Study Team) and will
cooperate diligently to carry out a Joint Feasibility Study (JFS) to confirm the
geophysical and geological model of the area, to estimate the ultimate natural
gas and oil potential of the area, to evaluate improved drilling technology, to
evaluate completion and stimulation solutions to improve gas and oil recovery
and establish economic criteria for a potential development. Once this block is
approved for foreign cooperation by the relevant department of the Chinese
Government, the parties will commence to negotiate a Production Sharing

The Study Team will prepare interim progress reports and a final report
recommending either onward work program or no further activity on the block. The
purpose of conducting the JFS is to study the natural gas and oil reserve
potentials associated with this block and if considered feasible, a Production
Sharing Contract would be entered into between PetroChina and Sunwing.


1.   Sunwing will send a team of technical experts to the SWOG Chengdu office to
     review relevant data and will travel to the block to observe and review
     infrastructure and topography of the area.

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2.   Following receipt of the entire data package, Sunwing will sort and
     catalogue such data as to enable efficient onward retrieval and technical
     use of the data during the JFS

3.   The Study Team will complete the JFS within three (3) months upon
     finalizing the cataloging of the data package. At the end of the JFS the
     Study Team will submit the final detail report to PetroChina and Sunwing

4.   Main studies and technical requirements

     During the JFS, the Study Team will prepare a study report which shall
     include but not be limited to the following:

     o    Identify geological structures with significant exploration prospects
          by using the available seismic and geological data. This may involve
          the reprocessing of some of the available seismic data.

     o    Evaluate wells within the block boundaries in order to develop a
          description of the reservoir and fluid properties that would most
          likely be encountered in the exploration prospects.

     o    Determine the hydrocarbon in place and reserves for each of the
          exploration prospects.

     o    Analyze the test data and production data from wells within the block
          boundaries and develop a production forecast for each prospect.

     o    Evaluate drilling and completion techniques to be employed to best
          exploit these prospects.

     o    Prepare capital cost estimates for drilling, completion, and
          facilities, and prepare operating cost estimates. These cost estimates
          will be used for economic evaluations.

     o    Conduct economic evaluations for each prospect.

     o    Rank the prospects according to the economic parameters and risk.

     o    Prepare a final study report that includes a proposed work program
          complete with an economic analysis of the program.

5.   The data package that PetroChina should provide to Sunwing includes but is
     not limited to the following data for this block:

     o    Coordinates of proposed block area including exclusion areas for
          existing gasfields, oilfields and other man made structures
     o    Surface infrastructure map including roads and villages
     o    Bourgeau Anomaly map
     o    Gravity map
     o    Magnetic Anomaly map
     o    Map summarizing exploration activity within the block
     o    Composite columnar cross section to 4500 meters
     o    Topographic maps, current structure maps, basement burial depth maps,
          current top of reservoir structure maps and surface oilfield facility
     o    Geographic and geology maps of existing fields
     o    Map showing location of seismic lines

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     o    Detailed seismic lines including digital data from digitally recorded
     o    Seismic cross sections
     o    Complete drilling well histories on each well, including daily
          reports, bit records, drilling fluids, etc.
     o    Complete electric well log data (in digital form where available) for
          each well
     o    All core data, representative core samples, core analysis reports and
          relative permeability data (the samples will be returned after use)
     o    Completion and stimulation data on existing wells
     o    Formation pressure data and temperature data/logs
     o    All water, gas composition analysis
     o    AOF test data and deliverability test data on the existing wells
     o    Copies of existing seismic or geological reports on each block
     o    Statistical data or reports for seismic, geology and drilling

6.   Estimated Work schedule following receipt of the complete data package by

     o    Upon receipt of the data package, Sunwing's staff will catalogue all

     o    During the next three months, the Study Team will carry out the JFS
          under terms of the JSA, and will prepare and present a written, final
          report to PetroChina. The Study Team will also be responsible for
          preparing an economic evaluation.

