Exhibit
10.53


 


Horizontal
Water Jet Well Drilling Technology Services Agreement


 


	
  Project Title:

  	
  Horizontal Water Jet Well
  Drilling Technology Services

  
	
   

  	
   

  
	
  Party A:

  	
  Hanyu Oil Exploration
  Technology Development Co., Ltd.( of Xingrongtai District, Panjin City)

  
	
   

  	
   

  
	
  Party B:

  	
  Tianjin New Highland
  Science Development Co., Ltd.

  



 

















 


Party
A:                                                    Hanyu Oil
Exploration Technology Development Co., Ltd.( of Xingrongtai District,  Panjin City)


 


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


 


This Agreement is made and entered into by
and between Party A and Party B on the basis of equal status, volition, and
friendly consultation, with regard to the horizontal water jet well drilling
technology services, so as to clarify the rights and obligations for both parties,
who shall implement the Agreement with full responsibility and credibility.


 


1                                          Cooperation Scheme


 


1.1                                 Party A shall
assist Party B to develop the water jet well drilling technology services
market in Jilin Oilfield and Liaohe Oilfield (“End Users”) and shall be
responsible for entering into water jet technology service contracts with the
End Users.


 


1.2                                 Upon entry into
the aforesaid technology service contracts with the End Users, Party A shall
transfer to Party B the responsibility for the actual implementation of such
contracts. Party A warrants that it will apply the prices agreed herein to such
contracts as entered into the End Users. Party B shall pay annually a service
fee of RMB One Million Three Hundred and Sixty Thousand to Party B as a corresponding
remuneration and compensation.


 


2                                          The Content and Scope of
Technological Services


 


In accordance with the
design principles and construction technological requirements of Party A and
the End Users, Party B shall fulfill the following aspects of work:


 


2.1                                 Responsible to
complete the project construction work of horizontal water jet well drilling
under the terms of the Agreement.


 


2.2                                 Provide the
tools, instruments, equipment, and facilities as required for the delivery of
technological services for horizontal water jet well drilling, responsible for
the adjustment, installation, and operation of its self-provided equipment and
tools, as well as their dismantling, repair, and maintenance, so that the
equipment and tools remain in good conditions during the time of project
construction.


 


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


 


2.4                                 Submit to Party
A the necessary formal documents, including but not limited to the
technological plan for horizontal water jet well drilling and summaries.


 


3                                          Term of Technology Services


 


3.1                                 The term of
technology services pursuant to the provisions of this Agreement is three (3)
years, starting from the date hereof.


 


4                                          Responsibilities
and Obligations of Party A


 

















 


4.1                                 Part A shall
provide Party B with not less than 200 wells for implementation of work
hereunder and shall provide the technological conditions as required for the
delivery of technological services indicated in this Agreement, and shall
ensure that the necessary equipment and downhole 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.


 


4.2                                 Party A shall
be responsible to submit to Party B requests for technological services, and
timely 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.


 


4.3                                 With regard to
strata that contain H2S, Party A shall be responsible to provide the necessary
protective equipment and measures. Party B shall not be held accountable for
any accidents and/or construction delays due to the quality defects of the
aforementioned supplementary services that Party A is required to provide.


 


4.4                                 Party A shall
notify Party B of the on-site arrival date(s) of staff, equipment, and tools,
seven (7) days in advance.


 


4.5                                 Party A shall
review the construction design of the well(s) in question submitted by Party B,
verify the construction design plan that Party B modifies onsite, special work
plan, and the written instruction of work to be communicated downhole, and be
responsible for all the technological duties outside of the technological
service operations specified in this Agreement.


 


4.6                                 Party A has the
right to check the quality and safety of the equipment and instruments of Party
B, and has the right to forbid the use of those that do not comply with the
standards previously agreed by the parties. Representatives from Party A have
the right to check, at any time, the onsite work status of engineers from Party
B.


 


4.7                                 Party A shall
collaborate on the efforts of sending onsite injured or sick personnel to the
hospital for emergency care, and the medical costs shall be covered by whoever
is held accountable for that matter.


 


4.8                                 Considering
that the instruments and downhole equipment of Party B entail particular strata
features, Party A may not force Party B to deliver equipment downhole or to
conduct downhole construction work if the strata features do not meet the
construction requirements of such instruments and equipment of Party B.


 


4.9                                 In 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
such complicate situations are resolved.


