Exhibit 10.54


 


Horizontal
Water Jet Well Drilling  Technology Services Agreement


 


	
  Project Title:

  	
   

  	
  Horizontal Water Jet Well Drilling Technology
  Services

  
	
   

  	
   

  	
   

  
	
  Party A:

  	
   

  	
  Hebei Daofu Oil Exploration Technology Development
  Co., Ltd.

  
	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
  Tianjin New Highland Science Development
  Co., Ltd.

  



 

















 


	
  Party A:

  	
   

  	
  Hebei Daofu Oil Exploration Technology Development
  Co., Ltd.

  
	
   

  	
   

  	
   

  
	
  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 Huabei Oilfield, Dagang Oilfield,
Shengli Oilfield, Jidong Oilfield and Zhongyuan 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
Four Million 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
600 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 One Million.


 


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:

  	
   

  	
  Hebei Daofu Oil Exploration Technology Development
  Co., Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Legal Representative or Corporate Seal: (Seal)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: August 25, 2010

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
  Tianjin New Highland Science Development
  Co., Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Legal Representative or Corporate Seal: (Seal)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: August 25, 2010