Exhibit 10. (p)
CORRS CHAMBERS WESTGARTH
Lawyers
Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
AUSTRALIA
Tel: (07) 3228 9333
Fax: (07) 3228 9444
DX: 135 BRISBANE
PALM VALLEY PRODUCERS
KUFPEC AUSTRALIA PTY LTD
GASGO PTY LIMITED
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PALM VALLEY GAS PURCHASE AGREEMENT - DEED OF AMENDMENT
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7
B/583635/1B/583635/1/58952.1
58952.1
THIS DEED is made on
BETWEEN SANTOS LTD ACN 007 550 923 a company incorporated in the
State of South Australia and having its registered office
at Level 29, 91 King William Street, Adelaide, South
Australia (Santos) of the first part
AND MAGELLAN PETROLEUM (N.T.) PTY LTD ACN 009 718 183 a
company incorporated in the State of Queensland and
having its registered office at 10th Floor, 145 Eagle
Street, Brisbane, Queensland (Magellan) of the
second part
AND FARMOUT DRILLERS PTY LTD ACN 000 393 635 a company
incorporated in the State of New South Wales and having its
registered office at Level 29, 91 King William Street,
Adelaide, South Australia (Farmout) of the third part
AND CANSO RESOURCES PTY LTD ACN 002 133 833 a company
incorporated in the State of New South Wales and having its
registered office at Level 29, 91 King William Street,
Adelaide, South Australia (Canso) of the fourth part
AND SANTOS EXPLORATION PTY LTD ACN 005 784 305 a company
incorporated in the State of Victoria and having its
registered office at Level 29, 91 King William Street,
Adelaide, South Australia (SEPL) of the fifth part
AND KUFPEC AUSTRALIA PTY LTD ACN 001 800 924 a company
incorporated in the State of New South Wales and having its
registered office at Level 1, 18 Richardson Street, West
Perth, Western Australia (Kufpec) of the sixth part
AND GASGO PTY LIMITED ACN 009 627 801 a company incorporated in
the Northern Territory and having its offices at 4th Floor,
Energy House, 18-20 Cavenagh Street, Darwin, Northern
Territory (Gasgo) of the seventh part
RECITALS
A The Producers and Gasgo are parties to the Palm Valley Gas
Purchase Agreement made 28 June 1985 (the Gas Purchase
Agreement)under which Gasgo purchases natural gas from the Producers.
B Kufpec was a party to the Gas Purchase Agreement until pursuant to
a Deed of Covenant and Consent dated 31 October 2002 its
interest under the Gas Purchase Agreement was assigned to Magellan
with effect from 1 December 2001.
C Each of the Parties has agreed that with effect on and from the
Effective Date the Gas Purchase Agreement is amended in the
manner set out in this Deed.
IT IS AGREED
1 INTERPRETATION
1.1 Definitions
In this Deed, unless the context otherwise requires, terms defined in
the Gas Purchase Agreement have the meaning they bear in the Gas
Purchase Agreement and:
"Deed" means this deed and the recitals to it.
"Effective Date" means 1 July 2002.
"Gas Purchase Agreement" has the meaning given in recital A of this
Deed.
"Parties" means the parties to this Deed.
"Producer Claim" means any and all duties, obligations, liabilities,
responsibilities, actions, causes of action, potential causes of
action, suits, rights, claims, demands, expenses and liabilities of
any nature whatsoever which may apply against, be imposed upon or be
accruing or has accrued against the Purchaser arising out of or
connected with any failure by or delay of the Purchaser in approving
the drilling of the sixth, seventh, eighth and ninth Additional Wells
which failure or delay occurred on or before or may be continuing up
to the Effective Date.
"Producers" means the parties to this Deed other than Gasgo and
Kufpec.
"Purchaser Claim" means any and all duties, obligations, liabilities,
responsibilities, actions, causes of action, potential causes of
action, suits, rights, claims, demands, expenses and liabilities of
any nature whatsoever which may apply against, be imposed upon or be
accruing or has accrued against each or any of the Producers or
Kufpec arising out of or connected with any failure on the part of
the Producers or Kufpec to supply all or any part of the contracted
quantities of Gas in accordance with the terms of the Gas Purchase
Agreement which failure may have occurred on or before or be
continuing up to the Effective Date.
1.2 Interpretation
Headings are for convenience only and do not affect interpretation.
The following rules of interpretation apply unless the context
requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) Where a word or phrase is defined, its other grammatical
forms have a corresponding meaning.
(d) A reference to a person includes a body corporate, an
unincorporated body or other entity and conversely.
