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Exhibit 99.3
FARMOUT AGREEMENT
Dated 20th January 2000
BETWEEN: INDO-PACIFIC ENERGY (NZ) LTD, of 284 Karori Rd,
Karori, Wellington, New Zealand ("Indo") (an
Assignor')
AND: MOONDANCE ENERGY LIMITED, of 100 Stirling St, Perth,
WA, Australia ("Moondance") (an Assignor')
AND: MOSAIC OIL NL, of 3rd floor, 6-8 Underwood St,
Sydney, NSW 2000, Australia ("Mosaic") (an 'Assignor')
AND: CONTINENTAL OIL NL, of 3rd floor, 6.8 Underwood St,
Sydney, NSW 2000, Australia ("Continental") (a
'Continuing Party')
AND: BORAL ENERGY RESOURCES (NZ) LIMITED, of 38-44 Bruce
McLaren Rd, Henderson, Auckland, New Zealand ("Boral")
(the 'Farmee')
INTRODUCTI0N.
A. The Assignors and Continuing Party are the registered holders of
Petroleum Exploration Permit PEP 38330. East Coast, North
Island, New Zealand.
B. The Assignors and Continuing Party have agreed to farmout in
total a 175% interest in the Permit to the Farmee on the
conditions set out in this Agreement.
IT IS AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 Unless otherwise defined in this Agreement or the contrary
intention appears, a term used in this Agreement which is
defined in the JOA, has the meaning ascribed to it in the JOA.
1.2 In this Agreement (including the Recitals), unless the context
otherwise requires:
"Act" means the Crown Minerals Act 1991, (New Zealand);
"Assigned Interest" means a 175% Participating interest,
"Aggressors" means Indo, Mosaic, and Moondance;
"Condition" means the condition precedent set out in clause
2.1.1;
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"Continuing Party" means Continental.
"Deed of Assignment" moans a deed of Assignment and Assumption
relating to this farmout transaction, substantially in the form
attached as Schedule 3;
"Dollar" or "$" means New Zealand dollars;
"Effective Date" means I January 2000;
"JOA" means the joint operating agreement dated 8th December
1998 between the Assignors and the Continuing Patty;
"Joint Venture" means the Assignors and Continuing Party
(together with the Farmee after the date of this Agreement)
undertaking the Joint Operations;
"Operator" means (he Operator appointed under the JOA;
"Parties" means the named parties to this Agreement and their
permitted successors and assigns and "Party" has a corresponding
meaning;
"Permit" means Petroleum Exploration Permit PEP 38330 issued
pursuant to the Act and includes any extension, renewal, re-
issuance or other such licence issued to any Party pursuant to
the Act in replacement of it;
"Permit Area" means the area the subject of the Permit at any
time;
"Processing Costs" means the costs of processing the Survey
which are incurred by the Joint Venture in accordance with the
JOA;
"Respective Interest", in respect of each Assignor, means the
Participating Interest to be assigned by that Assignor to the
Farmee, as set out in Schedule 1;
"Terminating Assignor" has the meaning given to that expression
in clause 2.2,
"Seismic Costs" means, the costs of the Survey incurred by the
Joint Venture in accordance with the JOA;
"Survey" means a seismic programme comprising about 44 km of
vibroseis acquisition in the vicinity of Kanakanaia and Arataha,
and about 2 km of dynamite acquisition in the vicinity of
Kanakanaia, the final line location of which is subject to
agreement between the Parties;
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"working day" means a day other than a Saturday, a Sunday or a
public holiday in the place in which the act, matter or thing is
to be done or is deemed to be done or received.
1.3 The headings to this Agreement are for reference only and are
not to be used construing the Agreement.
1.4 Unless the context otherwise requires, words importing the
singular include the plural and vice versa and words importing a
gender include any other gender.
1.5 References to a clause, Schedule or Attachment is to a clause,
schedule or attachment to this Agreement.
1.6 In this Agreement, other grammatical forms of a word or phrase
defined in this Agreement have a corresponding meaning,
2. CONDITION PRECEDENT
2.1 Consent to Agreement
2.1.1 This Agreement is conditional upon receiving consent to this
Agreement and the Deed of Assignment in accordance with the Act.
