exv10w15



 





EXHIBIT 10.15




City of Buenos Aires, December 28, 2006




Messrs.

Pan American Energy LLC Sucursal Argentina (Argentine Branch)

Av. Leandro N. Alem 1180

(1001) Buenos Aires



Re.: Strategic Agreement for the rendering of Drilling, Completion and Workover Services of
oil and/or gas wells. Amendment # 2.




Dear Sirs,



We hereby submit to your consideration our sole amendment proposal (the “Amendment”) to the
Strategic Agreement for the rendering of Drilling, Completion and Workover Services of wells
located in the area of the Gulf of San Jorge, Provinces of Chubut and Santa Cruz, and other related
services transcribed in our note dated July 1, 2003, the text of which is transcribed herein below.



All capitalized terms used in this Amendment that have not been expressly defined shall have the
meaning assigned to them by the Strategic Agreement.



“WHEREAS,





	 	•	 	taking into account the changes in prices and costs verified in the local market, it is
the PARTIES intention to adjust the tariffs and work certification modalities set forth by
the Strategic Agreement;
	 
	 	•	 	taking into account that opportunities have been detected, it is the PARTIES intention
the adjustment of the drilling equipments to the prevailing operational conditions in the
rendering of the SERVICES, formalizing an adjustment of the Technical Specifications
attached to the Strategic Agreement;
	 
	 	•	 	the PARTIES have agreed that due to the work experience registered as of the beginning
of the Strategic Agreement to the date, it would be of mutual convenience to extend its
term.





THEREFORE the PARTIES agree to execute this Amendment under the following terms:



1. PARTIES

DLS Argentina Limited — Sucursal Argentina, with legal domicile at Sarmiento 663, City of Buenos
Aires, hereinafter referred to as “DLS” and PAN AMERICAN ENERGY LLC — Sucursal Argentina, with
legal domicile at Av. Leandro N. Alem 1180 of the City of Buenos Aires, hereinafter referred to as
“PAE”, (both parties jointly referred to as the “PARTIES” and individually as “PARTY”).



2. PURPOSE

The purpose of this Amendment is to modify the Strategic Agreement in the following aspects:





2.1. Tariffs

The tariffs that DLS shall be entitled to charge for the rendering of the SERVICES, as of
January 1, 2006 shall be those established in Appendix I “Tariffs” attached to the present
Amendment, which nullifies and replaces all prior consideration with reference to this
issue contained in the Strategic Agreement and its amendments prior to the present one.




2.2. Technical Specification



 









 






The drilling equipments that DLS shall use for the rendering of the SERVICES will have to
conform completely to what it is set forth in Appendix II “Technical Appendix — IIA —
DRILLING IN THE GOLFO SAN JORGE BUSINESS UNIT” attached to the present Amendment, which
nullifies and replaces the document with equivalent content of the Strategic Agreement.




In addition, DLS shall provide the main and ancillary equipment necessary for the provision
of the SERVICES in accordance with the API Standards and the Norms and Standards set forth
in Appendix III of the present Amendment, and with the specific Application Norms referred
in them.




2.3. Term

The Strategic Amendment modified by the present Amendment shall have a term of five (5)
years as of the Effective Date of the present and shall remain in effect up to the
fulfillment of the established term, date in which it will finalize without requiring
further action and without the need of any prior notice in that direction.




The term previously set forth, however, will be subject to the early termination
stipulations which are established in the Documents of the Strategic Agreement.


3. RENDERING OF THE SERVICES

The Services that constitute the subject matter of this Agreement shall be rendered exclusively to
the extent to which they are required by PAE and in the amount determined by the latter, in
accordance with the guidelines set forth by the Strategic Agreement.



4. RATIFICATION

All terms and conditions not expressly amended by the present Amendment shall continue to be
governed by the Strategic Agreement, whose terms and conditions are deemed to be reproduced herein
and ratified to all effects.



The present offer shall be considered accepted by you when Pan American Energy LLC (Sucursal
Argentina) pays the first invoice which DLS Limited Argentina (Sucursal Argentina) presents in
accordance with the new tariffs set forth in the preceding Article 2.1..



For the purposes of this Amendment the payment date shall be considered as the “Effective Date” of
the Amendment.



Sincerely,



/s/ Martín Zöldi




Martín Zöldi

Vice President






 










 





APPENDIX I — PRICES



The present Appendix I forms part of the “Strategic Agreement for the rendering of Drilling,
Completion and Workover Services of oil and gas wells” dated
January 1, 2006 (hereinafter, the
“Agreement” or the “Alliance”). All capitalized terms that are not expressly defined by the present
instrument shall have the meaning assigned to them by the Agreement.





