Exhibit 10.2

 
CONSTRUCTION SERVICES AGREEMENT
 
This CONSTRUCTION SERVICES AGREEMENT (this “Agreement”), dated as of May 15,
2006, is entered into by and among Standard Drilling, Inc., a Delaware
corporation (the “Company”), Romfor West Africa, Ltd, a Limited Liability
Bahamian corporation (“Romfor”), and Stuart Breckon, an individual residing at
Houston, Texas (“Breckon” and, together with Romfor, the “Service Providers”).
 
WHEREAS, the Service Providers are engaged in the business of designing drilling
rigs, acquiring drilling rig materials and components, either new or used from
various sources, and constructing drilling rigs from such materials and
components;
 
WHEREAS, the Company desires to engage and retain the Service Providers for the
term and purposes hereinafter set forth and the Service Providers desire to
provide to the Company the Services (as hereinafter defined) for the
consideration hereinafter stated; and
 
WHEREAS, at the request of the Company, the Service Providers (a) are currently
providing exclusive Acquisition Services (as hereinafter defined) and
Construction Services (as hereinafter defined) with respect to three drilling
rigs in accordance with the inventory and cost estimates set forth on Exhibit A
and three additional drilling rigs to be completed on or about January 2007 and
otherwise substantially in accordance with the inventory and cost estimates set
forth on Exhibit A (collectively, the “Existing Rig Constructions”) and (b) will
provide exclusive Services (as hereinafter defined) for additional drilling rigs
in accordance with the terms and conditions of this Agreement;
 
NOW, THEREFORE, in consideration of the engagement of the Service Providers by
the Company, and of the compensation and other remuneration to be paid by the
Company to the Service Providers for such engagement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, each of Romfor, Breckon and the Company
hereby agree as follows:
 
ARTICLE 1
DEFINITIONS; CONSTRUCTION
 
1.1        Definitions. As used in the Agreement, the following terms shall have
the respective meanings set forth below or set forth in the provision of the
Agreement referenced by such term:
 
“AAA” has the meaning ascribed to such term in Section 7.9(b) of this Agreement.
 
“Acceptance Notice” has the meaning ascribed to such term in Section 3.2 of this
Agreement.
 
“Accepted Rig” has the meaning ascribed to such term in Section 3.2 of this
Agreement.
 
“Acquired Property” has the meaning ascribed to such term in Section 3.1 of this
Agreement.
 
 

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“Acquisition Services” has the meaning ascribed to such term in Section
2.2(a)(ii) of this Agreement.
 
“Additional Expenses” has the meaning ascribed to such term in Section 2.2(b) of
this Agreement.
 
“Agreement” has the meaning ascribed to such term in the preamble of this
document, as the same may be amended from time to time.
 
“Base Compensation” has the meaning ascribed to such term in Section 5.1 of this
Agreement.
 
“Bonus” has the meaning ascribed to such term in Section 5.2 of this Agreement.
 
“Breckon” has the meaning ascribed to such term in the preamble of this
Agreement.
 
“Claim” means any and all claims, demands, suits, causes of action, settlements,
judgments, damages, fines, liability, losses, costs and expenses (including,
without limitation, court and arbitration costs, experts’ fees and attorneys’
fees), whether arising in equity, at common law, or by statute, or under the law
of property, contract or tort (including, without limitation, negligence and
strict liability without regard to fault), of every kind or character.
 
“Claimant” has the meaning ascribed to such term in Section 7.9(b) of this
Agreement.
 
“Company” has the meaning ascribed to such term in the preamble of this
Agreement.
 
“Confidential Information” has the meaning ascribed to such term in Section 6.1
of this Agreement.
 
“Construction Services” has the meaning ascribed to such term in Section
2.2(a)(iii) of this Agreement.
 
“Defaulting Party” has the meaning ascribed to such term in Section 4.2(a) of
this Agreement.
 
“Design Services” has the meaning ascribed to such term in Section 2.2(a)(i) of
this Agreement.
 
“Effective Date” has the meaning ascribed to such term in Section 2.1 of this
Agreement.
 
“Existing Rig Constructions” has the meaning ascribed to such term in the
preamble of this Agreement.
 
“Initial Term” has the meaning ascribed to such term in Section 4.1 of this
Agreement.
 
“Material Default” has the meaning ascribed to such term in Section 4.2(a) of
this Agreement.
 
 
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“Non-Defaulting Party” has the meaning ascribed to such term in Section 4.2(a)
of this Agreement.
 
“Ordered Rig” has the meaning ascribed to such term in Section 2.2(a)(ii) of
this Agreement.
 
