Exhibit 10.10


 


Technological Services Agreement


 


On Horizontal Hydro Drilling for Coalbed
Gas Wells


 


	
  Project
  Title:

  	
  Technological
  Services for Horizontal Hydro Well Drilling

  
	
   

  	
   

  
	
  Party A:

  	
  Liaoning
  Ouyadongdi Coalbed Gas Technology Development Co. Ltd.

  
	
   

  	
   

  
	
  Party B:

  	
  Tianjin
  New Highland Science Development Co., Ltd.

  
	
   

  	
   

  
	
  Location
  of Agreement Signed:

  	
  Shenyang
  City, Liaoning Province

  
	
   

  	
   

  
	
  Date of
  Agreement Signed:

  	
  October 26,
  2009

  
			



 


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Party A:         Liaoning
Ouyadongdi Coalbed Gas Technology Development Co. Ltd.


 


Party B:          Tianjin
New Highland Science Development Co., Ltd.


 


This
Agreement is made and signed into by and between Party A and Party B on the
basis of equal status, volition, and friendly consultation, with regard to the
technological services for horizontal hydro well drilling that Party B agrees
to provide Party A, so as to clarify the rights and obligations for both
parties, who shall execute the Agreement with full responsibility and
credibility.


 


WHEREAS,


 


1              The Content
and Scope of Technological Services


 


In
accordance with the design principles and construction technological
requirements specified by Party A, Party B shall fulfill the following:


 


1.1           Complete
construction work regarding the horizontal hydro well drilling project.


1.2           Provide the
tools, instruments, equipment, and facilities as required for the delivery of
technological services for horizontal hydro well drilling; adjust, install and
operate equipment and tools provided by Party B; dismantle, repair, and
maintenan aforementioned equipment and tools so that the equipment and tools
remain in good condition during the time of construction.


1.3           Complete the
construction design plan for horizontal hydro well drilling, and produce plan
modifications according to the actual conditions of on-site construction.


1.4           Submit to
Party A necessary formal documents, including but not limited to the
technological plan for horizontal hydro well drilling.


 


2              Term of
Technological Services


 


2.1           The term of
technological services pursuant to the provisions of this Agreement is two
(2) years, starting from the date whereby this Agreement is signed into
effect.


 


3              Responsibilities
and Obligations of Party A


3.1           Party A
shall provide the technological conditions as required for the delivery of
technological services indicated in this Agreement, and ensure that the
necessary equipment, downhole motors, and water jet units work properly, so as
to facilitate Party B’s efforts to provide the technological services in accordance
with the terms of this Agreement.


3.2           Party A
shall submit to Party B requests for technological services, and accurately
provide Party B with the geological design needed for the execution of this
Agreement, including but not limited to the relevant data and documents of
geological strata and wells.


3.3           Party A
shall bear the responsibility of organizing the necessary well-repair team and
well-survey team, provide necessary water sources and electricity, and cover
all resulting costs. In the event that a negative pressure water jet is needed
in order to improve the effectiveness of the existing water jet, Party A shall
be responsible for providing air compressors, pump cars and other equipment
that are necessary for the negative water jet to work properly. With regard to
strata that contain H2S, Party A shall bear the
responsibility of providing the necessary protective equipment and measures. 


 


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Party B
shall not be held accountable for any accidents or construction delays due to
the defects in quality involving the aforementioned supplementary services that
Party A is required to provide.


3.4           Party A
shall give Party B five (5) days advance notice of the on-site arrival
date(s) of staff, equipment, and tools..


3.5           Party A
shall facilitate Party B’s efforts to process road transportation procedures
for the equipment, and the resultant costs shall be covered by Party B.


3.6           Party A
shall review the construction design of the well in question submitted by Party
B, verify the construction design plans modified onsite by Party B, special
work plans, and written work instructions to be communicated downhole, and bear
responsibility for all technological duties apart from the technological
services already specified in this Agreement.


3.7           Party B
shall cover the costs and expenses of board and communications for the fixed
number of Party B’s formally employed staff, during the course of onsite
construction.. Party A shall provide space necessary for the storage and
maintenance of Party B’s equipment, while Party B shall bear the responsibility
of covering the corresponding costs.


3.8           Party A has
the right to check the credentials and work capabilities of Party B’s staff,
and those staff members whose qualifications do not comply are required to be
replaced within the limit of seven (7) days. Party B shall cover the
resultant costs.


3.9           Party A has
the right to check the quality and safety of the equipment and instruments that
Party A has rented, and has the right to forbid the use of those equipment and
instruments that do not comply with standards agreed upon mutually by both
parties. Representatives from Party A have the right to check, at any time,
whether engineers from Party B have complied with those duties.


