Exhibit 10.35
LETTER AGREEMENT
March 17, 1999
Karakuduk-Munai, Inc.
221 Norfolk, Suite 1150
Houston, TX 77098
Gentlemen:
This letter will evidence the agreement between Karakuduk-Munai, Inc.
(hereafter "KKM") and Challenger Oil Services, PLC (hereafter "Challenger").
Reference is made to that certain International Daywork Exploration Drilling
Services Contract dated April 7, 1998 between KKM and Challenger, as amended by
Amendment No. 1 dated October 21, 1998 (said drilling services contract, as
amended, hereafter referred to as the "Drilling Contract"). Various disputes
pertaining to the Drilling Contract and related documents have arisen and, as a
result of recent discussions of these matters, and for valuable consideration
and the mutual covenants and agreements herein contained, Challenger and KKM
have agreed to settle and compromise those disputes as follows:
1. Immediately upon the execution by Challenger of (i) this Letter Agreement
and (ii) the Amendment No. 2 to the International Daywork Drilling Contract
- Land between KKM and Challenger dated even date herewith, KKM shall wire
transfer or direct another to wire transfer on behalf of KKM to the below
listed Challenger bank account the sum of Four Hundred Thousand United
States Dollars ($400,000). The Challenger bank account information for this
purpose is:
Citibank New York
Routing Code ABA021000089
A/C No. 10999217 Citibank Jersey
In Favor of Challenger Oil Services PLC
A/C No. 430604007
Atten: Mr. Hugo Peterson
2. The payment to Challenger of the sum specified in item 2 above shall be
deemed to be in full payment and discharge of all claims (past, present or
future) for all equipment, materials and services, performed or provided by
or for Challenger, for or on behalf of KKM, for the period prior to January
1, 1999. For the avoidance of doubt, such payment described above shall
clear any outstanding balances between Challenger, on the one hand, and
KKM, on the other hand, for work performed under the Drilling Contract
prior to January 1, 1999, except for the sums of money referred to in
Paragraphs 3 and 4 below.
3. The payment to Challenger of the sum specified in item 2 above will not be
reduced or offset by any payments made or advanced to Challenger by KKM or
on behalf of KKM; provided however, it is agreed by the parties herein that
the amount of US$27,915.00 has been paid or advanced by or for KKM to or
for the benefit of Challenger prior to January 1, 1999, and the amount of
US$10,000.00 has been paid or advanced by or for KKM to or for the benefit
of Challenger after January 1, 1999, and such amounts shall remain valid
and available for offset by KKM against the invoice for January 1999
services to be prepared by Challenger for standby charges pursuant to the
Drilling Contract, as amended.
4. Of the payment to Challenger specified in item 2 above, the sum of
$23,469.20 shall be deemed to be a prepayment in such amount towards
amounts owed by KKM for the invoice of January 1999 services which
Challenger will soon be issuing to KKM under the Drilling Contract, as
amended. The parties hereto agree to offset such invoice for January 1999
services by this sum of $23,469.20.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
If you agree and accept the above agreements, please indicate your
acceptance and agreement in the appropriate space below.
Challenger Oil Services, PLC
BY: /s/ J. Paine
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TITLE: General Manager Challenger Oil Services PLC,
Signing as P.O.A. for Challenger Oil Sevices PLC.
Agreed & Accepted this 17 day of March, 1999 by:
Karakuduk-Munai, Inc.
BY: /s/ N. Klinchev
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TITLE: General Director