“Person” means any individual or entity, including, without limitation, any
corporation, limited liability company, company (general or limited), joint
venture, association, joint stock company, trust or unincorporated organization.
 
“Requested Drilling Rig” has the meaning ascribed to such term in Section
2.2(a)(i) of this Agreement.
 
“Respondent” has the meaning ascribed to such term in Section 7.9(b) of this
Agreement.
 
“Romfor” has the meaning ascribed to such term in the preamble of this
Agreement.
 
“Rules” has the meaning ascribed to such term in Section 7.9(b) of this
Agreement.
 
“Service Providers” has the meaning ascribed to such term in the preamble of
this Agreement.
 
“Services” has the meaning ascribed to such term in Section 2.2(b).
 
“Term” has the meaning ascribed to such term in Section 4.1 of the Agreement.
 
“Work Product” has the meaning ascribed to such term in Section 6.1 of this
Agreement.
 
1.2         Construction. All article, section, subsection and exhibit
references used in this Agreement are to this Agreement unless otherwise
specified. Exhibits attached to this Agreement constitute a part of this
Agreement and are incorporated herein. Unless the context of this Agreement
clearly requires otherwise, (a) the singular shall include the plural and the
plural shall include the singular wherever and as often as may be appropriate,
(b) the words “includes” or “including” shall mean “including without
limitation,” and (c) the words “hereof,” “herein,” “hereunder” and similar terms
in this Agreement shall refer to this Agreement as a whole and not any
particular section or article in which such words appear.
 
ARTICLE 2
SERVICES OF SERVICE PROVIDER
 
2.1        Engagement; Effective Date. Subject to the terms of this Agreement,
the Company agrees to engage the Service Providers to provide, and the Service
Providers agree to provide, the Services to the Company beginning as of the date
of this Agreement (the “Effective Date”) and continuing until the last day of
the Term.
 
 
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2.2        Services.
 
(a)   During the Term, the Service Providers shall perform the following
services for the Company and such other services as the Company and the Service
Providers mutually agree:
 
(i)   upon the request of the Company from time to time, provide general and
detailed design services, including specifications and limitations for each
material component thereof, for drilling rigs (each, a “Requested Drilling Rig”)
based upon the proposed use and operation of such Requested Drilling Rig as
specified by the Company and including a proposed completion date for each such
Requested Drilling Rig (collectively, the “Design Services”);
 
(ii)   provide construction cost estimates for each Requested Drilling Rig,
including line item cost estimates and proposed sources for each material or
component thereof and, if the cost estimate is approved in writing by the
Company (together with the Existing Rig Constructions, an “Ordered Rig”),
acquire such materials and components for such Ordered Rig in a timely and
efficient manner on behalf of, and at the cost of, the Company (the “Acquisition
Services”);
 
(iii)   construct each Ordered Rig in accordance with the design and cost
estimates approved in writing by the Company for such Ordered Rig (the
“Construction Services”); and
 
(iv)   provide all necessary engineering, material, equipment, labor,
supervision, tools and other services necessary to complete the Design Services,
the Acquisition Services and the Construction Services.
 
(b)   The services to be performed by the Service Providers pursuant to this
Agreement are collectively referred to herein as the “Services”. The Company
shall pay, in accordance with Section 3.1, the cost of the materials and
components acquired pursuant to the Acquisition Services and for any labor or
other expenses relating to any Ordered Rig approved in writing by the Company
(the “Additional Expenses”).
 
2.3        Status of the Service Providers. The parties agree that the Service
Providers are to provide the Services in the capacity of an independent
contractor and not as an employee or agent of the Company. The Company shall
have no right to control or direct the manner in which the Services are to be
performed. The Service Providers shall be solely responsible for all federal,
state or local taxes required by law to be paid with respect to the payments and
benefits described in this Agreement. Notwithstanding the foregoing, during the
Term, the Service Providers shall not provide any service that is a Service to
any other Person without the prior written consent of the Company.
 
2.4         The Service Providers Qualifications. The Service Providers hereby
each represent and warrant to the Company that the Service Providers are fully
acquainted with the conditions and requirements pertaining to the Services. The
Service Providers shall maintain, at their own cost and expense, all licenses,
permits, authorizations and approvals necessary to do business and perform the
Services in the jurisdictions in which the work is performed and otherwise in
accordance with this Agreement. The Service Providers shall perform the Services
diligently and to the best of their abilities, devoting such time as is
necessary to fully perform the Services.
 
