Exhibit 10.62
AGREEMENT
regarding cooperation within the Poznan Area
Entered into this 8th day of January 2003, by and between
1) Polskie Gornictwo Naftowe i Gazownictwo S.A., having its seat in Warsaw
at ul. Krucza 6/14 ("POGC"); and
2) FX Energy Poland Sp. z o.o. having its seat in Warsaw at Al. Jana Pawla
II 29 ("FX")
hereinafter jointly called the "Parties" and each of them individually a
"Party";
and
3) FX Energy Inc. having its seat in Salt Lake City, Utah, USA at Highland
Drive No. 3006 suite 206 ("FX USA"), acting as a surety for FX's
obligations arising from this Agreement.
PREAMBULA:
A) The Parties hereto have reached an agreement on all issues regarding
conducting of their joint operations within the Fences area that were
subject of discussions between the Parties and have concluded by
signing the Settlement Agreement regarding the Fences area on this day.
B) The Parties desire to conduct joint operations within an additional
area described in detail in Appendix 1 (the ,,Poznan" area), on the
similar principles as within the Fences area;
C) The Parties desire to set forth the basic principles for their
cooperation within the Poznan area.
Therefore, the Parties hereby have agreed as follows:
Article 1
Basic Parties' obligations and transaction documents
1.1 Subject as stated below, the Parties' initial interests in all rights
and obligations within the Poznan area shall be as follows:
- 51% POGC
- 49% FX
1.2 In exchange for the information and knowledge obtained by POGC as a
result of geological work conducted within the Poznan area (either
solely or jointly with other parties), FX commits to finance 100% costs
of joint exploration operations until the sum of such costs reach USD 4
million. The USD 4 million shall be spent by FX by December 31, 2004,
in accordance with work programs and budgets approved pursuant to the
Poznan JOA (defined below). The above commitment is in addition to and
independent from FX commitments resulting from the Settlement Agreement
regarding the Fences Area dated ___________, between POGC and FX
1.3 FX confirms that it is aware of the fact that POGC conducted certain
exploration work jointly with Conoco and Ruhrgas within the Poznan
Area, which did not result in any commercial discovery.
1.4 Operations within the Poznan Area shall be conducted pursuant to a
joint operating agreement (the "Poznan JOA"), the detailed provisions
of which both Parties shall negotiate promptly in good faith and which
both Parties shall sign no later than 30 days from the date hereof. The
Poznan JOA shall be substantially in the same form and content as the
respective agreement regarding the Fences JOA (as amended), and shall
reflect the following basic terms:
a) the Parties interests in all rights, assets, obligations and
liabilities arising under joint operations shall be 51% POGC
and 49% FX and such interest structure shall be binding from
the date of conclusion of the Poznan JOA;
b) FX shall cover the cost of initial joint exploration work up
to 4 mln USD, in consideration of the work performed by POGC
within the Poznan area that resulted in obtaining geological
information which POGC shall make available to FX;
c) all decisions of the Operating Committee shall require a 2/3
majority;
d) unless mutually decided otherwise, the Parties shall not form
any company or a partnership for the purposes of conduction of
works within the Poznan area.
Article 2
Transfer of mining usufruct in the Poznan area
2.1 POGC and FX shall conclude an agreement (the "Transfer Agreement"),
substantially consistent with the form set forth in Appendix 2 hereto
relating to transfer to FX a 49% interest in each of the mining
usufructs established on the concession areas comprising the Poznan
area as described in Appendix 1, subject to FX having fulfilled its
commitment to finance 100% of initial operations up to USD 4 million,
as stated in Clause 1.2 above and subject to full performance by FX of
all obligations under the Fences Settlement Agreement and subject to
obtaining of all the required consents from the State Treasury, which
POGC shall promptly apply for and shall make best efforts to obtain as
soon as possible. The Transfer Agreement shall be concluded
concurrently with this Agreement and shall state that the effect of
disposal concerning the transfer of the mining usufruct shall occur as
of the moment of FX accomplishment of the obligations set out in Clause
1.2 or granting the appropriate security for their accomplishment.