	1.	 	INTRODUCTION
	 
	 	 	The PARTIES acknowledge that the compensation scheme described below has been designed by
mutual agreement for the purpose of facilitating the achievement of the goals set for the
Alliance and, to this effect, such scheme may be revised and amended at the request of any of
the PARTIES, on the basis that the operation practices and/or a change in the external
conditions during the term of the Agreement reveal a discrepancy between the intended results
and the results actually achieved.
	 
	 	 	Likewise, at any time during the term of the Agreement any PARTY may propose any amendment to
the present compensation scheme that might reinforce the effective achievement of the intended
goals.
	 
	 	 	In any case, the proposed amendments shall require both PARTIES approval in order to be
incorporated to the Agreement.
	 
	2.	 	QUOTATION CURRENCY AND ADJUSTMENT FOR INFLATION






	 	2.1.	 	Mixed Unit






	 	 	The prices contained in the present Appendix I are expressed in Mixed Units, hereinafter MU; a
MU is a currency unit defined for the sole purpose of facilitating the management of the prices
of the Agreement.

MU result from directly adding the amounts in US Dollars (USD) and in legal tender Argentine
Pesos ($) in which any price may be broken down according to the PARTIES agreement. Therefore
MU shall become completely defined by identifying the USD proportion in each MU, since the
remaining complementary part corresponds to $.

The corresponding complete notation shall be: MU(X%USD), which means that every MU shall be
composed of X% USD and (100-X)% $.

For the purpose of clarifying the meaning and application of the MU, the following two examples
may be used:
	 
	 	 	Case 1: 100 MU(30%USD) are equivalent to USD30 + $70

Case 2: 200 MU (60%USD) are equivalent to USD120 + $80
	 
	 	 	In this Agreement, when a price is expressed in MU(X%USD), the amount corresponding to USD
shall be referred to as USD Portion and the amount corresponding to $ shall be referred to
as $ Portion.
	 
	 	 	In the examples above, in the first case the USD Portion is 30 and the $ Portion is 70; in
the second case, the USD Portion is 120 and the $ Portion is 80.






	 	2.2.	 	Ii Adjustment Index






	 	 	For the purposes of attenuating the significant variations on profitability that
inflation/deflation processes may impose on contracts executed on the basis of fixed prices,
the Parties agree to review and eventually adjust the different prices and tariffs contained in
the present Appendix I on a monthly basis, by using the Ii Adjustment Index; the Index general
calculation way and application procedure are the following:





 









 






	 	2.2.1.	 	The Ii Adjustment Index corresponding to the “i” period shall be calculated on a
monthly basis according to the following formula:





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	IFASPi-1
	 	 	 	IGOILi-1
	 	 	 	IPPi-1
	 	 
	 

	 	 
	 	 	 	 
	 	 	 	 	 	 
	Ii = A x

	 	 	 	+ B x
	 	 	 	+ C x	 	 	 	 
	 

	 	IFASP0
	 	 	 	IGOIL0
	 	 	 	IPP0	 	 







	 	 	 	where
	 
	 	 	 	IFASP: Cost in $ of an intervention crew composed or 1 driller, 1 derrickman and 3
roughnecks as stated in the Services Salary Table of the Collective Bargaining
Agreement for the FASPyGP, considering the agreement’s basic gross salaries (no extras)
plus employer’s contributions to the Retirement Fund, Act 19.032, Medical Care and
Labor Risk Insurance. The annual statutory bonus and employer’s contributions
percentages shall also be added, including the Cuota Solidaridad (Solidarity
Contribution) minus the recovery of tax credits.
	 
	 	 	 	IGOIL: Price in $ of diesel oil in bulk in Comodoro Rivadavia
	 
	 	 	 	IPP: Producer’s Basic Prices Index
	 
	 	 	 	Sub-indexes ‘i-1’ indicate that the value corresponds to the period preceding the ‘i’
period regarding which the Adjustment Index is being calculated.
	 
	 	 	 	Sub-indexes ‘0’ indicate that the value corresponds to the initial month, defined as
December, 2005.
	 
	 	 	 	Coefficients A, B and C shall be defined for each particular tariff.
	 
	 	2.2.2.	 	The ‘i’ period adjusted tariff shall result from multiplying the $ Portion of the
tariff by the Ii Adjustment Index calculated in accordance with section 2.2.1 above.
	 