2.1.2 The Operator must, as soon as practicable after the execution
of this Agreement by all Parties, submit this Agreement for the
consent referred to in clause 2.1.1. Each Patty must use its
best endeavours to execute 91 documents and do and procure to be
done all acts and things as are reasonably within its powers to
ensure that the Condition is satisfied as soon as is reasonably
practicable after the execution of this Agreement. Immediately
upon a Party becoming aware that the Condition is satisfied, it
must notify the other Parties of such satisfaction.
2.13 Nothing in clause 2.1.1 affects the rights and obligations of
the Parties or provisions of this Agreement which do not create,
assign affect or deal with any legal or equitable interest in or
affecting the Permit.
2.2 Consequences of Non Satisfaction
If the Condition has not been satisfied within 18 months after
the, date of this Agreement or such later date as the Parties
may agree in writing then:
(a) any Party may by 14 days' prior notice in writing to the
other Parties terminate this Agreement to the extent that
it relates to an Assignor's Respective Interest, in which
event the Farmee must do and procure to be done all acts
and things and execute and deliver and procure the
execution and delivery of all documents as may be
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reasonably necessary to effect the re-transfer of the
Respective Interest to the Assignor which has elected to
terminate or, if the Farmee has elected to terminate, to
each Assignor ("Terminating Assignor"). The Terminating
Assignor must within 120 days after the date of termination
reimburse to the Farmee that proportion of the amounts
referred to in clause 3 that relate to the Terminating
Assignor's Respective Interest already paid by the Farmee;
and
(b) except as otherwise expressly provided in this Agreement,
no Party in respect of which the Agreement has been
terminated will have any further rights or obligations
under this Agreement, and will not be liable to any other
Party in respect of any damages, costs or expenses except
such as may arise or have arisen as a result of *a breach
of this Agreement prior to termination under this clause.
2.3 Effective Date
Upon satisfaction of the Condition, this Agreement is deemed to
have effect from the Effective Date,
3. EARNING OBLIGATION
3.1 Survey Costs
3.1.1 In consideration for the benefits in clause 4, shall pay 100%
of the Seismic Costs pursuant to cash calls made by the Operator
under the JOA, capped at $385,000, and 100% of all Processing
Costs. If the Seismic Costs exceed $385,000 each Party will pay
its Participating Interest share of all subsequent Seismic
Costs, in the Percentages set out in Schedule 2.
3.1.2 The Farmee's contributions under this clause 3.1 are owed
severally to each Assignor in the proportion that that
Assignor's Respective Interest bears to the Assigned Interest.
3.2 Other Costs
From the Effective Date, the Farmee will contribute its
Participating Interest share of all costs and expenses of the
Joint Venture and the Joint Operations (other than for the
Survey) under the JOA.
3.3 Payment
The Farmee shall pay all money requited under this clause 3 in
accordance, with the cash calls made by the Operator and
otherwise in accordance with the JOA to the Joint Account,
except that Processing Costs may be recurred directly by the
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Farmee. In that case, that obligation under this clause will be
satisfied by the production of the results of processing the
Survey to the Assignors and Continuing Party, in sufficient
detail to at least meet petroleum industry standard practice and
Clauses 10.2 and 10.7a) of the JOA as if the Farmee was the
Operator for the purposes of the processing the Survey, and
including any Other information specifically requested by any
Assignor or Continuing Patty.
4. FARMEE RIGHTS
4.1 Assigned Interest
In consideration of, the Farmee agreeing to perform the
obligations under clause 3, the Parties will sign the Deed of
Assignment to witness the formal assignment of the Assigned
Interest to the Farmee contemporaneously with the signing of
this Agreement. The Operator will seek all relevant consents to
such executed Deed, as required by the Act. Clauses 2.1 and 2.2
(with such changes as are necessary) apply to this seeking of
consent.
4.2 Operatorship
If the Parties discover gas within the Permit Area at any time
after the Effective Date and the Farmee requests the
appointment, the Assignors and Continuing Party will use their
best endeavours to appoint the Farmee as Operator for all Joint
Operations pertaining to the production of natural gas (and
associated liquids) in the Permit or any Petroleum Mining
Permits associated with such gas discovery, including field
development and production, plant and process engineering, and
product distribution and marketing;
4.3 Participation in Joint Venture
From the date of execution of this Agreement, the Farmee has the
right to be represented on the Operating Committee and to vote
in accordance with its Participating Interest as set out in
Schedule 2, subject to continued compliance with its obligations
under this Agreement.