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2.5        Warranty. The Service Providers hereby warrant and represent to the
Company that the Service Providers are fully qualified and capable of performing
the Services and that the Services shall be performed in a good and workmanlike
manner and in compliance with applicable law.
 
2.6        Title; Risk of Loss; Insurance. Title to any Acquired Property and
any Ordered Rig (regardless of its state of completion) shall remain with the
Company at all times. The Service Providers shall have all risk of loss of any
Acquired Property and any Ordered Rig (including any Accepted Rig) until
delivered in accordance with Section 3.3. During the Term, the Service Providers
shall maintain insurance as required by Exhibit B hereto and the cost of such
insurance, to the extent applicable to the Acquired Property, shall be an
Additional Expense. The Company shall be named as additional insureds on all
policies required to be carried by the Service Providers hereunder. Within five
days after the Effective Date, the Service Providers shall deliver to the
Company certificates evidencing the insurance coverages required hereunder. Such
certificates shall provide that any change restricting or reducing coverage or
the cancellation of any policies under which the certificates are issued shall
not be valid with respect to the Company’s interests therein until the Company
has received at least 30 days prior written notice of such change or
cancellation. Further, such certificates shall state that the insurance is
primary coverage and not concurrent with or excess over other valid insurance
which may be available to the Company. Should any coverage subject of any such
certificate expire or lapse during the continuance of this Agreement, the
Service Providers shall provide renewal or replacement certificates of insurance
immediately upon the expiration or termination of any such coverage. All
policies required to be carried by the Service Provider hereunder shall be
endorsed to provide waiver of subrogation rights in favor of the Company. The
Service Providers agree to comply with all terms of the insurance contracts
required to be maintained by it in Exhibit B hereto.
 
2.7        Waiver ofLiens. The Service Providers acknowledge and agree that the
Acquired Property is the property of the Company. Each of the Service Providers
hereby waive, release and discharge the Acquired Property from any and all liens
and charges of every character and however arising that either of the Service
Providers may now or hereafter have against the Acquired Property or any Ordered
Rig for labor, materials and/or services (including the Services) furnished
pursuant to this Agreement or otherwise. It is the intention of the Service
Providers to relinquish and release to the Company the Acquired Property
(whether as an Accepted Rig or otherwise) free and clear of all liens and lien
claims of every character that the Service Providers or any Person acting by,
through or under either of the Service Providers may now or hereafter have
against such Acquired Property for labor, materials and/or services (including
the Services) furnished pursuant to this Agreement. The Service Providers agree
and covenant that all laborers and servicemen employed or to be employed by the
Service Providers and any Person acting by, through or under either Service
Provider, if any, and all costs and expenses for materials attached to or
included in the Acquired Property shall be fully paid and that no laborer or
servicemen shall have any claim, demand or lien on the Acquired Property, and
that no chattel mortgage, security interest, conditional bill of sale or
retention of title agreement shall be given or executed by the Service Providers
in connection with the Acquired Property or the Services. In connection with
this Section 2.7, each of the Service Providers hereby agrees execute any waiver
of liens or other release of liens as requested by the Company from time to
time.
 
 
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ARTICLE 3
OTHER OBLIGATIONS
 
3.1        Acquisition Costs. The Service Providers have acquired some of the
materials and components for the Existing Rig Constructions and will acquire all
of the materials and components for each Ordered Rig for and on behalf of the
Company (such materials and components, the “Acquired Property”). The Service
Providers have and shall keep detailed and accurate records (including
third-party invoices and expense reports) to reflect the actual costs of the
Acquired Property and the Additional Expenses, and the Service Providers have or
will forward from time to time copies of such third-party invoices and expense
reports to the Company for payment. The Company has paid or will pay each
relevant third-party for which it has received an invoice in accordance with
this Section 3.1 and, upon such payment, the Company shall be the sole owner of
the Acquired Property purchased pursuant to such invoice. The Company shall
reimburse the Service Providers for any Additional Expenses for which it has
received an expense report in accordance with this Section 3.1. Upon request,
the Service Providers will identify the physical location of each piece of
Acquired Property within the Service Providers’ care, custody or control and
allow the Company access to such Acquired Property for inspection.
 
3.2         Acceptance. Within 10 days of a notice from the Service Providers to
the Company that any Ordered Rig is complete, the Company shall have the right
to fully inspect such Ordered Rig and reject or accept such Ordered Rig in its
reasonable discretion based upon whether such Ordered Rig was constructed in
accordance with the Design Services and the specifications agreed by the parties
for such Ordered Rig. If the Company determines to accept such Ordered Rig, the
Company shall notify the Service Providers of such acceptance (an “Acceptance
Notice” and such Ordered Rig, an “Accepted Rig”). If the Company determines to
reject such Ordered Rig, the Company shall notify the Service Providers of such
rejection, such notice to specify in reasonable detail the reasons for such
rejection.
 
