Sample Business Contracts

China-Sichuan-Zitongxi and Zitongdong Blocks Joint Study Agreement - Petrochina Co. Ltd. and Sunwing Energy Ltd.

Sponsored Links

                             JOINT STUDY AGREEMENT


                           PETROCHINA COMPANY LIMITED
                              SUNWING ENERGY LTD.

                                   TO CONDUCT
                           A JOINT FEASIBILITY STUDY
                            IN NORTHWESTERN SICHUAN
                              FOR THE PURPOSES OF


                              JOINT STUDY AGREEMENT

                           PETROCHINA COMPANY LIMITED
                               SUNWING ENERGY LTD.

                                   TO CONDUCT
                            A JOINT FEASIBILITY STUDY
                             IN NORTHWESTERN SICHUAN
                               FOR THE PURPOSES OF

Sunwing Energy Ltd. (Sunwing) sent a team of technical experts to visit the
Southwest Oil and Gasfield Company (SWOG) in Chengdu, Sichuan in November 2000.
SWOG is a subsidiary of PetroChina Company Limited (PetroChina). Technical
experts from SWOG presented overviews on the potential of six (6) natural gas
and oil exploration/development blocks. After further evaluation of the
preliminary data presented to Sunwing, Sunwing has recommended to PetroChina
that further detailed studies of the Zitongxi and Zitongdong blocks are required
prior to entering into any negotiations of a Production Sharing Contract(s).
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 the 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.

The Study Team will prepare interim progress reports and a final report
recommending either onward work programs on one or both blocks or no further
activity on one or both of the blocks. The purpose of conducting the JFS is to
study the natural gas and oil reserve potentials associated with these blocks
and if considered feasible, a Production Sharing Contract or Contracts 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 actual block sites to observe
     and review infrastructure and topography of the area.

                                                                  March 29, 2001
                                     1 of 5


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 f&am will complete the JFS within six (6) 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 both 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 fields 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 fields 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 each 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

                                                                  March 29, 2001
                                     2 of 5


     o    Detailed seismic lines including digital data from digitally recorded
     o    Seismic cross sections
     o    Complete drilling well histories in each producing gasfield, including
          daily reports, bit records, drilling fluids, etc.
     o    Access to complete drilling well histories of all other wells drilled
          in the proposed blocks
     o    Complete electric well log data (in digital form where available)
     o    All core data, representative core samples, core analysis reports and
          relative permeability data
     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 six 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 and Sunwing. During the term of the JFS, the
          Study Team will present interim progress reports after two and
          four-month periods to PetroChina and Sunwing. The Study Team will also
          be responsible for preparing an economic evaluation.

7.   In order to facilitate the JFS, Sunwing will invite at its expense, the
     following experts (as required) to either its Calgary or Bakersfield

     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 all the studies as provided for in this agreement.

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

                                                                  March 29, 2001
                                     3 of 5


     1.3. Provide or assist to provide necessary and appropriate data pertinent
          to the JFS, including data in PetroChina possession or data in the
          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 any future Production Sharing Contract(s).

     1.5. Within two (2) months after PetroChina has accepted the feasibility
          study report from Sunwing, both parties will commence negotiations on
          a Production Sharing Contract(s).

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 one hundred and eighty
          thousand US Dollars (US$l80,000) 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

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

          o    The first installment one hundred and five thousand US Dollars
               (US$105,000) shall be paid within thirty (30) days upon signing
               of this Agreement.
          o    The second installment thirty-five thousand US Dollars
               (US$35,000) shall be paid within thirty (30) days upon receipt of
               the data package.
          o    The third installment forty thousand US Dollars (US$40,000) shall
               be paid within thirty (30) days upon expiration of the Study

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

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

     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 related business 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, for a period of
          nine (9) months from the signing of this JSA, Sunwing will have the

                                                                  March 29, 2001
                                     4 of 5


          exclusive right to negotiate with PetroChina for Production Sharing
          Contracts in these two blocks.

                           ARTICLE 4 - CONFIDENTIALITY

1.   All data provided by PetroChina and/or other government organizations to
     Sunwing are 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
     purposes 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 Study 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:

     PetroChina Company Limited                Sunwing Energy Ltd.
     World Tower, #I6 Ande Road,               Room 1928, China World Trade
     Dongcheng District                        Center, #I Jianguomenwei Dajie,
     Beijing 100011                            Beijing 100004

     /s/ Zeng Xing/Qiu                         /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: March 29, 2001

                                                                  March 29, 2001
                                     5 of 5