Document:

EXHIBIT 10.13

                                ESCROW AGREEMENT

      THIS ESCROW  AGREEMENT  (this  "Agreement") is made and entered into as of
May  25,  2004  AMERICHIP   INTERNATIONAL,   INC.,  a  Nevada  corporation  (the
"Company");  the Buyer(s) listed on the Securities Purchase Agreement, dated the
date hereof,  (the  "Investor(s)"),  and BUTLER  GONZALEZ,  LLP, as Escrow Agent
hereunder (the "Escrow Agent").

                                   BACKGROUND

      WHEREAS,  the Company and the  Investor(s)  have entered into a Securities
Purchase Agreement (the "Securities Purchase  Agreement"),  dated as of the date
hereof,  pursuant to which the  Company  proposes  to sell  secured  convertible
debentures (the  "Convertible  Debentures")  which shall be convertible into the
Company's  Common Stock,  par value $.001 per share (the "Common  Stock"),  at a
price per share  equal to the  Purchase  Price,  as that term is  defined in the
Securities Purchase  Agreement.  The Securities Purchase Agreement provides that
the Investor(s) shall deposit the purchase amount in a segregated escrow account
to be held by Escrow Agent in order to effectuate a disbursement  to the Company
at a closing to be held as set forth in the Securities  Purchase  Agreement (the
"Closing").

      WHEREAS,   the  Company  intends  to  sell  Convertible   Securities  (the
"Offering").

      WHEREAS,  Escrow Agent has agreed to accept,  hold, and disburse the funds
deposited with it in accordance with the terms of this Agreement.

      WHEREAS,  in order to  establish  the  escrow of funds  and to effect  the
provisions of the Securities Purchase Agreement, the parties hereto have entered
into this Agreement.

      NOW THEREFORE,  in consideration of the foregoing,  it is hereby agreed as
follows:

            1.  DEFINITIONS.  The  following  terms  shall  have  the  following
meanings when used herein:

            a. "Escrow  Funds" shall mean the funds  deposited with Escrow Agent
pursuant to this Agreement.

            b. "Joint Written Direction" shall mean a written direction executed
by the Investor(s) and the Company  directing  Escrow Agent to disburse all or a
portion  of the  Escrow  Funds or to take or  refrain  from  taking  any  action
pursuant to this Agreement.

            c. "Escrow Period" shall begin with the commencement of the Offering
and shall terminate upon the earlier to occur of the following dates:

                  (i) The date upon  which  Escrow  Agent  confirms  that it has
received  in the  Escrow  Account  all  of  the  proceeds  of  the  sale  of the
Convertible Debentures;

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                  (ii) The  expiration  of  twenty  (20)  days  from the date of
commencement  of the  Offering  (unless  extended  by mutual  written  agreement
between the Company and the Investor(s)  with a copy of such extension to Escrow
Agent); or

                  (iii)  The  date  upon  which a  determination  is made by the
Company and the  Investor(s)  to terminate the Offering prior to the sale of all
the Convertible Debentures.

      1. During the Escrow  Period,  the Company and the  Investor(s)  are aware
that they are not  entitled  to any funds  received  into  escrow and no amounts
deposited in the Escrow  Account shall become the property of the Company or the
Investor(s)  or any other  entity,  or be subject to the debts of the Company or
the Investor(s) or any other entity.

            2.  APPOINTMENT OF AND ACCEPTANCE BY ESCROW AGENT.  The  Investor(s)
and the Company hereby appoint Escrow Agent to serve as Escrow Agent  hereunder.
Escrow Agent hereby accepts such  appointment and, upon receipt by wire transfer
of the Escrow Funds in accordance with Section 3 below,  agrees to hold,  invest
and disburse the Escrow Funds in accordance with this Agreement.

            a. The Company hereby  acknowledges that the Escrow Agent is counsel
to the Investor(s) in connection with the transactions contemplated and referred
herein.  The  Company  agrees  that  in the  event  of any  dispute  arising  in
connection  with this Escrow  Agreement  or  otherwise  in  connection  with any
transaction  or agreement  contemplated  and referred  herein,  the Escrow Agent
shall be permitted to continue to represent the Investor(s) and the Company will
not seek to disqualify such counsel.

            3.  CREATION  OF  ESCROW  FUNDS.  On or  prior  to the  date  of the
commencement of the Offering, the parties shall establish an escrow account with
the Escrow Agent,  which escrow account shall be entitled as follows:  AmeriChip
International,  Inc/Cornell Capital Partners,  LP Escrow Account for the deposit
of the Escrow Funds. The Investor(s) will instruct  subscribers to wire funds to
the account of the Escrow Agent as follows:

BANK:

ROUTING #:

ACCOUNT #:

NAME ON ACCOUNT:

NAME ON SUB-ACCOUNT:

            4. DEPOSITS INTO THE ESCROW  ACCOUNT.  The  Investor(s)  agrees that
they shall promptly deliver funds for the payment of the Convertible  Debentures
to Escrow Agent for deposit in the Escrow Account.

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            5. DISBURSEMENTS FROM THE ESCROW ACCOUNT.

            a. The Escrow Agent will  continue to hold such funds until  Cornell
Capital  Partners,  LP on behalf of the  Investor(s) and Company execute a Joint
Written  Direction  directing  the Escrow  Agent to  disburse  the Escrow  Funds
pursuant to Joint Written  Direction  signed by the Company and the Investor(s).
In  disbursing  such funds,  Escrow Agent is  authorized to rely upon such Joint
Written  Direction  from the  Company  and the  Investor(s)  and may  accept any
signatory  from the Company  listed on the signature  page to this Agreement and
any signature from the Investor(s) that the Escrow Agent already has on file.

            b. In the event  Escrow  Agent  does not  receive  the amount of the
Escrow Funds from the Investor(s), Escrow Agent shall notify the Company and the
Investor(s). Upon receipt of payment instructions from the Company, Escrow Agent
shall refund to each subscriber  without  interest the amount received from each
Investor(s),  without  deduction,  penalty,  or expense to the  subscriber.  The
purchase  money returned to each  subscriber  shall be free and clear of any and
all claims of the Company, the Investor(s) or any of their creditors.

            c. In the event  Escrow  Agent does receive the amount of the Escrow
Funds  prior to  expiration  of the Escrow  Period,  in no event will the Escrow
Funds be released to the Company  until such amount is received by Escrow  Agent
in collected funds. For purposes of this Agreement,  the term "collected  funds"
shall mean all funds  received by Escrow Agent which have cleared normal banking
channels and are in the form of cash.

            6.  COLLECTION  PROCEDURE.  Escrow  Agent is  hereby  authorized  to
deposit the proceeds of each wire in the Escrow Account.

            7.  SUSPENSION OF  PERFORMANCE:  DISBURSEMENT  INTO COURT. If at any
time, there shall exist any dispute between the Company and the Investor(s) with
respect to  holding or  disposition  of any  portion of the Escrow  Funds or any
other  obligations of Escrow Agent hereunder,  or if at any time Escrow Agent is
unable to determine, to Escrow Agent's sole satisfaction, the proper disposition
of any portion of the Escrow Funds or Escrow Agent's proper actions with respect
to its obligations hereunder, or if the parties have not within thirty (30) days
of the furnishing by Escrow Agent of a notice of resignation pursuant to Section
9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:

            a.  suspend the  performance  of any of its  obligations  (including
without  limitation any  disbursement  obligations)  under this Escrow Agreement
until such dispute or uncertainty  shall be resolved to the sole satisfaction of
Escrow Agent or until a successor  Escrow Agent shall be appointed  (as the case
may be);  provided  however,  Escrow  Agent shall  continue to invest the Escrow
Funds in accordance with Section 8 hereof; and/or

            b.  petition  (by  means  of an  interpleader  action  or any  other
appropriate method) any court of competent  jurisdiction in any venue convenient
to Escrow Agent, for  instructions  with respect to such dispute or uncertainty,
and to the  extent  required  by law,  pay into  such  court,  for  holding  and
disposition in accordance with the instructions of such court, all funds held by
it in the Escrow Funds,  after deduction and payment to Escrow Agent of all fees
and expenses  (including  court costs and attorneys'  fees) payable to, incurred
by, or expected to be incurred by Escrow Agent in connection with performance of
its duties and the exercise of its rights hereunder.

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            c.  Escrow  Agent  shall  have  no  liability  to the  Company,  the
Investor(s), or any person with respect to any such suspension of performance or
disbursement  into  court,  specifically  including  any  liability  or  claimed
liability that may arise, or be alleged to have arisen, out of or as a result of
any delay in the  disbursement of funds held in the Escrow Funds or any delay in
with respect to any other action required or requested of Escrow Agent.

            8. INVESTMENT OF ESCROW FUNDS. Escrow Agent shall deposit the Escrow
Funds in a non-interest bearing account.

      If Escrow  Agent has not  received a Joint  Written  Direction at any time
that an investment decision must be made, Escrow Agent shall maintain the Escrow
Funds, or such portion thereof,  as to which no Joint Written Direction has been
received, in a non-interest bearing account.

            9. RESIGNATION AND REMOVAL OF ESCROW AGENT.  Escrow Agent may resign
from the  performance of its duties  hereunder at any time by giving thirty (30)
days' prior  written  notice to the  parties or may be removed,  with or without
cause, by the parties,  acting jointly,  by furnishing a Joint Written Direction
to Escrow  Agent,  at any time by the  giving of ten (10)  days'  prior  written
notice  to  Escrow  Agent as  provided  herein  below.  Upon any such  notice of
resignation or removal,  the  representatives of the Investor(s) and the Company
identified  in Sections  13a.(iv) and 13b.(iv),  below,  jointly shall appoint a
successor  Escrow  Agent  hereunder,  which shall be a  commercial  bank,  trust
company or other financial  institution  with a combined  capital and surplus in
excess of  $10,000,000.00.  Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent,  such successor Escrow Agent
shall  thereupon  succeed  to and become  vested  with all the  rights,  powers,
privileges  and duties of the retiring  Escrow  Agent,  and the retiring  Escrow
Agent  shall be  discharged  from its duties and  obligations  under this Escrow
Agreement,  but shall not be discharged  from any liability for actions taken as
Escrow Agent  hereunder  prior to such  succession.  After any  retiring  Escrow
Agent's  resignation or removal,  the provisions of this Escrow  Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent,  after making copies of
such records as the retiring  Escrow Agent deems  advisable and after  deduction
and payment to the retiring  Escrow  Agent of all fees and  expenses  (including
court costs and  attorneys'  fees)  payable to,  incurred  by, or expected to be
incurred by the retiring  Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.

            10. LIABILITY OF ESCROW AGENT.

            a. Escrow Agent shall have no liability or  obligation  with respect
to the Escrow  Funds  except  for Escrow  Agent's  willful  misconduct  or gross
negligence.  Escrow Agent's sole  responsibility  shall be for the  safekeeping,
investment, and disbursement of the Escrow Funds in accordance with the terms of
this  Agreement.  Escrow Agent shall have no implied duties or  obligations  and
shall not be charged with  knowledge or notice or any fact or  circumstance  not
specifically  set forth herein.  Escrow Agent may rely upon any instrument,  not
only as to its due  execution,  validity and  effectiveness,  but also as to the
truth and accuracy of any information contained herein, which Escrow Agent shall
in good faith  believe to be genuine,  to have been signed or  presented  by the
person or parties  purporting to sign the same and conform to the  provisions of
this  Agreement.  In no event  shall  Escrow  Agent be  liable  for  incidental,
indirect, special, and consequential or punitive damages. Escrow Agent shall not
be obligated to take any legal action or commence any  proceeding  in connection
with the Escrow  Funds,  any account in which Escrow Funds are  deposited,  this
Agreement or the Purchase  Agreement,  or to appear in,  prosecute or defend any
such legal action or proceeding. Escrow Agent may consult legal counsel selected
by it in any event of any dispute or question as to  construction  of any of the
provisions hereof or of any other agreement or its duties hereunder, or relating
to any dispute  involving  any party  hereto,  and shall incur no liability  and
shall be fully indemnified from any liability whatsoever in acting in accordance
with  the  opinion  or  instructions  of  such  counsel.  The  Company  and  the
Investor(s)   jointly  and  severally  shall  promptly  pay,  upon  demand,  the
reasonable fees and expenses of any such counsel.

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<PAGE>

            b. Escrow Agent is hereby  authorized,  in its sole  discretion,  to
comply with orders  issued or process  entered by any court with  respect to the
Escrow Funds, without determination by Escrow Agent of such court's jurisdiction
in the  matter.  If any  portion  of the Escrow  Funds is at any time  attached,
garnished  or  levied  upon  under  any  court  order,  or in case the  payment,
assignment,  transfer,  conveyance  or  delivery of any such  property  shall be
stayed or  enjoined  by any court  order,  or in any case any order  judgment or
decree shall be made or entered by any court affecting such property or any part
thereof,  then and in any such event,  Escrow Agent is  authorized,  in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel  selected by it,  binding upon it,  without
the need for appeal or other action;  and if Escrow Agent complies with any such
order,  writ,  judgment or decree,  it shall not be liable to any of the parties
hereto or to any other person or entity by reason of such compliance even though
such order,  writ  judgment or decree may be  subsequently  reversed,  modified,
annulled, set aside or vacated.

            11. INDEMNIFICATION OF ESCROW AGENT. From and at all times after the
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent  permitted by law and to the extent provided  herein,  indemnify and hold
harmless Escrow Agent and each director, officer, employee,  attorney, agent and
affiliate of Escrow Agent (collectively,  the "Indemnified Parties") against any
and all actions,  claims (whether or not valid), losses,  damages,  liabilities,
costs  and  expenses  of  any  kind  or  nature  whatsoever  (including  without
limitation  reasonable  attorney's  fees,  costs and  expenses)  incurred  by or
asserted against any of the Indemnified  Parties from and after the date hereof,
whether direct, indirect or consequential,  as a result of or arising from or in
any way relating to any claim,  demand,  suit, action, or proceeding  (including
any inquiry or  investigation) by any person,  including without  limitation the
parties to this Agreement,  whether  threatened or initiated,  asserting a claim
for any legal or  equitable  remedy  against  any  person  under any  statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or  equitable  cause or  otherwise,  arising  from or in
connection with the negotiation,  preparation, execution, performance or failure
of performance of this Agreement or any transaction contemplated herein, whether
or not any such  Indemnified  Party is a party to any such action or proceeding,
suit or the target of any such inquiry or investigation; provided, however, that
no  Indemnified  Party  shall  have the right to be  indemnified  hereunder  for
liability finally determined by a court of competent jurisdiction, subject to no
further appeal, to have resulted from the gross negligence or willful misconduct
of such  Indemnified  Party.  If any such  action or claim  shall be  brought or
asserted against any Indemnified  Party,  such Indemnified  Party shall promptly
notify the Company and the Investor(s) hereunder in writing, and the Investor(s)
and the Company shall assume the defense  thereof,  including the  employment of
counsel and the payment of all expenses.  Such  Indemnified  Party shall, in its
sole discretion,  have the right to employ separate counsel (who may be selected
by such  Indemnified  Party in its sole  discretion)  in any such  action and to
participate and to participate in the defense thereof, and the fees and expenses
of such  counsel  shall  be paid by such  Indemnified  Party,  except  that  the
Investor(s) and/or the Company shall be required to pay such fees and expense if
(a) the  Investor(s) or the Company agree to pay such fees and expenses,  or (b)
the  Investor(s)  and/or the  Company  shall fail to assume the  defense of such
action or proceeding or shall fail, in the sole  discretion of such  Indemnified
Party, to employ counsel reasonably satisfactory to the Indemnified Party in any
such action or proceeding, (c) the Investor(s) and the Company are the plaintiff
in any such action or  proceeding  or (d) the named or potential  parties to any
such action or proceeding  (including any potentially impleaded parties) include
both  the  Indemnified  Party,  the  Company  and/or  the  Investor(s)  and  the
Indemnified  Party shall have been  advised by counsel  that there may be one or
more legal  defenses  available to it which are different  from or additional to
those  available  to the Company or the  Investor(s).  The  Investor(s)  and the
Company  shall be  jointly  and  severally  liable to pay fees and  expenses  of
counsel  pursuant to the preceding  sentence,  except that any obligation to pay
under  clause (a) shall apply only to the party so  agreeing.  All such fees and
expenses payable by the Company and/or the Investor(s) pursuant to the foregoing
sentence  shall be paid from time to time as  incurred,  both in  advance of and
after the final  disposition  of such action or claim.  The  obligations  of the
parties under this section shall survive any termination of this Agreement,  and
resignation  or  removal  of  the  Escrow  Agent  shall  be  independent  of any
obligation of Escrow Agent.

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      The parties agree that neither  payment by the Company or the  Investor(s)
of any claim by Escrow Agent for indemnification  hereunder shall impair, limit,
modify,  or affect,  as between the Investor(s) and the Company,  the respective
rights and obligations of Investor(s),  on the one hand, and the Company, on the
other hand, under the Placement Agency Agreement.

            12. EXPENSES OF ESCROW AGENT.  Except as set forth in Section 11 the
Company shall  reimburse  Escrow Agent for all of its  reasonable  out-of-pocket
expenses,  including  attorneys' fees, travel expenses,  telephone and facsimile
transmission  costs,  postage  (including  express mail and  overnight  delivery
charges),   copying  charges  and  the  like.  All  of  the   compensation   and
reimbursement  obligations  set forth in this  Section  shall be  payable by the
Company,  upon demand by Escrow Agent. The obligations of the Company under this
Section shall survive any  termination of this Agreement and the  resignation or
removal of Escrow Agent.

            13. WARRANTIES.

            a.  The  Investor(s)   makes  the  following   representations   and
warranties to Escrow Agent:

                  (i) The  Investor(s)  has full power and  authority to execute
and deliver this Agreement and to perform its obligations hereunder.

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                  (ii) This  Agreement  has been duly  approved by all necessary
corporate  action  of  the  Investor(s),  including  any  necessary  shareholder
approval,  has been  executed by duly  authorized  officers of the  Investor(s),
enforceable in accordance with its terms.

                  (iii)  The  execution,   delivery,   and  performance  of  the
Investor(s)  of this  Agreement  will not  violate,  conflict  with,  or cause a
default under the certificate of incorporation or bylaws of the Investor(s), any
applicable law or regulation, any court order or administrative ruling or degree
to which the  Investor(s)  is a party or any of its property is subject,  or any
agreement, contract, indenture, or other binding arrangement.