3.3         Delivery. For each Accepted Rig, the Service Providers shall deliver
such Accepted Rig to the Company at the location specified by the Company for
such Accepted Rig (the “Point of Delivery”) and, upon receipt by the Company at
the Point of Delivery, risk of loss of the Accepted Rig will pass to the
Company.
 
3.4        Access. The Company may at any time visit the worksite where the
Construction Services are being performed to observe the work of the Service
Providers. The Company may inspect the quality of such work as reasonably
requested from time to time.
 
 
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ARTICLE 4
TERM, TERMINATION AND RELATED MATTERS
 
4.1        Term. The term of this Agreement shall commence on the Effective Date
and end on the second anniversary of the Effective Date (the “Initial Term”)
unless earlier terminated in accordance with Section 4.2; provided that the term
will be extended to the fourth anniversary of the Effective Date unless written
notice to the contrary is given by the Company to the Service Providers’ at
least 30 days prior to the end of the Initial Term (the Service Providers’
actual period of engagement, whether extending past the Initial Term or
terminated earlier in accordance with this Agreement, is referred to herein as
the “Term”).
 
4.2        Termination.
 
(a)   If at any time either the Company or the Service Providers (in either
case, a “Defaulting Party”) shall refuse or fail to comply in any material
respect with any of its obligations under this Agreement (a “Material Default”),
then the Company (if either or both of the Service Providers are the Defaulting
Party) or the Service Providers (if the Company is the Defaulting Party) (as
applicable, the “Non-Defaulting Party”) may give written notice to the
Defaulting Party, and if such Defaulting Party fails to remedy the Material
Default within 30 days after such notice is given, the Non-Defaulting Party may
suspend performance under this Agreement until such time as the Material Default
is cured. The Non-Defaulting Party may terminate this Agreement for a Material
Default by the Defaulting Party under this Agreement that is not cured within 30
days after suspension of performance in accordance with this Section 4.2(a).
 
                       (b)   This Agreement shall terminate automatically either
(i) upon Breckon’s death or (ii) the failure by Breckon, by reason of illness,
incapacity or other disability, to perform his duties or fulfill his obligations
under this Agreement in the view of the Company and as certified in writing by a
competent medical physician chosen by the Company, for a period of 30
consecutive days or a cumulative period of 180 total days in any 12-month
period.
 
                4.3         Effect of Termination. If this Agreement terminates,
the rights and obligations of the parties hereunder shall terminate without any
further liability of either party to the other party, except that the provisions
contained in Sections 6, 7 and 8 shall survive any such termination and except
that the liabilities of each party that have accrued prior to such termination
shall remain the liabilities of such party from and after such termination.
 
ARTICLE 5
COMPENSATION AND BONUSES
 
5.1        Base Compensation. During the Term, the Company shall pay Breckon
gross annual compensation of $200,000 (the “Base Compensation”). The Company
shall pay the Base Compensation to Breckon in equal monthly installments.
 
        5.2        Bonuses.In addition to the Base Compensation due under
Section 5.1, for each Accepted Rig, the Company shall pay Romfor a rig
completion bonus (a “Bonus”) of both (a) $650,000 and (b) 100,000 shares of
common stock of the Company, in each case within 30 days of the date of delivery
of any Accepted Rig at the Point of Delivery in accordance with Section 3.3.
 
 
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ARTICLE 6
PROTECTION OF INFORMATION
 
6.1         Disclosure to and Property of the Company. All information, designs,
ideas, concepts, improvements, product developments, discoveries and inventions,
whether patentable or not, that are conceived, made, developed or acquired by
the Service Providers, individually, collectively or in conjunction with others,
during the Term that relate to the Company’s business, products or services
(including, without limitation, all such information relating to the Services)
(collectively, “Confidential Information”) shall be disclosed to the Company and
are and shall be the sole and exclusive property of the Company. Moreover, all
documents, videotapes, written presentations, brochures, drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications, computer
programs, e-mail, voice mail, electronic databases, maps, drawings and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression (collectively, “Work Product”) are and shall be the sole and
exclusive property of the Company. Upon termination of this Agreement by the
Company, for any reason, the Service Providers promptly shall deliver such
Confidential Information and Work Product, and all copies thereof to the
Company.
 