(e) A reference to a clause is to a clause of this Deed.
(f) A reference to any party to this Deed or any other
agreement or document includes the party's successors and
permitted assigns.
(g) A reference to any agreement or document is to that
agreement or document as amended, novated, supplemented,
varied or replaced from time to time, except to the extent
prohibited by this Deed or that other agreement or
document.
(h) A reference to any legislation or to any provision of any
legislation includes any prior corresponding legislation,
modification or re-enactment of it, any corresponding
legislative provision and any legislative provision
substituted for it and all regulations and statutory
instruments issued under it.
2 AMENDMENT TO GAS PURCHASE AGREEMENT
2.1 The Parties acknowledge covenant and agree that on and from the
Effective Date the Gas Purchase Agreement is amended as follows:
1 Insert a new clause 2.61 as follows:
"2.61 Development Work after 1 July 2002:
(a) Notwithstanding any other provision of this
Agreement the following clauses of this clause
2.61 shall govern the responsibilities,
obligations and liabilities of the Parties under
this Agreement in respect of the drilling of
Additional Wells on and from 1 July 2002. Where
there is any inconsistency between the
provisions of this clause 2.61 and any other
provision of this Agreement then the provisions
of this clause 2.61 shall prevail to the extent
of any such inconsistency.
(b) For the purpose of this clause 2.61 "Successful"
within the context of the drilling of an
Additional Well shall be defined as the drilling
of a Well which maintains an average flow rate
of at least 113,267 Cubic Metres per day, as
metered, into the gas treatment plant servicing
the Gas Field over the first 6 months of its
operation such that the total production from
the Gas Field increases by a commensurate
amount.
For the purpose of determining increased total
field production of Gas as a result of the
drilling of any Additional Well, the Producers
and the Purchaser shall agree a forecast of
future Gas production until the expiry date of
this Agreement from the Gas Delivery System as
it exists prior to the drilling of the relevant
Additional Well. Such forecast shall be the base
level of production for the purpose of
determining the increase in total field
production of Gas as a result of the drilling of
the relevant Additional Well. The Parties
acknowledge that each forecast of future
production of Gas prior to the drilling of the
relevant Additional Well shall be made without
reference to any potential event of Force
Majeure which may cause any material variation
in production. Any forecast of future production
of Gas shall be adjusted to take into account
any material variation in production which
actually occurs as a result of an event of Force
Majeure so that the base level of production
used to establish any incremental increase in
production as a result of drilling any
Additional Well, shall be the forecast quantity
so adjusted. If the Purchaser and the Producers
are unable to agree:
(i) such a forecast of production;
(ii) whether there has been a material variation in production as a result of
any event of Force Majeure; or
(iii) how to adjust an existing forecast due to occurrence of an event of Force
Majeure,
then that forecast, the existence of any
material variation in production or adjustment
(as applicable) shall be determined by reference
to an Independent Expert in accordance with
clause 2.60. Notwithstanding anything else in
this Agreement, for the purposes of this clause
2.61(b), Force Majeure specifically excludes the
event or circumstance set out in paragraph (g)
of the definition of Force Majeure in clause
1.10 of this Agreement.
(c) The Parties acknowledge and agree that on and
from 1 July 2002 the Purchaser's liability to
meet Development Expenditure in respect of the
Additional Wells shall be determined only in
accordance with and limited to its liability
under this clause 2.61.
(d) The Purchaser hereby approves the drilling of a
sixth Additional Well as Development Work. The
Producers shall supply to the Purchaser
recommendations for the location of the drilling
of the sixth and any subsequent Additional Well
but the final determination of the location of
the sixth Additional Well and any further
Additional Well approved by the Purchaser as
Development Work shall be the Purchaser's.
(e) The reasonable costs incurred by the Producers
in drilling the sixth Additional Well shall be
Development Expenditure for the purpose of this
Agreement which shall be recouped by the
Producers from the Purchaser.
(f) Subject to the availability of a drilling rig
the Producers shall expeditiously upon approval
by the Purchaser in accordance with this clause
2.61 carry out each of the drilling, completion
and connection to the Gas Delivery System of the
sixth Additional Well and any subsequent
Additional Well in accordance with good oil
field practice and in a cost-effective manner.
(g) If the sixth Additional Well is Successful then
the Purchaser will approve the drilling of the
seventh Additional Well as Development Work and
the expenditure of the Producers in respect of
the drilling of that Additional Well shall be
Development Expenditure for the purpose of this
Agreement.