5. DEFAULT
5.1 Default by Farmee
5.1.1 If the Farmee defaults in the payment of any money required to
be paid by it under clause 3 or in any other obligation under
this Agreement and that default is not remedied within 21 days
after it receives a notice from the Operator to remedy the
default then, in addition to all other rights of the Assignors
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under this Agreement, the JOA and at law, each Assignor has the
tight to terminate this Agreement to the "tent it relates to its
Respective Interest of the defaulting Farmee, by giving notice
to the Farmee and to require the Farmee to reassign to that
Assignor (at the Farmee's sole cost and expense) the Respective
Interest of that Assignor that had been transferred to the
Farmee.
5.1.2 At that time, each Party must execute and deliver all documents
and use its best endeavours to do and procure to be done all
acts, matters and things as may be necessary or desirable to
carry out and give full force and effect to the reassignments
referred to in this clause 5.1.
5.13 Termination of this Agreement by an Assignor tinder this clause
5.1 does not affect this Agreement to the extent it relates to
those Assignors which have elected not to terminate and the
obligations of the Former continue severally to each of those
Assignors.
5.2 Power of Attorney
The Farmee irrevocably grants to each Assignor a power of
attorney, exercisable at any time after termination of Ibis
Agreement under clause 5.1 or a failure to fulfil the Condition
within 18 months after the date of this Agreement. Upon the
default of the Farmee to execute and deliver all documents
required to reassign the relevant Respective Interest, each
Assignor as attorney shall have power in the Farmee's name and
on its behalf to carry out, execute, sign, seal and deliver all
deeds, instruments, acts and things that in the opinion of that
Assignor is necessary to carry out, execute, sign, seal, deliver
or do in order to retransfer the Respective Interest to that
Assignor. Any reasonable act or thing done by the attorney on
behalf of the Farmee binds the Farmee absolutely. The Farmee
must, at all times, indemnify and hold harmless the attorney and
its directors, officers, employees and representatives from and
against any and all claims, damage,% and liabilities arising out
of any act or thing reasonably done., and any obligation or
responsibility reasonably assumed by the attorney on behalf of
the Farmee.
6. REPRESENTATION, WARRANTIES, AND COVENANTS
6.1 Assignors' Warranties
6.1.1 Each Assignor severally represents and warrants in respect of
its Respective Interest that as at both the Effective Date and
at the, date of this Agreement:
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(a) no act, event or omission has occurred which (or which with
the passage of time) would render it liable to be struck
off the register of the place in which it is incorporated;
(b) it has full power and authority to enter this Agreement and
to perform and observe the terms and conditions of this
Agreement;
(c) it is not in liquidation nor has it passed any resolution
for its winding up, no receiver or receiver and manager has
been appointed over all or any part of its property or
undertaking, no petition has been presented for its winding
up and no writ of execution has been issued against it or
any of its property and, to the best of its knowledge,
information and belief no such action is threatened or
contemplated and no act, event or omission has occurred
which (or which wit)) the passage of time) might result in
any such event or action; and
(d) it is the legal and beneficial owner of its Respective
Interest;
(e) to the best of its knowledge, information and belief, after
having made due enquiry, it has clear and marketable title
to its Respective Interest and that interest is free and
clear of any and all encumbrances, overrides or carries or
rights or interests of third parties of any nature, other
than:
(i) rights or interests created by the Act or the Permit;
or
(ii) rights or interests created by or under the JOA;
(f) to the best of its knowledge, information and belief, after
having made due enquiry, the Permit is in good standing and
full force and effect and not subject to forfeiture or any
other related process of any kind which may affect the
title or good standing of the Permit for any reason;
(g) it is not engaged in any litigation or arbitration
proceedings or other dispute in respect of the Permit, nor
is it aware, to the best of Its knowledge, information and
belief, after having made due enquiry, of any pending or
threatened litigation or arbitration proceedings or other
dispute in respect of the Permit;
(h) to the best of its knowledge, information and belief, after
having made due enquiry, it is not aware of any outstanding
breach of any lawful obligation that will materially
adversely affect the Permit.
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6.1.2 Any claim by the Farmee for a breach of a warranty referred to
in clause 6.1 .1 will be taken to be waived or withdrawn and
will be barred and unenforceable on the second anniversary of
the date of this Agreement unless proceedings in respect of the
claim have been commenced against the relevant Assignor.