7.   In order to facilitate the JFS and evaluation, Sunwing should invite at its
     expense, the following experts (as required) to either its Calgary or
     Bakersfield off ice:

     Senior Geologist
     Senior Geophysicist
     Senior Reservoir Engineer
     Senior Log Analyst
     Senior Drilling Engineer
     Senior Operations/Production Engineer
     Senior Economist


1.   Based on this agreement, PetroChina's rights and obligations include but
     are not limited to the following:

     1.1. Participate in the JFS as provided for in this agreement.

     1.2. Provide assistance to Sunwing to obtain necessary permits and
          approvals for the JFS.

     1.3. Provide or assist to provide necessary and appropriate data pertinent
          to the JFS, including the data in PetroChina possession or data in the

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          hands of other government organizations necessary for the JFS if it is

     1.4. Provide technical experts to help conduct the JFS. Priority is to
          provide technical experts who will likely participate in this program
          and the execution phase of the future Production Sharing Contract.

     1.5. After the receipt of the Approval from the relevant department of the
          Chinese government and the results of the JFS have been accepted by
          PetroChina, both parties will commence negotiations on a Production
          Sharing Contract as soon as possible.

2.   Based on this agreement Sunwing's rights and obligations include but are
     not limited to the following:

     2.1. Sunwing shall pay a data package fee of eighty thousand US Dollars
          (US$80,000) to CCAD (the official authority in charge of onshore Sino-
          foreign cooperation as authorized by PetroChina) for data as outlined
          in Article 2 Clause 5 of this agreement.

          The payment will be made in three (3) installments.

          O    The first installment forty-five thousand US Dollars (US$45,000)
               shall be paid within thirty (30) days upon signing of this

          O    The second installment fifteen thousand US Dollars (US$l5,000)
               shall be paid within thirty (30) days upon receipt of the data

          O    The third installment twenty thousand US Dollars (US$20,000)
               shall be paid within thirty (30) days upon expiration of the
               Study period.

     2.2. Apply the appropriate advanced technology as commonly practiced in the
          international oil community in conducting the Study.

     2.3. Provide the necessary technical experts to work on the study.

     2.4. Carry out the data analysis and processing as approved in the study

     2.5. Bear all costs related to the JFS, including the cost of data
          acquisition, the costs associated with the business expenses incurred
          by PetroChina personnel (including international travel and
          accommodation and travel related expenses) assigned to the Study Team
          and costs incurred for travel and travel related business expenses
          for the Study Team while in China, Calgary or Bakersfield.

     2.6. Unless otherwise agreed to by the Parties in writing, Sunwing will
          have the exclusive right to negotiate with PetroChina for a Production
          Sharing Contract in this block for a period of four (4) months
          (negotiation period) after the receipt of the Approval from the

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          department of the Chinese government and the results of the JFS have
          been accepted by PetroChina.

                           ARTICLE 4 - CONFIDENTIALITY

1.   All data provided by PetroChina and/or other government organizations to
     Sunwing will remain confidential. The data cannot be transferred, presented
     as gift, sold, published or made public without the written approval from
     PetroChina or other government organizations. Sunwing will not provide the
     data to any third party except for consultants hired by Sunwing for the
     purpose of completing or auditing the JFS and only after they sign a
     non-disclosure agreement.

2.   Without approval from the other party, PetroChina or Sunwing shall not
     provide the results of this JFS to any third party other than their
     affiliated companies.

3.   The above confidentiality of this agreement will remain effective after the
     expiration of this agreement.

                               ARTICLE 5 - OTHERS

1.   This agreement is under the jurisdiction of the laws of the People's
     Republic of China.

2.   This agreement is written and signed in both Chinese and English, and they
     have equal force and effect.

3.   Contact address of the parties:

<S>                                         <C>
PetroChina Company Limited                  Sunwing Energy Ltd.
World Tower, #16 Ande Road,                 Room 1928, China World Trade
Dongcheng District                          Center, #1 Jianguomenwei Dajie,
Beijing 100011                              Beijing 100004

By: /s/ Zeng Xing Qiu                       By: /s/ Robert M. Friedland
   -------------------------------             -----------------------------
Zeng Xing Qiu,                              Robert M. Friedland,
General Manager                             Co-Chairman
Foreign Cooperation Administration          Sunwing Energy Ltd.
PetroChina Company Limited

Date:          29/03/2001                    Date:       29 March 2001
      -----------------------------               ---------------------------


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