(h) If the seventh Additional Well is Successful
then, in addition to the Producers' obligations
under clause 2.22, the Producers shall as soon
as practicable after completion of the drilling
thereof commence work in assessing the reservoir
and deliverability of the Gas Field and shall
furnish to the Purchaser a report ("Reserves and
Deliverability Report") by an independent
reservoir engineer, approved by the Purchaser
(such approval not to be unreasonably withheld),
estimating the Proven Reserves in the Gas Field
and the annual production capacity of the Gas
Field over its life from the then existing
Wells.
(i) Subject to the Purchaser being satisfied, acting
reasonably, that the findings of the Reserves
and Deliverability Report justify the drilling
of an eighth Additional Well, and subject to the
sixth and seventh Additional Wells continuing to
realise a net increase in the production of Gas
from the Gas Field compared to production prior
to the drilling of the sixth Additional Well,
then the Purchaser shall approve the drilling of
the eighth Additional Well as Development Work
and the expenditure of the Producers in respect
of the drilling of that Additional Well shall be
Development Expenditure for the purposes of this
Agreement.
(j) If the eighth Additional Well is Successful then
subject to the sixth, seventh and eighth
Additional Wells continuing to produce a net
increase in the production of Gas from the Gas
Field compared to production prior to the
drilling of the sixth Additional Well, then the
Purchaser shall approve the drilling of the
ninth Additional Well as Development Work and
the expenditure of the Producers in respect of
the drilling of that Additional Well shall be
Development Expenditure for the purposes of this
Agreement.
(k) Gas production from the Gas Field prior to the
drilling of the sixth Additional Well for the
purpose of paragraphs (i) and (j) will be
determined by calculating the average daily
production of the Gas Field over the period of
two months prior to the date the drilling of the
sixth Additional Well commences, but excluding
any day on which production has been materially
reduced by an event of Force Majeure. If the
Purchaser and the Producer are unable to agree:
(A) whether, on any day, there has been a material
reduction in production as a result of any event
of Force Majeure; or
(B) how to adjust the Gas Field production due to an
occurrence of an event of Force Majeure;
then the existence of any material reduction or
adjustment (as applicable) shall be determined
by reference to an Independent Expert in
accordance with clause 2.60.
(l) If the sixth or any subsequent Additional Well
is not Successful then there shall be no further
obligation on the Purchaser to approve the
drilling of subsequent Additional Wells
provided that the Producers may at their
discretion drill and complete any Additional
Well, and connect same to the Gas Delivery
System and should that Well be Successful
then the expenditure incurred by the Producers
in respect of that
Additional Well shallbe deemed to be Development
Expenditure which shall be recouped by the
Producers from the Purchaser as if the
drilling, completion and connection of that
Additional Well was Development Work for the
purposes of this Agreement.
(m) The Producers shall at all times do everything
reasonably necessary including the undertaking
of Development Work to maximise production of
Gas from the Gas Field to be sold and delivered
to the Purchaser under this Agreement using the
Gas Delivery System in a cost-effective manner
in accordance with good oil field practice. For
the avoidance of doubt the Producers shall have
no obligation to expand or modify the Gas
Delivery System other than by carrying out
Development Work and the Producers shall have no
obligation to drill Additional Wells except in
accordance with the provisions of paragraphs (d)
to (k) inclusive.
(n) Notwithstanding any other provision of this
Agreement and any other obligation on the
Purchaser hereunder, the Purchaser and the
Producers acknowledge and agree that the
Purchaser shall purchase at the Contract Price
from the Producers all Gas the Producers are
able to produce from the Gas Field over the
balance of the term of this Agreement as a
result of complying with this clause 2.61.
(o) Notwithstanding any other provision in this
Agreement and any other right or obligation on
the Producers hereunder, the Producers must
obtain the approval of the Purchaser (such
approval not to be unreasonably withheld) to
each of:
(A) completing; and
(B) connecting to the Gas Delivery System,
of any Additional Well, the drilling of which
has been approved by the Purchaser pursuant to
this clause 2.61. The reasonable costs incurred
by the Producers in completing or connecting
with the Gas Delivery System (as the case may
be) of any Additional Well which has been
approved by the Purchaser pursuant to this
paragraph (o) will be Development Expenditure
for the purposes of this Agreement which shall
be recouped by the Producers from the Purchaser.
(p) The Producers shall operate and maintain the Gas
Field in accordance with good oil field
practice.
(q) The Producers shall not do anything to
artificially restrict, interrupt or curtail the
production of Gas from the Gas Field below that
available from the developed capacity of the Gas
Delivery System for the purpose of obtaining a
benefit for the Mereenie Producers or any other
party under any agreement for the sale of
natural gas from the Mereenie Field between the
Mereenie Producers or any other party and the
Purchaser or NTEC (now Power and Water
Corporation) or any other party, whether entered
into before or after 1 July 2002.