3.10         Party A
shall take part in sending onsite personnel to the hospital for emergency care,
and the medical costs shall be covered by whoever is held accountable for the
matter.


3.11         Party A may
not force Party B to deliver equipment downhole or to conduct downhole
construction work when the instruments and downhole equipment of Party B entail
particular strata features.


3.12         In the case
of abnormal situations downhole, Party A shall proactively coordinate with
Party B in taking protective measures, and construction work may not be resumed
until complications are resolved.


 


4              Responsibilities
and Obligations of Party B


 


4.1           Party B
shall provide this project with professional technicians who must have onsite
construction work experience and competence regarding this technological
services project.


4.2           Upon the
reception of Party A’s notification, Party B shall organize and dispatch its
staff, equipment, and instruments to the site as soon as possible.


4.3           Party B
shall provide the specialized tools, drilling tools, instruments, and
supplementary parts as required for the project, and bear responsibility for
dismantling, maintaining, and repairing the aforementioned tools, instruments,
and parts, so that they remain in good condition at any point in time.


4.4           Party B
shall complete the construction design for the well in question in accordance
with the technological requirements of Party A, as well as its geological
design and engineering design. Party B shall provide the technological services
for horizontal hydro well drilling on the basis of the construction design
reviewed and approved by Party A.


4.5           Party B
shall provide written documents describing the requirements, measures, drilling
tool combinations for onsite construction work and the auxiliary work required
of Party A. 


 


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The
documents shall be sent to the team leader from Party A, who shall direct the
work instructions to the well-repair team.


4.6           During the
course of onsite construction work, construction workers from Party B shall
negotiate construction measures with representatives from Party A according to
actual construction conditions.


4.7           Party B
shall abide by all the rules and regulations that Party A has made for
living and production zones, and comply with Party A’s supervision.


4.8           Party B
shall bear the responsibility of dispatching its employees to locations
designated by Party A at the time and date designated by Party A.


4.9           Party B
shall ensure that its employees follow the ethnic group-related laws,
regulations, and policies in the area and respect the customs of the ethnic
groups. Party B shall be held solely accountable for the legal and economic
results due to noncompliance.


4.10         Party B
shall be held legally and economically accountable for the causalities arising
from accidents for which Party B is held accountable, unless whoever else shall
be responsible for the causalities where Party B is not at fault.


4.11         During the
course of construction work, Party B shall bear the responsibility of covering
the costs of scrapping, damage, drill-burying, drill-sticking, and other
defects in its instruments, tools, and equipment, if such is due to its own
fault; if not, whoever responsible shall compensate the economic losses.


4.12         Party B shall
strictly follow relevant national requirements for production safety as well as
industry-wide specifications. Party B shall be solely and totally responsible
for accidents if they are of its own fault. If not, whoever caused the
accidents shall bear full liability.


4.13         Party B
shall strictly follow national requirements for environmental protection as
well as industry-wide specifications in this regard. Party B shall be solely
and totally responsible for accidents of environmental destruction and pollution
if they are of its own fault. If not, whoever caused the harm shall bear full
liability.


4.14         If accidents
are caused by unbalancing, Party A shall bear full liability.


 


5              Work
Relationship Between Party A and Party B


5.1           In
accordance with the Agreement, Party B shall fully provide services for the
construction, while Party A shall require its well-repair team to actively
coordinate with Party B. The two parties shall support and assist each other so
as to ensure the successful completion of the construction work under this
Agreement


5.2           Party A has
the right to check, at any point of time, the status in which Party B delivers
its technological services according to the provisions of this Agreement, so as
to verify whether Party B’s construction plan complies with the terms under the
provisions of this Agreement.


5.3           As long as
the construction plan proposed by Party B is reasonable and feasible, it is
proper for Party A to send it to the work units as instructions. In the event
that representatives from Party A raise disputes regarding the construction
plan, the written instructions of Party A shall be regarded as the official
instructions.


 


6              Costs,
Billing Settlement, and Project Acceptance


6.1           When the
actual drilling footage is less than the designed footage, the calculation of
drilling costs shall be based on the footage actually completed, at the rate
900 RMB/meter; when the actual footage exceeds the designed footage, the
drilling costs shall be based on the design footage, at the rate of 900 RMB/meter.


6.2           In the event
that, where it is the fault of Party B, the actual effective footage is
insufficient to the extent that the volume of controlled gas resources is
reduced (disregarding 


 


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reduction
due to factors of geological strata), Party B shall voluntarily take remedial
measures for additional water jet drilling.


