Exhibit
10.16


 


Confidential Treatment has
been requested for the omitted portions of the exhibit and the omitted portions
have been separately filed with the Commission.


 


Agency Appointment
Contract


 


The
Principal: (hereinafter referred to as Party A) Tianjin New Highland
Science & Technology Development Co.,Ltd.


 


The
Agency : (hereinafter referred to as Party B) Dongying Luda Petrochemical
Equipment Co.,Ltd.


 


Place
of Signature: Tianjin City


 


Date
of Signature: July 1, 2007


 


Party
A and Party B as mentioned above sometimes hereinafter referred to collectively
as “Parties” or individually as a “Party”


 


Definitions:


 


“Contract”
refers to the Agency Appointment Contract signed on July 1, 2007; 


 


“Units”
are to one (a) set of Jet-DrillTM Semi Enclosed Skid
Shallow (two thousand meters) Well Unit, and one (a) set of Jet-DrillTM Semi Enclosed Skid
Deep (three thousand meters) Well Unit.


 


According to the “Contract Law of
the People’s Republic of China” as well as other relevant laws and regulations,
on the basis of 


 

















 


equality and volition, the Parties
agree to reach the following agreement on the drill purchase.


 


Article 1 Scope of Appointment


 


Party B agrees to buy one
(a) set of Jet-DrillTM Semi Enclosed Skid
Shallow (two thousand meters) Well Unit and one (a) set of Jet-DrillTM Semi Enclosed Skid
Deep (three thousand meters) Well Unit on behalf of Party A.


 


Article 2 Requirements Related
to Well Units and Its Ancillary Equipment


 


The basic requirements of Party A’s
purchase of one (a) set of Jet-DrillTM Semi Enclosed Skid
Shallow (two thousand meters) Well Unit and one (a) set of Jet-DrillTM Semi Enclosed Skid
Deep (three thousand meters) Well Unit are:


 


A.           Unit
Model : one (a) set of Jet-DrillTM Semi Enclosed
Skid Shallow (two thousand meters) Well Unit and one (a) suit of Jet-DrillTM Semi Enclosed Skid Deep (three thousand
meters) Well Unit.


 


B.             Purchase Quantity: One set
of each


 

















 


Confidential Treatment has
been requested for the omitted portions of the exhibit and the omitted portions
have been separately filed with the Commission.


 


Article 3
Price Terms


 


A.
One (a) set of Jet-DrillTM Semi Enclosed Skid Shallow (two
thousand meters) Well Unit: [xxxx];


 


B.
One (a) set of Jet-DrillTM Semi Enclosed Skid Deep (three
thousand meters) Well Unit: [xxxx];


 


C.
Total Price: [xxxx]


 


Date
of Delivery: before August 10th, 2007


 


Place
of Delivery: Tianjin City


 


Cost
of Delivery: All cost related to delivery shall be borne by Party B


 


Article 4
Term of Entrustment:


 


From
July 1st, 2007 to
August 20th, 2007


 


After
the expiration of the aforementioned term, the Parties should sign a separate
contract or extend the term in written form in the case that further services
are needed.


 


Article 5
Transfer of Delegation


 


Party
B may not delegate its obligations under this agreement to any third person.


 

















 


Confidential Treatment has
been requested for the omitted portions of the exhibit and the omitted portions
have been separately filed with the Commission.


 


Article 6
Payment Terms


 


Payment
will be made on a progressive basis.


 


A.           Party A shall pay Party B
the initial amount of [xxxx] within three(3 )days after this Agreement enters
into effect by the signatures of both Parties.


 


B.             The amount of [xxxx] will be
paid by Party A to Party B as a second payment within fifteen (15) days after
this Agreement enters into effect by the signatures of both Parties.


 


C.             The third payment of [xxxx]
will be made by Party A to Party B on August 10th, 2007, the date of which the purchased units will
have arrived.


 


D.            After the verification and
acceptance of the purchased units, the balance of [xxxx] will be paid to Party
B by Party A.


 


Article 7
Inspection of the Units


 


Party
B shall appoint a representative to inspect the units upon delivery. The
appointed representative shall sign on the bill of lading after inspection to
confirm that all requirements are met. Party B has the obligation to assist
Party A in making claims


 

















 


against
the supplier in the case that any defects in quality are discovered during the
inspection.


 


Article 8
Party A’s Rights and Obligations


 


A.           The right to obtain units
purchased by Party B under the Contract;


 


B.             The right to be informed of
the progression of the affairs entrusted to Party B;


 


C.             Party A may not enter into
private agreements with clients introduced by Party B during the term of
service or within three (3) months after the expiration of the term.


 


D.            Party A shall pay to Party B
the contracted price after the Party B completes its obligations.


 


Article 9
Party B’s Rights and Obligations


 


A.           The right to complete the
agency services under this Contract and to charge the contracted price.


 


B.             Party B shall keep Party A
informed of all details on the Units in a timely manner so as to protect Party
A’s rights, and may not damage Party A’s interests by providing fraudulent
information to Party A, withhold information on the actual circumstances of
Party B, or conspire with other parties.