6.2         Disclosure to Service Provider.The Company may disclose to or
place the Service Providers in a position to have access to or develop
Confidential Information and Work Product of the Company. Subject to the
provisions of this Agreement, the Service Providers agree to preserve and
protect the confidentiality of all Confidential Information or Work Product of
the Company.
 
6.3        No Unauthorized Use or Disclosure.The Service Providers agree that
they will not, at any time during or after the Term, make any unauthorized
disclosure of Confidential Information or Work Product, or make any use thereof,
except in the carrying out of the Services. The Service Providers shall use
commercially reasonable efforts to cause all Persons to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such Person was bound hereby.
 
6.4        Remedies.The Service Providers acknowledge that money damages would
not be a sufficient remedy for any breach of this Article 6 by the Service
Providers, and the Company shall be entitled to enforce the provisions of this
Article 6 by terminating payments then owing to the Service Providers under this
Agreement or otherwise and to specific performance and injunctive relief as
remedies for such breach or any threatened breach. Such remedies shall not be
deemed the exclusive remedies for a breach of this Article, but shall be in
addition to all remedies available at law or in equity, including the recovery
of damages from the Service Providers and their agents.
 
 
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ARTICLE 7
MISCELLANEOUS
 
7.1        Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or delivered by facsimile during
business hours or when mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
 
 

If to the Company to:
Standard Drilling, Inc.
1667 K Street NW, Suite 1230
Washington, DC 20006
Facsimile No.:  202-223-4406 
Attention: Prentis B. Tomlinson, Jr. Chairman
     If to the Service Providers to: Stuart Breckon
1035 Dairy Ashford, Suite 320
Houston, TX 77079

                 

                 

or to such other address as either the Company or the Service Providers may
furnish to the other in writing in accordance herewith, except that notices of
changes of address shall be effective only upon receipt.
 
7.2        Applicable Law. This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
 
7.3        No Waiver.No failure by either party hereto at any time to give
notice of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
 
7.4        Severability.To the extent permitted by applicable law, the Company
and the Service Providers hereby agree that any term or provision of this
Agreement that renders such term or provision or any other term or provision
hereof invalid or unenforceable in any respect shall be modified to the extent
necessary to avoid rendering such term or provision invalid or unenforceable,
and such modification shall be accomplished in the manner that most nearly
preserves the benefit of the Company and the Service Providers bargain
hereunder. If a court of competent jurisdiction determines that any term or
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that term or provision shall not affect the validity or
enforceability of any other term or provision of this Agreement, and all other
terms or provisions shall remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in a materially adverse manner with respect to either party.
 
 
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7.5        Counterparts.This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
 
7.6        Headings.The section headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
 
7.7        Assignment.This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This Agreement and the
rights and obligations of the parties hereunder are personal and neither this
Agreement nor any right, benefit or obligation of the Service Providers shall be
subject to voluntary or involuntary assignment, alienation or transfer, whether
by operation of law or otherwise, without the prior written consent of the
Company.
 
7.8        Amendment; Entire Agreement. This Agreement may not be changed orally
but only by an agreement in writing agreed to and signed by both parties. This
Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, contains all the covenants, promises, representations,
warranties and agreements between the parties with respect to the engagement of
the Service Providers by the Company and supersedes any and all prior
agreements, including employment agreements, consulting agreements, bonus plans,
benefit plans and other compensation or benefit plans between Breckon or Romfor
and the Company.
 
7.9        Arbitration.
 
(a)  The parties shall use their reasonable efforts to resolve disputes arising
out of this Agreement on an amicable basis. If any such dispute remains
unresolved after such period of 30 days, then the matter shall forthwith be
referred to arbitration pursuant to the terms of Section 7.9(b).
 
   (b)  To resolve a dispute that has not been resolved under Section 7.9(a),
the matter shall be referred either by the Service Providers or the Company (in
either case, the “Claimant”) to arbitration by one arbitrator pursuant to the
Rules of Commercial Arbitration (the “Rules”). The Claimant shall file a request
for arbitration with the American Arbitration Association (“AAA”) and notify the
other party (the “Respondent”) in writing of the nature of the dispute. The
arbitrator shall be appointed by the AAA in accordance with the Rules. Following
the selection of the arbitrator as set forth above, the arbitration shall be
conducted promptly and expeditiously so as to enable the arbitrator to render a
decision within 30 days. Subject to the foregoing and except to the extent the
parties shall agree to the contrary, the arbitrator hearing the dispute shall
apply and follow the Federal Rules of Civil Procedure and the Federal Rules of
Evidence. If there is any conflict between the Rules and this Section 7.9, this
Section 7.9 shall govern. The arbitration shall be held in Houston, Texas. The
parties acknowledge that the arbitrator shall have the authority to grant
equitable remedies, if appropriate.
 