 


4.10                           Party A shall
assume the safety and environmental protection responsibilities in connection
with the construction work. Party A shall be liable to indemnify any loss
arising from safety and environmental protection accidents not covered by the
insurance proceeds of the insurers.


 


4.11                           Party A
covenants that the prices applied by it in the service contracts entered into
with the End Users shall be the same as those specified herein.


 


4.12                           Party A
covenants not to enter into any similar service contract with any party other
than Party B or engage in the provision of similar services on its own.


 


5                                          Responsibilities
and Obligations of Party B


 


5.1                                 Party shall be
responsible to conduct technical communications, prepare the construction plan,
select the construction zone, provide onsite construction services and confirm
the work quantities, all directly with the End Users.


 


5.2                                 Party B shall
provide this project with professional technicians who must have onsite
construction work experiences and competence for this technological services
project.


 

















 


5.3                                 Upon receipt of
Party A’s notification, Party B shall timely organize and dispatch its staff,
equipment, and instruments to the site at the date/time designated by Party A.


 


5.4                                 Party B shall
provide the specialized tools, drilling tools, instruments, and supplementary
parts as required for the project, and be responsible for their dismantling,
maintenance, and repair, so that they remain in good conditions at any point of
time.


 


5.5                                 Party B shall
complete the construction design for the well(s) in question in accordance with
the technological requirements of Party A and the End Users and the geological
and engineering designs. Party B shall provide the technological services for
horizontal water jet drilling on the basis of the reviewed and approved
construction design.


 


5.6                                 Party B shall
be responsible to dispatch its employees to reach locations designated by Party
A at time/date designated by Party A.


 


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


 


5.8                                 Party B shall
strictly follow relevant national requirements for safe production, national
requirements for environmental protection as well as relevant industry
regulations so as to avoid the occurrence of accidents.


 


6                                          Costs, Billing
Settlement, and Project Acceptance


 


6.1                                 Payments for
horizontal water jet drilling technological services:


 


Payments for the
aforementioned technological services and trainings shall be based in the
actual horizontal footage, at the rate of 2,500 RMB/meter.


 


6.2                                 If construction
cannot be completed as designed due to geological and/or environmental reasons,
the parties agree to early terminate the contract work of horizontal water jet
drilling. The payments for water jet drilling shall be based in the actual work
quantities.


 


6.3                                 Party A shall
be responsible to settle the payments with the End Users and shall ensure that
the age of the accounts receivable shall not exceed a maximum of 90 days. Party
A shall pay to Party B a penalty of RMB10,000 
for each day in excess of the foregoing maximum period.


 


6.4                                 Party B shall
on a quarterly basis pay to Party A a service fee of RMB Three Hundred and
Forty Thousand.


 


7                                          Force Majeure
and Exemption from Liabilities


 


7.1                                 In the event
that this Agreement cannot be performed or continue to be performed due to
force majeure (such as floods, severe weather, and earthquakes), neither party
shall not bear any breach of contract liabilities in respect of the other
party.  Neither party shall be liable to
the other party for economic losses arising from uncontrollable and
unpredictable natural disasters, unless such party is liable to predict and prevent
such losses under this Agreement. After the force majeure ends, the parties
shall negotiate whether or not to continue to perform the terms of this
Agreement.


 


7.2                                 If, during the
course of construction, construction is discontinued due to Party A’s fault 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                                          Disputes
Resolution


 


8.1                                 If a dispute
arises during the performance of the Agreement, both parties shall first seek
to resolve such dispute through friendly consultations, failing which, the
parties shall appeal to the competent People’s Court of the place of execution
of this Agreement.


 


9                                          Miscellaneous


 


9.1                                 During the
course of executing the Agreement, if the construction work encounters
significant technological problems or matters not mentioned herein, the
parties, through negotiation, may make changes to part of the provisions herein
and/or sign supplementary contracts. Changes to the Agreement shall be made writing
and shall be signed and sealed by both parties.


 


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


 


9.3                                 The parties
shall maintain in confidence the content of this Agreement as well as the
information required for the performance of this Agreement.


 


9.4                                 The Agreement
is signed in four (4) exemplars, with each party holding two (2) of them. This
Agreement becomes effective upon execution and sealing.


 


Party
A:                                                    Hanyu Oil
Exploration Technology Development Co., Ltd.( of Xingrongtai District,  Panjin City)


 


Legal
Representative or Corporate Seal: [Company Seal]


 


Date:
August 23, 2010


 


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


 


Legal
Representative or Corporate Seal: [Company Seal]


 


Date:
August 23, 2010