                  (iv)  Mark  Angelo  has  been  duly  appointed  to  act as the
representative of the Investor(s)  hereunder and has full power and authority to
execute,  deliver, and perform this Escrow Agreement, to execute and deliver any
Joint  Written  Direction,  to amend,  modify,  or waive any  provision  of this
Agreement,  and  to  take  any  and  all  other  actions  as  the  Investor(s)'s
representative  under this  Agreement,  all without further consent or direction
form, or notice to, the Investor(s) or any other party.

                  (v)  No  party   other  than  the   parties   hereto  and  the
Investor(s)s  have, or shall have, any lien,  claim or security  interest in the
Escrow  Funds or any part  thereof.  No  financing  statement  under the Uniform
Commercial Code is on file in any jurisdiction  claiming a security  interest in
or describing  (whether  specifically or generally) the Escrow Funds or any part
thereof.

                  (vi)  All  of  the   representations  and  warranties  of  the
Investor(s)  contained  herein are true and  complete  as of the date hereof and
will be true and complete at the time of any disbursement from the Escrow Funds.

            b. The Company makes the following representations and warranties to
the Escrow Agent:

                  (i) The  Company  is a  corporation  duly  organized,  validly
existing,  and in good  standing  under the laws of the State of Nevada  and has
full power and  authority to execute and deliver this  Agreement  and to perform
its obligations hereunder.

                  (ii) This  Agreement  has been duly  approved by all necessary
corporate action of the Company,  including any necessary  shareholder approval,
has been executed by duly  authorized  officers of the Company,  enforceable  in
accordance with its terms.

                  (iii) The execution,  delivery, and performance by the Company
of this Agreement is in accordance  with the Securities  Purchase  Agreement and
will not violate,  conflict  with, or cause a default under the  certificate  of
incorporation  or bylaws of the Company,  any applicable law or regulation,  any
court order or  administrative  ruling or decree to which the Company is a party
or any of its property is subject,  or any agreement,  contract,  indenture,  or
other  binding  arrangement,  including  without  limitation  to the  Securities
Purchase Agreement, to which the Company is a party.

                  (iv)  Harry  Hargens  has been  duly  appointed  to act as the
representative  of the Company  hereunder  and has full power and  authority  to
execute,  deliver, and perform this Agreement,  to execute and deliver any Joint
Written Direction, to amend, modify or waive any provision of this Agreement and
to take all other actions as the Company's  Representative under this Agreement,
all without  further consent or direction from, or notice to, the Company or any
other party.

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                  (v)  No  party   other  than  the   parties   hereto  and  the
Investor(s)s  have, or shall have, any lien,  claim or security  interest in the
Escrow  Funds or any part  thereof.  No  financing  statement  under the Uniform
Commercial Code is on file in any jurisdiction  claiming a security  interest in
or describing  (whether  specifically or generally) the Escrow Funds or any part
thereof.

                  (vi) All of the  representations and warranties of the Company
contained  herein are true and  complete  as of the date hereof and will be true
and complete at the time of any disbursement from the Escrow Funds.

      14. CONSENT TO JURISDICTION  AND VENUE. In the event that any party hereto
commences  a  lawsuit  or other  proceeding  relating  to or  arising  from this
Agreement,  the parties  hereto agree that the United States  District Court for
the District of New Jersey shall have the sole and exclusive  jurisdiction  over
any  such   proceeding.   If  all  such  courts  lack  federal   subject  matter
jurisdiction,  the parties agree that the Superior Court Division of New Jersey,
Chancery  Division of Hudson County shall have sole and exclusive  jurisdiction.
Any of these  courts  shall be proper  venue for any such  lawsuit  or  judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the  jurisdiction  of any of the courts
specified  herein  and agree to accept the  service of process to vest  personal
jurisdiction over them in any of these courts.

      15. NOTICE.  All notices and other  communications  hereunder  shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid,  when delivered  personally,  one (1) day
delivered  to  any  overnight   courier,   or  when   transmitted  by  facsimile
transmission  and upon  confirmation of receipt and addressed to the party to be
notified as follows:

If to Investor(s), to:           Cornell Capital Partners, LP
                                 101 Hudson Street - Suite 3606
                                 Jersey City, NJ  07302
                                 Attention: Mark Angelo
                                            Portfolio Manager
                                 Telephone: (201) 985-8300
                                 Facsimile: (201) 985-8266

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If to Escrow Agent, to:          Butler Gonzalez LLP
                                 1000 Stuyvesant Avenue
                                 Union, NJ 07083
                                 Attention: David Gonzalez, Esq.
                                 Telephone: (908) 810-8588
                                 Facsimile: (908) 810-0973

If to the Company, to:           AmeriChip International, Inc.
                                 12933 W. 8 Mile Road,
                                 Detroit, Michigan 48325
                                 Attention: Marc Walther, President
                                 Telephone: (313) 341 1663
                                 Facsimile: (313) 341-4667

With a copy to:                  Schiff Hardin LLp
                                 1101 Connecticut Avenue, N.W., Suite 600
                                 Washington, D. C. 20036
                                 Attention: Ernest M. Stern, Esq.
                                 Telephone: (202) 778-6461
                                 Facsimile: (202) 778-6460

Or to such other address as each party may designate for itself by like notice.

            16.  AMENDMENTS OR WAIVER.  This  Agreement may be changed,  waived,
discharged  or terminated  only by a writing  signed by the parties  hereto.  No
delay or omission by any party in exercising any right with respect hereto shall
operate as waiver.  A waiver on any one occasion shall not be construed as a bar
to, or waiver of, any right or remedy on any future occasion.

            17.  SEVERABILITY.  To the extent any provision of this Agreement is
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  to  the  extent  of  such  prohibition,   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

            18. GOVERNING LAW. This Agreement shall be construed and interpreted
in  accordance  with the  internal  laws of the State of Nevada  without  giving
effect to the conflict of laws principles thereof.

            19.  ENTIRE  AGREEMENT.   This  Agreement   constitutes  the  entire
Agreement  between  the  parties  relating  to  the  holding,   investment,  and
disbursement  of  the  Escrow  Funds  and  sets  forth  in  their  entirety  the
obligations and duties of the Escrow Agent with respect to the Escrow Funds.

            20. BINDING EFFECT.  All of the terms of this Agreement,  as amended
from  time to time,  shall be  binding  upon,  inure  to the  benefit  of and be
enforceable by the respective heirs,  successors and assigns of the Investor(s),
the Company, or the Escrow Agent.

                                       9
<PAGE>

            21. EXECUTION OF COUNTERPARTS.  This Agreement and any Joint Written
Direction  may be  executed  in  counter  parts,  which when so  executed  shall
constitute one and same agreement or direction.

            22. TERMINATION.  Upon the first to occur of the disbursement of all
amounts  in the  Escrow  Funds  pursuant  to  Joint  Written  Directions  or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof,  this Agreement  shall  terminate and Escrow Agent shall have no further
obligation or liability  whatsoever with respect to this Agreement or the Escrow
Funds.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       10
<PAGE>

      IN WITNESS WHEREOF the parties have hereunto set their hands and seals the
day and year above set forth.

                                   AMERICHIP INTERNATIONAL, INC.

                                   By: ___________________________________

                                   Name:      Marc Walther
                                   Title:     President

                                   CORNELL CAPITAL PARTNERS, LP

                                   _______________________________________
                                   By:        Yorkville Advisors, LLC
                                   Its:       General Partner

                                   By: ____________________________________
                                   Name:      Mark Angelo
                                   Title:     Portfolio Manager

                                   BUTLER GONZALEZ LLP

                                   By: ____________________________________
                                   Name:      David Gonzalez, Esq.
                                   Title:     Partner

                                       11exv10w1

 

CONTRACT FORM

AGREEMENT NUMBER: GN — 070/RIG/NOC

FOR THE PROVISION OF DRILLING RIG SERVICES

Between

NINOTSMINDA OIL COMPANY

and

GREAT WALL DRILLING COMPANY LIMITED

      

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 1

 

 

THIS AGREEMENT is made on 21 June 2004.

BETWEEN

	(1)	 	Ninotsminda Oil Company (NOC), acting in accordance with the Laws and
Legislation of Cyprus, and having its registered office at 22
Stasicratous, Olga Court, P.O. Box 48, Nicosia, Cyprus ( hereinafter
referred to as the “Company”); and

	(2)	 	GREAT WALL DRILLING COMPANY LIMITED (GWDC), a company incorporated under
the laws of the People’s Republic of China, having its principal place of
business at P.O.Box 766 Liu Pukang, Beijing 100724, P.R.China,
(hereinafter referred to as the “Contractor”).

Whereas

	A	 	The Company and its Co-Venturer(s) have an undivided interest under
the Production Sharing Agreement for the exploration and production
of the Manavi fields in the Contract Area in Georgia, and the Company
desires to conduct a drilling program as set forth and described in
Schedule IV.
	 
	B	 	The Contractor is engaged in the business of providing drilling rig
services and represents that it has adequate resources and equipment
in good working order and competent personnel capable of efficiently
performing the services to conduct the drilling program contemplated
herein.
	 
	C	 	The Company wishes to invite the Contractor to drill and complete or,
as necessary, plug and abandon, such wells utilizing its equipment
and Contractor Personnel according to good international oilfield
practices, all applicable laws, rules, and regulations and in
accordance with the terms and conditions as more specifically set
forth herein.
	 
	D	 	The Contractor has agreed to provide a drilling rig and associated
services and competent personnel to perform the drilling program for
Company.

NOW THEREFORE IT IS HEREBY AGREED BY BOTH PARTIES as follows:

	1.	 	The Contractor agrees to perform the services detailed in Schedule IV
hereof in accordance with the terms and conditions of the Agreement and,
in consideration of the Contractor’s due performance and completion of the
said services the Company agrees to pay the Contractor according to the
terms and conditions contained herein.
	 
	2.	 	The following Schedules and documents shall form part of the Agreement:

	 	 	 	 	 
	 

	 	Schedule I:
	 	General Terms and Conditions
	 

	 	Schedule II:
	 	Compensation
	 

	 	Schedule III:
	 	Commercial Terms and Administrative Procedures (Liabilities, Insurance, Notices etc.)
	 

	 	Schedule IV:
	 	Scope of Work
	 

	 	Schedule V:
	 	Equipment, materials and services to be provided by Company
	 

	 	Schedule VI:
	 	Equipment, materials and services to be provided by Contractor
	 

	 	Schedule VII:
	 	Checklist of responsibilities for services and materials

In the event of any inconsistency or discrepancy between any of the
Schedules forming part of the Agreement, then precedence shall be in
order from Schedule I to Schedule VII as listed above.

	3.	 	The Company reserves the right to require that the Contractor will
procure, either a guarantee or bond from a bank or financial institution
acceptable to the Company or a written guarantee by the Contractor’s
parent company of the Contractor’s performance of the said services
hereunder.

	4.	 	This Agreement is valid for the duration starting from the date first
written above to the date of Contractor’s completion of the WORK as
specified herein, or early termination in accordance with the terms and
conditions of the Contract, whichever occurs first.

      

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

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IN WITNESS WHEREOF the Agreement is executed as follows:

Ninotsminda Oil Company

	 	 	 
	Name

	 	Nikoloz Tevzadze
	Signature

	 	/s/: Nikoloz Tevzadze
	Title

	 	Georgian British Oil Company Ninotsminda General Director
	Date:

	 	21 June 2004

      

GREAT WALL DRILLING COMPANY LIMITED

	 	 	 
	Name

	 	Hu Xinfeng
	Signature

	 	/s/: Hu Xinfeng
	Title

	 	Vice President of Great Wall Drilling Company
	Date:

	 	21 June 2004

      

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 3

 

 

General Terms & Conditions — Table of Contents

	 	 	 	 	 
	Article
	 	Title

	1.
	 	Interpretation
	2.
	 	Basis of Agreement
	3.
	 	Commencement, Duration and Scope of Work
	4.
	 	Title
	5.
	 	Contractor Supplied Resources
	6.
	 	Not Used
	7.
	 	Other contractors
	8.
	 	Transport of Personnel and Equipment
	9.
	 	Health, Safety and Environment
	10.
	 	Representatives
	11.
	 	Bases
	12.
	 	Contractor's Work Obligations
	13.
	 	Conduct of the Contractor
	14.
	 	not applicable
	15.
	 	Independent Contractor
	16.
	 	Prices and Rates
	17.
	 	Payment
	18.
	 	Taxation
	19.
	 	Liabilities and Indemnities
	20.
	 	Rights, Benefits and Indemnities
	21.
	 	Insurance
	22.
	 	Status of Co-Ventures
	23.
	 	Force Majeure
	24.
	 	Non Performance by the Contractor
	25.
	 	Substitution of the Rig
	26.
	 	Liquidation or Insolvency

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	27.
	 	Termination
	28.
	 	Suspension
	29.
	 	Confidentiality and Publicity
	30.
	 	Assignment and Subcontracting
	31.
	 	Amendments
	32.
	 	No Waiver
	33.
	 	Notices
	34.
	 	Entire Agreement
	35.
	 	Severance
	36.
	 	Law

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

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SCHEDULE I

GENERAL TERMS AND CONDITIONS

	1	 	INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In the Agreement the following words and expressions shall, unless the context otherwise requires, have the following
meanings:

	 	 	 
	“Affiliate”

	 	shall mean in relation to any Party, any company or other legal entity in which, directly
or indirectly, such Party holds fifty (50) percent or more of the voting rights in such
company, partnership or legal entity or a company, corporation or other legal entity
holding, directly or indirectly, fifty percent or more of the voting rights in such Party.
	 
	 	 
	“Agreement”

	 	shall mean the Agreement reached between the Company and the Contractor as set forth in the
documents listed hereunder and any subsequent amendments thereto agreed in writing by the
Company and the Contractor to form part of the Agreement:
	 
	 	 
	Schedule I

	 	General Terms and Conditions
	 
	 	 
	Schedule II

	 	Compensation
	 
	 	 
	Schedule III

	 	Commercial Terms and Administrative Procedures (Liabilities, Insurances Notices etc)
	 
	 	 
	Schedule IV

	 	Scope of Work
	 
	 	 
	Schedule V

	 	Equipment, materials and services to be provided by Company
	 
	 	 
	Schedule VI

	 	Equipment, materials and services to be provided by Contractor
	 
	 	 
	Schedule VII

	 	Checklist of responsibilities for services and materials.
	 
	 	 
	“Contract Area”

	 	shall mean the Manavi Fields in the Republic of Georgia and any areas or premises used in
association therewith.
	 
	 	 
	“Company’s Representative”

	 	shall be the person nominated from time to time and notified to Contractor in writing as
being the person authorised to liaise with and issue instructions to Contractor prior to
and during the performance of the Work in accordance with the terms in Article 10.
	 
	 	 
	“Contractor’s Representative”

	 	shall be the person nominated in writing to
Company as being the person assigned to the Work throughout the
duration of the Agreement and having the authority to act for and on
behalf of the Contractor in all matters relating to the Agreement.
	 
	 	 
	“Co-Venturer”

	 	shall mean any company or other legal entity which is party to the Production Sharing Agreement
in the          Manavi           Fields and/or associated agreements in either case for the
purposes of searching for and extraction of hydrocarbons in the form of oil or gas in the
Contract Area and on whose behalf the Company is entering into the Agreement.
	 
	 	 
	“Demobilisation”

	 	shall mean the removal from Location on the completion of the Work of all of the Contractor’s
equipment and personnel.

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	“Extra Work”

	 	shall mean any extra work required by the Company, being always subject to a Variation Document.
	 
	 	 
	“Government”

	 	shall mean the government of the Republic of Georgia inclusive of any ministry, department,
authority, agency or other body representing the government or exercising any power of the
government pursuant to any statute, regulation or official decree.
	 
	 	 
	“Location”

	 	shall mean the location of any work to be carried out by the Contractor contemplated under the
Agreement and in relation to which the Contractor carries out the work pursuant to the Agreement.
	 
	 	 
	“Mobilisation”

	 	shall mean the arrival at the first Location of all of the Contractor’s Equipment and personnel
necessary for the Contractor to carry out the Work also it shall mean full Rig Up, where the Rig
Up means full erection of the drilling rig and readiness of Contractor for spudding, which shall
be confirmed without any delay by Company in written form.
	 
	 	 
	“Party”

	 	means a party to this Agreement, its successors and permitted assignees.
	 
	 	 
	“Production Sharing
Agreement”

	 	means any Production Sharing Agreement awarded by the Government of the Republic of Georgia to
the Company.
	 
	 	 
	“Scope of Work”

	 	shall mean the scope of work set out in Schedule IV.
	 
	 	 
	“Schedule(s)”

	 	shall mean the schedule(s) detailed in Article 1.1 as referred to numerically and exhaustively
therein.
	 
	 	 
	“US Dollars”

	 	shall mean United States Dollars.
	 
	 	 
	“Variation Document”

	 	shall mean any Extra Work required by the Company and issued to the Contractor in writing and
signed by the Company’s representative, which alters the Work, as further set out in Article 3.3
hereunder.
	 
	 	 
	“Willful Misconduct”

	 	shall mean, in relation to the Contractor and/or Company, an intentional and conscious or
reckless disregard of any provision of the Agreement by any of its or its Affiliates’ officers,
directors, employees, agents or sub-contractors having any involvement in the Work.
	 
	 	 
	“Work”

	 	shall mean all work required by the Company in accordance with the Scope of Work and in
accordance with the obligations set forth in Article 12 and pursuant to the Company’s
instructions as may be given from time to time in accordance with the Agreement.

	1.2	 	Interpretation

	 	(i)	 	Any and all references in the Agreement to Articles are
references to the Articles contained in this Schedule 1 of the
Agreement.
	 
	 	(ii)	 	Words importing the singular only also include the plural and
vice versa where the context requires.
	 
	 	(iii)	 	The headings in the Agreement are used for convenience only
and do not form part of the Agreement and shall not govern or affect
the interpretation or construction of the Agreement.
	 
	 	(iv)	 	Any reference to statute, statutory provision or statutory
instrument shall include reference to that statute, statutory
provision or statutory instrument as may be from time to time
amended, extended or re-enacted.
	 