6.2 Farmee's Warranties
The Farmee represents and wan-ants that, as at both the
Effective Date and the date of this Agreement:
(a) no act, event or omission has occurred which (or which with
the passage of time) would render it liable to be struck
off the register of the place in which it is incorporated;
(b) it has full power and authority to enter this Agreement and
to perform and observe the terms and conditions of this
Agreement;
(c) it is not in liquidation nor has passed any resolution for
its winding up, no receiver or receiver and manager has
been appointed over all or any part of its properties or
undertakings, no petition has been presented for its
winding up and no writ of execution has been issued
against it or any of its property and, to the best of its
knowledge, information and belief, no such action, is
threatened or contemplated and no act, event or omission
has occurred which (or which with the passage of time)
might result in any such event or action.
6.3 No Merger
The warranties given in clauses 6.1 and 62 will not merge on the
satisfaction of the Condition.
7. RECORDS AND DATA
The Assignors and Continuing Party must deliver to the Farmee a
copy of all records, data and information of a technical nature
relating to the Assigned Interest,-, reasonably requested by the
Farmee as soon as practicable after the request is made. If this
Agreement is terminated for any reason, the Farmee must
immediately return all records, data and information provided to
it, and all copies made by it or its employees, contractors,
consultants or other agents, to the Operator.
8. CONFIDENTIALITY
Clause 18 of the JOA shall apply to this Agreement and all of
its provisions and other information provided pursuant to this
Agreement by the Assignors and Continuing Party to the Farmee.
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A Party may not assign its rights or novate its obligations
under this Agreement unless it first complies with the
provisions of the JOA regarding assignments.
10. RISK
Each Assignor retains all risk and liability connected with
ownership of and operations undertaken in connection with the
Respective Interest of that Assignor on or prior to the
Effective Date and each Assignor must indemnify, defend and hold
the Farmee harmless from all costs, liabilities, penalties,
claims, causes of action, demands, lawsuits and expenses
(including without limitations, court costs and legal fees)
associated with ownership of its Respective Interest or arising
out of any operation, accident, act, event or circumstance
occurring in connection with their Respective Interests, on or
prior to the Effective Date. After the Effective Date, the
Farmee, subject to the JOA, assumes all risk and liability
connected with ownership of and operations undertaken in
connection with the Assigned Interest.
11. COSTS
11.1 Subject to clause 11.2, any consent or other fee payable in
respect of this Agreement or any reassignment of the Assigned
Interest will be borne and paid by the Pan-nee and the Guarantee
indemnities the Assignors against liability to pay any such
feel.
11.2 In the cast of a reassignment of the Assigned Interest as a
consequence of the failure to satisfy the Condition, any costs
for any reassignment will be shared equally between the
Terminating Assignor(s) and the Farmee.
11.3 Each Party will bear its own costs, including legal costs,
associated with the negotiation, preparation and execution of
this Agreement.
12. FURTHER ASSURANCE
Each Party must execute and deliver all documents and use it's
best endeavours to do and procure to be done all acts, matters
and things necessary or desirable to carry out and give full
force and effect to the terms and satisfy the conditions, of
this Agreement and the terms of the Act.
13. NOTICES
13.1 Method and Addresses
All notices or other communications permitted or required to be
given must be in writing and are deemed to have been received:
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(a) in the case of posting, on the tenth working day after it
is posted;
(b) in the case of delivery by hand, at the time of such
delivery on a working day;
(c) in the case of a facsimile transmission, at the time and
date of despatch shown in a report issued by the sender's
facsimile machine which confirms transmission to the
recipient of the number of pages in the notice. If the time
of despatch is not on a working day or is after 4.00 pan on
a working day, then it will be deemed received at the
commencement of business on the next working day;
and is to be delivered or sent to the following address or
facsimile transmission number set out below;
If to Indo: 284 Karori Rd
Karori, Wellington
New Zealand
Attention: Manager, Corporate Affairs
Facsimile: 644 476 0120
If to Mosaic: 3rd floor,
6-8 Underwood St,
Sydney NSW 2000
Australia
Attention: Mr John Carmody
Facsimile: 612 9241 1655
If to Moondance: 100 Stirling St,
Perth, WA,
Australia
Attention: Mr Andy Svalbe
Facsimile: 618 9227 9079
If to Boral: Boral Energy Resources Limited
Second floor South Tower
339 Coronation Drive
Milton QLD 4064
Attention: Mr David Lowry
Facsimile: (07)3367 1026
13.2 Substitute Address
A Party may at any time and from time to time designate a
substitute address for the purpose of clause 13.1 by giving
notice to the other Parties.