	 	 	 	In the explanatory examples used in section 2.1, if for a particular month the
Adjustment Index was Ii = 1.05, the payable amounts would be the following:
	 
	 	 	 	Case 1: 100 MU(30%USD) are equivalent to USD30 + $70          USD30 + $73.5 are payable

Case 2: 200 MU(60%USD) are equivalent to USD120 + $80          USD120 + $84 are payable
	 
	 	2.2.3.	 	The Adjustment Index for a particular month calculated according to above described
methodology shall require prior approval by PAE in order to be effectively applicable to
the tariffs. Following approval the adjustment shall remain in effect until replaced by a
new Adjustment Index approved by PAE.
	 
	 	2.2.4.	 	Under no circumstances shall the USD Portion of the tariff be affected by adjustments
for inflation.
	 
	 	2.2.5.	 	The variables selected to design the Adjustment Index as well as their respective
coefficients A, B and C regarding each particular tariff may be replaced by new variables
and coefficient values provided the Parties agree to do so.






	3.	 	COMPENSATION SCHEME






 










 






3.1. Drilling Service




Compensation to be paid by PAE to DLS for the drilling service rendered in accordance with the
scope, terms and conditions of the Agreement and its Appendixes and the type of equipment used:




	 	•	 	“Small Equipment”: Rigs Nbr. 101. 102, 104, 111, 136 and 154, and
	 
	 	•	 	“Large Equipment”: Rigs Nbr. 113, 148 and 150,






shall be subject to the following scheme:




	 	3.1.1.	 	Wells between 900 and 2,700 mts. depth / Conventional drilling
	 
	 	 	 	The drilling of wells whose final depth is between 900 and 2,700 mts. and which have been
drilled by using the standard methodology specified in Appendix II, or by using
methodologies previously tested and adopted by the PARTIES by mutual agreement and which
therefore cannot be termed as “tests” (hereinafter, “Conventional Drilling”), shall be
compensated with a lump sum (“lump sum”) for each completed well, to be determined in
accordance to the following formula:





LS = K n x T Std





	 	 	 	where:
	 
	 	 	 	LS = Lump Sum [MU(25%USD)]
	 
	 	 	 	Kn = Standard Hourly Rate in accordance with the size of the equipment




K1 “Small Equipment” = 1,259.13 UM(25%USD)/hour



K2 “Large Equipment” = 1,345.35 UM(25%USD)/hour





	 	 	 	T Std = Standard drilling Time measured in hours, which shall be determined on the
basis of the final depth of the completed well TD expressed in meters using the notation:





T Std = ηi x112xEXP(0.00048xTD)





	 	 	 	where ηi is the efficiency applicable to the period ‘i’ for which
the Standard Time is being calculated. The ηi efficiency shall be
recalculated every 6 months as from the effective date of the Agreement using the notation:





	 	 	 	 	 	 	 
	ηi = ηi-1 X { 1- [(1-

	 	Σ ΤReal
	 	) x 0.5]}
	 	 
	 

	 	 	 	 	 	 
	 

	 	Σ ΤStd(i-1)	 	 	 	 







	 	 	 	where:
	 
	 	 	 	Σ TReal is the summation of the time actually used in the
drilling of all the wells certified under the Lump Sum tariff and carried out during the
past 12 months of operation.
	 
	 	 	 	Σ T Std(i-1) is the summation of the time anticipated by the function
T Std in effect during the period immediately prior to the period for which the
efficiency is being calculated, applied to the same wells as referred above.





 









 






	 	 	ηi-1 is the efficiency corresponding to the immediately previous period. It is
hereby established that the efficiency corresponding to the initial 6 months period equals
1 (one).
	 
	 	 	Deviations beyond 30 % of the real time on the standard curve
	 
	 	 	Wells which depths are between 900 and 2700 meters and which real drilling time exceeds in
more than 30 % the standard time for such depth, shall be certified under the hourly tariff
methodology, as provided in paragraph 3.1.2.
	 
	 	 	For the purposes of the present section, the referred drilling times comprise as from the
beginning of the dismantling of the equipment at one site up to the beginning of the
dismantling of the equipment at the next site, including transport time from one site to
the other one.
	 
	 	 	Logging Hours
	 
	 	 	In case that during the completion of a well more than 38.25 hours are used in logging
operations, an additional amount shall be paid in addition to the lump sum “LS”, to be
determined in accordance to the following notation:
	 
	 	 	H1 x SHO + H2 x OHR
	 
	 	 	where:
	 
	 	 	H1 = logging hours following the first 38.25 and up to a maximum of 48 total hours.
	 