	 	(v)	 	Unless stated elsewhere in the Agreement, the General Terms
and Conditions shall take precedence over the terms of Schedules II
to VII. In case of ambiguity and conflict among

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	 	 	 	Schedule II to Schedule VII, then precedence shall be in order from
Schedule II to Schedule VII as listed.

	2	 	BASIS OF AGREEMENT
	 
	2.1	 	Contractor’s Covenants
	 
	 	 	In consideration of the payments to be made to the Contractor by the Company for the Work in accordance with the Agreement,
the Contractor hereby covenants with the Company that the Contractor shall duly perform and complete the Work at the times
and in the manner and subject to the terms, conditions and stipulations set forth in the Agreement.
	 
	2.2	 	Company’s Covenants
	 
	 	 	In consideration of the due performance and completion of the Work, the Company hereby covenants, for itself and its
successors and assignees, with the Contractor that the Company will pay to the Contractor such sums as may become payable
to the Contractor in accordance with the Agreement.
	 
	3	 	COMMENCEMENT, DURATION AND SCOPE OF WORK
	 
	3.1	 	Commencement and Duration of Agreement
	 
	 	 	The Agreement shall come into effect on the date first written above and shall continue thereafter to be in effect and in
full force until all Work including any agreed extensions, has been completed and all other obligations of the Parties
under the Agreement have been performed in accordance herewith, unless sooner terminated in accordance with the provisions
of this Agreement.
	 
	3.2	 	Scope of Work
	 
	 	 	The Company intends to drill a well on the Ninotsminda licence area on the Manavi Field.
The Company reserves the right to modify the Scope of Work on reasonable notice to the Contractor in accordance with
Article 3.3.
	 
	3.3	 	Variations
	 
	 	 	The Company may, within the terms and conditions of the Agreement, require Extra Work and issue a Variation Document to the
Contractor. Except in an emergency endangering life or property, the Extra Work shall not be commenced until the
Contractor has first received a Variation Document. Rates for Extra Work shall be agreed and clearly defined by the
Parties in the Variation Document.
	 
	3.4	 	Time of the Essence
	 
	 	 	The Contractor acknowledges that the time of performance of the Work is
an integral and essential part of the Agreement and that the Company
requires the Work to be completed considering that time is of the
essence.
	 
	4	 	TITLE
	 
	4.1	 	Contractor warrants good title to all materials, goods, equipment and
plant that are to be provided by Contractor hereunder. Contractor
represents and warrants that no other person or corporation has any right,
title or interest in or to any equipment described in Schedule VI hereto
or utilized in the Work, or any lien, mortgages, encumbrance or claim
thereon, except as may have been specifically notified to Company in
writing prior to the execution of this Agreement.
	 
	4.2	 	Contractor shall without compensation completely disclose in detail
promptly in writing to Company all developments, concepts, know-how,
discoveries, inventions and improvements made, developed, perfected,
devised, completed, conceived or acquired by Contractor whether or not
patentable, whether

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	 	 	or not with Company’s facilities, whether or not during regular working
hours and whether solely by the Contractor or in collaboration with
others which may arise from the performance of the Work or results from
any tasks specifically assigned by the Company to Contractor which the
Contractor agrees will belong to Company and if so requested by Company,
the Contractor will assign, transfer and convey to Company and/or its
assignee all right, title and interest in and to all such developments,
discoveries, inventions and improvements. For the purpose of this Article
4.0, “Contractor” shall mean the Party to this Agreement, its
sub-contractors, its and their Affiliates, together with its and their
respective officers, directors, employees and agents.
	 
	5	 	CONTRACTOR SUPPLIED RESOURCES
	 
	5.1	 	Safety
	 
	 	 	The Contractor shall observe and comply with all guides, codes and
regulations issued by any authority having jurisdiction in the
Contract Area relating to health, safety and the environment and,
without prejudice to the generality of the foregoing, shall comply in
all respects with the provisions of Article 9 hereunder.
	 
	5.2	 	Sufficiency
	 
	 	 	Contractor shall be deemed to have read carefully, all drawings,
plans, specifications and all other documentation based on this Agreement
and the services to be performed hereunder, in order for Contractor to
determine the class, quantity and quality of equipment, materials and
labour that will be required for the performance of the WORK. Contractor
shall be responsible for ensuring that it includes all necessary
equipment and materials and is of the quality required for performance of
the Work. Contractor shall ensure a full understanding and knowledge of
the nature and scope of the Work and the prevailing conditions under
which it shall be performed.
	 
	 	 	Prior to mobilizing equipment to the Location, Contractor shall
forward copies of the certification for its equipment to the Company. If
an acceptable certifying authority has not certified Contractor’s
equipment, Contractor shall be responsible for obtaining such
certification at its own cost, prior to mobilisation.
	 
	5.3	 	Changes to the Contractor’s Equipment
	 
	 	 	The Company may, at any time upon giving notice to the Contractor,
require the Contractor to make changes to the Contractor’s equipment
as specified in such notice. Upon receipt thereof the Contractor shall
effect such changes as soon as practicable. Any resulting increase or
reduction in charges will be agreed between the Parties in writing
prior to the changes being brought into practice.
	 
	5.4	 	Contractor shall ensure that it contacts Company’s Representative to
establish which Company procedures apply to the Work and to obtain an
up-to-date copy of such procedures prior to commencement. It shall be
Contractor’s responsibility to thereafter ensure that the Work is, at all
times, performed and any items provided by Contractor in accordance with
Company procedures, specifications and statutory requirements.
	 
	 	 	At Company’s sole option, Contractor may be required to propose its
own procedures or specifications for Company’s approval and, once
approved, adhere to them for the term of the Agreement.
	 
	5.5	 	Personnel
	 
	 	 	The Contractor shall, at its expense, provide and keep available for
the Work, personnel who are suitably qualified to perform the tasks
required of them to carry out and complete the Work, including
supervisory personnel having a thorough knowledge of drilling
equipment and techniques. Contractor shall ensure that an English
speaking representative, or interpreter, be available at all times at
the Location. Without prejudice to the generality of the foregoing
the Contractor shall ensure that personnel are skilled, experienced
and qualified for the operations they are required to carry out
hereunder to a standard not less than that which may from time to time
be required by the relevant Government authorities.

Contract No. GN - 070/RIG/NOC

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	 	 	Contractor shall, at its own expense, procure and maintain in full
force and effect all administrative authorisations including, by way
of illustration and not limitation, entry visas, residence permits and
work permits for all Contractor employees, agents or servants whose
services are engaged in the performance of the Work.
	 
	 	 	In relation to any Contractor personnel expected to make, in the
Company’s sole opinion, significant technical contribution to the
Work, the Contractor shall submit full particulars, in the form of a
resume, of the qualifications and experience of said personnel to the
Company prior to that member of the Contractor’s personnel starting
any part of the Work. No such person may start unless the Company’s
written approval has been given. The Contractor shall submit resumes
of its other personnel assigned to the Work on written request by the
Company. The Company reserves the right to reject any person
designated by the Contractor, prior to that person commencing work on
the project.
	 
	5.6	 	Removal of Personnel
	 
	 	 	The Company may at its sole discretion demand in writing that the
Contractor remove from the Work, at no cost to Company, any person who
in Company’s opinion is incompetent in the performance of his duties
or is guilty of misconduct or whose behavior is considered detrimental
to Company and Contractor will be obliged to comply and, if so
required, to furnish an acceptable replacement at no extra cost to
Company. No remuneration will be payable during any period when all
Contractor’s personnel are unable to perform their duties to the
satisfaction of the Company.
	 
	5.7	 	Deficiency in Personnel
	 
	 	 	If the Company is of the opinion that the Contractor is operating with
a deficiency in the number or quality of the Contractor’s personnel or
that of its Affiliates, agents or sub-contractors dedicated at any
time to the Work or any part thereof the Company may require the
Contractor to remove such personnel at the Company’s sole discretion
and replace with personnel satisfactory to the Company or to use
additional personnel satisfactory to the Company and the Contractor
shall bear any additional costs in respect thereof.
	 
	5.8	 	Adjustment to the Contractor’s Personnel
	 
	 	 	The Contractor shall not at any time without the Company’s approval
increase or decrease the number of the Contractor’s personnel or that
of its Affiliates, Agents or Sub-contractor.
	 
	5.9	 	Discipline
	 
	 	 	The Contractor shall at all times maintain strict discipline and good
order among its personnel and that of its Affiliates, agents or its
sub-contractors. The Contractor shall ensure that, in addition to the
terms of Article 13, all such personnel comply with all of the
following rules in the Contract Area:

	 	(i)	 	it is forbidden to bring into or use in the Contract Area
unauthorized explosives;
	 
	 	(ii)	 	it is forbidden to possess or consume drugs, alcohol or other
intoxicants or to be under their influence and the safety or quality
of work shall not be jeopardized;
	 
	 	(iii)	 	it is forbidden to indulge in fighting, horseplay or
malicious damage, careless or reckless behavior;
	 
	 	(iv)	 	smoking is strictly forbidden other than in approved designated areas.

	5.10	 	Employment of Personnel
	 
	 	 	The Contractor shall adhere to all labour laws, regulations, standards and practices, general levels of pay and
allowances, general conditions of employment, accommodation, messing and transport applicable in the Contract Area.
	 
	5.11	 	Personnel Records

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	 	 	The Contractor shall keep relevant medical records, wages books and time sheets and full records of all personnel employed
in connection with the Work.
	 
	 	 	The Company shall be entitled at all times to inspect and take copies from all or any such documents. The Contractor
shall also submit such returns as the Company may require relating to matters to be contained in such documents.
	 
	5.12	 	Passports and Visas
	 
	 	 	The Contractor shall ensure that all the Contractor’s personnel and that of its Affiliates, agents and sub-contractors are
in possession of valid passports and the Contractor shall obtain all visas and entry or other permits required to enable
such personnel to proceed to and work in the Contract Area. To the extent that such visas or permits are required to be
issued by the Government of the Republic of Georgia or any other relevant authority, the Company shall, at the Company’s
sole discretion, endeavour to assist the Contractor to obtain such visas and permits. The costs of obtaining such visas
or permits shall be borne by the Contractor.
	 
	5.13	 	Waste Containers and Materials
	 
	 	 	Contractor shall be responsible for unused or waste containers, resulting from Contractor’s services at the Location,
which contain waste, and Contractor shall comply with best industry practice and all relevant legislation, regulations,
standards, etc. in relation to such waste.
	 
	6	 	NOT USED
	 
	7	 	OTHER CONTRACTORS
	 
	 	 	The Contractor agrees to co-operate fully at all times with all other contractors undertaking services for the Company.
	 
	8	 	TRANSPORT OF PERSONNEL AND EQUIPMENT
	 
	8.1	 	Contractor Transport
	 
	 	 	The Contractor shall provide any and all transportation required for its personnel and equipment in connection with the
performance of the Work at no cost to the Company.
	 
	9	 	HEALTH, SAFETY AND ENVIRONMENT
	 
	9.1	 	Affiliates, Agents and Sub-contractors
	 
	 	 	The Contractor shall ensure that its Affiliates, agents and its sub-contractors observe and comply with the provisions of
this Article 9.
	 
	9.2	 	Compliance with Requirements of Government Authorities
	 
	 	 	The Contractor shall observe and comply with all guides, codes and regulations issued or amended from time to time by any
government or other authority having jurisdiction in the Contract Area relating to health, safety and environment and
shall ensure that its personnel, Affiliates, agents and sub-contractors shall each observe and comply with all such
guides, codes and regulations.
	 
	9.3	 	Obligations of Contractor
	 
	9.3.1	 	It shall be the Contractor’s obligation to determine at all times
whether operations can be safely continued or undertaken including,
without limiting the generality of the foregoing, the obligation to
determine by the Contractor’s own inspection that all items of equipment
furnished by the Contractor are loaded and/or stored in a proper and safe
manner and that the equipment furnished by the

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	 	 	Contractor is in all respects suitable to undertake any contemplated
operations in the then existing physical conditions.
	 
	9.3.2	 	The Contractor shall ensure that its personnel receive all necessary
information and instruction on equipment dangers to enable them to carry
out the Work without undue risk to themselves, other personnel, plant and
equipment and the environment. Without prejudice to the generality of the
foregoing:

	 	(i)	 	the Contractor shall be responsible to ensure that personnel
wear all items of safety clothing and equipment as required by
applicable statute or regulation;
	 
	 	(ii)	 	the Contractor shall take all measures to provide safe
working conditions; in particular, no smoking or open flame or
matches or lighters shall be permitted on the rig except in areas
designated by the Contractor in consultation with the Company as
areas wherein smoking or open flames are permitted.

	9.4	 	Contractor’s Policy
	 
	 	 	The Contractor will supply to the Company a copy of its own health,
safety and environmental policy. The statement shall indicate how
responsibilities are allocated and shall specify by name one
individual with overall responsibility for health, safety and
environmental matters.
	 
	9.5	 	Company’s Regulations
	 
	 	 	Without prejudice to the Contractor’s general responsibility for the
safety of its operations and the personnel involved, the Contractor
shall observe, perform and follow health, safety and environment
regulations issued by the Company and supplied to the Contractor.
	 
	9.6	 	Responsibility
	 
	 	 	The presence of, and the inspection and supervision by, the Company’s
representatives at the Location in accordance with and pursuant to the
provisions of the Agreement shall not relieve the Contractor from its
obligations and responsibilities hereunder.
	 
	9.7	 	Abnormal and Hazardous Conditions
	 
	 	 	If at any time the Contractor believes that continuation of the Work
will result in abnormally hazardous conditions, then the Contractor
shall notify the Company accordingly in writing and in the meantime
shall exert every possible effort to overcome such conditions.
Whenever practicable the Contractor shall consult with the Company’s
representative as to what constitutes an abnormally hazardous
condition for the purpose of this provision. In any such case the
Contractor is entitled to stop performing operations provided that it
takes all precautions to leave the equipment and the Location in the
safest possible condition.
	 
	 	 	With respect to adverse weather conditions the Contractor, in
consultation with the Company, shall decide when in the face of
impending adverse weather conditions, to instigate precautionary
measures in order to safeguard the Location, the equipment and
personnel to the fullest possible extent. The Contractor and the
Company shall each ensure that its representative for the time being
will not act unreasonably in the exercise of their discretion under
this Article.
	 
	9.8	 	Termination
	 
	 	 	The Contractor’s refusal or inability to remedy any hazardous safety
or environmental working practice, or to perform the required
modification to its equipment within seven (7) days shall constitute a
fundamental breach of the Agreement and the Company shall be entitled,
in addition to and without prejudice to any other rights and remedies
the Company may have, to terminate the Agreement in accordance with
Article 27 hereunder.

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	9.9	 	Medical Treatment
	 
	 	 	The Contractor shall be responsible for the medical welfare of its
personnel and the personnel of its Affiliates, agents and its
sub-contractors and will take care of their periodical medical
examinations, will make arrangements for medical attendance, treatment
or hospitalisation if and when necessary and will arrange suitable
insurance coverage for such contingencies. In cases of extreme
emergency, the Company will endeavour to provide medical assistance to
the Contractor’s personnel provided it shall in no way incur any
liability in respect thereof. Charges for treatment or hospitalisation
or for any insurance coverage in respect of the foregoing shall be for
the Contractor’s account.
	 
	9.10	 	Reporting
	 
	 	 	The Contractor shall immediately inform the Company in writing when a
safety or environmental incident and/or accident occurs in any way
connected with the Work, whether or not it may affect any operations of
the Company or the operations of others working on behalf of the Company.
	 
	9.11	 	Travel
	 
	 	 	Whenever the personnel of the Contractor or of its Affiliates, agents
or of its sub-contractors are employed in working on or in any of the
facilities of the Company or are traveling to and from such
facilities, then the Contractor shall ensure that they shall comply
with both the Company’s safety regulations currently in force and the
safety provisions contained in the Agreement.
	 
	10	 	REPRESENTATIVES
	 
	10.1	 	Company’s Representative
	 
	 	 	Company’s Representative shall be Mr Alex Chinchinadze.
	 
	 	 	Company’s Representative may at any time and for any reason(s)
delegate any or all of his rights and duties and/or functions to any
other person. Company shall promptly notify Contractor of any such
delegation in writing.
	 
	 	 	Contractor shall establish and at all times, maintain communication
with Company’s Representative or his nominated delegate to obtain any
decision, direction or authorisation necessary for the complete
performance of the Work. The presence of Company’s Representative or
the nominated delegate shall not relieve Contractor from his
obligations in the proper execution of the Work.
	 
	 	 	Company’s Representative or his nominated delegate shall be
responsible for monitoring the performance of the Work and shall have
the necessary authority to stop or suspend any part of the Work which
in his opinion is not performed to a satisfactory standard.
	 
	 	 	In addition to the duties and authority defined hereunder the
Company’s Representative is authorised to require that the Contractor
provides such other services that the Company’s representative deems
necessary to ensure the safety and completion of the Work provided
that such requirement of services is within the capability of the
Contractor.
	 
	 	 	The Company’s Representative shall also be authorised to require the
Contractor to make good any part of the Work which has not been
performed in accordance with the Agreement and the costs of such
making good shall be borne by the Contractor.
	 
	 	 	In the performance of his duties the Company’s representative shall
inform the Contractor’s representative of the desired end result of
the operation and any special parameters to be observed or
precautions to be taken by the Contractor in the performance of the
Work.
	 
	 	 	Contractor shall at all times permit Company’s Representative or his
nominated delegate unescorted free access to all areas where the Work
or any parts thereof is being performed wheresoever such areas may be
located.

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	 	 	Failure of Company’s Representative or his nominated delegate to
inspect or call to the attention of Contractor, any particulars in
which the Work does not comply with the Agreement, shall in no way
relieve Contractor of its obligations under the Agreement.
	 
	10.2	 	Contractor Representative
	 
	 	 	Contractor’s Representative shall be Mr. Liu Baihong
	 
	 	 	Contractor’s Representative may delegate his authority and duties to any
nominated deputy subject to prior written approval from Company and
provided that such person is at that time already involved in the Work.
	 
	 	 	Contractor’s Representative or his nominated deputy shall comply with and
adhere strictly to instructions issued by Company’s Representative or his
nominated delegate on any and all matters concerning the Work to be
provided under this Agreement.
	 