2.2 All administrative cost and taxes connected with the transfer of rights
pursuant to the Transfer Agreement shall be paid by FX. FX shall be
responsible for filing the appropriate tax return. Other costs related
to the mining usufruct shall be covered from the Joint Account in
accordance with the Poznan JOA.
2.3 Should the State Treasury refuse its consent for the mining usufruct
transfer, the Parties shall act diligently to find ways of alternative
securing FX direct rights to 49% of benefits produced by the joint
operations within the Poznan area.
2.4. Together with the rights of the mining usufruct and without a separate
compensation, POGC shall transfer to FX a 49% ownership interest in all
geological data regarding the Poznan area owned by POGC, subject to
obtaining the required consent of the Minister of Environment. Other
provisions of this Article 2 shall apply to the geological data mutatis
mutandis.
Article 3
Detailed financial matters
For the purposes of calculating any US Dollar equivalent of any amounts to be
paid in Polish Zloty (or vice versa), the average exchange rate published by the
National Bank of Poland on the day the payment is made (i.e. the appropriate
amount is received by the payee), shall be applied.
Article 4
Gas sales
POGC hereby commits to purchase gas produced from each of wells drilled
hereafter in the Poznan area under the Poznan JOA, after the date of conclusion
of this Agreement pursuant to the Natural Gas Sale and Purchase Agreement dated
December 18, 2000, concluded between POGC and FX, which is hereby extended to
cover also all future wells made within the Poznan area. The Gas Sales Agreement
shall continue in force until December 31, 2008.
Article 5
Default by FX
5.1 Should FX fail to perform fully its obligations specified in the Clause
1.2 in accordance with the provisions of this Agreement by December 31,
2004, POGC shall have the right to terminate this Agreement by a 90-day
written notice to FX, with the reservation that the effect of
termination shall not occur if FX fulfils all its obligations within
the notice period.
5.2. If the Agreement is terminated pursuant to Clause 5.1, the Poznan JOA
will nevertheless remain in effect with respect to aerial extent of any
prospects structures mapped and drilled within the frame work of the
Poznan JOA prior to the termination and FX shall keep its 49% interest
in rights such structure by the end of validity of the POGC
concessions. (The prospect aerial extent shall be delineated by the
lowest closing contour or by the bottom of a defined hydrocarbon
contact determined by a well penetration, whichever is deeper). Subject
to the above, promptly following the termination of this Agreement, FX
shall transfer its interest in the usufruct(s) established within the
Poznan area to POGC or any party nominated by POGC, pursuant to an
agreement substantially consistent with form specified in Appendix 2,
mutatis mutandis.
Article 6
Assignment and pledge
6.1 FX shall have the right to assign its rights and obligations under the
Poznan JOA, the Gas Sales Agreement or this Agreement to a third party
of its choice with a written consent of POGC.
6.2 POGC may not refuse its consent for assigning by FX its rights and
obligations without an important reason, which shall include in
particular a weak financial position of the proposed assignee or POGC
remaining in a serious dispute with the proposed assignee.
6.3 FX shall have the right to pledge its rights under the Poznan JOA or
this Agreement in accordance with Polish law, provided that FX shall
inform POGC in writing of its intention to establish a pledge with a
14-days prior notice and shall withhold the establishment of the
pledge, if POGC raises, within this period, an objection based on an
important reason, as referred to in Clause 6.2
6.4 POGC shall have the right to assign its rights and obligations under
the Poznan JOA, the Gas Sales Agreement or this Agreement to a
subsidiary formed pursuant to the POGC restructuring program which
shall hold rights to the fields concerned by the Poznan JOA, the Gas
Sales Agreement and this Agreement.