6.3           Payment
method: Within ninety (90) days after completing verification of the monthly
work load, Party A shall make payments to Party B for its services based on the
work load of the corresponding period.


6.4           If
construction cannot be completed as designed due to geological reasons, the
parties agree to the early termination of the construction work on horizontal
hydro well drilling. The payments for drilling work shall be based in the
actual production volume.


6.5           If Party A
decides to make changes or adjustments to the construction design according to
the actual conditions of onsite construction, it shall cover the resultant
costs.


6.6           Upon the
completion of construction for each well, Party A shall make verifications
according to construction design, in which process Party B shall provide the
necessary facilitation. Verification shall be completed within five
(5) days after Party B completes its work. If Party A fails to complete
verification, without any justifiable reasons, within ten (10) days after
the completion of construction by Party B, it shall be automatically designated
that the work in question passes verification. If the work does not pass
verification according to the construction design, Party B shall immediately
make corrections, and shall cover all costs during the course of correction.
After correction, Party A shall conduct verification in the same manner as
previously applied. After successful verification, Party A’s signature shall be
required for confirmation.


 


7              Force
Majeure and Exemption from Liabilities


7.1           In the event
that this Agreement cannot be executed or continue to be executed due to force
majeure (such as floods and earthquakes), both parties shall not be held liable
for breach of agreement. Unless predicted and/or protected under the terms of
this Agreement between the parties, they shall not bear any liabilities for the
economic losses arising from uncontrollable and/or unpredictable natural
disasters. After force majeure ceases, the parties shall negotiate whether or
not to continue to execute the terms of this Agreement.


7.2           If, during
the course of construction, construction is discontinued due to the fault of or
force majeure, including but not limited to geological factors, strata
structural factors, and natural disasters, Party B shall not bear any
liabilities for the direct or indirect losses caused to Party A.
Discontinuation of construction due to such reasons shall not exempt Party A
from its obligations to make payments to Party B for the portion of
construction already completed.


 


8              Early
Termination or Suspension


8.1           Each party
has the right of early termination or suspension of the Agreement due to
serious faults of the other party.


8.2           If Party A
proposes early termination of the Agreement due to such reasons as change of
plans, it shall make payments to Party B for its services on the basis of the
actual volume of production


8.3           If, during
the course of construction, construction is discontinued due to the fault of
Party A or force majeure, including but not limited to geological factors,
strata structural factors, and natural disasters, both parties agree to the
early termination of the Agreement.


 


9              Settlement
of Disputes


9.1           If disputes
arise during the course of executing the Agreement, both parties shall
prioritize friendly negotiations as the form of dispute settlement. If
negotiation fails, the parties shall appeal to the People’s Court of Law in the
jurisdiction of the location where the Agreement is signed into effect.


 


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10            Miscellaneous


10.1         During the
course of executing the Agreement, if significant technological problems or
matters not mentioned herein are encountered during construction, the parties,
through negotiation, may make changes to part of the provisions herein and/or
sign supplementary contracts. Changes to the Agreement shall be presented in
written form and signed into effect by and between both parties, stamped with
seals.


10.2         In light of
the fact that the equipment for horizontal hydro drilling is designed for oil
layer wells instead of coal layer construction, as is the case with this
project, both parties shall actively communicate and cooperate with each other
where construction problems occur, so as to jointly fulfill the mission of
coalbed gas development. If geological traits of the coalbed turn out to be
less than ideal, both parties shall try to complete the construction through
joint efforts. If construction cannot be completed as ideally designed due to
recognized factors of coalbed traits, both parties agree to exempt each other
from any liabilities.


10.3         Notifications,
reports, and correspondences needed for the execution of this project shall be
delivered in written form to the locations that designated by each party.


10.4         The
Agreement enters into effect as of the date of both parties’ signatures and
ends as all the terms herein are settled.


10.5         The Agreement
is signed in four (4) originals, with each party holding two
(2) originals.


 


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  Party A:

  	
  Liaoning
  Ouyadongdi Coalbed Gas Technology Development Co. Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Seal:

  
	
   

  	
   

  
	
   

  	
  [Company
  Seal]

  
	
   

  	
   

  
	
   

  	
  Date:

  



 


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  Party B:

  	
  Tianjin
  New Highland Science Development Co., Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Seal:

  
	
   

  	
   

  
	
   

  	
  [Company
  Seal]

  
	
   

  	
   

  
	
   

  	
  Date:

  



 


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