	 	 	Contractor’s Representative or his nominated deputy shall be present at
the Location at all times when the Work is being performed and shall act
in full charge of the Work. Contractor’s Representative or his nominated
deputy shall have full authority to resolve all day to day matters which
may arise between the Contractor and Company and to act for and bind the
Contractor in all matters relating to the Contractor’s performance of the
Work and its obligations hereunder.
	 
	 	 	The Contractor’s representative or his nominated deputy will participate
within a team environment at the Location and is expected to form a
harmonious relationship with other senior service company representatives
and Company’s Representative. Furthermore, the Contractor’s
Representative or his nominated deputy will endeavour to act in a
proactive manner to prevent inefficiencies in the operation as a whole
and will advise Company’s Representative as soon as practicable if any of
the Contractor’s equipment becomes not fully serviceable or if any
Company supplied item(s) or resources consumed by the Contractor are
required in order to maintain efficient operations.
	 
	 	 	In the event that Company shall require the removal of Contractor’s
Representative or his nominated deputy and so requests in writing,
Contractor shall, at no additional cost to Company, immediately remove
Contractor’s Representative or his nominated deputy from the Work. The
Contractor will immediately replace him with another Contractor’s
Representative or his nominated deputy who shall be approved by the
Company.
	 
	11	 	BASES
	 
	11.1	 	Company Base
	 
	 	 	The Company will maintain base(s) as detailed in Part 10 of Schedule
III for the purposes of the Agreement.
	 
	11.2	 	Contractor Base
	 
	 	 	The Contractor shall maintain an office base at the Location
designated in Part 10 of Schedule III from where the Contractor’s
senior management will direct the Contractor’s Representative at the
Location
	 
	12	 	CONTRACTORS WORK OBLIGATIONS
	 
	12.1	 	Deemed Satisfaction
	 
	 	 	The Contractor shall satisfy itself in respect of all operational,
environmental, and statutory requirements and all other matters which
may affect the performance of the Work, and failure to do so will not
relieve Contractor from any of its contractual obligations hereunder.
	 
	12.2	 	Mobilization and Demobilization

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	 	 	The Contractor shall mobilise the Contractor’s equipment and the
Contractor’s personnel to the Location no later than the date
specified in the Scope of Work or such later date as may be agreed by
the Company in writing and shall demobilize same upon the completion
of the Work (or at a mutually agreed later date) to the satisfaction
of the Company.
	 
	 	 	In case of late mobilisation except caused by Force Majeure, when
Mobilization takes longer than time determined as estimated time for
Mobilisation, Company has a right to charge Contractor for those
expenses which might occur for the Company due to such delay of
Mobilisation. Company should informs Contractor about any such
possible expenditures that Company might become liable to any other
party due to late Mobilisation.
	 
	 	 	In the event that the spudding in operation is delayed due to the
failure of readiness for services by Company’s other contractors,
the Contractor shall be entitled to be compensated by the Company at
the applicable operating day rate for the period of such delay.
	 
	12.3	 	Contractor’s Performance
	 
	 	 	The Contractor shall perform the Work with all due skill, diligence
and care and in a safe competent and workmanlike manner in accordance
with good and prudent oil and gas field practice as judged by oil
industry standards and as ordinarily employed by reputable
international companies.
	 
	12.4	 	Compliance with Laws

	 	12.4.1	 	The Contractor shall comply, and shall ensure that its Affiliates,
employees, agents and its sub-contractors comply with all laws,
decrees, circulars, regulations, rules and directives and with all
relevant local customs of the Republic of Georgia and laws, decrees,
circulars, regulations, rules and directives of other governments
which are applicable at the date hereof or which may in the future
become applicable to the Contractor’s business, the Contractor’s
equipment or to its personnel or that of its Affiliates, agents or
its sub-contractors engaged in the Work.
	 
	 	12.4.2	 	The Contractor hereby indemnifies the Company against any and all
fines, penalties or other liability which may be asserted or
assessed due to Contractor’s breach by any person referred to in the
foregoing Article 12.4.1 of any such laws, decrees, circulars,
regulations, rules and directives and local customs.

	12.5	 	Permits
	 
	 	 	The Contractor shall procure all licenses and permits necessary to
enable Contractor to perform the Work. The Company agrees to assist
the Contractor to obtain such licenses and permits.
	 
	12.6	 	Operations to be Performed
	 
	 	 	The Contractor shall undertake and complete the Work in accordance
with Schedule IV — Scope of Work and the drilling program specified
by the Company.
	 
	12.7	 	Procurement of Local Goods and Services

	 	12.7.1	 	The Contractor undertakes that, where and to the extent that it in
Contractor’s own opinion is available and technically and economically
practicable, it shall:

	 	(i)	 	purchase all equipment, goods, materials and supplies that the
Contractor is obliged to provide under the Agreement from local
suppliers or manufacturers; and
	 
	 	(ii)	 	make use of services and research facilities,
professional or otherwise, which are rendered by local firms
or companies incorporated in Georgia; and

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	 	(iii)	 	give favorable preference to the employment of
local nationals in the Work to the fullest extent possible
provided such nationals have, in the opinion of the
Contractor, the required qualifications and experience.

	 	12.7.2	 	For the purpose of the foregoing Article 12.7, the term
“technically and economically practicable” shall mean that:

	 	(i)	 	materials, equipment and supplies which the
Contractor is obliged to provide under the Agreement conform
to technical and safety standards acceptable to both the
Company and the Contractor, and that they are available in
the required quantities and quality and can be delivered
within periods acceptable to both Parties; and
	 
	 	(ii)	 	the terms and conditions of supplies including
maintenance, servicing and availability of spare parts are
acceptable both to the Company and to the Contractor, and
	 
	 	(iii)	 	prices and costs are acceptable to the Contractor.

	12.13	 	Delivery of Spares
	 
	 	 	The Contractor shall arrange for the delivery from point of origin (Salyan Oil Field in Azerbaijan or China) to the
supply base specified in Part 10 of Schedule III of spare parts for the Contractor’s equipment together with all
necessary or desirable packing and marking for that purpose. All charges and/or costs relating to the importation and/or
exportation of the Contractor’s equipment, spare parts and supplies will be paid by the Contractor who shall also where
practicable supervise all activities of the packing company and its forwarding agent in order to expedite proper shipment
and ensure proper documentation as required by applicable government and/or government agencies.
	 
	12.14	 	Data
	 
	 	 	The Contractor shall deliver to the Company all copies of the forms or other data pertaining to the Work(s) upon
completion. The Contractor may retain copies of non-confidential data in accordance with good oil field practice for its
records provided that it shall have first obtained the Company’s written consent otherwise all information pertaining to
the Work(s) will be returned to the Company.
	 
	12.15	 	Additional Work
	 
	 	 	The Contractor shall also carry out any further work as may be required by the Company subject to being in accordance
with the conclusions on such additional work to be mutually agreed in
writing by the Parties.
	 
	12.16	 	Ownership of Technical Information
	 
	 	 	No technical information acquired or developed by the Contractor under the Agreement shall become the property of the
Contractor and all such technical information shall be delivered in accordance with the Company’s instructions upon
completion or termination of the Agreement or when so instructed by the Company.
	 
	 	 	During the course of the Work, the Contractor may use such technical information whether in the form of tapes, data,
documents, specifications and plans in the performance of the Work and shall keep them in its custody and care, and shall
deliver them to the Company upon completion.
	 
	12.17	 	Delivery

	 	12.17.1	 	The Contractor shall deliver the work related technical
information to the addresses specified in Part 3 of Schedule III of
the Agreement or to any third party as designated in writing by the
Company. The Contractor shall take all possible measures to ensure
that no magnetic medium (tape, disk or other) will be passed
through, or otherwise come into the vicinity of any form of,
magnetic device during transport.

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	 	12.17.2	 	Prior to transportation of any technical information, tapes,
results and/or data by the Contractor, the Contractor shall advise
the Company’s representative of the shipping and packing details.

	12.18	 	Maintenance of Equipment

	 	12.18.1	 	Well Control Equipment
	 
	 	 	 	The Contractor shall exercise care in the
prevention of fires, explosions and blowouts and
it shall do everything possible to maintain well
control equipment in good operating condition at
all times including but not necessarily limited
to employing correct service schemes, replacement
of unserviceable parts with original
manufacturers spare parts, routine pressure
testing and shall ensure that approved well
control equipment is in good order at all times.
During drilling operations the Contractor shall
use satisfactory blow-out prevention equipment
approved by the Company.
	 
	 	 	 	The Contractor shall examine and test all blow-out prevention
devices in accordance with the Company’s drilling or testing
programme and to record the results of such tests on the drilling
reports.
	 
	 	12.18.2	 	Drill string

	 	(a)	 	Contractor shall supply drill strings which are
either new or meet Premium Grade requirements as set out in
API RP7G, latest edition. If not new, Contractor will also
supply a history of the drill string. Contractor shall supply
Company with a copy of inspection reports of the drill
strings, such inspections having been made after release from
the Rig’s previous assignment and prior to commencement with
the Company.
	 
	 	(b)	 	Contractor’s drill pipe shall be smooth hard
banded to the satisfaction of the Company.
	 
	 	(c)	 	Contractor’s drill strings shall be fully
re-inspected, at the cost of Contractor after each 20,000ft of
hole drilled (or two wells if the cumulative depth is greater
than 20,000 ft) or every six (6) months whichever shall first
occur, and items failing to meet Premium Grade requirements of
API RP7G latest edition shall be promptly replaced. Company
shall have the right to have Contractor’s drill strings
inspected at any time at Company’s cost, between contractual
inspection, and items failing to meet Premium Grade
requirements of API RP7G, latest edition shall be promptly
replaced, or repaired in a manner acceptable to Company, at
Contractor’s cost.
	 
	 	(d)	 	Contractor’s drill collars shall be
fully-inspected after each 20,000ft of hole drilled and/or at
Company requirement, at the cost of Company and those not
meeting the appropriate grade will be promptly replaced. Drill
collars pin and box connections shall have stress-relief
grooves as per API RP7G, Elevator and Slip grooves and be
spiraled.
	 
	 	(e)	 	All other down hole tools shall be similarly
inspected by methods acceptable to Company, and replaced if
cracks, wear or other defects are revealed at the end of well
or more frequently at Company’s request.
	 
	 	(f)	 	All inspections performed by Contractor to meet
the provision of this Article must not result in any downtime.
In the event that such inspections do incur downtime, during
day rate operations, the daily repair rate as specified in
Schedule II shall be applicable.

	12.19	 	Rig to be Maintained in Good Order
	 
	 	 	The Contractor shall ensure supply of all of the equipment,
materials and supplies as may be needed by it to keep the
Contractor’s Equipment in good working condition and to enable it to
have on hand or on order at all times sufficient supply of
consumable materials and spare parts to ensure an efficient
uninterrupted operation for Company in Georgia.

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	12.20	 	Drilling Reports and Records
	 
	 	 	The Contractor shall maintain all statutory, regulatory and any
other required records of its operations under the Agreement and
shall at all times provide the Company with such data and
information, including copies of any documents, as will permit the
Company to comply with applicable statutory or other reporting
obligations, subject to Company’s notification to Contractor of such
data and information.
	 
	 	 	Without prejudice to the generality of the foregoing, the Contractor
shall keep and furnish to the Company a daily drilling report
showing the relevant information in respect to hole sizes and depth
for each hole section encountered in the Work and the formations
penetrated, and shall prepare reports and records as requested
including but not limited to a weekly BOP checklist, trip sheets and
kick control sheets, and notify the Company immediately when any oil
or gas-bearing formation is encountered. The format and contents
required for the drilling report shall be specified by the Company
and the Contractor hereby agrees to comply in all respects with the
Company’s reporting requirements set out in this Article and in Part
6 of Schedule III.
	 
	 	 	The Company shall at all times have complete access to all records
and such other data as may be compiled by the Contractor relating to
the Work. All such data and records shall, upon request, be
delivered by the Contractor to the Company and shall belong
exclusively to the Company.
	 
	13	 	CONDUCT OF THE CONTRACTOR
	 
	13.1	 	Gifts and Alcohol
	 
	 	 	Neither the Contractor nor any of its personnel shall make or offer
any bribe, gratuity, reward, commission or other inducement in money
or of any other description whatsoever to any person, firm or
company directly or indirectly involved with the Work. Neither the
Contractor nor any of its personnel shall except for bona fide
medical purposes, keep, sell, barter, give, dispense or otherwise
dispose of any drugs or alcoholic liquors to any person at/on the
Location or in the Contract Area or permit the same to be done by
any person.
	 
	13.2	 	Business Ethics/Conflict of Interests
	 
	 	 	Contractor shall not use, or allow to be used, any information of
any kind which is proprietary to Company, in a manner which could
conflict with the interests of Company.
	 
	 	 	Contractor is obliged to exercise care and diligence to prevent
itself and its personnel from conducting any actions or conditions,
which could result in a conflict with Company’s interests.
	 
	 	 	Contractor’s obligations shall include, but not be limited to,
establishing precautions effectively to prevent any of its and its
Affiliates and its sub-contractors personnel from making, receiving,
providing and offering to Company and its Affiliates and its
sub-contractors personnel:

	 	(a)	 	any gifts of more than nominal value, or
	 
	 	(b)	 	entertainments other than infrequent meals, or
	 
	 	(c)	 	payments, or
	 
	 	(d)	 	loans or,
	 
	 	(e)	 	any other consideration for the purpose of influencing
individuals.

	13.4	 	Alcohol at the Location
	 
	 	 	Alcohol shall not be permitted at the Location save in a form
generally used in medicine and forming a bona fide constituent of a
medical kit. The Company’s representative reserves the right to
check that Contractor’s personnel and those of it’s Affiliates,
agents and its sub contractors are complying with

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	 	 	the provisions of Article 13.1 and 13.4. The Company’s representative
may at his absolute discretion prohibit any member of the Contractor’s
personnel to go on to the Location or may require such person to leave
the Location where he has reasonable grounds to suspect non-compliance by
Contractor’s personnel with the provisions of either Article 13.1 or
13.4.
	 
	13.5	 	Personnel
	 
	 	 	The Contractor shall ensure that its personnel and those of its
Affiliates, agents and its sub-contractors are advised of and comply
with the provisions of this Article 13.
	 
	13.6	 	Fair Wages
	 
	 	 	The Contractor shall pay fair and reasonable wages, such as may be
prescribed by law, regulation, decree or other Government instrument,
to its locally engaged personnel. The Contractor shall abide by the
laws and regulations of the Republic of Georgia and shall carry
employers liability insurance (or equivalent), as more particularly
set out in Article 21 below, providing voluntary benefits and
covering the Contractor’s liability to all locally engaged employees.
	 
	13.7	 	Industrial Relations
	 
	 	 	The Contractor shall maintain good industrial relations and shall
inform and consult the Company on all matters related to employee
relations, including but not limited to rates of pay, allowances,
amenities, overtime, collective bargaining, union relationships,
discipline and grievance procedures and shall keep the Company fully
informed on all said matters on its own initiative to the extent
necessary so that the Company’s interests in this matter shall not be
prejudiced, and in any case as and when the Company requires.
	 
	13.8	 	Public Relations
	 
	 	 	The Contractor shall use its best endeavors to maintain goodwill with
Government, any regulatory bodies in the Republic of Georgia and with
the general public.
	 
	 	 	The Contractor shall not release any article, film or comment about
the Work to the press or any other party without the prior written
consent of the Company.
	 
	13.9	 	Personnel Records
	 
	 	 	The Contractor shall keep relevant medical records, wages books and time
sheets and full records of all personnel employed in connection with the
Work.
	 
	 	 	The Company shall be entitled at all times to inspect and take copies
from all or any such documents. The Contractor shall also submit such
returns as the Company may require relating to matters to be contained in
such documents.
	 
	14	 	NOT APPLICABLE
	 
	15	 	INDEPENDENT CONTRACTOR
	 
	 	 	In the performance of this Agreement it is hereby declared that
Contractor is an independent contractor and not an agent of Company.
All persons assigned to the Work by Contractor shall be deemed to be
personnel or agents or employees of Contractor and in no sense shall
such personnel be deemed to be agents or employees of Company.
Neither the Contractor nor any person employed or assigned by the
Contractor shall either represent itself or himself (as applicable)
or be deemed for any purpose to be an employee, agent, or
representative of the Company in the performance of the Work. Save
as specifically provided for elsewhere in the Agreement, Contractor’s
equipment shall be under the exclusive control of the Contractor.
	 
	16	 	PRICES AND RATES

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	 	 	The Contractor shall, subject to the provisions set out in Schedule
II, be paid in accordance with the prices and rates set out therein.
	 
	17	 	PAYMENT
	 
	17.1	 	Invoices

	 	17.1.1	 	All invoices submitted by Contractor to Company shall set out the
particulars described in Part 8 of Schedule III. These invoices
shall be submitted in accordance with regulations as defined in
Article 17.1.2 governing the submission of invoices and acceptance
of Work performed.
Contractor shall submit monthly one invoice, covering all Work
carried out under the Agreement, in the previous calendar month.
	 
	 	17.1.2	 	Generally the Contractor drilling invoices cover the followings
required by the Company

	 	1)	 	Tour Sheets; travel tickets;
	 
	 	2)	 	A Billing Period — Make sure correct Tour Sheet
dates and Invoice billing dates are the same;
	 
	 	3)	 	Well Location — Must be the same as the Tour
Sheets location;
	 
	 	4)	 	Well Number — Must be the same as the Tour Sheets;
	 
	 	5)	 	Invoice Number — Must be given and also no for
duplication;
	 
	 	6)	 	Day Rate Operating — Amount charged must be the
same with the current existing Contract with the Company;
	 
	 	7)	 	Number of Days — number of day’s charge is correct
and matches with the Tour Sheets. Number of copies of Tour
Sheets attached is correct and complete. Number of days being
charged must equal to the Dates stated in the Tour Sheets;
	 
	 	8)	 	Number of Hours — number of hours charged is
correct and matches with the Tour Sheets. Number of copies of
Tour Sheets attached is correct and complete. Number of hours
that are being charged must equal to the From and To columns
in the Tour Sheets;
	 
	 	9)	 	Day Rate Standby — Amount being charged must be
the same with the current existing Contract with the Company.
Standby Rate must be lower than the Operating Day Rate;
	 
	 	10)	 	Labor Charges “Positions” — all positions being
charged are legitimate and in accordance with the existing
Contract. Positions being charged are all reported in the Tour
Sheets. Check if Names reported in the Tour Sheets are for
Expats and /or National names;
	 
	 	11)	 	Labor Charges “Per Day” — amount being charged
matches with the existing Contract;
	 
	 	12)	 	Labor charges “Number of Days” number of days
charged corresponds to the timesheets being attached and with
the Tour Sheets;
	 
	 	13)	 	Travel Days “Number of Days” — number of days
being charged correspond to the timesheets attached and the
with the Tour Sheets;
	 
	 	14)	 	Travel Days “Rate Per Day” — rates being charged
are correct and match with existing Contract;
	 
	 	15)	 	Total Invoice — Total Calculations in amount of
invoice must be equal to the sum of the break downs.

