Exhibit 10.51


 


Drilling Equipment Leasing Agreement


 


	
  Project
  Title:

  	
  Drilling
  Equipment Leasing

  
	
   

  	
   

  
	
  Party A:

  	
  Tianjin
  New Highland Science Development Co., Ltd. (“Leasor”)

  
	
   

  	
   

  
	
  Party B:

  	
  Tianjin
  Botenear Oil Engineering Co., Ltd. (“Lessee”)

  



 

















 


	
  Party A:

  	
  Tianjin
  New Highland Science Development Co., Ltd. (“Leasor”)

  
	
   

  	
   

  
	
  Party B:

  	
  Tianjin
  Botenear Oil Engineering Co., Ltd. (“Lessee”)

  



 


This
Agreement is made and entered into for mutual good faith performance by and
between Party A and Party B with regard to the leasing by Party A of drilling
equipment to Party B in accordance with the Contract Law of the People’s
Republic of China and other relevant laws and regulations on the basis of equal
status, volition, and friendly consultation.


 


1.             Leased
Equipment:  9 sets of MWD, as more fully
described in the annex.


 


2.             Purpose and
Usage of Leased Equipment


 


The drilling
equipment leased by Party A to Party B hereunder shall be used for directional
drilling operations.


 


3.             Term of
Lease


 


3.1           The term of
lease shall begin on October 1, 2010 and end as of September 30,
2015.


 


3.2           Upon expiry
of the term of lease, Party A shall have the right to recover, and Party B is
obligated to timely return, all of the equipment.


 


3.3           If Party A
agrees to continue to lease such equipment upon expiry of the lease hereunder,
and if Party B desires to extend the lease, Party B shall have the preferred
right to renew the lease under comparable conditions, provided that Party B
shall 60 days prior to the expiry of this Agreement give Party A a written
request to that effect and the rent shall be negotiated by the parties
separately.


 


4.             Rent; Method
and Time of Payment


 


4.1           Each piece
of the drilling equipment shall be leased at a monthly rent of RMB70,000.


 


4.2           Method and
Time of Rent Payment: The rent shall be paid once every 3 months from the date
of delivery of the first piece of equipment. The rent shall be paid at the end
of each such period by way of bank wire transfer.


 


4.3           The rent
shall not be adjusted during the term of lease hereunder.


 


5.             Delivery of
Leased Equipment


 


5.1           Time of
Delivery: Party A shall by October 1, 2010 deliver 7 pieces of equipment
to Party B and the remaining two pieces shall be delivered to Party B by
November 1, 2010.


 


5.2           Place of
Delivery:  Party B shall pick up and
transport the leased equipment on its own at such place as designated by Party
A. Party B shall issue an equipment delivery receipt to Party A upon taking
delivery of the equipment.


 


5.3           Method of
Inspection and Acceptance: When delivering the leased equipment, Party A shall
give Party B a 72 hours prior notice notifying Party B to take part in the
inspection and acceptance process. The two parties will jointly inspect the
equipment. If the


 

















 


equipment
passes the inspection, the parties will jointly sign an acceptance form. If the
equipment does not pass the inspection, Party B shall have the right to reject
it and to demand Party A to take measures to remedy the same.


 


5.4           If Party A
fails to provide the leased equipment by the times specified herein, Party A
shall pay to Party B liquidated damages of RMB5,000 for each day of delay.


 


6.             Custody and
Maintenance of Leased Equipment


 


6.1           Party B
shall well custody the leased equipment. 
When returning the leased equipment, Party B shall give Party A a
72-hour prior notice notifying Party A to take part in the inspection and
acceptance process. If the leased equipment is damaged or lost due to improper
custody or use by Party B, Party B shall pay to Party A an indemnity of an
equivalent value, which shall be assessed by a professional body acceptable to
both parties. The parties shall comply with such value assessment.


 


6.2           The
transportation, loading and unloading, installation, commissioning, use,
maintenance and repair and testing of the equipment during the term of lease,
together with relevant costs, shall be the responsibility of Party B. Party B
shall further be responsible for the safety of the equipment during the course
of transportation and use and shall be held fully liable to indemnify against
any damage to or loss of the leased equipment or any injury or death of any
person or any loss of property.


 


7.             Return of
Leased Equipment


 


7.1           If, upon
expiry of the term of lease, the parties do not renew the lease agreement,
Party B shall within 15 days of expiry of the lease return the leased equipment
to Party A and shall bear the transportation cost, loading and unloading cost,
inspection cost and other costs in connection with the return of the leased
equipment.


 


7.2           If, upon
expiry of the term of lease, the parties do not renew the lease agreement,
Party B shall on the date of expiry immediately cease using the leased
equipment.


 


7.3           Party A and
Party B will jointly inspect any returned equipment and in the event of any
damage or loss Party B shall provide an indemnity of an equivalent value
calculated at the market price.


 


8.           Obligations
of Party A


 


8.1         Unless
otherwise agreed herein, Party A shall not recover the equipment during the
term of lease.


 


8.2         Party A
shall ensure that it is the owner of the leased equipment and has the right to
lease the same to Party B. Party B shall have the right to demand Party A to
produce the ownership certificates for the leased equipment hereunder. Where
Party A is not the owner of any leased equipment, Party A shall provide a
formal power of attorney from the owner of such leased equipment, along with
the ID card or legal person business license of such owner. The photocopies of
the foregoing certificates shall constitute an integral part of this Agreement.
If Party B suffers any loss due to the defect in Party A’s right to the leased
equipment or Party A’s misrepresentation as to such equipment, Party A shall
indemnify Party B against such loss.