	 	 	H2 = logging hours following the first 48 hours
	 
	 	 	SHOn = as defined in section 3.1.4
	 
	 	 	OHRn = as defined in section 3.1.2






	 	3.1.2.	 	Wells over 2,700 mts. depth and TESTS
	 
	 	 	 	Wells of a projected final depth exceeding 2,700m or wells in which the PARTIES decide
to use technologies or procedures as TESTS shall be compensated through the Hourly Rate
plus reimbursable costs system.
	 
	 	 	 	The materials and services actually employed during the drilling and not included in
the equipment’s hourly compensation shall be reimbursed by PAE to DLS at the
presentation of the corresponding expenses vouchers or through the use of unit price
lists approved by the PARTIES in due time.
	 
	 	 	 	Such materials and services comprise, among others: Drill Bits, Mud Materials, Water
Transport, Rentals, etc.
	 
	 	 	 	NDT is the Net Drilling Time measured in hours as from the well spuding up to the
completion of the works and dismantling of the equipment; the amount PAE shall pay DLS
in order to compensate the use of the drilling equipment shall be calculated as the
result of NDT x OHRn, where:
	 
	 	 	 	OHR1 = Operation Hourly Rate “Small
Rigs” = 902.71 MU(18%USD)/hour
	 
	 	 	 	OHR2 = Operation Hourly Rate “Large
Rigs” = 993.42 MU(18%USD)/hour
	 
	 	 	 	DTA Tariff





 









 






	 	 	 	The compensation to be paid by PAE to DLS for Dismantling, Transport and Assemblage
(DTA) of the rigs shall be:
	 
	 	 	 	DTA1 “Small Rigs” = 50,843.69 MU(18%USD)

DTA2 “Rigs 113 and 148” = 74,030.90 MU(18%USD)

DTA3 “Rigs 150” = 121,467.31 MU(18%USD)
	 
	 	 	 	Forklifts (autoelevadores)
	 
	 	 	 	TDOAE = Daily Operation Tariff = 481.44 (MU(0%USD)
	 
	 	 	 	Monitoring systems (Pason)
	 
	 	 	 	TDOSM = Daily Operation Tariff = 132.57 MU(100%USD)
	 
	 	3.1.3.	 	Deepenings exceeding 2,700 mts. depth
	 
	 	 	 	In case of deepenings exceeding 2,700m for all types of wells having an original final
depth of less than 2,700m, the total compensation shall be calculated as the summation
of the LS (Lump Sum) corresponding to 2,700m, calculated as described in 2.1.1, plus
the amount resulting of applying the Hourly Rate plus Reimbursable Costs system defined
in 2.1.2, applied as from 2,700m depth up to the completion of the well.
	 
	 	3.1.4.	 	Stand By Rate
	 
	 	 	 	The Stand By Rate applicable as provided for by the Technical Appendix shall be:
	 
	 	 	 	SHO1 = Stand By Hourly Rate “Small Rigs” = 830.50 MU(18%USD)/hour

SHO2 = Stand By Hourly Rate “Large Rigs” = 913.96 MU(18%USD)/hour
	 
	 	3.1.5.	 	Coefficients for calculating the Adjustment Index
	 
	 	 	 	The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.1 are:





	 	 	 
	A =
	 	0.42
	B =
	 	0.19
	C =
	 	0.39







3.2. Completion and Workover service




Compensation to be paid to DLS for the Completion and Workover service rendered in
accordance with the scope, terms and conditions of the Agreement and its Appendixes shall
be:




	 	3.2.1.	 	Operation Hourly Rate
	 
	 	 	 	The hourly rate that shall be used to compensate the use of Completion equipment shall
be:





 









 






	 	 	 	OHR = Operation Hourly Rate = 421.62 MU(13%USD)/hour
	 
	 	3.2.2.	 	Stand By and Climate Factor Hourly Rate
	 
	 	 	 	The Stand By and Climate Factor Hourly Rate applicable as provided for by the Technical
Appendix shall be:
	 
	 	 	 	SHR = Stand By Hourly Rate = 381.60 MU(13%USD)/hour
	 
	 	 	 	CFHR = Climate Factor Hourly Rate = 273.02 MU(13%USD)/hour
	 
	 	3.2.3.	 	DTA Rate
	 
	 	 	 	Compensation that PAE shall pay DLS for the Dismantling, Transport and Assemblage (DTA)
of Completion equipment shall be:
	 
