Exhibit 10.1
 
TRANSLATED FROM THE ORIGINAL MANDARIN

Oil Resource Exploration and Development Contract

Jianyuan Contract [2010] No.01

Party A: Sunite Right Banner Jianyuan Mining Co. Ltd

Party B: Sunite Right Banner Shengyuan Oil and Gas Technology Development Co.,
Ltd
(Original Name: Sunite Right Banner Shengyuan Trading Co., ltd)

（No.7 Exploration and Construction Team）

Place：Sunite Right Banner Oil Development Management Team

Date：Jan 28, 2010
 
 
 
 
1

--------------------------------------------------------------------------------

 
 
This Contract arises from the Joint Exploration and Development of Oil Resources
Contract (Jianyuan contract [2009] [**]) between Sunite Right Banner Jianyuan
Mining Co. Ltd. and Sunite Right Banner Shengyuan Trading Co. Ltd. dated July
18, 2009. Sunite Right Banner Shengyuan Trading Company changed its name to
Sunite Right Banner Shengyuan Oil and Gas Technology Development Co., Ltd., to
undertake the rights and obligations under the original contract. Other than the
change in the name of Party B, the name of the Contact person and the date of
the Agreement, all of the terms of the original agreement remain the same and
the original agreement is hereby terminated.
 
Pursuant to the Oil and Gas Exploration Development Contract between Party A and
the Yanchang Oilfield Administration, Party A has the right to explore and
develop oil resources in Sunite Right Banner domestic oilfields under
exploration permit number: [**]. Pursuant to the approval of the government of
Sunite Right Banner, (Sunite You Zheng [2009] No. [**]), Party A has the right
to jointly explore and develop the oilfield through joint ventures with a third
party. Party B volunteered to invest in the oil and gas venture exploration and
development after investigating the resources in the Durimu Area. In order to
clarify the rights and obligations of both parties, Party A and Party B have
reached the following terms upon mutual consent,
 
I.             The Content of Cooperation
 
(1)
Project content:  Party A and Party B agree to cooperate to conduct risk
exploration and development within the exploration area designated by Party A.
Party B shall provide the capital for the foregoing.

 
(2)
Exploration Area: 174.64 square kilometers

 
(3)
Regional coordinates: [**]

 
II.            Cooperation Pattern
 
Party A and Party B shall cooperate in the oil exploration in the oilfield
designated by Party A with capital provided by Party B. Party B shall be
responsible for all of the costs and bear all of the exploration risk. Party A
and Party B shall distribute the income according to the terms of this contract.
 
 
 
[**] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
 
2

--------------------------------------------------------------------------------

 
 
III.           Contract Term
 
(1)
The Term of this Agreement is from January 28th 2010 through January 28th 2035,
a total of 25 years. Upon the expiration of this Agreement, Party A agrees that
Party B has the right of first refusal to request a further extension of the
Agreement under identical terms.

 
(2)
Upon execution of the Agreement, Party B must start the exploration work in the
oilfield before August 1st 2010, or Party A has the right to unconditionally
withdraw the oilfield without compensation to Party B.

 
IV.           Agreement for Revenues and Distribution of Fees
 
(1)
The Parties shall distribute income from crude oil production as follows: Party
A is entitled to 25% of the production, while Party B is entitled to 75% of the
production (Party B’s exploration, production and administration costs will be
included and will not be calculated separately).

 
(2)
Party B shall pay 1) RMB [**] per square kilometer as the oil resource
developing surcharge, and 2) and a one-time payment of RMB [**] per year per
square kilometer for a 2-year Exploration Royalty and Administration fee. (Total
of RMB[**])

 
(3)
Party B shall provide the results of comprehensive geological information to
Party A free of charge.

 
(4)
Party B shall pay tax and surcharge fees to the Sunite Right Banner Tax
Administration Authority pursuant to applicable state laws and regulations.
(Note: the parties shall be separately responsible for their own tax obligation
in connection with their respective oil revenue distribution)

 
(5)
The local government shall determine the sales channel of the crude oil in
accordance with state channels.

 
V.           Agreement of the Crude Oil Sale.
 
Party B shall be entitled to 75% of the production revenues, and Party A shall
be entitled to 25%. 75% of the taxes shall be paid by Party B, and 25% by Party
A.
 
VI.          Party A's Rights and Obligations
 
(1)
Party A has the right to monitor the process of exploration and development at
all stages, and make site inspections to confirm the production reported by
Party B.  Party B shall bear responsibility for any issues and compensate Party
A accordingly.

 
(2)
Party A and Yanchang Oilfield Holding Ltd. are responsible for the technical
support to the oilfield.

 
(3)
Party A shall assist Party B to coordinate with local herders, and related
government departments to maintain good relationships.

 
[**] Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
 
3

--------------------------------------------------------------------------------

 
 
VII.         Party B’s Rights and Obligations
 
(1)
Party B shall develop the resources with scientific planning, protecting the
environment and ecology, and consistent with sustainable development principles.