	 	17.1.3	 	The Company shall make payment within 30 days after receipt of
such invoice (submitted pursuant to Article 17.1.1) to the
Contractor’s nominated bank account as notified by Contractor to the
Company.
	 
	 	 	 	If the Company fails to make payment due to the Contractor
within such 30 days, the Company shall compensate the Contractor by
the Prevailing Interests (using Prevailing Interest Rate) of the
unpaid amount calculated from the date of the 30th day of receipt
of invoice to the date when the Company pays Contractor all the
amount of above unpaid invoice.
	 
	 	17.1.4	 	Any invoice not complying with the provisions hereof may be
returned by the Company to the Contractor whereupon the Contractor
shall submit a rectifying invoice. If such rectifying invoice is
received by the Company later than the time for submittal provided
for in Article 17.1.1, the month of submittal for the purpose of
this provision shall be that next following the calendar month in
which such rectifying invoice was received.
	 
	 	17.1.5	 	No payment made by the Company shall be construed as acceptance in
whole or in part of the performance by the Contractor of any of its
obligations under the Agreement.

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	 	17.1.6	 	In the event that Contractor is unable to meet its obligations
hereunder due to any event of Force Majeure as defined in Article
23, any rates payable shall after 30 (thirty) days since its
occurrence be reduced to zero for the remaining duration of the
Force Majeure event.
	 
	 	17.1.7	 	Any payment made by Company hereunder, including the final billing
where appropriate, shall not prevent Company from reasonably filing
claims or prejudice its right to recover the amount of such claims
however they may have arisen.
	 
	 	17.1.8	 	All invoices in respect of this Agreement shall be submitted
within six (6) months of termination. Company shall have the right
to reject any invoice submitted after this period.
	 
	 	17.1.8	 	Final payment for completed Work can only be made after the Work
performed has been completed and signed as completed by both
Contractor and Company.

	17.2	 	Company’s Right to Dispute Invoices
	 
	 	 	If the Company disputes any item on an invoice received pursuant
hereto then it shall be entitled to withhold from payment, without
payment of interest, that amount in dispute until the settlement
provided that;

	 	(i)	 	the Company notifies the Contractor of the disputed item(s);
and
	 
	 	(ii)	 	the Contractor issues a credit note for the disputed portion
of the said invoice following receipt of which the Company shall
thereafter pay only the undisputed portion of any such invoice.

	17.3	 	Payments Due to the Contractor
	 
	 	 	Without prejudice to any other of the Company’s rights under the
Agreement or otherwise, it shall be entitled to deduct from any
payment due or becoming due to the Contractor under the Agreement,
all costs, damages or expenses for which the Contractor is liable to
the Company under the Agreement.
	 
	17.4	 	Audit

	 	17.4.1	 	The Company shall have the right to audit at all reasonable times
all the records and accounts in connection with the Work, including
without limitation all reimbursed costs and expenses relating
thereto, which the Contractor shall be obliged to maintain
throughout such period. The foregoing audit rights of the Company
shall continue for a period of two (2) calendar years commencing 1st
day of the next month following the later of-.

	 	(i)	 	the month in which the Work is completed, or
	 
	 	(ii)	 	the month in which Company receives the
Contractor’s final invoice relating to the Work or after
termination of the Agreement if earlier, and the Contractor
shall preserve and shall cause its sub-contractors to preserve
all documents for the same said period.

	 	17.4.2	 	Any amount by which the payment by the Company to the Contractor
exceeds the amount due to the Contractor as shown by such audit
shall be returned forthwith to the Company

	17.5	 	Freedom from Liens

	 	17.5.1	 	The Contractor shall indemnify and hold Company harmless from and
shall keep the Contractor’s equipment, Company equipment, well(s)
and Work free and clear of all liens, claims, assessments, fines and
levies created or caused or committed by Contractor, its Affiliates,
agents or its subcontractors.
	 
	 	17.5.2	 	Should there prove to be any such lien created or caused or
committed by the Contractor, as mentioned in this Article 17.5, upon
the property of the Company after all payments hereunder

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	 	 	 	have been
made by the Company, the Contractor agrees to refund to the Company
upon demand all moneys that the latter may be compelled to pay to
discharge any such lien.
	 
	 	17.5.3	 	The Contractor agrees to furnish to the Company, if requested, a
full and complete statement that all the Contractor’s suppliers,
sub-contractors and vendors have been paid in full for work done or
materials furnished in connection with the performance of the Work,
subject to the payment due to the Contractor by the Company.
	 
	 	17.5.4	 	Each party shall defend, indemnify and hold the other party
harmless from and against all claims, liens and other encumbrances
against such party’s property on account of debts and claims alleged
to be due from the party to any person or corporation.

	17.6	 	Sub-Contracts
	 
	 	 	The Contractor shall ensure that the provisions of the foregoing
Articles 17.4 and Article 17.5 are included in all agreements it
shall enter into with any subcontractors who shall supply any labour,
equipment or materials to be provided under the Agreement.
	 
	18	 	TAXATION
	 
	18.1	 	General

	 	18.1.1	 	The Contractor shall minimize, and shall procure that its
Affiliates, agents and its sub-contractors and its or their
personnel shall, to the extent permitted by the laws of the Republic
of Georgia, minimize its/their liabilities to taxes.
	 
	 	18.1.2	 	Subject to the provisions of Article 18. 1.1, the Contractor shall
pay any tax, and shall ensure that all due payment is made by its
Affiliates, agents and sub-contractors of any tax which may be
lawfully assessed upon any of them by any appropriate Government
authority in connection with the activities of any of them.
	 
	 	18.1.3	 	For the purposes of this Article 18.1 only, the expression ‘tax’
shall mean where the context so admits, any tax, duty or other
charge of any nature whatsoever, including any interest, assessed or
levied in respect of the Contractor’s activities or the activities
of its Affiliates, agents or sub-contractors or its or their
personnel under the Agreement, by any Government or other authority
having jurisdiction within the Contract Area.
	 
	 	18.1.4	 	The Contractor shall comply with the regulations presented by any
department of the Republic of Georgia for the monitoring and
controlling of articles imported into the Republic of Georgia for
petroleum operations.

	18.2	 	Contractor’s Personnel
	 
	 	 	The Contractor shall make and shall procure that its Affiliates,
agents and sub-contractors shall make all payments to their personnel
less any tax or other deductions required to comply with statutory
obligations, whether local or otherwise. Contractor shall pay all
such tax or other deductions to the Government or appropriate
authorities in accordance with applicable regulations.
	 
	18.3	 	Customs Duties

	 	18.3.1	 	Contractor shall be solely responsible for all import/export
charges including clearing and transportation of all Contractor’s
equipment and its sub-contractors’ materials and equipment required
for the Work.
	 
	 	18.3.2	 	Company shall never be liable to pay any import and export
charges, duties and the like for personnel effects, food, alcohol,
tobaccos and other goods of Contractor’s personnel.

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	 	 	Under the Production Sharing Agreement for the Contract Area goods
imported and re-exported are free of any duties if necessary for the
proper conduct of petroleum operations so long as the Contractor complies
with the import/export protocol for the said Production Sharing Agreement
which Company will issue to Contractor. Contractor should obtain the
necessary certificate in this regard. Any charges related to
non-compliance of these protocols (as varied from time to time) will be
for Contractor’s account.
	 
	18.4	 	Withholding Taxes

	 	18.4.1	 	If the laws of the Republic of Georgia so require, the Company
shall be entitled to withhold income, profits, excess profits, sales
or turnover, royalty and other taxes from any payments due to the
Contractor under the Agreement to the extent that such laws require.
	 
	 	18.4.2	 	In order to facilitate this taxation purposes the Contract
should include the following information:

	 	1)	 	Contractor’s status (foreign, local, foreign
entity)
	 
	 	2)	 	Contract period with Company should be clearly
defined
	 
	 	3)	 	Contractors materials and services should be
shown separately marked in the invoice issued to the Company
and for services should be shown that are made outside or
inside of Georgia

	18.5	 	VAT
	 
	 	 	Notwithstanding the terms of Article 18.1 above, but without
prejudice to the terms of Article 18.3 above, the Company will pay to
the Contractor in addition to and together with the consideration due
under the Agreement any Value Added Tax chargeable in respect of
goods or services supplied by the Contractor under the Agreement
provided that the Contractor provides the Company with a valid tax
invoice as may be required under the relevant legislation and
regulations made thereunder. The Company shall also pay to the
Contractor any end user tax which the Contractor is obliged by the
law of any other country or political sub-division thereof to charge
in respect of goods or services supplied to the Company under the
Agreement.
	 
	 	 	Under the Production Sharing Agreement for the Contract Area goods,
services and works supplied are currently subject to zero percent VAT
rate. The Company will, where appropriate, provide a VAT exemption
certificate to the Contractor in accordance with all relevant legislation
from time to time.

	18.6	 	Indemnity

	 	18.6.1	 	Except as specifically provided in this Article 18, the Contractor
shall pay all taxes assessed against it in connection with the Work
or the Contractor’s equipment under the Agreement and hereby agrees
both to protect and indemnify the Company and to hold the Company
safe and harmless from any and all claims or liability for income,
excess profits, royalty or other taxes assessed or levied by the
Government, or by the government of any other country against the
Contractor.
	 
	 	18.6.2	 	The Contractor further agrees to protect and hold the Company
harmless from all taxes assessed or levied against or on account of
wages, salaries or other benefits paid to the Contractor’s personnel
or that of its Affiliates, agents or that of its sub-contractors and
all taxes assessed or levied against, or on account of any property
or equipment of such persons.

	18.7	 	The Contractor shall use all reasonable efforts to co-operate with the
Company in all administration of taxes as aforesaid.
	 
	18.8	 	The provisions of this Article 18.0 shall survive the expiration,
repudiation or any termination of this Agreement.
	 
	19	 	LIABILITIES AND INDEMNITIES
	 
	19.1	 	Indemnity by the Company and the Contractor

	 	19.1.1	 	Company and Contractor each agree to defend, indemnify and hold
Contractor and Company respectively, harmless from and against any
and all liability, damage, claim or costs (including

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	 	 	 	legal costs and
expenses) in respect of sickness or injury to and death of their
respective employees regardless of the cause or reason therefore and
regardless of the negligence or breach of duty of the other.
	 
	 	19.1.2	 	Contractor agrees to defend, indemnify and hold Company harmless
from and against any and all liability, damage, claim or costs
(including legal costs and expenses) in respect of loss of, damage
to, or loss of use of Contractor’s equipment or property howsoever
caused and regardless of the sole or concurrent negligence, or
breach of duty of Company. For the purpose of this sub-article
Contractor’s equipment or property shall be deemed to include all
equipment owned, hired or being provided by Contractor in relation
to the Work.
	 
	 	19.1.3	 	Company agrees to defend, indemnify and hold Contractor harmless
from and against any and all liability, damage, claim or costs
(including legal costs and expenses) in respect of loss of, damage
to, or loss of use of Company’s equipment or property howsoever
caused and regardless of the sole or concurrent negligence or breach
of duty of Contractor.
	 
	 	19.1.4	 	Each Party shall bear all consequential or indirect losses it
suffers and shall indemnify and hold harmless each other for any
liability therefore. Consequential loss shall include, but not be
limited to, loss of production, profits, use or any other economic
loss.

	19.2	 	Liability for Contractor’s equipment above and below the Rotary Table
	 
	 	 	Notwithstanding the foregoing provisions of Article 19.1.2, the Company
shall be liable to and indemnify the Contractor for damage to or loss,
loss of use or recovery or destruction of the Contractor’s Equipment
while being used on the well below the rotary table caused by in-hole
difficulties including, without limitation, stuck pipe, lost circulation
or blow out, abnormal wear, hydrogen sulphide embrittlement, or corrosion
fatigue except such damage, loss or destruction is not caused by the
negligence and/or willful misconduct and/or default and/or breach of duty
(statutory or otherwise) of the Contractor or its affiliates, agents or
its sub-contractors whoever is the owner of the so lost or damaged
downhole equipment and/or its or their personnel who shall each make all
reasonable efforts to avoid or cause any resulting delay in the Work.
	 
	19.3	 	The Hole
	 
	 	 	The Company shall hold the Contractor harmless against any damage to or
loss of the hole or casing therein, except where such loss or damage is
caused by or results from the Contractor’s gross negligence and/or wilful
misconduct and/or default and/or breach of duty (statutory or otherwise)
or that of its affiliates, agents or sub-contractors and/or its or their
personnel and, in such event, the Contractor’s liability, without
prejudice to the Company’s rights under article 19.9, shall be limited
either:

	 	i)	 	to drill a new hole to the depth at which the loss or damage
occurred; or
	 
	 	ii)	 	to re-drilling such section of the damaged hole,

	 	 	in either case in accordance with the terms of the Agreement the
Contractor, for such repair or re-drilling work, will be paid at a
reduced rate which is equal to 50 % of the Daily Operating Rate.
	 
	19.4	 	Blow-out or Crater

	 	19.4.1	 	During the course of drilling it is likely that hydrocarbons shall
be found in sufficient quantities to cause a fire hazard or endanger
the well(s), personnel or equipment. Hence the Contractor shall
ensure that good drilling practices are employed and take such
precautions as are necessary and proper to prevent a catastrophe and
to protect life and property.
	 
	 	19.4.2	 	If the well blows out, catches fire or in any manner gets beyond
full control, the Company shall have the right under Article 9.7 to
assume complete control and supervise the Work required to regain
full control of the well. During such period the Contractor agrees
to make its personnel and services available at the well.

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	 	19.4.3	 	It is understood and agreed that the Company shall bear the cost
and expense of killing the well or otherwise bringing it under
control.

	19.5	 	Reservoir and Pollution Liability
	 
	 	 	The Company shall assume all liability for and agrees to indemnify
and hold harmless the Contractor in respect of loss of or damage to
any geological formation, strata or oil or gas reservoir or for loss
or damage caused by pollution which originates below the surface
howsoever caused on the part of Contractor
	 
	19.6	 	Contractor’s Responsibility for Pollution

	 	19.6.1	 	The Contractor shall assume all responsibility for and agrees to
defend, indemnify and hold the Company harmless from, loss or damage
arising from pollution or contamination which originates from the
Contractor’s equipment above the surface and/or the surface
equipment of its Affiliates, agents or sub-contractors and from
spills of fuels, lubricants, motor oils or other effluent in its or
their possession and control, howsoever caused and irrespective of
negligence and/or default and/or breach of duty (statutory or
otherwise) on the part of the Company or its Affiliates, agents and
subcontractors and/or its or their personnel.
	 
	 	19.6.2	 	Without prejudice to Article 19.6, Contractor shall ensure that
all personnel use the prevailing standards of care and diligence to
prevent unlawful disposal of all waste oil, water and other waste
materials or fluids which may accumulate or be caused by
Contractor’s performance of this Agreement. Contractor shall not
dispose of any objects, scrap, waste, rubbish, equipment, fluid or
fuel. Contractor shall take all reasonable precautions to prevent
pollution of any nature or kind originating from the surface
equipment during its performance of this Agreement.
	 
	 	19.6.3	 	In the event of any disposal prohibited by Article 19.6.2, whether
by dumping, spilling, emission or otherwise arising from
Contractor’s performance or non-performance of this Agreement,
Contractor shall be fully liable for and bear the costs of removal
of any such item(s) dumped, spilled, emitted or otherwise disposed
of regardless of the sole, concurrent or contributory negligence or
breach of duty (statutory or otherwise) of Company. In the event of
any such disposal, Contractor shall immediately undertake all
reasonable remedial and protective measures required in such
circumstances.
	 
	 	19.6.4	 	Contractor shall notify Company immediately with respect to any
pollution, loss, damage,
claim or demand, (or occurrence which may give rise to same)
resulting from the performance of this Agreement.
	 
	 	19.6.5	 	Without relieving Contractor of any of its obligations under
Article 19.6.2, if Contractor does not promptly proceed to perform
its obligations under this Article 19.6, Company may take part to
any degree it deems necessary in the control and removal of any
pollution, dumping, spillage or contamination which is the
responsibility of Contractor under this Article 19.6 or which is due
to any act or omission of Contractor. Contractor shall reimburse
Company for costs arising from such actions of Company upon receipt
of invoice from Company. Company shall have the right to deduct such
costs from any sum due or becoming due to Contractor under this
Agreement.
	 
	 	19.6.6	 	Contractor shall not deposit or cause or permit any of
Contractor’s personnel to deposit any substances or articles in or
around the Contract Area except in accordance with the terms of a
license issued by the relevant Government authority.

	19.7	 	Patents
	 
	 	 	The Contractor hereby indemnifies and holds the Company harmless from
any and all claims, injunctions, legal proceedings and the costs and
expenses therefore and any loss, damage or liability

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	 	 	which may be
incurred on account of infringement of patent or other proprietary
rights claimed by any third party in respect of any device,
apparatus, system or method of use supplied or utilized by the
Contractor in the performance of the Work.
	 
	 	 	If the Contractor is prevented from performing any part of the Work
because of legal restraint due to a third party claim that the
Contractor has infringed patents or other proprietary rights, the
Contractor shall be relieved of any responsibility to continue the
performance of the Work until no longer legally restrained, and the
Company shall have no liability to pay for Work not performed due to
such legal restraint. The Contractor shall use its best endeavors to
continue those parts of the Work not so legally restrained.
	 