(r) The Producers shall provide to the Purchaser at
approximately 6 monthly intervals from 1 July
2002 until the expiry date of the Agreement
bona fide forecasts of future production of
Gas from the Gas Field. If the Purchaser
disputes any forecast provided by the Producers
it may refer the issue to an Independent
Expert in accordance with clause 2.60 who will
determine the amount of the forecast. If no
such forecast is provided, the forecast of
future production of Gas from the Gas Field
shall be the amount agreed between the Parties
and if the Parties cannot agree, the amount
determined by reference to an Independent
Expert in accordance with clause 2.60. The
forecasts to be provided in accordance with
this subclause are in addition to those
determined pursuant to paragraph (b).
(s) Notwithstanding any other provision of this
Agreement and any other obligation upon the
Producers under this Agreement, where the
Producers fail to deliver any part or all of the
quantities of Gas otherwise required to be
delivered to the Purchaser pursuant to this
Agreement, the Producers shall only be deemed to
be in breach of this Agreement and will only
have liability to the Purchaser arising out of
any such failure to deliver to the extent that
that failure is caused by a breach of any of
paragraphs (d) (f), (h), (m), (p) and (q) of
this clause 2.61.
Other than pursuant to this paragraph (s) the
Producers shall have no liability of any nature
whatsoever to the Purchaser arising out of any
failure to deliver any part or all of the
quantities of Gas otherwise required to be
delivered to the Purchaser pursuant to this
Agreement.
(t) In the event that the Producers fail to comply
with any of their obligations under paragraphs
(d) (f), (h), (m), (p) and (q) of this clause
2.61 and that failure results in a failure to
supply to the Purchaser a quantity of
Gas which would otherwise have been able to
have been supplied if there had been no breach
of those clauses then the Purchaser will be
entitled to liquidated damages in accordance
with clauses 3.43 and
3.44 to 3.47, subject to clause 3.41, as if the
reference to Obligation Gas in those clauses
were a reference to the amount of Forecast Gas
that should have been delivered over the period
of the failure to supply if there had been
no breach of paragraphs (d), (f), (h),
(m), (p) or (q) of this clause 2.61, as the case
may be, and the reference to Default Gas were a
reference to the difference
between that amount of Gas and the amount of Gas
actually delivered over that period.
(u) The Parties acknowledge that clause 2.57 applies to any Additional
Wells drilled under this clause 2.61."
2 Insert the following definitions into clause 1.10:
"Date of Expiry" is defined in clause 10.20(c)(ii).
"Forecast Gas" means the amount of Gas (in GJ) to be
produced from the Gas Field until the Date of Expiry, as
specified in the forecast first referred to in clause
2.61(r) which has most recently been provided to the
Purchaser, or if no forecast is provided in accordance with
that clause, the forecast as otherwise determined in
accordance with that clause.
"Mereenie Field" has the same meaning as "Gas Field" in the
Mereenie Agreement.
"Monthly Forecast Gas" means the Forecast Gas divided by
the number of Months remaining until the Date of Expiry .
"Reserves and Deliverability Report" is defined in clause
2.61(h).
"Successful" is defined in clause 2.61(b).
3 Insert the words "and 2.61" after the word "2.50" into the
definition of "Additional Wells" in clause 1.10.
4 Delete clause 10.20(c)(ii) and replace it with the
following new clause 10.20(c)(ii):
"(ii) Terminate such separate Agreement whereupon the
Purchaser shall have no further liability to
that Producer hereunder and shall be entitled to
recover from that Producer as and by way of
liquidated damages the net present value
(determined as hereinafter provided) of the
amount determined by multiplying the Forecast
Gas by the Contract Price from the date of
termination by the Purchaser as aforesaid to the
date on which this Agreement would otherwise
have terminated ("Date of Expiry"). The net
present value of such damages shall be
determined by:
(A) ascertaining the amount of the
liquidated damages which would be
recoverable from that Producer in
respect of the Month immediately
preceding the date of termination if
that Producer had made default in
delivery of its Ownership Percentage
of the Monthly Forecast Gas during
that month;
(B) assuming that the same amount of
liquidated damages as in paragraph (A)
above would apply in respect of each
Month from the date of termination to
the Date of Expiry; and
(C) discounting the amounts referred to
in paragraph(B) above to present value
at the rate of 8 per cent per annum.