 
(2)
Party B may do risk exploration in the oilfield and enjoy the oil exploration
benefits.

 
(3)
Party B shall provide an annual exploration plan, oil development onsite
emergency plan and single well geological engineering design reports to Party A.
All the reports shall be subject to Party A’s approval before implementation.
Party B has the right to determine the number of wells to be drilled in
accordance with the oilfield exploration and development plan and report.  Party
B’s annual investment contribution shall be no less than 10 million RMB each
year.

 
(4)
Party B shall respect the local customs, manage relationships with local
herders, and compensate the herders in accordance with applicable law.

 
(5)
All the geophysical prospecting and drilling exploration are subject to the
approval of Party A and shall be implemented in accordance with procedures
established by Party A. Party B shall provide timely and accurate reports for
various statements (statements attached). Especially for a new well, Party B
shall provide two copies of well completion reports within seven days of
completion of drilling the well or Party A shall have the right to refuse to
approve the drilling of new well.

 
(6)
Party B shall pay attention to safety management in the construction process,
issue sound safety contingency plans and enhance security supervision. In
addition, Party B shall be fully responsible for all economic compensation and
legal obligations if accidents occur in the construction.

 
(7)
Party B is responsible for fire prevention work, and shall strictly adhere to
all necessary fire prevention measures in accordance with applicable laws and
regulations. If accidents, such as fire, happen, Party B shall take full
responsibility and compensate Party A for all losses incurred.

 
(8)
Party B must comply with all applicable rules and regulations of the Sunite
Banner local committee, the government and oil development Sunite Right Banner
management team.

 
VIII.       Responsibility for Breach of Contract
 
(1)
Party B shall bear all economic losses and legal proceedings caused by
exploration outside the area designated in this Agreement.

 
(2)
If Party B breaches Article VII(3) of this Agreement which requires an annual
exploration investment of not less than RMB10 million, Party A has the right to
withdraw the oilfield unconditionally and without compensation to Party B.

 
Both Parties must distribute revenues in accordance with the terms of this
Agreement.  If any Party takes advantage and harms the other Party by using
misleading information or advanced technologies, the breaching party shall
compensate for all losses, plus a penalty of 30% of the loss to the other
Party..
 
(3)
Party B shall not change its legal corporate name or transfer all or part of its
shares to any third party without the consent of Party A. If Party B withdraws
from the exploration area without the consent of Party A, Party B shall pay
Party A a penalty of RMB100,000, and be responsible for all lost profits of
Party A.

 
 
4

--------------------------------------------------------------------------------

 
 
(4)
Other than as a result of force majeure events (e.g., earthquake, typhoon, fire,
flood and war) or changes in government policies or as agreed by both Parties,
neither Party shall unilaterally terminate this Agreement, otherwise, the
breaching Party shall compensate the other party for all losses.

 
(5)
Party B must comply with relevant government rules and regulations, otherwise,
party B shall bear all the consequences, and Party A has the right to take back
the oilfield.

 
IX.          Confidentiality
 
(1)
All the information obtained in the construction process shall be treated as
confidential information and may only be shared between the Parties. Party B
shall not disclose any information to a third party, and should not publish
public pictures and books. All the technological achievements in the exploration
process belong to Party B, and Party A has the duty of confidentiality.

 
(2)
Contacts and Statement Reports

 
In the terms of the contract, Xiaoqiang Zhang is assigned as the contact person
for Party A, and Zhiyong Chen is assigned as the contact person for Party B. The
duties of Contact persons:
 
 
·
Strengthen the contact and communications between the two Parties;

 
 
·
Communicate with the other party with respect to problems and difficulties;

 
 
·
Discuss resolutions for technical problems;

 
Notice of a unilateral change in contact person must be provided to the other
party in writing. The responsible party shall bear the corresponding liability
caused by the failure to so notify.
 
X.            Effectiveness of the Terms of the Agreement
 
The Agreement comes into effect after the Agreement is signed by the two
Parties’ representatives (seal), the full amount set forth in the Fourth Clause
of the Agreement has been paid by Party B, and a joint management account has
been established.
 
 
5

--------------------------------------------------------------------------------

 
 
XI.          Others
 
(1)
All disputes in connection with this Agreement or the execution thereof shall be
firstly settled through negotiation. If both sides fail to reach a settlement
after negotiations, such dispute shall be submitted to arbitration or to the
oilfield court for legal action.

 
(2)
The two Parties shall sign a supplemental agreement for any issues not contained
in this Agreement, and such supplemental agreement shall have the same effect as
this Agreement.

 
This Agreement is in six copies, both parties herein holding three copies.
 
Party A（seal）：Representative：
 
Party B（seal）：Representative：
 
Signing location:  Sunite Right Banner Oil Exploration Management Community
 
Signing date: 1/28/2010
 
 
 
 
 
 6

--------------------------------------------------------------------------------