	19.8	 	Default of the Contractor

	 	19.8.1	 	If the Contractor has failed to (i) conduct the Work in a
diligent, skilful and workmanlike manner and in accordance with good
oil field practice or (ii) if the Contractor’s equipment is not
performing to the specification; or (iii) if the Contractor is
otherwise in material default hereunder, the Company shall give the
Contractor written notice in which the Company shall specify the
cause of its dissatisfaction. Upon receipt of such written
notification the Contractor shall (i) correct the working procedures
of its personnel to ensure compliance with good oilfield practice,
or (ii) repair or replace such faulty equipment, or (iii) remedy its
default hereunder.
	 
	 	19.8.2	 	Should the Contractor fail or refuse to remedy or fail to commence
to remedy the said cause of dissatisfaction within a period after
receiving such notice as is set out in Part 3 of Schedule III, the
Company shall be entitled, without prejudice to its rights under the
Agreement or otherwise at law to

	 	(i)	 	terminate the Agreement forthwith, or
	 
	 	(ii)	 	assume responsibility for supervising the Work
and deduct the extra costs thereby reasonably incurred from
the amounts payable to the Contractor, or
	 
	 	(iii)	 	take over the operation of the Contractor’s
equipment at no extra cost whatsoever to the Company. The
Contractor shall be paid therefore as if the Contractor was
operating Contractor’s equipment, less the extra amounts
incurred by the Company in taking over the operation.

	 	19.8.3	 	Should the aforesaid cause of dissatisfaction be incapable of
remedy by the Contractor, the foregoing requirement of notice of
dissatisfaction shall be disregarded and the Company shall be
entitled to exercise its rights under Article 19.8.2 forthwith.

	19.9	 	The Company shall have the right to retain out of any payment to be made
under the Agreement an amount sufficient to indemnify it completely
against any liability mentioned in Article 19 provided that the Company
shall first advise the Contractor of any such liability and shall afford
the Contractor the opportunity to contest the same prior to the Company
making settlement thereof.
	 
	19.10	 	The provisions of this Article 19 shall survive the expiration,
repudiation or any termination of this Agreement.
	 
	20	 	RIGHTS, BENEFITS AND INDEMNITIES
	 
	20.1	 	Extension of Rights

	 	a)	 	Wherever in the Agreement rights, benefits, or indemnities
are given in favor of the Company such rights, benefits or
indemnities shall apply equally to the Co-Venturers, Affiliates and
to the Company’s Affiliates, Affiliates and their respective
directors and employees engaged in connection with the performance
of the Agreement.

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	 	b)	 	Wherever in the Agreement rights, benefits, or indemnities
are given in favor of the Contractor, such rights, benefits or
indemnities shall apply equally to the Contractor’s Affiliates,
agents and sub-contractors engaged in connection with the
performance of the Work and to any of their representative officers,
directors and employees.

	20.2	 	Liability for Affiliates, etc.
	 
	 	 	The Contractor shall procure that each of its Affiliates, agents and sub-contractors and its or their personnel which is
engaged in any way in any matters in connection with the Agreement shall observe and perform the terms hereof and the
Contractor shall be responsible for such performance as though it had performed the same itself.
	 
	21	 	INSURANCE
	 
	21.1	 	Georgia
	 
	 	 	The Contractor shall take out and maintain to the satisfaction of the Company and, with an insurance company acceptable to
the Company, insurance adequate to cover its liabilities hereunder and to fulfill the legal requirements of any Government
authority or other appropriate bodies in the Republic of Georgia.

	 
	 	 	Notwithstanding the generality of this Article 21, insurance coverage required to be secured and maintained by the
Contractor’s local sub-contractors shall be limited to those insurances and amounts required by applicable law,
regulations or decree of the Republic of Georgia together with such other insurances as Contractor may deem necessary.
Contractor shall be liable towards Company and its Co-Venturers for any absence or insufficiency of the insurances of
Contractor’s sub-contractor. Contractor shall provide that its sub-contractors and their insurers waive all rights of
recourse against Company and its Co-Venturers to the extent Contractor or its sub-contractors have assumed liability or
granted indemnity under this Agreement.
	 
	21.2	 	Rights of Recourse
	 
	 	 	Contractor shall arrange that all the insurance policies referred to in Article 21.1 shall be endorsed to show Company,
its Co-Venturers and, in respect of joint operations, other operators, as additional insureds and shall contain a waiver
of insurers/underwriters rights of recourse against Company, its Co-Venturers and, in respect of joint operations, Other
Operators. These provisions shall apply only to the extent of the liabilities assumed by Contractor under this Agreement.
	 
	21.3	 	Certificates
	 
	 	 	Prior to commencement of the Work, Contractors shall arrange for certificates of its insurance to be furnished to Company.
All certificates shall provide that Company is given not less than thirty (30) days prior written notice of cancellation
or material change.
	 
	21.4	 	Non-Compliance and Indemnity
	 
	 	 	If the Contractor fails or refuses to obtain the specified insurances or to comply with the provisions of this Article the
Company shall, without prejudice to any other rights it may have, have the right to procure such insurance at the
Contractor’s expense in which event any sums paid by the Company pursuant hereto shall immediately become due and payable
to the Company by the Contractor and the Company shall be entitled to deduct such sums from any moneys due or which may
become due to the Contractor under the Agreement.
	 
	 	 	In the event that the Contractor does not maintain any or all of the insurances detailed under this Article, the
Contractor hereby indemnifies the Company and the Co-Venturers from any and all liability for loss arising out of the
aforesaid risks.
	 
	22	 	STATUS OF CO-VENTURERS

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	 	 	The Company makes this Agreement on behalf of all Co-Venturers. Notwithstanding the foregoing:

	 	(i)	 	Contractor agrees to look only to Company for due performance
of this Agreement and nothing herein contained will impose any
liability upon, or entitle Contractor to commence any proceedings
against any Co-Venturer other than Company.
	 
	 	(ii)	 	Company will be entitled to enforce this Agreement on behalf
of all Co-Venturers as well as for itself and for this purpose
Company and only Company may commence proceedings in its own name to
enforce all obligations and liabilities of Contractor and to make
any claim which any Co-Venturer may have against Contractor.

	23	 	FORCE MAJEURE
	 
	 	 	Neither the Company nor the Contractor shall be in breach of the
Agreement if and for so long as its performance of any obligation
hereunder is hindered or prevented due to circumstances beyond its
reasonable control including but not limited to strikes or other
labor disputes (except where involving the Contractor’s personnel or
that of its Affiliates, agents or subcontractors), riot, act of God,
sabotage, insurrection, interference by any Georgian or other
governmental authority provided that either the Company or the
Contractor, as the case may be, shall give notice to the other Party
promptly on becoming aware of any such cause, stating the particulars
thereof. The notifying Party shall promptly give further notice if
its performance of any such obligation is no longer hindered or
prevented as aforesaid. The time for performance of such obligation,
and any other obligations as are conditional upon such performance,
shall be extended by the period between each of the said notices
provided that the notifying Party shall make reasonable efforts to
perform such obligation prior to the time for performance extension
as aforesaid.
	 
	 	 	In the event of the occurrence of any cause set out in Article 23 and
such cause prevails for a period in excess of fifteen (15) days, the
Parties agree to meet forthwith to mutually agree the way forward. If
after seven (7) days (22days after commencement of Force Majeure)
agreement has not been reached on the way forward then Company shall
have the right to cancel the Agreement immediately. Any Force Majeure
occurrence shall never be just cause for Company to withhold any
payment due to the Contractor under this Agreement.
	 
	24	 	NON PERFORMANCE BY THE CONTRACTOR
	 
	24.1	 	Rights of the Company
	 
	 	 	If the Contractor fails to perform any of its obligations as
specified in this Agreement herein or to provide any of the
Contractor’s equipment or if the Contractor’s equipment fails to meet
the manufacturer’s rating for such equipment resulting in unsafe
operations or lower efficiency thereof, the Company’s representative
shall notify the Contractor in writing specifying the nature of such
failure and immediately thereafter the Company shall have the right
either:

	 	(i)	 	to shutdown operations or suspend the Work until such time as
the Contractor shall have rectified any specified failure; or
	 
	 	(ii)	 	to hire, if the Contractor has no substitute equipment and
refuses to purchase, from the nearest available source satisfactory
to the Company any equipment which should have been provided by the
Contractor or which is required to replace equipment not acceptable
to the Company’s representative and the justifiable, substantiated
and documented costs of hiring and transporting such equipment shall
be recoverable by the Company from the Contractor or
	 
	 	(iii)	 	to continue with the Work by using the substandard equipment
at reduced efficiency, in which event the Company shall have the
right to reduce the rates and charges payable to the Contractor by
an amount in direct relation to the percentage that the Work has, in
the Company’s reasonable opinion, been so reduced in efficiency or
slowed down.

	24.2	 	Shutdown or Termination

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	 	 	Notwithstanding the provisions of Article 24.1 (ii) and 24.1 (iii)
the Company may, at its sole discretion, give written notice to the
Contractor of its dissatisfaction and elect to shutdown operations or
suspend the Work until such time as the Contractor has made good the
default or, if the default is not remedied, until the Company elects
to terminate the Agreement. Such notice shall not be given
unreasonably. During the period of shutdown of operations or
suspension of the Work under this Article 24.2 no payment shall be
due to the Contractor.
	 
	25	 	RIG SUBSTITUTION
	 
	 	 	The Contractor shall not substitute the rig without the prior written
consent of the Company. The Company will have the right to inspect
the rig prior to making a decision. The substitution, if agreed, will
be made so as to cause no disruption to Company’s ongoing program and
shall be at no cost to Company.
	 
	26	 	LIQUIDATION OR INSOLVENCY
	 
	 	 	If the Contractor shall become bankrupt or insolvent or have a
receiving order made against it, or compounds with its creditors, or
being a corporation, commences to be wound up (such winding-up not
being voluntary for the purposes of reconstruction or amalgamation)
or shall carry on its business under a receiver for the benefit of
its creditors, or pursuant to the intervention of any competent
court, or any of them the Company may at its option either:

	 	(i)	 	terminate the Agreement with immediate effect by notice in
writing to the Contractor or to the receiver or liquidator or to any
person in whom the Agreement may become vested; or
	 
	 	(ii)	 	give such receiver or liquidator or other person the option
of carrying out the Agreement subject to the provision to the
Company of a guarantee acceptable to the Company for the due and
faithful performance of the Agreement up to an amount and on terms
acceptable to Company.

	27	 	TERMINATION
	 
	27.1	 	General Termination
	 
	 	 	The Agreement shall terminate forthwith if the Production Sharing
Agreement, or any Production Sharing Agreement in the Contract Area,
is terminated for any reason whatsoever and the Agreement may, after
the Commencement Date, notwithstanding any of the other provisions of
this Article 27, be terminated at any time by the Company without
cause giving written notice to the Contractor, subject to the
provisions of Article 27.2.
	 
	27.2	 	Reimbursement to Contractor
	 
	 	 	In the event of termination of the Agreement, other than arising out
of default of the Contractor its Affiliates, agents and/or its
sub-contractors or completion of the Work, the Company shall
reimburse the Contractor, in accordance with the provisions of this
Agreement (including Schedule II, Prices and Rates) for Work
performed prior to the date of termination and the demobilization fee
plus early termination fee as defined by this Agreement. The
Contractor shall use its best endeavors to minimize the costs to be
paid by the Company in the event of termination under this Article.
	 
	27.3	 	Default of the Contractor

	 	27.3.1	 	The Contractor shall, throughout the period of the Agreement,
maintain the applicable classification or certification of the
equipment. The Company may suspend the Work or terminate the
Agreement forthwith due to the failure of the Contractor to maintain
the classification or certification.
	 
	 	27.3.2	 	In the event of any of:

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	 	(i)	 	the breach by the Contractor of Article 18.1.4
	 
	 	(ii)	 	the breach by the Contractor of any of the other terms and
conditions of the Agreement; or
	 
	 	(iii)	 	the Contractor, its Affiliates, its or their agents or its or
their sub-contractors,

	 	(a)	 	fails to proceed with the Work with due diligence; or
	 
	 	(b)	 	Persistently or flagrantly neglects to carry out its or their
obligations under the Agreement; or
	 
	 	(c)	 	fails to maintain an acceptable level of safety or to
comply with the requirements of Article 9 hereof, or
	 
	 	(d)	 	fails to comply with any reasonable instructions given to it in writing by the Company’s
representative in connection with the Work, or

	 	(iv)	 	the Contractor subcontracts any part of the Work without the prior written consent of the Company; or
	 
	 	(v)	 	the Contractor abandons the Agreement,

	 	 	 	Then the Company may give notice in writing to the Contractor to
make good such breach, failure, neglect, contravention or abandonment.
	 
	 	 	 	Should the Contractor fail to commence to remedy or refuse or fail
to prove to the Company’s satisfaction that it has taken and is
continuing to take measures to remedy the matters specified in the
notice within a period of not more than seven (7) days, or such
other period as the Company may stipulate in the notice, the
Company shall have the right to terminate the Agreement forthwith
upon expiry of the period of notice or upon such later date
determined by the Company.
	 
	 	27.3.3	 	In the event of termination in accordance with the provisions of
this Article 27.3 the Company shall not be liable for any further
payment to the Contractor other than any payment, which may be due
in respect of work done prior to the date of termination.
	 
	 	27.3.4	 	Unless early termination in accordance with the provisions of the
Agreement, the Agreement shall terminate in any event on completion
of the work in accordance with Article 3.1.

	27.4	 	Company’s rights and remedies.
	 
	 	 	Company’s rights and remedies as set out herein are without prejudice
to its other rights and remedies under this Agreement.
	 
	28	 	SUSPENSION
	 
	 	 	In the event that the Company elects to suspend the Contract, the
Company shall compensate the Contractor at stack rates as per
Schedule II. However, such suspension shall not exceed five months
starting from the suspension date.
	 
	29	 	CONFIDENTIALITY AND PUBLICITY
	 
	29.1	 	Contractor shall ensure that its sub-contractors, its and their
respective officers, directors, employees and agents shall not:

	 	(a)	 	make any announcement, or issue any circular, in connection
with the subject matter of the
Agreement without the prior written approval of the Company.
	 
	 	(b)	 	divulge information obtained in the performance of the
Agreement, to any person, or company, or corporation, other than the
Company.

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	 	(c)	 	use any such information, except for the performance of the
Agreement.
	 
	 	(d)	 	reproduce, copy, disclose to, place at the disposal of or use
on behalf of any third party or enable any third party to peruse,
copy or use any documents or material, received or prepared save
such as is strictly necessary for the performance of the obligations
of Contractor under the Agreement.

	29.2	 	Without prejudice to Contractor’s obligations under Article 29.1,
Contractor shall make known such obligations to its sub-contractors and
their officers, directors, employees and agents and shall bind them to act
in such a manner as to ensure that Contractor is not in breach of such
obligations.
	 
	29.3	 	Contractor’s obligations under this Article 29.0 shall not apply to
information which (a) is or becomes part of the public domain, (b) was in
Contractor’s possession prior to award of this Agreement and which Company
did not notify Contractor as being confidential, (c) was received from
third parties and for which, to the best of Contractor’s knowledge having
made all reasonable enquiries, it had normal rights of disclosure.
	 
	29.4	 	Contractor’s obligations under this Article 29.0 shall continue
notwithstanding the expiry, repudiation or any termination of this
Agreement.
	 
	30	 	ASSIGNMENT AND SUB-CONTRACTING
	 
	30.1	 	Company Approval
	 
	 	 	Neither the Agreement nor any rights, benefits or duties or
obligations arising hereunder shall be transferred, assigned,
sub-contracted, pledged or used as collateral for a loan or advance
in part or in whole by the Contractor without the prior written
approval of the Company. The Contractor shall have complete charge
of its personnel engaged in the performance of the Work and shall
ensure that all such personnel, including all its sub-contractors and
its and their personnel shall comply with all rules and regulations
issued by the Company and with all laws, rules and regulations issued
by any other authority, particularly any government authority.
	 
	30.2	 	Continuing Responsibility

	 	30.2.1	 	Notwithstanding written approval by the Company of any of its
sub-contractors pursuant to this Article 30, the Contractor shall
not be relieved from any of its obligations or liabilities under the
Agreement and the Contractor shall be responsible for the acts,
defaults and omissions of its Affiliates, agents and sub-contractors
and its or their employees or consultants as though they were the
acts, defaults and omissions of the Contractor. The Contractor shall
have complete charge of its personnel engaged in the performance of
the Work and shall ensure that all such personnel, including all its
sub-contractors and its and their personnel, shall comply with all
rules and regulations issued by the Company and with all laws, rules
and regulations issued by any other authority, particularly any
government authority.
	 
	 	30.2.2	 	No sub-contract shall bind or purport to bind the Company, and
each sub-contract shall provide for its immediate termination in the
event of discontinuation or termination of the Agreement in
accordance with Articles 23, 24, 25, 26 or 27 hereof or for its
inundate suspension of the Work in the event of suspension in
accordance with Article 28 hereof.
	 
	 	30.2.3	 	All sub-contractors shall be responsible only to the Contractor;
notwithstanding the foregoing, the Company shall have the same
rights in respect to the inspection of the Work as are provided for
in the Agreement governing the Work provided by the Contractor.
	 
	 	30.2.4	 	The Contractor hereby indemnifies the Company against all actions,
causes of action, claims, demands and damages whatsoever arising
from the acts or omissions or employment of any sub-contractor.

	30.3	 	Company Assignment

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	 	 	The Company, by notice to the Contractor, shall be entitled to assign its rights, obligations and duties under the
Agreement to any Affiliate, third party or Co-Venturer as shall become the operator for the consortium of Co-Venturers in
succession to the Company or Other Operators, provided that the Company shall remain liable for and shall not be relieved
of any of its obligations under this Contract both before and after such assignment.
	 
	31	 	AMENDMENTS
	 
	31.1	 	The Agreement shall not be amended except where mutually agreed in writing by both Parties.
	 
	31.2	 	The Company (or Contractor) will not be obliged to consider any claim
unless the following procedure is strictly adhered to:

	 	(i)	 	Contractor (or Company) will submit written notice to
Company (or Contractor) within twenty eight (28) days of the
occurrence constituting such claim.
	 
	 	 	 	and
	 
	 	(ii)	 	Contractor (or Company) will submit to Company (or
Contractor) a written detailed statement of any such claim, which
may be subject to audit, within sixty (60) days of the occurrence
constituting such claim.
	 
	 	 	 	Claim submissions identified outside the time scale described shall
be considered to be time barred.