	 	 	 	DTA(=f) = DTA between wells located on the same flange = 7,104.22 MU(13%USD) +
[Distance in excess of 20Km] x 122.73 MU(13%USD)/Km
	 
	 	 	 	DTA(≠f) = DTA between wells located on different flanges = 16,281.29 MU(13%USD)
	 
	 	3.2.4.	 	Coefficients for calculating the Adjustment Index
	 
	 	 	 	The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.2 are:





	 	 	 
	A =
	 	0.59
	B =
	 	0.09
	C =
	 	0.32







3.3. Pulling Service




Compensation to be paid to DLS for the Pulling service rendered in accordance with the
scope, terms and conditions of the Agreement and its Appendixes shall be:




	 	3.3.1.	 	Operation Hourly Rate
	 
	 	 	 	The hourly rate that shall be used to compensate the use of Pulling equipment shall be:
	 
	 	 	 	Light Pulling
	 
	 	 	 	OHR = Operation Hourly Rate = 315.62 MU(13%USD)/hour
	 
	 	 	 	Heavy Pulling
	 
	 	 	 	OHR = Operation Hourly Rate = 356.61 MU(13%USD)/hour
	 
	 	3.3.2.	 	Stand By and Climate Factor Hourly Rate
	 
	 	 	 	The Stand By and Climate Factor Hourly Rate applicable as provided for by the Technical
Appendix shall be:





 









 






	 	 	 	Light Pulling
	 
	 	 	 	SHR = Stand By Hourly Rate = 284.05 MU(13%USD)/hour
	 
	 	 	 	CFHR = Climate Factor Hourly Rate = 157.80 MU(13%USD)/hour
	 
	 	 	 	Heavy Pulling
	 
	 	 	 	SHR = Stand By Hourly Rate = 320.96 MU(13%USD)/hour
	 
	 	 	 	CFHR = Climate Factor Hourly Rate = 178.31 MU(13%USD)/hour
	 
	 	3.3.3.	 	DTA Rate
	 
	 	 	 	Compensation that PAE shall pay DLS for the Dismantling, Transport and Assemblage (DTA)
of Pulling equipment shall be:
	 
	 	 	 	Light Pulling
	 
	 	 	 	DTA(=f) = DTA between wells located on the same flange = 1,262.39 MU(13%USD) +
[distance exceeding 20 Km] x 21.03 MU(13%USD/Km
	 
	 	 	 	Heavy Pulling
	 
	 	 	 	DTA(=f) = DTA between wells located on the same flange = 1,783.13 MU(13%USD) +
[distance exceeding 20 Km] x 23.75 MU(13%USD/Km
	 
	 	3.3.4.	 	Coefficients for calculating the Adjustment Index
	 
	 	 	 	The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.3 are:





	 	 	 
	A =
	 	0.66
	B =
	 	0.06
	C =
	 	0.28







3.4 Extra Salary Compensations




PAE shall reimburse the benefits, not comprised in the salary, that DLS have to pay to its
unionized personnel as a result of resolutions approved by the respective workers unions,
by an item independent from the tariff, calculated as follows:




Personnel:



	 	 	 	 	 	 	 	 	 
	 	 	UNIONS
	 	 	PRIVATE OIL	 	IERARCHICAL
	[# individuals per equipment per month	 	WORKERS	 	PERSONNEL
	 
	DRILLING
	 	 	24	 	 	 	8.5	 
	COMPLETION AND WORKOVER
	 	 	20	 	 	 	5.5	 
	PULLING
	 	 	16	 	 	 	4.5	 






 









 








Billing Costs:




PAE shall add to the acknowledged benefits a billing cost percentage. The same shall comprise:



	 	 	 	 	 
	Turnover Tax
	 	 	2,50	%
	Municipal/Commercial Activities Tax
	 	 	0,60	%
	Banking Debits and Credits Tax (Ley del cheque)
	 	 	1,36	%
	Grossing up
	 	 	0,20	%
	 
	Total
	 	 	4,66	%







The current values of extra salary compensations as of the date of execution of this agreement
are:




Drilling




ESC = Extra Salary Compensation = 2.067,45 MU(0%USD)/day/equipment




Completion and Workover




ESC = Extra Salary Compensation = 1.640,03 MU(0%USD)/day/equipment




Pulling




ESC = Extra Salary Compensation = 1.317,25 MU(0%USD)/day/equipment