(c)  Arbitration under this Section 7.9 shall be the exclusive means for a party
to seek resolution of any dispute arising out of, or any breach or alleged
breach of, this Agreement, except that any party may bring an action before a
competent court for the adoption of provisional or protective measures or
equitable relief. The award of the arbitrator shall be final and binding on the
parties. Each of the Claimant and the Respondent shall bear (i) in equal
proportions the cost and expenses of the arbitration proceeding assessed by the
AAA, and (ii) their respective expenses in prosecuting or defending the
arbitration.
 
 
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(d)  Judgment on the arbitral award rendered may be entered in any court having
jurisdiction or application may be made to such for a judicial acceptance of the
award and an order of enforcement, as the case may be. The parties acknowledge
and agree that any party may seek before any court of competent jurisdiction,
provisional, protective or equitable relief.
 
7.10        Existing Rigs. The parties acknowledge that the Existing Rig
Constructions were initiated but not completed prior to the Effective Date and
agree that the Existing Rig Constructions are hereby deemed to be Ordered Rigs
for all purposes under this Agreement. Any services provided by the Service
Providers with respect to such Existing Rig Constructions shall be deemed to be
the relevant Service to be provided under this Agreement. From and after the
Effective Date, the parties rights and obligations with respect to the Existing
Rig Constructions are governed by this Agreement and any prior agreement, oral
or written, between or among the parties with respect to such Existing Rig
Constructions is hereby terminated.
 
7.11        Limitations of Liability. The Service Providers shall be responsible
for and shall release, defend, protect, indemnify and hold harmless the Company
and its affiliates, officers, employees and representatives (the “Company
Group”) from and against any and all Claims with respect to either Service
Provider’s breach of this Agreement or with respect to injury, illness or death
of, or damage to or loss of property, equipment, tools, or materials of, the
Service Providers and their employees, agents or representatives, arising out of
or in any way connected with the performance of the Services or this Agreement,
REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE COMPANY GROUP, but
excluding, with respect to a given member of the Company Group, if caused by the
intentional misconduct of such member of the Company Group.
 
7.12        Custodial Responsibility for the Company’s Property.The Service
Providers shall be responsible for and shall release, defend, protect, indemnify
and hold harmless the Company Group from and against any and all Claims with
respect to damage, destruction or loss of property, equipment, tools or
materials of the Company Group (including Acquired Property) that the Service
Providers have taken possession of, or have assumed risk of loss or exercised
custody or control over, in connection with the performance of the Services or
this Agreement, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE
COMPANY GROUP; but excluding, with respect to a given member of the Company
Group, if caused by the intentional misconduct of such member of the Company
Group.
 
 
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7.13        Third Persons and Property.The Service Providers shall be
responsible for and shall release, defend, protect, indemnify and hold harmless
the Company Group from and against any and all Claims with respect to injury,
illness or death of, or damage to or loss of property, equipment, tools, or
materials of, any Person in connection with the performance of the Services or
this Agreement to the extent caused by the Service Provider’s act or omission.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above, to be effective as of the Effective Date.
 
 

  STANDARD DRILLING, INC.         By:     Name:     Title:                
ROMFOR INTERNATIONAL, LTD         By:     Name:     Title:                
STUART BRECKON                

 
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EXHIBIT A

EXISTING RIG CONSTRUCTIONS

 
Rig # 1 Inventory
For Depths of 8,000 to 12,000 ft.
 

DRAWWORKS: Electrohoist II drawworks rated at 1200 HP. Powered by 2 GE 752
traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling
line.     MAST: Parco Model SL 136A mast rated at 750,000 lb hook load capacity.
136’ clear height. Six 48” sheaves and one 55” fastline sheave, grooved for 1
3/8” line. API rated maximum static hook load of 750,000 lb with 12 lines
strung.     SUBSTRUCTURE: Parco Model SL 136A substructure with drill floor
height of 21’, width of 27’ 6” and clear cellar span of 15’6”. Rated at 638,000
lb casing capacity and 487,000 lb setback capacity.     BLOCK: 400 ton Upetrom
block     HOOK: 400 ton Upetrom hook     SWIVEL: 400 ton Upetrom swivel    
ROTARY TABLE: 27 ½” Chinese Ideco rotary table independently powered by 1 - GE
752 traction motor (1,000 hp)     KELLY: 5 ¼” hex Kelly, Varco Model 27 HDP pin
drive, 3 1/2'’ x 55’ Taurus hose     MUD PUMPS:
1 - Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2
- GE 752 traction motors (1,000 hp each)
1 - Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2
- GE 752 traction motors (1,000 hp each)
    MUD SYSTEM: 1000 bbl, 2 tank system consisting of:       Shaker tank: 500
bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Brandt 2 x
10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal
pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit
degasser, poor boy degasser.       Suction tank: 500 bbl, 3 runner skid mud tank
with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp
agitators.     BOP EQUIPMENT
1 - 13 5/8” x 5,000 psi Shaffer spherical
1 - 13 5/8” x 5,000 psi Cameron type U double
1 - 13 5/8” x 5,000 psi Cameron type U single

