Exhibit 10.21
JOINT STUDY AGREEMENT
BETWEEN
PETROCHINA COMPANY LIMITED
AND
SUNWING ENERGY LTD.
TO CONDUCT
A JOINT FEASIBILITY STUDY
OF THE YUDONG BLOCK
IN CHONGQING MUNICIPALITY
FOR THE PURPOSES OF
ENTERING INTO PRODUCTION SHARING CONTRACTS
JOINT STUDY AGREEMENT
BETWEEN
PETROCHINA COMPANY LIMITED
AND
SUNWING ENERGY LTD.
TO CONDUCT
A JOINT FEASIBILITY STUDY
OF THE YUDONG BLOCK
IN CHONGQING MUNICIPALITY
FOR THE PURPOSES OF
ENTERING INTO PRODUCTION SHARING CONTRACTS
Surwing Energy Ltd. (Sunwing) sent a team of technical experts to visit the
Southwest Oil and Gasfield Company in Chengdu, Sichuan (SWOG) in November 2000.
SWOG is a subsidiary of PetroChina Company Limited (PetroChina). Technical
experts from SWOG presented overviews on the potential of six (6) exploration
blocks. After further evaluation of the preliminary data presented to Sunwing,
Sunwing has recommended to PetroChina that further detailed study of the Yudong
block is required prior to any negotiations of a Production Sharing Contract.
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 a 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. Once this block is
approved for foreign cooperation by the relevant department of the Chinese
Government, the parties will commence to negotiate a Production Sharing
Contract.
The Study Team will prepare interim progress reports and a final report
recommending either onward work program or no further activity on the block. The
purpose of conducting the JFS is to study the natural gas and oil reserve
potentials associated with this block and if considered feasible, a Production
Sharing Contract would be entered into between PetroChina and Sunwing.
ARTICLE 2 - WORK SCHEDULE AND SCOPE OF STUDY AND TECHNICAL REQUIREMENTS
1. Sunwing will send a team of technical experts to the SWOG Chengdu office to
review relevant data and will travel to the block to observe and review
infrastructure and topography of the area.
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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 Team will complete the JFS within three (3) 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 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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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 this 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
▇ ▇▇▇▇▇▇▇▇ 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
maps
o Geographic and geology maps of existing fields
o Map showing location of seismic lines
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o Detailed seismic lines including digital data from digitally recorded
lines
o Seismic cross sections
o Complete drilling well histories on each well, including daily
reports, bit records, drilling fluids, etc.
o Complete electric well log data (in digital form where available) for
each well
o All core data, representative core samples, core analysis reports and
relative permeability data (the samples will be returned after use)
o Completion and stimulation data on existing ▇▇▇▇▇
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 ▇▇▇▇▇
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
Sunwing:
o Upon receipt of the data package, Sunwing's staff will catalogue all
data.
o During the next three 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. The Study Team will also be responsible for
preparing an economic evaluation.
7. In order to facilitate the JFS and evaluation, Sunwing should invite at its
expense, the following experts (as required) to either its Calgary or
Bakersfield off ice:
Senior Geologist
Senior Geophysicist
Senior Reservoir Engineer
Senior Log Analyst
Senior Drilling Engineer
Senior Operations/Production Engineer
Senior Economist
Translator
ARTICLE 3 - RIGHTS AND OBLIGATIONS OF THE PARTIES
1. Based on this agreement, PetroChina's rights and obligations include but
are not limited to the following:
1.1. Participate in the JFS as provided for in this agreement.
1.2. Provide assistance to Sunwing to obtain necessary permits and
approvals for the JFS.
1.3. Provide or assist to provide necessary and appropriate data pertinent
to the JFS, including the data in PetroChina possession or data in the
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hands of other government organizations necessary for the JFS if it is
available.
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 the future Production Sharing Contract.
1.5. After the receipt of the Approval from the relevant department of the
Chinese government and the results of the JFS have been accepted by
PetroChina, both parties will commence negotiations on a Production
Sharing Contract as soon as possible.
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 eighty thousand US Dollars
(US$80,000) 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 agreement.
The payment will be made in three (3) installments.
O The first installment forty-five thousand US Dollars (US$45,000)
shall be paid within thirty (30) days upon signing of this
Agreement.
O The second installment fifteen thousand US Dollars (US$l5,000)
shall be paid within thirty (30) days upon receipt of the data
package.
O The third installment twenty thousand US Dollars (US$20,000)
shall be paid within thirty (30) days upon expiration of the
Study period.
2.2. Apply the appropriate advanced technology as commonly practiced in the
international oil community in conducting the Study.
2.3. Provide the necessary technical experts to work on the study.
2.4. Carry out the data analysis and processing as approved in the study
plan.
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 travel related 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, Sunwing will
have the exclusive right to negotiate with PetroChina for a Production
Sharing Contract in this block for a period of four (4) months
(negotiation period) after the receipt of the Approval from the
relevant
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department of the Chinese government and the results of the JFS have
been accepted by PetroChina.
ARTICLE 4 - CONFIDENTIALITY
1. All data provided by PetroChina and/or other government organizations to
Sunwing will remain 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
purpose 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 JFS 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.
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Beijing 100004
By: /s/ Zeng ▇▇▇▇ ▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Zeng ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Manager Co-Chairman
Foreign Cooperation Administration Sunwing Energy Ltd.
Department
PetroChina Company Limited
Date: 29/03/2001 Date: 29 March 2001
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