Article 7
Miscellaneous
Articles XVI through XVIII of the Fences JOA are incorporated herein by
reference and become Articles 9 through 11 of this Agreement.
Article 8
Warranty
FX USA hereby grants a suretyship in favour of POGC for the obligations of FX
arising from this Agreement.
FX ENERGY POLAND SP. Z O.O.
/s/ David N. Pierce, Member of the Management Board
POLSKIE GORNICTWO NAFTOWE I GAZOWNICTWO S.A.
/s/ Zbigniew Tatys, Director of Exploration and Production
/s/ A. Hoscilowicz, Director of Investments
FX ENERGY, INC.
/s/ David N. Pierce, President
SCHEDULE 1
Description of Poznan Area
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No Date of Mining
Usufruct Agreement
Concession and amendment(s), if Concession date Work commitment
name any and No. Total work commitment fulfilled Unpaid fees
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1 Kornik- 16.07.1996 16.07.1996 Seismic: 2D-100 km, All work commitments
Sroda Amendment of 32/96/p Reprocessing & reinterpretation. remain to be fulfilled.
16.07.2001 Drilling: meters/no. of
wells 3500/1
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2 Pyzdry 07.07.1999 07.07.1999 Seismic: 2D-400km Fulfilled: reprocessing- 6000 EUR
18/99/p reprocessing & reinterpretation. 206 km, one well -
Optional: 100km-2D 3787 meters.
Drilling meters/no. of
wells Optional: 3600/1
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3 Steszew 30.091999 30.09.1999 Seismic: 2D / km/ Fulfilled:
28/99/p Reprocessing-170 Seismic 2D-16.2km,
New profiles acquisition: Reprocessing-806km.
Phase I -50. Optional -150.
Drilling: meters / no. of wells
6800/2
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4 Jarocin- 03.08.2001 03.08.2001 Seismic: 2D/km/, 3D/km2/ All work commitments 11000 EUR
Grabin 16/2001/p Phase I-2D-100, Optional-3D-70. remain to be fulfilled.
Drilling: meters/ no. of wells
Phase I - 3000/1. Optional 3000/1
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APPENDIX 2
Transfer Agreement
THIS AGREEMENT is made the 8 day of January, 2003, in Warsaw
BETWEEN:
1. POLSKIE GORNICTWO NAFTOWE I GAZOWNICTWO S.A. with its registered office
in Warsaw, at ul. Krucza 6/14, 00-537 Warsaw, entered into the National
Court Register maintained by the District Court for the city of Warsaw
under the KRS No. 0000059492 ("PGNiG"),
and
2. FX ENERGY POLAND Sp. z o.o. with its registered seat in Warsaw, at al.
Jana Pawla II 29, 00-867 Warsaw, entered into the National Court
Register maintained by the District Court for the city of Warsaw under
the KRS No. 0000052459 ("FX"),
jointly called the "Parties" and each of them individually a "Party".
Article 1
Purpose of the Agreement
The Parties enter into this Agreement pursuant to Article 2 of the Agreement for
Cooperation within the Poznan Area of even date herewith.
Article 2
PGNiG title to Mining Usufructs
PGNiG represents that it holds 100% of the mining usufructs for exploration and
identification of oil and natural gas (the "Mining Usufructs") in the
"Jarocin-Grabina", "Kornik- Sroda", "Pyzdry" and Steszew" areas (jointly called
the "Poznan Area") established pursuant to the Agreements on Establishment of
the Mining Usufruct dated August 3, 2001, July 16, 1996 (as amended on July 17,
2001), July 7, 1999 and September 30, 1999, respectively, and the Concessions
No.16/2001/p, No.32/96/p, No. 18/99/p and No.28/99/p, respectively, all of which
are attached hereto as Schedule 1 to this Agreement. The Mining Usufructs are
free of any encumbrances or third party claims.