 
 

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CLOSING UNIT:
Koomey 6 station closing unit, 190 gallon
c/w 1 electric and two air pumps, with remote
    CHOKE MANIFOLD:
1 - 3 1/16”, 5,000 psi manual choke
1 - 3 1/16”, 5,000 psi hydraulic choke
    SCR: I.E.C. Systems SCR with 3 Model 1500 SCR drive cubicles and one
engine/generator power control system for 4 power units.     POWER GENERATION: 3
Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw)  
  COMPRESSORS 2 - Gardner Denver 40 hp electric screw type compressors     DRILL
PIPE: 12,000 ft of 4 ½”” Grade E and G     DRILL COLLARS: 16 - 8” drill collars,
21 - 6” drill collars     INSTRUMENTATION:
5 pen drilling recorder
Totco deviation recording tool
    HANDLING TOOLS: All handling tools for 4 ½” drill pipe, 6” and 8” drill
collars     ROTARY TONGS: BJ Type “B” rotary tongs, 3 ½” to 13 3/8”     WINCHES:
2 - 10,000 lbs capacity drill floor winches     OTHER EQUIPMENT: Fuel tank
(8,000 gallons) with 2 transfer pumps and filter system, water tank with 2
centrifugal pumps, kelly spinner, pipe spinner, full rig lighting, upper dog
house, mechanic shop

 
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Rig # 2 Inventory
For Depths of 8,000 to 12,000 ft.
 

DRAWWORKS: Electrohoist II drawworks rated at 1200 HP. Powered by 2 GE 752
traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling
line.     MAST: Parco Model SL 136A mast rated at 750,000 lb hook load capacity.
136’ clear height. Six 48” sheaves and one 55” fastline sheave, grooved for 1
3/8” line. API rated maximum static hook load of 750,000 lb with 12 lines
strung.     SUBSTRUCTURE: Parco Model SL 136A substructure with drill floor
height of 21’, width of 27’ 6” and clear cellar span of 15’6”. Rated at 638,000
lb casing capacity and 487,000 lb setback capacity.     BLOCK: 400 ton Upetrom
block     HOOK: 400 ton Upetrom hook     SWIVEL: 400 ton Upetrom swivel    
ROTARY TABLE: 27 ½” Chinese Ideco rotary table independently powered by 1 - GE
752 traction motor (1,000 hp)     KELLY: 5 ¼” hex Kelly, Varco Model 27 HDP pin
drive, 3 1/2'’ x 55’ Taurus hose     MUD PUMPS:
1 - Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2
- GE 752 traction motors (1,000 hp each)
1 - Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2
- GE 752 traction motors (1,000 hp each)
    MUD SYSTEM: 1000 bbl, 2 tank system consisting of:       Shaker tank: 500
bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Brandt 2 x
10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal
pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit
degasser, poor boy degasser.       Suction tank: 500 bbl, 3 runner skid mud tank
with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp
agitators.     BOP EQUIPMENT
1 - 13 5/8” x 5,000 psi Shaffer spherical
1 - 13 5/8” x 5,000 psi Cameron type U double
1 - 13 5/8” x 5,000 psi Cameron type U single
    CLOSING UNIT:
Koomey 6 station closing unit, 190 gallon
c/w 1 electric and two air pumps, with remote

 
 