Termination of this Agreement with respect to
any Producer shall be without prejudice to the
rights of any Party accruing prior to
termination, but subject thereto and to the
provisions of this clause the Purchaser shall
not have and shall not make any further or other
claims upon the relevant Producer arising out of
or in any way in connection with any default by
the Producer or termination of this Agreement as
aforesaid."
5 Delete clause 10.30(i) and replace with the following new
subclause:
"Suspend deliveries of Gas hereunder provided that the
Purchaser shall remain liable to pay that Producer the
amount due to it for Monthly Forecast Gas which will not
give any entitlement to Make Up Gas; and/or"
6 Alter all references to "Annual Minimum Quantities"
in clause 10.30 to "Forecast Gas" in each case where it is
used in clause 10.30.
7 Delete clause 2.27.
2.2 The Parties ratify and confirm the terms of the Gas Purchase
Agreement as amended by clause 2.1.
3 RELEASE
3.1 The Purchaser hereby releases each of the Producers and Kufpec
with effect on and from the Effective Date from all Purchaser Claims.
3.2 Each of the Producers and Kufpec may plead the release given pursuant
to clause 3.1 as a bar to all and any claims, allegations,
proceedings or actions which the Purchaser may bring against each and
any of them in respect of any Purchaser Claim.
3.3 The Purchaser may not make any Purchaser Claim against any of the
Producers or Kufpec or commence or continue any action or proceeding
against any of the Producers or Kufpec in relation to any Purchaser
Claim.
3.4 Each of the Producers and Kufpec hereby releases the Purchaser with
effect on and from the Effective Date from all Producer Claims .
3.5 The Purchaser may plead the release given pursuant to clause 3.4 as a
bar to all or any claims, allegations, proceedings or actions which
any of the Producers or Kufpec may bring against it in respect of any
Producer Claim.
3.6 No Producer or Kufpec shall make any Producer Claim against the
Purchaser or commence or continue any action or proceeding against
the Purchaser in relation to any Producer Claim.
4 EXECUTION
(a) Execution by one Party is conditional on execution by all
Parties and the Deed shall have no force or effect unless
and until all the parties named as Parties to this Deed
have executed and delivered it.
(b) This Deed may be executed in any number of counterparts and
when such counterparts, taken together, have been executed
by all of the Parties thereto, they shall be deemed to
constitute one instrument and the same instrument.
5 GENERAL
5.1 (a) All stamp duty and registration and other fees payable on
and in respect of this Deed shall be borne and
paid by the Producers and the Purchaser in equal shares.
(b) The Parties hereto shall otherwise bear their own costs
(including legal costs) associated with this Deed.
5.2 This Deed shall be governed by and construed in accordance with the
laws of the Northern Territory and the parties hereby submit to the
non-exclusive jurisdiction of the Courts and Tribunals of the
Northern Territory, in relation to this Deed.
5.3 No modification or variation of the terms and provisions of this Deed
shall be effective except by written instrument duly executed by the
Parties.
5.4 The Parties shall perform, execute, acknowledge and deliver all such
further acts, deeds and assurances in relation to this Deed as may be
reasonably required to give effect to this Deed, and its effect on
the Gas Purchase Agreement.
Each attorney executing this Deed states that he has no knowledge of any
revocation or suspension of his power of attorney.
IN WITNESS WHEREOF the parties have executed this Deed on the date first above
mentioned.
SIGNED SEALED AND DELIVERED for and on behalf of CANSO )
RESOURCES PTY LTD, FARMOUT DRILLERS PTY LTD, SANTOS )
EXPLORATION PTY LTD and SANTOS LTD by )
)
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their duly authorised Attorney under separate Powers of ) Attorney each dated )
who hereby states ) that he has no notice of revocation of the said Powers ) of
Attorney at the time of execution of this instrument ) in the presence of: )
)
)
.......................................................................
Witness
.......................................................................
Name of Witness (print)
THE COMMON SEAL of MAGELLAN PETROLEUM (N.T.) PTY LTD )
was affixed in accordance with its Constitution in the )
presence of: )
.................................................................................
Director Director
.................................................................................
Name of Director (print) Name of Director (print)
THE COMMON SEAL of KUFPEC AUSTRALIA PTY LTD was duly ) affixed in accordance
with its Constitution in the ) presence of: )
.................................................................................
Company Secretary/Director Director
.................................................................................
Name of Company Secretary/Director (print) Name of Director (print)
THE COMMON SEAL of GASGO PTY LIMITED was affixed in ) accordance with its
Constitution in the presence of: )
)
.................................................................................
Company Secretary/Director Director
.................................................................................
Name of Company Secretary/Director (print) Name of Director (print)