Article 3
Transfer of Mining Usufruct
3.1 PGNiG hereby transfers to FX and FX receives, a 49% ownership interest
in the Mining Usufructs, subject to the following suspensory
conditions:
a) FX having fulfilled all its obligations under Article 1.2 of
the agreement referred to in Article 1, with respect to
financing of 100% of the costs of initial joint operations
within the Poznan Area until such costs reach USD 4 million;
b) FX having fulfilled all its obligations under the Settlement
Agreement regarding the Fences Area dated ____________ with
respect to paying the outstanding invoices and with interest
accrued;
c) FX having fulfilled all its obligations under the Settlement
Agreement regarding the Fences Area dated ____________ with
respect to financing of 100% of the costs of initial joint
operations within the Fences Area until such costs reach USD
16 million; and
d) obtaining consent from the State Treasury for the transfer of
the Mining Usufructs, as required under the relevant mining
usufruct agreements.
3.2 As soon as either Party considers that either of conditions precedent
specified in Clause 3.1 under letters a) b) or c) has been fulfilled,
it shall notify the other thereof in writing. If the other Party so
notified disputes the fulfillment, it should respond to the other Party
in writing explaining its position in detail within 14 days. Failing
such response, the relevant condition shall be deemed fulfilled upon
the lapse of the said 14-day period. As soon as the consents referred
to under letter d) above are obtained, PGNiG shall notify that to FX in
writing.
3.3 Transfer of the Mining Usufructs shall occur automatically upon
fulfillment of the last suspensory condition.
3.4 This Agreement shall terminate, if the Settlement Agreement regarding
the Fences Area or the agreement referred to in Article 1 is terminated
due to breach by FX.
Article 4
Transfer of ownership of geological information
4.1 PGNiG, as the owner of the geological information contained in the
documentation regarding the Poznan area acquired before January 1,
2002, (listed in Schedule 4 to the Agreement referred to in Article 1),
hereby transfers to FX and FX receives a 49% interest in rights to
information contained in all of that above documentation, subject to
the suspensory condition of obtaining a consent from the Minister of
Environment, as required pursuant to he Geological and Mining Law. As
soon as the consent is obtained, PGNiG shall notify that to FX in
writing.
4.2 PGNiG, as the holder of the exclusive right to commercially use the
geological information regarding the Poznan Area acquired after January
1, 2002, (defined in Schedule 5 to the Agreement referred to in Article
1) hereby transfers to FX and FX receives a 49% interest in the above
right.
Article 5
Costs
FX shall cover all administrative cost and taxes due in connection with this
Agreement.
Article 6
Miscellaneous
6.1 Any disputes related to this Agreement shall be resolved by the
Arbitration Court at the Polish Chamber of Commerce in accordance with
its rules.
6.2 This Agreement has been executed in Polish and English. In case of any
discrepancies between both versions, the Polish version shall prevail.
6.3 Any amendments to this Agreement must be in writing to be valid.
POLSKIE GORNICTWO NAFTOWE I GAZOWNICTWO S.A.
____________________
____________________
FX ENERGY POLAND SP. Z O.O.
____________________
SCHEDULE 3
Copies of Mining Usufruct Agreements and Concessions
SCHEDULE 4
Geological information regarding the Poznan Area owned by PGNiG
Covered is all geological and geophysical information from the Poznan Area
obtained by POGC as a result of geological and geophysical work conducted during
the period between 01.02.1989 and 01.01.2002. This information is managed by the
archives department of Geological Bureau GEONAFTA.
SCHEDULE 5
Geological information regarding the Poznan Area
to which PGNiG has the exclusive right of commercial use
Covered is all geological and geophysical information from the Poznan Area
obtained by POGC as a result of geological and geophysical work before
01.02.1989 or after 01.01.2002. PGNiG is obliged to obtain consent from the
State Treasury to use the information obtained prior to 01.02.1989, and then to
use it in accordance with the terms specified by the State Treasury.