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CHOKE MANIFOLD:
1 - 3 1/16”, 5,000 psi manual choke
1 - 3 1/16”, 5,000 psi hydraulic choke
    SCR: I.E.C. Systems SCR with 3 Model 1500 SCR drive cubicles and one
engine/generator power control system for 4 power units.     POWER GENERATION: 3
Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw)  
  COMPRESSORS 2 - Gardner Denver 40 hp electric screw type compressors     DRILL
PIPE: 12,000 ft of 4 ½”” Grade E and G     DRILL COLLARS: 16 - 8” drill collars,
21 - 6” drill collars     INSTRUMENTATION:
5 pen drilling recorder
Totco deviation recording tool
    HANDLING TOOLS: All handling tools for 4 ½” drill pipe, 6” and 8” drill
collars     ROTARY TONGS: BJ Type “B” rotary tongs, 3 ½” to 13 3/8”     WINCHES:
2 - 10,000 lbs capacity drill floor winches     OTHER EQUIPMENT: Fuel tank
(8,000 gallons) with 2 transfer pumps and filter system, water tank with 2
centrifugal pumps, kelly spinner, pipe spinner, full rig lighting, upper dog
house, mechanic shop

 
 
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Rig # 3 Inventory
For Depths of 10,000 to 15,000 ft.

DRAWWORKS: Electrohoist II drawworks rated at 1500 HP. Powered by 2 GE 752
traction motors (1,000 hp each). Wichita 336H Brake. Grooved for 1 3/8” drilling
line.     MAST: Parco Model SL 142A mast rated at 1,050,000 lb hook load
capacity. 142’ clear height. Six 60” sheaves and one 60” fastline sheave,
grooved for 1 3/8” line. API rated maximum static hook load of 1,050,000 lb with
12 lines strung.     SUBSTRUCTURE: Parco Model SL 142A substructure with drill
floor height of 28’, width of 29’ 6” and clear cellar span of 19’ 6”. Rated at
1,050,000 lb casing capacity and 682,500 lb setback capacity.     BLOCK: 500 ton
Upetrom block     HOOK: 500 ton Upetrom hook     SWIVEL: 500 ton Upetrom swivel
    ROTARY TABLE: 27 ½” Chinese Ideco rotary table independently powered by 1 -
GE 752 traction motor (1,000 hp)     KELLY: 5 ¼” hex Kelly, Varco Model 27 HDP
pin drive, 3 1/2'’ x 55’ Taurus hose     MUD PUMPS:
1 - Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2
- GE 752 traction motors (1,000 hp each)
1- Chinese EMSCO FB-1600 triplex mud pump (1600 hp) independently powered by 2 -
GE 752 traction motors (1,000 hp each)
    MUD SYSTEM: 1000 bbl, 2 tank system consisting of:       Shaker tank: 500
bbl, 3 runner skid mud tank with 3 - Swaco ALS linear motion shakers, Brandt 2 x
10” desander, Swaco desilter with 12 x 4” cones, 2- 5 x 6 mission centrifugal
pumps p/b 50 hp electric motors, 1 - 10 hp mud agitator, Drillco electric pit
degasser, poor boy degasser.       Suction tank: 500 bbl, 3 runner skid mud tank
with 2 - 5x6 mission centrifugal pumps p/b 50 hp electric motors and 3 - 10 hp
agitators.     BOP EQUIPMENT
1 - 13 5/8” x 5,000 psi Shaffer spherical
1 - 13 5/8” x 5,000 psi Cameron type U double
1 - 13 5/8” x 5,000 psi Cameron type U single
    CLOSING UNIT:
Koomey 6 station closing unit, 190 gallon
c/w 1 electric and two air pumps, with remote

 
 
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CHOKE MANIFOLD: 1 - 3 1/16”, 5,000 psi manual choke
1 - 3 1/16”, 5,000 psi hydraulic choke
    SCR: I.E.C. Systems SCR with 3 Model 1500 SCR drive cubicles and one
engine/generator power control system for 4 power units.     POWER GENERATION: 3
Caterpillar D-399 diesel engines with Caterpillar SR4 generator ends (1030 kw)  
  COMPRESSORS 2 - Gardner Denver 40 hp electric screw type compressors     DRILL
PIPE: 14,000 ft of 5” Grade E and G     DRILL COLLARS: 16 - 8” drill collars, 21
- 6” drill collars     INSTRUMENTATION: 5 pen drilling recorder
Totco deviation recording tool
    HANDLING TOOLS: All handling tools for 5” drill pipe, 6” and 8” drill
collars     ROTARY TONGS: BJ Type “B” rotary tongs, 3 ½” to 13 3/8”     WINCHES:
2 - 10,000 lbs capacity drill floor winches     OTHER EQUIPMENT: Fuel tank
(8,000 gallons) with 2 transfer pumps and filter system, water tank with 2
centrifugal pumps, kelly spinner, pipe spinner, full rig lighting, upper dog
house, mechanic shop

 
 
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EXHIBIT B
 
INSURANCE REQUIREMENTS
 
 
 
Page 7