	32.	 	WAIVER
	 
	 	 	None of the provisions of this Agreement will be considered waived by
Company unless such waiver is given in writing by Company. No such waiver
shall be a waiver of any past or future defaults, breach or modification
of any of the terms, provisions, conditions or covenants of this
Agreement unless expressly set forth in such waiver.
	 
	33	 	NOTICES
	 
	33.1	 	Addresses
	 
	 	 	All notices under the Agreement shall be in writing and shall be
given at such addresses as the parties shall specify from time to
time by written notice. In the absence of such notice, the addresses
for the time being shall be those set forth on the first page hereof.
	 
	 	 	Either Party may from time to time change its address for service
herein by giving written notice to the other Party.
	 
	33.2	 	Delivery

	 	33.2.1	 	Any notice may be served by hand delivery to a Party at its
address for service hereunder or by facsimile transmission or by
courier mail.
	 
	 	32.2.2	 	(a) Any notice given by hand delivery shall be deemed to be given
at the time of delivery
	 	 	 	 
	 	 	 	(b) Any notice given by facsimile transmission shall
be deemed to be given at the time transmission has been
confirmed, subject to

      the following provision. Where said time
of transmission falls outside the normal business hours of the
recipient, delivery shall

      be deemed to be given at 10.00 hours
(recipient’s local time) on the recipient’s next following
business day.
	 	 	 	 
	 	 	 	(c) Any notice served by courier mail shall be deemed
to be given:

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	 	(i)	 	two (2) days after mailing by courier
where sender and recipient are resident in the same
country; and
	 
	 	(ii)	 	seven (7) days after mailing by courier
where sender and recipient are not resident in the same
country.

	 	33.2.3	 	For the purposes hereof, “business day” shall be any day, other
than a Saturday or a Sunday:

	34	 	ENTIRE AGREEMENT
	 
	 	 	The Agreement represents the entire Agreement between the Parties in
relation to the subject matters hereof and shall supersede any
previous documentation or agreement or undertaking (including any
translation of this Agreement into any other language) between the
Parties in relation to all or any such matters.
	 
	35	 	SEVERANCE
	 
	 	 	Any provision herein, which is or becomes illegal or unenforceable
shall be severed from the Agreement and shall not affect the validity
of the remaining provisions thereof.
	 
	36	 	LAW
	 
	36.1	 	Choice of Law
	 
	 	 	The Agreement shall be governed by and construed in accordance with
the laws of Georgian, excluding any of its conflict of law rules,
which would direct or refer to the laws of another jurisdiction.
	 
	36.2	 	Choice of Venue
	 
	 	 	The Parties specifically attorn and submit themselves to the
exclusive jurisdiction of the Courts of Georgian.
	 
	36.3	 	Arbitration

	 	36.3.1	 	Any difference arising out of or in connection with the terms of this
Agreement (regardless of the nature of the question or dispute) shall as
far as possible be settled amicably. Failing an amicable settlement
within a reasonable period such difference or dispute shall be finally
settled under the rules of conciliation and arbitration of the
International Chamber of Commerce by three arbitrators appointed in
accordance with the said rules and the decision or award resulting from
such arbitration shall be final and binding on the Parties. The place of
arbitration shall be Singapore and the language of arbitration shall be
English.
	 
	 	36.3.2	 	If the dispute is over technical matters, the settlement of which is of
a purely technical nature, the Parties may agree to refer such dispute to
the decision of independent experts appointed by the Parties. Failing
such agreement, the dispute shall be referred to arbitration as provided
for in the foregoing paragraphs of this Article.
	 
	 	36.3.3	 	Arbitration fees shall be borne by the losing Party.

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SCHEDULE II

COMPENSATION

	1.	 	PREAMBLE
	 
	1.1	 	General

	 	1.1.1	 	All rates and prices detailed herein shall be in US Dollars
and fixed and firm for the duration of the Agreement.
	 
	 	1.1.2	 	All invoices submitted on the basis of the rates specified
hereunder shall be supported by Company approved IADC Drilling
Reports, personnel timesheets, plant sheets and shipping manifests
where applicable.
	 
	 	1.1.3	 	“Day” or “day” shall mean a period of 24 hours beginning at
0000 hours on any day and ending at 2400 hours on the same day.
Daily rates shall be calculated to the nearest quarter of an hour
pro rated accordingly to a maximum of 24 hours per day.
	 
	 	1.1.4	 	Unless otherwise agreed in writing between the parties, any
expenditure of whatsoever nature incurred by the Contractor in
connection with the Agreement or the Work for which responsibility
has not been assumed in the Agreement by the Company shall be for
the account of the Contractor.

	1.2	 	Personnel
	 
	 	 	The personnel rates proposed in section 2.0 of this Schedule II shall
be deemed to include but not be limited to the following:

	 	(a)	 	Contractor’s liability as employer, including all employment
taxes, social security contributions, or other levies imposed by
governmental authorities.
	 
	 	(b)	 	Salaries, bonus payments, pensions, holiday contributions,
severance payments medical expenses, sick pay and other employee
benefits arising from the employment of personnel.
	 
	 	(c)	 	All hours worked, including any overtime and any nightshift
premium.
	 
	 	(d)	 	Personnel protective equipment (including handtools,
protective clothing, etc).
	 
	 	(e)	 	All relevant payroll deductions.
	 
	 	(f)	 	Any increase in (b) above payable during the term of this
Agreement.
	 
	 	(g)	 	Any safety training/medical certification costs.
	 
	 	(h)	 	Mobilization/demobilization costs.
	 
	 	(i)	 	All insurance provisions including but not limited to those
specified in Article 10.0.
	 
	 	(j)	 	Overhead and profit.
	 
	 	(k)	 	All costs of whatsoever nature incurred by Contractor in the
administration of this Agreement.

	1.3	 	Equipment

	 	1.3.1	 	The equipment rates contained in section 2.0 of this
Schedule II shall be deemed to include, but not be limited to, the
following:

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	 	(a)	 	Provision of the equipment (24 hours).
	 
	 	(b)	 	Mobilization/demobilization costs.
	 
	 	(c)	 	Maintenance and breakdown work.
	 
	 	(d)	 	Overheads and profit.
	 
	 	(e)	 	Insurance provisions as specified in Article
10.0.
	 
	 	(f)	 	All other costs of whatsoever nature incurred by
Contractor in the administration of this Agreement.

	2.	 	RATES AND PRICES
	 
	 	 	Contractor shall insert below all rates, prices and price lists for all
proposed equipment and personnel. All such rates, prices and price lists
shall remain fixed and firm for the duration of the Agreement.
	 
	 	 	Mobilization fee: US$250,000 (two hundred and fifty thousand US Dollars)
	 
	 	 	Lump sum price to move rig into Manavi      fields and rig up ready for
work at Company’s first Location to be designated by Company. Such sum
shall be payable 30 days from receipt of Contractor’s invoice following
Company’s acceptance of the unit at first location.
	 
	 	 	Estimate time for Mobilization is determined 30 days in advance.
	 
	 	 	Demobilization Fee: US$250,000 (two hundred and fifty thousand US
Dollars)
	 
	 	 	Lump sum payable on release of rig away from the last location.
	 
	 	 	Estimate time for Demobilisation is determined 10 days in advance.
	 
	 	 	Early Termination Fee is determined as 125,000 USD (one hundred twenty
five thousand US Dollars)
	 
	 	 	Daily Rates
	 
	 	 	The rates quoted shall be firm throughout the duration of the Agreement
and any further extension thereto
	 
	 	 	Daily Operating Rate: US$13,520 (thirteen thousand five hundred and
twenty US Dollars) per day
	 
	 	 	The amount payable to the Contractor for the provision and operation of
the Contractor’s equipment, its personnel and any of its sub contractors
required for the performance of the Work. This rate shall apply from
acceptance of unit on a well by Company representative until release of
rig at end of work on the well as certified by Company representative,
except for periods when other rates are applicable as specified hereunder
and as otherwise provided in this Agreement. Rate is for 24 hour
operations and firm throughout the duration of the Agreement and any
further extension thereto
	 
	 	 	Daily Repair Rate: US$12,168 (twelve thousand one hundred and sixty eight
US Dollars only) per day
	 
	 	 	The rate applicable in the event the Work is stopped as a result of any
of Contractors equipment, services and personnel being unable to perform
the work due to equipment failure and repair or if Contractor fails to
perform in accordance with this Agreement in terms of Article 24.1(1) of
Schedule 1. After 48 hours accumulated in any one calendar month, the
rate shall be zero.
	 
	 	 	Standby Rate: US$12,168 (twelve thousand one hundred and sixty eight US
Dollars only) per day

Applicable for any period when the rig is on location but unable to proceed
with operations because of adverse weather conditions, waiting on
instructions from COMPANY or delivery of COMPANY’s equipment or

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materials,
or damage to COMPANY’s equipment, or otherwise as a direct instruction, act
or omission of COMPANY provided that the rig is fully manned and otherwise
held in full readiness to resume operations.

	 	Stacked Rate:	 	US$3,000 (three thousand US Dollars only) per day — for first two months

US$4,000 (four thousand US Dollars only) per day — after first two months

	 	 	The rate applicable in the event the Company instructs Contractor to
demobilize his personnel and keep equipment stacked at Company’s
designated secure area.
	 
	 	 	Fishing Rate: US$8,112 (eight thousand one hundred and twelve US Dollars
only) per day
	 
	 	 	The rate applicable in the event of fishing job due to Contractor’s
negligence and will apply until normal operations are resumed.
	 
	 	 	Force Majeure Rate: [US$6,760 (six thousand seven hundred and sixty US
Dollars only) per day
	 
	 	 	The rate applicable when work is not being performed in accordance with
Article 23 of this Agreement.
	 
	 	 	Reduced Rate (same as Re-Entry Rate): US$6,760 (six thousand seven
hundred and sixty US Dollars) per day.

	 	Moving Lump Sum:	 	US$70,000 (seventy thousand US Dollars) per move within ten (10) KM

US$82,000 (eighty-two thousand US Dollars) per move within thirty (30) KM

US$6,000 (six thousand US Dollars) every 5 KM for rig move more than 30 KM

	 	 	The sum payable for moving rig and all Company’s equipment from release
of rig on one well until rig up is complete on next well and accepted by
Company Representative. Company shall pay such invoice 30 days from
receipt of invoices following completion of move.

	 	Catering Rates:	 	 US$25 (twenty five US Dollars) Room only per day per person

US$5 (five US Dollars) breakfast per meal per person

US$10 (ten US Dollars) lunch per meal per person

US$10 (ten US Dollars) supper per meal per person

	 	 	Prevailing Interest Rate: Determined as Libor (%),
	 
	 	 	Early Termination Fee: US$125,000 (one hundred and twenty five thousand
US Dollars). Each side agrees to open Letter of Credit (LC) account for
this amount. In case Early Termination is caused by the COMPANY, the
CONTRACTOR is entitled to collect Early Termination Fee from the
COMPANY’s LC account. Also, if the termination is caused by the
CONTRACTOR, then the COMPANY is entitled to withdraw Early Termination
Fee from CONTRACTOR’s LC account.
	 
	 	 	Contractor’s personnel
	 
	 	 	A deduction calculated at the rates set out below shall be made from the
amount due to Contractor in respect of any non-provision of personnel. It
is understood that manpower shortages for up to twenty-four (24) hours
per incident will be accepted by Company without reduction in the
applicable day rates when any of the personnel as listed below are
removed from rig Location for illness, injury or emergency reasons
provided the reason for such absence is duly noted on the Daily Drilling
Report. Excess personnel in one job classification may not be used to
fill vacancies in another job classification unless specifically approved
by Company’s Drilling Supervisor. Contractor will reduce its invoiced
amount to Company for each month in which manpower shortages actually
occurred.

	 	 	 	 	 	 
	Rig Based
	 	US$/Day

	Superintendent
	 	 	85	 
	Toolpusher(E)
	 	 	75	 
	Driller(E)
	 	 	65	 

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	Rig Based
	 	US$/Day

	Driller(L)
	 	 	30	 
	Assistant Driller(E)
	 	 	60	 
	Assistant Driller(L)
	 	 	20	 
	Derrickman(L)
	 	 	15	 
	Floorman(L)
	 	 	12	 
	Roustabout(L)
	 	 	12	 
	Chief Mechanic(E)
	 	 	65	 
	Mechanic(E)
	 	 	10	 
	Chief Electrician(E)
	 	 	65	 
	Electrician(L)
	 	 	15	 
	Rig Medic(L)
	 	 	15	 
	Welder(L)
	 	 	15	 
	Camp Boss
	 	 	75	 

SCHEDULE III

COMMERCIAL TERMS AND ADMINISTRATIVE PROCEDURES

	Part 1	 	Liabilities
	 
	Part 2	 	Insurance
	 
	Part 3	 	Notices
	 
	Part 4	 	Anticipated Commencement and Completion Dates
	 
	Part 5	 	Acceptance Criteria
	 
	Part 6	 	Reporting Requirements
	 
	Part 7	 	Permits and Authorizations
	 
	Part 8	 	Invoices and Payments
	 
	Part 9	 	Transport of Contractor Personnel and Equipment
	 
	Part 10	 	Bases

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Part 1  Liabilities

	 	 	Not used.

Part 2  Insurance

	 	 	These insurances are established by Company as minimum requirements and
are not to be considered indicative of the ultimate amounts and types of
insurance which Contractor needs.
	 
	 	 	The minimum requirements are:

	 	(a)	 	Insurance complying with all applicable social, workers’
compensation and occupational disease laws, Employers Liability
insurance with limits as required by applicable law or with a
minimum limit of one million US Dollars ($1,000,000), whichever is
the greater, and which shall cover all Contractor’s employees and
sub-contractor’s employees, performing work under this Agreement;
	 
	 	(b)	 	Comprehensive General/Public Liability insurance with a
combined single limit of not less than five million US Dollars
($5,000,000) per occurrence to cover liabilities for bodily injury,
including death to persons and liabilities for loss of or damage to
property;
	 
	 	(c)	 	Automobile Liability insurance for all vehicles used by
Contractor Group in the performance of the Agreement to comply with
all applicable laws with limits of not less than five million US
Dollars ($5,000,000) per occurrence to cover liabilities for bodily
injury, including death to persons and liabilities for damage to
property.
	 
	 	(d)	 	All risks insurance to the replacement value of all
Contractor’s Equipment.

	 	 	References to “applicable laws” shall mean the applicable laws of the country or countries where the work under the Agreement
is to be performed and all other laws applicable to Contractor in the performance of this Agreement.

Part 3  Notice

	 	i)	 	Article 33.1 — For the purposes of Article 33.1 the Parties addresses shall be those set out below:

Contractor’s Address shall be:

P.O. Box 766 Liu Pukang,

Beijing 100724,

P.R.China
 

Attention:

Hu
Xinfeng
 

Company’s
Address shall be:

P.O. Box 291

St. Peter Port

Guernsey

GYI 3 RR

BRITISH ISLES
 

Attention:

Dr. David
Robson
	 
	 	ii)	 	Article [19.4.2] — Default of Contractor
	 
	 	 	 	For the purposes of Article [19.4.2] the period of notice by the Company shall be 7 days to remedy fault

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Part 4  Commencement and Duration

	 	i)	 	Article 3.1

	 	(a)	 	The Commencement Date shall be that date on which
the Contractor commences performance of the Work and the
duration shall continue thereafter until all Work has been
completed and all other obligations of the Parties under the
Agreement have been performed in accordance herewith, unless
early termination in accordance with the provisions of this
Agreement.

Part 5  Acceptance Criteria

	 	 	Not used.

Part 6  Reporting Requirements

	 	 	The Contractor shall complete and maintain all records and reports
that may be called for by the Company.

Part 7  Permits and Authorisation

	 	 	Not used.

Part 8  Invoices and Payments

	 	 	Article 17.1
	 
	 	 	Invoices shall be addressed to:

	 	 	 	Ninotsminda Oil Company

P.O. Box 291

St. Peter Port

Guernsey

GYI 3 RR

BRITISH ISLES

	 	 	Each Invoice shall:

	 	(a)	 	be in duplicate
	 
	 	(b)	 	bear the Agreement reference number
	 
	 	(c)	 	state the name of the Company’s Representative
	 
	 	(d)	 	be accompanied by supporting evidence and itemized in
accordance with the Company’s requirement.
	 
	 	(e)	 	Time records and/or other documentation provided as
supporting documents to invoices, must be authorized by Company’s
Representative.

	 	 	Payment
	 
	 	 	Payment shall be made to the Contractor’s bank as follows:

	 	 	Bank: Address: ABN AMRO Bank, N.V. Singapore Branch

63 Chulia Street, Singapore 049514
	 
	 	 	Swift Code:  ABNASGSG
	 
	 	 	Account Number:  05.01.42.569 USD
	 
	 	 	Beneficiary:  China Petroleum Finance Co. Ltd.
	 
	 	 	Payment Details:  Great Wall Drilling Company A/C No. 111

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Part 9  Transport of Contractor Personnel and Equipment

	 	 	Article 9.1 — Contractor’s Transport
	 
	 	 	Shall be in accordance with the terms and conditions of this article in Schedule I.

Part 10  Bases

	 	 	Article 10.1 — Company Base — shall be located at: Patardzeuli, Georgia.
	 
	 	 	Article 10.2 — Contractor’s Base — shall be located at: Patardzeuli, Georgia

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SCHEDULE IV

SCOPE OF WORK

	 	 	Company has a plan to drill and complete a new exploration well in Ninotsminda
field approximately 60 km East of Tbilisi in Georgia.
	 
	 	 	The drilling program will commence as soon as the rig is mobilized to Manavi
field after pre-spud inspection. The Contractor will mobilize its equipment and
personnel to Manavi field and get ready to spud for the first well in the
period between 30th July and 15 August 2004.
	 
	 	 	If the program is successful the Company may extend the Contract to drill more
wells, which will be mutually agreed by both parties. The well has a planned
total vertical depth of 5000m. The field has reservoirs pressures ranging from
normal to abnormal pressures. Therefore the rigs must have BOP stacks rated to
10,000psi for the well. Mud weights used during drilling operation might be up
to 18.3 ppg. The formations to be drilled have highly reactive shale sections.
Hole stability problems and differential sticking risks are always present. A
top drive system with torque control is required.
	 