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14. WAIVER AND VARIATION
14.1 Waiver
No waiver of any provision of this Agreement not consent to any
departure from it by any of the Parties will be effective unless
it is in writing signed by a duly authorised representative of
the, relevant Party. Such waiver or consent will be effective
only for the specific instance and for the specific purpose for
which it has been given.
14.2 Default of Delay Not Waiver
No default or delay on the part of any Party in exercising any
rights, powers or privileges under this Agreement will operate
as a waiver thereof nor will a single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
14.3 Variation
No variation of this Agreement will be effective as between the
Parties unless made in writing and signed by a duly authorized
representative of each of the Parties.
15. BINDING EFFECT
This Agreement is to be binding upon and shall enure to the
benefit of the Parties and their lawful permitted assigns.
16. SEVERANCE
If a provision of this Agreement is held to be illegal, void or
unenforceable by any Court or administrative body having
jurisdiction, such determination will not affect the remaining
parts of this Agreement which shall remain in full force and
effect as if such illegal or unenforceable provision bad not
been included.
17. RIGHTS OF PARTIES
17.1 All remedies, rights, undertakings, obligations or agreements of
the Parties arising by law, this Agreement or otherwise are
cumulative and are not in limitation of any other right, remedy,
undertaking, obligation or agreement of such Party. Each Party
may follow any remedy to which such Party is entitled by law,
this Agreement or otherwise concurrently or successively at that
Party Is option.
17.2 The rights, duties and obligations of the Parties are several
and not joint nor joint and several.
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17.3 Those clauses which by their nature are intended to survive
termination of this Agreement (including without limitation
clauses 7 and 8) shall so survive termination.
18. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter of this Agreement and
supersedes and extinguishes any covenants, agreements,
representations and warranties previously given or made. No oral
or written warranties or representations not contained in this
Agreement will be of any force or effect unless reduced to
writing and signed by all Parties and expressed to be in
modification of this Agreement.
19. GOVERNING LAW
This Agreement is to be governed and Interpreted in accordance
with the law of Now Zealand. Each Party submits to the exclusive
jurisdiction of the Courts of that country.
20. COUNTERPART EXECUTION
20.1 This Agreement may be executed in counterparts, each of which is
to be deemed an original but all of which will constitute one
and the same instrument. Any signature page of a counterpart may
be detached from it without impairing the legal effect of the
signatures on it and attached to another counterpart identical
in form but having attached to it one or more additional
signature pages signed by the other Parties.
20.2 Upon execution by it of a counterpart of this Agreement, each
Party will cause a facsimile copy of the signature page of Ole
counterpart to be transmitted to each of the other Parties and
each Party will;
(a) be bound by this Agreement from the time the last of the
counterparts has been successfully transmitted; and
(b) post the originally executed counterpart executed by it to
each other Party or as directed by (be Operator.
EXECUTED AS AN AGREEMENT by the Parties on the date set out above.
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Signed for and on behalf Of )
INDO-PACIFIC ENERGY (NZ) LTD )
by its duly appointed attorney ) /s/ illegible
in the presence of: ) Attorney
)
THE COMMON SEAL of MOSAIC OIL NL ) /s/ illegible
was affixed in the presence of: ) Director
)
) /s/ illegible
) Secretary
THE COMMON SEAL of CONTINENTAL )
OIL NL ) /s/ illegible
was affixed in the presence of: ) Director
)
) /s/ illegible
) Secretary
SIGNED by BORAL ) /s/ illegible
ENERGY RESOURCES (NZ) LIMITED ) Director
)
) /s/ illegible
) Witness
THE COMMON SEAL Of MOONDANCE )
ENERGY LIMITED ) /s/ illegible
is affixed in accordance with ) Director
its articles of association in )
the presence of: ) /s/ illegible
) Secretary
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SCHEDULE 1
CURRENT AND RESPECTIVE INTERESTS IN PC PEP 38330
Assignor or Current Interest Respective Interest being
Continuing Party assigned to the Farmee
Indo 34.000% 5.95%
Mosaic 20.00% 5.775%
Continental 13.00% 0
Moondance 13.00% 5.775%
100.00% 175%
SCHEDULE 2
INTERESTS AFTER FARMIN
Indo 28.05%
Mosaic 14.225%
Continental 13.00%
Moondance 27.225%
Boral 17.5%
100%