 

















 


C.             Upon the signing of the
Contract, Party B may not charge Party A for any fees not covered in the
Contract.


 


Article 10
Default Liability


 


A.           Party B shall compensate
Party A for any actual losses caused by Party B due to non-performance of the
Contract or other illegal activities within the term of entrustment mentioned
in Article 3.


 


B.             Party A shall pay Party B
RMB a penalty amounting to one hundred thousand (¥100,000.00) if Party A cannot make payments in accordance to the
specifications set out in Article 6 within ten (10) days after the signing
of the Contract. Party B will have ownership of the purchased Units, and Party
B will have sole discretion over the handling of the Units in the case that
Party A cannot make full payment for the Units on their arrival date as
stipulated in the Contract.


 


Article 11
Alteration and Termination of the Contract


 


Any
Party who wishes to alter the terms and conditions of this contract during the
period of its enforcement shall issue a notice in writing to the other Party.
The terms and conditions may be changed or a supplementary agreement may be
signed with the


 

















 


consent
of the other Party within a period agreed upon by both Parties. The altered
terms shall be duly noted.


 


Any
supplementary agreements or other written documents signed by both Parties
during the execution of the Contract shall constitute a part of this Contract
and have the same legal force as this Contract.


 


Article 12
Dispute Settlement


 


All
disputes arising from the execution of or in connection with the Contract shall
be settled through amicable consultation between both Parties or through
intercession by a third party. In the case that no settlement can be reached
between the two parties, the case under dispute shall be settled by one of the
following (only one method may be chosen):


 


A.           Submitting the dispute to
the Tianjin Arbitration Commission


 


B.             Taking legal action under
applicable laws


 


Article 13
This Contract is in duplicate, with each Party holding one copy, which enters
into effect upon being signed/affixed with the seals of both Parties.


 

















 


Article 14
Once the Contract is signed and affixed with seals, it is legally binding upon
both Parties. In the event that any situation or conditions arise due to
unforeseen circumstances not specified in the Contract, the Parties may make
amendments and supplements to the Contract upon agreement by both Parties. The
aforementioned amendments and supplements shall have legal force equal to those
of the Contract.


 

















 


Party A (Seal): Tianjin New Highland
Science and Technology Development Co.,Ltd.


 


	
  /s/ Liu Fengkai

  	
   

  
	
   

  	
   

  
	
  (Name of Legal
  Representative)

  	
   

  
	
   

  	
   

  
	
  Name: Liu Fengkai

  	
   

  



 

















 


Party B (Seal): Dongying Luda Petrochemical
Equipment Co.,Ltd.


 


	
  /s/ Zheng Yan

  	
   

  
	
   

  	
   

  
	
  (Name of Legal
  Representative)

  	
   

  
	
   

  	
   

  
	
  Name: Zheng Yan

  	
   

  



 

















 


Supplementary Agreement


 


Party
A: Tianjin New Highland Science & Technology Development Co.,Ltd.


 


Party
B: Dongying Luda Petrochemical Equipment Co.,Ltd.


 


Party A and Party B as
mentioned above sometimes hereinafter referred to collectively as “Parties” or
individually as a “Party”


 


Whereas,
the aforementioned parties who are the signatories of the Agency Appointment
Contract (hereinafter referred to as Contract) of July 1, 2007, on the
basis of mutual accordance through consultation, reach this supplementary
agreement on the matching of equipment as well as repair and maintenance
services as set forth in the following:


 


Article 1  Party B shall be responsible for matching
equipment to the Extended Coiled Tubing High Pressure Jetting Rig, which is
purchased by Party B on behalf of Party A in China with fees already covered by
the total contract price in accordance with the Contract.


 

















 


Article 2  Party B agrees to provide free repair and
maintenance services to the two(2) sets of units purchased by Party B for
12 months after acceptance and delivery of the units to Party A. Party A shall be
responsible for repairs, maintenance and other related expenses beyond the
aforementioned period.


 


Article 3  If Party B continues as Party A’s agent in
the purchase of  the Extended Coiled
Tubing High Pressure Jetting Rig after the Contract is fulfilled, and Party B
continues to provide services on the matching of equipment and maintenance,
Party B shall bear the  responsibility of
unit purchases, the matching of equipment and maintenance. Services involving
repairs on the purchased units shall be determined otherwise in a separate agreement
by both parties.


 


Article 4   This Supplementary Agreement is in duplicate
with each Party holding one copy.


 


Article 5  Once the Supplementary Agreement is signed
and affixed with seals, it will be legally binding upon both Parties, and shall
have legal force equal with those of the Contract.


 

















 


Party
A(Seal): Tianjin New Highland Science and Technology Development Co.,Ltd.


 


Authorized
Representative:


 


Party
B(Seal):Dongying Luda Petrochemical Equipment Co.,Ltd.


 


Authorized
Representative:


 


Date
of Signature: July 2nd,2007