 

















 


9.           Obligations
of Party B


 


9.1         Other than
the costs to be solely borne by Party A or jointly borne by Party A and Party B
as set out herein, all other taxes and costs in connection with this Agreement
shall be borne by Party B.


 


9.2         Expenses
arising in connection with the use of the leased equipment during the term of lease
shall be borne by Party B.


 


9.3         Unless
otherwise set out herein, Party B shall not withdraw from the lease earlier.


 


9.4         If Party B
defaults in the payment of the rent, Party B shall pay to Party A liquidated
damages of RMB5,000 for each day of default.


 


9.5         If Party B
delays in returning the leased equipment, Party B shall pay to Party A
liquidated damages of RMB5,000 for each day of delay.


 


10.         Ownership
of,  and Right to Use,  Leased Equipment


 


During the
term of lease, Party A shall remain the owner of the leased equipment and Party
B shall enjoy the right to use the leased equipment, provided that Party B may
not sublease, lend, transfer or mortgage the same, nor shall it without Party
A’s consent add to the equipment, or remove from it, any component.  Party A shall have the right to inspect the
use and condition of the drilling equipment and Party B shall provide all
facilitation.


 


11.         Confidentiality


 


Each of the
parties shall maintain in confidence the trade secrets of the other party
involved by or in this Agreement and such confidentiality obligation shall
survive the full performance of this Agreement.


 


12.         Force
Majeure


 


12.1       For the
purpose hereof, the term “force majeure” means the following: war, riot,
strike, flood or other acts of God, and any other factors and occurrences which
are unforeseeable, unpreventable and insurmountable or unavoidable by the
parties hereto.


 


12.2       Any accident
arising out of the negligence of Party B shall not constitute a force majeure
event.


 


12.3       If, as a result
of a force majeure event, the leased equipment cannot be normally used for more
than 30 days, Party B shall have the right to terminate this Agreement.


 


12.4       In the event
of a force majeure event, having regard to its willingness, economic factors
and the merit of relevant action, and the like, Party A shall not be obligated
to repair the equipment or restore it to its original condition, provided that
Party A shall notify Party B in writing of the same.


 


12.5       If a party
fails to perform all or part of its obligations hereunder due to a force
majeure event, it shall as soon as practicable notify the other party and shall
within 3 days from the occurrence of the force majeure event provide the other
party with a written report with details on the circumstances and the effect of
such force majeure event on the performance of this Agreement, together with a
notarized document issued by the local notary office certifying the occurrence
of such force majeure event.


 


12.6       No party
shall be liable to the other party for any loss arising as a result of the
inability of or delay in the performance of this Agreement due to any force
majeure event, provided


 

















 


that the
party affected by the force majeure event shall be liable to take, as soon as
practicable, appropriate or necessary measures to mitigate or remove the effect
of such force majeure event, failing which, such party shall indemnify against
the loss suffered by the other party as a result thereof.


 


13.           No Waiver


 


No failure
by any party at any time to request the other party to strictly perform its
obligations hereunder, or to request the other party to strictly comply with
any condition hereunder shall be construed as a waiver or compromise by such
party as to such obligations or conditions, and any such party may at any time
request the other party to fully and strictly perform such contractual
obligations and fully and strictly comply with such conditions.


 


14.         Preferred
Right


 


If, upon
expiry of this Agreement, Party A intends to continue to lease the leased
equipment or to sell the same, Party B shall have the preferred right to lease
or purchase the same.


 


15.         Governing
Law and Dispute Resolution


 


15.1         The
formation, validity, interpretation, performance of this Agreement and dispute
resolution hereunder shall be governed by the laws of the PRC.


 


15.2         Any dispute
arising out of the performance of, or in connection with, this Agreement shall
be resolved by the parties first through friendly consultations, failing which,
it may be brought by any party hereto for adjudication before the people’s
court of the place of execution of the Agreement. When a dispute arises or is
pending resolution, other than the matters under dispute, the parties shall
continue to exercise their relevant rights and perform their relevant
obligations hereunder.


 


16.         Miscellaneous


 


16.1         The annex
hereto is an integral part of this Agreement and shall have the same legal
force and effect as this Agreement. The specific content of the annex shall
become effective upon verification, confirmation and signing by the parties.


 


16.2         Any matters
not covered hereunder shall be dealt with by the parties under a written
supplementary agreement, which shall have the same legal force and effect as
this Agreement.


 


16.3         Any change
to this Agreement shall be made in writing.


 


16.4         This
Agreement shall become effective as of the date when this Agreement is executed
and sealed by the legal representatives of the parties hereto.


 


16.5         The
Agreement is made in Chinese in four (4) copies, with each party holding
two (2) of them. Each copy shall have the same legal force and effect.


 

















 


	
  Party A:

  	
  Tianjin
  New Highland Science Development Co., Ltd (Seal)

  
	
   

  	
   

  
	
   

  	
  Representative:
  

  	
  /s/ Xin
  Guoqiang [Company Seal]

  	
   

  
	
   

  	
   

  
	
  Party B:

  	
  Tianjin
  Botenear Oil Engineering Co., Ltd (Seal)

  
	
   

  	
   

  
	
   

  	
  Representative:
  

  	
  /s/ Pan
  Jiasheng [Company Seal]