	 	 	Hole sizes anticipated to be drilled are 26”, 17 1/2”, 12 1/4”, 8 1/2” and 6”
with casing sizes of 20”, 13 3/8”, 9 5/8”, 7’ (liner or full string) and 5”
liner.
	 
	 	 	The wellhead systems will be 20” 3000psi x 13 5/8” 5000 psi × 11” 10,000 psi.
	 
	 	 	Contractor will employ local rig crew up to and including assistant driller
from Georgia. Company accepts that this will entail training by Contractor with
expatriate personnel and in fact Company requires doubling up the assistant
driller positions on the rig for a period until the contractor is able to
release them from the work. Contractor to provide full details of training
program proposed for the local crews.
	 
	 	 	Contractor will be required to provide, operate and maintain at the rig site
the following accommodation in addition to that for Contractor’s senior
personnel (i.e. Superintendent, Chief Mechanic, Chief Electrician and Medic
will be at Location at all times):

	 	–	 	Two by two compartments sleepers with shower and toilets for
Company supervisors, Company geologists and Company’s visitors.
	 
	 	–	 	One x two compartments office for Company supervisors and
geologists of sufficient size to include radio/communication equipment
	 
	 	–	 	Separate medical facility for routine and emergency medical use
with adequate equipment and supplies
	 
	 	–	 	Space adequate for a clinic/work/supply storage area (minimum 150
sq ft)

	 	 	A desk, examining bed, storage cabinets, small refrigerator, sink with hot/cold
water and bathroom.
Medical and diagnostic equipment and books to provide adequate primary and
supportive care for medical/surgical and burn cases, sufficient to stabilise
and transport a patient to the next appropriate site for medical
hospitalization. There is to be available at rig a full range of medications,
disposables and equipment to treat all minor conditions and stabilization of
trauma and acute medical conditions including respiratory and cardiac support.
	 
	 	 	Contractor to supply a qualified para medic/nurse/doctor with major
trauma/surgical experience. Note nearest emergency clinic is located in
Sagaredjo which is approximately 10 km away and in Tbilisi 60/70 km away from
rig location. Medic must be capable of stabilizing patient and escorting to
Sagaredjo or Tbilisi. Advice will be available from the clinic in Tbilisi or
Sagaredjo.
	 
	 	 	All units are to be good quality and to have adequate heating and air
conditioning, furniture, fixtures, bedding, wiring, plumbing etc and to be
capable of withstanding rig moves without damage.
	 
	 	 	Rig shall have its own telephone system with at least the following stations
(explosion proof where required):
Drill floor — Company supervisor’s office, Contractor supervisor’s office,
Geologist’s office, Mud logging unit, Mud pit area.

Contract No. GN - 070/RIG/NOC

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SCHEDULE V

Equipment, Materials, supplies and Services to be provided by Company (for day rate only)

	Part l	 	Equipment, Materials. Supplies and Services to be Provided by the Company
	 
	 	 	The Company shall provide the following equipment, materials,
supplies and services subject to the terms and conditions of the
Contract.

	 	1.1	 	All necessary Drilling Permit(s) in name of Company
associated with the drilling program. Contractor to provide
assistance where requested.
	 
	 	1.2	 	Cementing services, as required by the Company.
	 
	 	1.4	 	Well test unit associated equipment for production
testing, including separators and other test vessels.
	 
	 	1.5	 	Wire Line Logging and perforating services.
	 
	 	1.6	 	Miscellaneous specialist services required by the
Company in connection with the well support services, acidizing,
well testing and fracturing .etc
	 
	 	1.7	 	Construction of well Locations and access roads to suit rig
	 
	 	1.8	 	Fuel and water for operation of the units
	 
	 	1.9	 	Emergency medical and evacuation services
	 
	 	2.0	 	Casing, tubing and Downhole completion equipment and tools
	 
	 	2.1	 	Disposal of waste from Location
	 
	 	2.2	 	Fluid chemicals and Engineering
	 
	 	2.3	 	Site security services

	 	 	The Contractor shall provide free of charge to the Company suitable
service (compressed air, water pumping, electricity, crane, forklift
and roustabout) for the service companies’ equipment and
installations listed above and such further services as may be
required by the Company.
	 
	Part 2	 	Personnel

	 	o	 	The Company’s Commercial and Technical Representative in Georgia is Mr Alexandre Chichinadze, located at:

	 	 	 	70 Kostava str

3th Floor

Tbilisi

Georgia

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 42

 

SCHEDULE VI

Equipment, Materials, supplies and Services to be supplied by Contractor

Contractor Supplied Resources

	Part 1	 	(A) Equipment, Materials, Supplies & Services
	 
	 	 	(B) Rig and Contractor’s Equipment
	 
	Part 2	 	Personnel
	 
	Part 3	 	Base

PART 1 (A)  EQUIPMENT, MATERIALS, SUPPLIES & SERVICES

Equipment, Materials. Supplies and Services to be provided by the Contractor

The Contractor shall provide the following equipment, materials, supplies and
services subject to the terms and conditions of the Contract.

	1.1	 	Accommodation and messing for Contractor’s personnel
	 
	1.2	 	Camp Location construction if required.
	 
	1.3	 	Secure containerized storage for rig spares
	 
	1.4	 	Transportation of Contractor’s personnel and equipment to and from Location
	 
	1.5	 	All necessary permits for the rig and Contractor to carry out the services
	 
	1.6	 	Craneage and fork lift services at rig site for all equipment including
Company’s and other contractor’s equipment
	 
	1.7	 	Moving of all Contractor’s equipment.
	 
	1.8	 	All necessary equipments for running the casings. The contractor will be
responsible for running the casings.

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	Equipment list of GW89

	Item
	 	Contractor’s data
	RIG
	 	GW89
	Number:
	 	1 
	Type:
	 	2000HP
	Design:
	 	Baoji Petroleum Machinery Plant
	Owner:
	 	Great Wall Drilling Company
	Age:
	 	2 years
	Capacity:
	 	19,686 ft w/5"DP
	Type of Power:
	 	AC/DC-SCR
	A.SUB-STRUCTURE DERRICK ACCESSORIES

	A.1  Sub-structure	 	 
	Make and Type
	 	Baoji, DZ450/9-S1
	Height:
	 	30 ft
	Width:
	 	39 ft
	Maximum Mast set back
	 	485,009 lbs
	Max. Rotary Table set back
	 	1,012,310 lbs
	A.2  Derrick	 	 
	Type:
	 	Front opening, JJ450/45-K5
	Dimension:
	 	149 ft (height), top opening (front/side): 8.2 ft/7.2, base opening: 29 ft
	Hookload Capacity:
	 	1,012,310 lbs
	Number of Lines:
	 	12
	Tubular Capacity:
	 	21,655ft x 5"DP, 4 stands x
9"DC, 6 stands x 8"DC Wind load limited 10 grade
	Protection Crown Block
	 	Yes
	A.3  Crown Block	 	 
	Type:
	 	TC-450, 1 1/2", 6 main sheaves
	Capacity
	 	12 lines, 1,012,310 lbs
	A.4  Floor Winches	 	 
	Type:
	 	3/4" x 394', Pneumatic
	Model:
	 	Pneumatic
	Capacity:
	 	11,023 lbs
	Amount:
	 	1
	A.5  Floor Winches	 	 
	Type:
	 	3/4" x 394', Pneumatic
	Model:
	 	Pneumatic
	Capacity:
	 	11,023 lbs
	Amount:
	 	1
	A.6  Monkey Board Winch	 	 
	Type:
	 	0.5 ton
	Model:
	 	Pneumatic
	Amount:
	 	1
	A.7  Catwalk Winch	 	 
	Type:
	 	Wireline 3/4" x 394'
	Model:
	 	Pneumatic
	Capacity:
	 	11,023 lbs
	Amount:
	 	1
	A.8  Casing Stabbing Board	 	 
	Type:
	 	Adjustable
	Motor:
	 	Electrically operated
	Characteristics:
	 	Platform adjustable, from 22 ft to 47 ft
	A.9  Derrick Accessories	 	 

	1.4	 	Transportation of Contractor’s personnel and equipment to and from Location
	 
	1.5	 	All necessary permits for the rig and Contractor to carry out the services
	 
	1.6	 	Craneage and fork lift services at rig site for all equipment including
Company’s and other contractor’s equipment
	 
	1.7	 	Moving of all Contractor’s equipment.
	 
	1.8	 	All necessary equipments for running the casings. The contractor will be
responsible for running the casings.

Contract No. GN - 070/RIG/NOC

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	Description:
	 	Derrick Climber and Escape Line, Explosion-proof lighting and safety rails, Belly board with fingers
	B.HOISTING & ROTARY EQUIPMENT

	B.1  Drawworks	 	 
	Type:
	 	ZJ70D
	Model:
	 	ZJ70D
	Capacity:
	 	2000HP
	Principal Brake
	 	Brake Bands “disc brake”
	Aux. Brake
	 	DFS 70 air-cooled electromagnetic eddy-current brake
	Motors:
	 	Two, 1072 HP each
	Type of Drum
	 	Twin drum with LEBUS grooved
	Catheads:
	 	Hydraulic
	Capacity of Derrick
	 	1,012,310 lbs w/12 lines
	Crown-O-Matic
	 	TRTC300
	Drilling Line
	 	1- 1/2"
	Brake Cooler
	 	Water cooling
	B.2  Drilling Line	 	 
	Description:
	 	1- 1/2"
	Spool (Motorized)
	 	Hydraulic
	B.3  Swivel	 	 
	Type:
	 	SL450
	Model:
	 	SL450
	Capacity:
	 	1,289,682 lbs
	B.4  Traveling Block	 	 
	Type:
	 	YC450
	Model:
	 	YC450
	Pulleys
	 	6×60"
	Capacity
	 	1,021,310 lbs
	B.5  Hook	 	 
	Make:
	 	Lanshi, China
	Model:
	 	DG-450
	Capacity:
	 	1,021,310 lbs
	B.6  Rotary Table	 	 
	Make:
	 	Lanshi, China
	Model:
	 	ZP375
	Size (for 7000Mtvd):
	 	37 1/2", driven by drawworks
	B.7  Master Bushing	 	 
	Type:
	 	Split
	Model:
	 	Adequate for rotary
	B.8  Casing Bushings	 	 
	Type:	 	 
	Model:
	 	Adequate for 20" to 4 1/2" casing
	B.9  Elevator Links	 	 
	Capacity
	 	500 ton
	Amount
	 	1 pair
	Length
	 	3.8m
	B.10  Elevator Links	 	 
	Capacity
	 	350 tons
	Amount
	 	1 pair
	Length
	 	2.7m
	B.11  Bushing Insert	 	 
	Type	 	 
	Description
	 	API # 1, 2, 3
	B.12  Kelly Bushings	 	 
	Type:
	 	Roller type
	Model:
	 	CF-5-1/4"
	B.13  Kelly	 	 
	Type:
	 	Kelly by 5 1/4" X 45 ft
	Connections:
	 	6 5/8" Reg. LH by 5 1/2"f FH pin connection
	Amount:
	 	1

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	B.14  Kelly
Spinner         Kelly Spinner	 	 
	Type:	 	 
	Model:
	 	Q300
	Amount
	 	1
	B.15 Kelly Saver Sub	 	 
	Description:
	 	4 1/2"IF pin×5 1/2" box
	B.16 Hydraulic make-up break

out drill strings
	 	TD or hydraulic tong
	B.17	 	 
	B.18  Torque compensator
	 	See Top Drive
	B.19  Top Drive	 	 
	Capacity
	 	450 ton
	Motor
	 	ZL490/390
	Motor Drive
	 	670KW
	Pipe handler
	 	88.9—139.7mm
	Continuous torque
	 	32KN.M
	Breakout torque
	 	70KN.M
	Drilling pipe size
	 	5", 3-1/2"
	Maximum Rotary RPM
	 	228RPM
	Working pressure
	 	35Mpa
	Current Rate
	 	0-960A
	Connections
	 	4-1/2" I.F.
	C.  High Pressure System Of Mud Pumps And Stand Pipe

	C.1  Mud Pumps	 	 
	Type:
	 	Triplex/F-1600
	Make:
	 	Baoji Petroleum Plant
	Amount:
	 	2
	Motors:
	 	2 DC motors compatible to each Pump
	Minimum HP per pump:
	 	1600HP
	Liners
	 	150mm, 160mm, 170mm, 180mm
	Pulsation Damper
	 	5000 psi
	Pop Off Valve:
	 	3", 5000 psi
	Suction Valve:
	 	yes
	Discharge Valve
	 	Yes
	Pulsation Dampner:
	 	Yes
	C.2  Superchargers for pumps	 	 
	Type:
	 	SB 6"×8"-12 1/2"
	Characteristics:
	 	75HP
	Quantity or Amount:
	 	1 per pump(2)
	C.3  High Pressure lines	 	 
	Type:
	 	H type dual stand pipe
	Discharge lines
	 	4" from the pumps
	Working Pressure
	 	5000 psi
	Pipe
	 	Schedule 160
	C.4  Stand Pipe Circulation	 	 
	Type:
	 	H type dual stand pipe
	Characteristics:
	 	5" OD nominal; 5,000 psi
	Amount:
	 	2
	Valves:
	 	5,000 psi WP
	Connections:
	 	1 x 4" ID 1502 union, 5 x 2" connection.
	Maximum Pressure:
	 	5000 psi
	Stand Pipe:
	 	Stand Pipe 4" ID w/ connections
	Hose (standpipe)
	 	2 x 3-1/2"; 5000psi; length of hose compatible to the unit
	C.5  Cementation Stand Pipe
	 	No providing

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	D.  LOW PRESSURE MUD SYSTEM

	D.1  Mixing Hopper	 	 
	Type:
	 	Mud hopper with low pressure high shear rate
	Amount:
	 	2
	Capacity:
	 	Mixing capacity of 18 lbs/gal
	Location:
	 	Mud house or Mud mixing station
	Description:
	 	High efficiency sys. With mixing table independent pumps with general system

inspected to include: system to inject air, sys to connect directly to pre mix tank
	D.2  Chemical Pre Mix Tank	 	 
	Type:	 	 
	Capacity:
	 	12 bbl
	Description:
	 	Equipped with a chemical mixer
	D.3 Mixing Pumps	 	 
	Type:
	 	SB 6”×8”-12 1/2”
	Make:
	 	China
	Motor:
	 	74HP
	Amount:
	 	2
	D.4  Active Tanks	 	 
	Characteristics
	 	Vacuum trucks connection using butterfly vavles. Mud Jet Agitation System. Ladders,

Hand rails, covered walk way and rain protection.
	AMT1: 350 Bls
	 	1# tank:189bbl, divided 3
compartments for trip tank (57bbl), and trap and degasser

respectively
	AMT2: 430 Bls
	 	2# tank:440bbl, centrifuge
	AMT3: 400 Bls
	 	3# tank:440bbl
	D.5  Reserve Mud Tanks	 	 
	Reserve 1:
	 	4# tank:440bbl
	Reserve 2:
	 	5# tank:440bbl, divided 4 compartments, 2 for weighted, 2 for shearing
	Reserve 3: Diesel or Mineral
	 	6# tank:440bbl
	Reserve 4: Contingency tank

(reserve tank)
	 	7# tank:440bls
	D.6  Agitators	 	 
	Amount:
	 	11
	Make:
	 	TuHa Petroleum Plant
	Type:
	 	WNJ-15
	Motor:
	 	20 HP
	D.7  Water Tank	 	 
	Type:	 	 
	capacity:
	 	629bbl
	Number:
	 	1+1
	D.8 Trip Tank	 	 
	Type:	 	 
	capacity:
	 	63bls
	Incremental Volume:	 	 
	Indicator Level
	 	Include instrumentation
	D.9  Trip Tank Pump	 	 
	Type:
	 	2PN
	Make:
	 	China
	Motor:
	 	Electric Motor compatible
	Amount:
	 	1
	D.10  Degasser	 	 
	Type:
	 	Derrick 2001
	Make:
	 	USA
	Capacity:	 	 

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Page 47

 

	 	 	 
	D.11  Poor Boy Degasser	 	 
	Type:
	 	Vertical
	Characteristics:
	 	31.5” OD × 20’
height: Gas capacity: 3500m3/h, 100psi

Discharge line with atmospheric_eparator. Mounted to the side of the derrick and

discharged above the crown.

Inlet line: 4”

Outlet for gas (exit line): 2-7/8”

Outlet line for liquid: 8”
	D.12  Mud Lab
	 	yes
	Amount
	 	1
	D.13  Cellar Suction Pump	 	 
	Diaphragm pump
	 	IS80-50-200
	Cellar Jet
	 	6”
	D.14  Bar Hoppers	 	 
	Amount
	 	2
	Capacity
	 	1000 sacks for each
	D.15  Mud Collection Tray	 	 
	Characteristics
	 	Available
	D.16 Flow line and flow Nipple	 	 
	Characteristic
	 	12”
	D.17  Mud Analysis Sink and Table	 	 
	Characteristic
	 	Used for/with Mineral oil water or the Mud used. Installed over active tanks
	D.18  Shale Shaker	 	 
	Make & type
	 	USA, DERRICK 2000
	Number
	 	2
	Flowline Size & type
	 	12”
	Screens size
	 	One layer: 20-250
	D.19  Desander	 	 
	Make & type
	 	DERRICK America, FLO-LINE2000
	Number
	 	1
	diameter
	 	3×10”
	number
	 	2
	Flow rate capacity
	 	1500GPM
	D.20  Desilter	 	 
	Make & type
	 	DERRICK America, FLO-LINE2000
	Number
	 	1
	-diameter
	 	2×4”×12 cones or
1×4” 16 cones 12 cones
	-number
	 	1 set
	Flow rate capacity
	 	1200GPM
	D.21  Centrifuge	 	 
	Make & type
	 	LW450-860, China
	Number
	 	1
	Flow rate capacity
	 	40 M3/h

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	E.  POWER AND TRANSMISSION SYSTEM

	E.1  Diesel Motor	 	 
	Type:
	 	CAT3512A
	Amount:
	 	4
	Model:
	 	CAT3512A
	Power:
	 	1200KW each
	E.2  Generators	 	 
	Type:
	 	MTG 807
	Model:
	 	MTG 807
	Amount:
	 	4
	Capacity:
	 	1500KVA
	E.3  SCR House	 	 
	Make:
	 	Xi’an, China
	Model:
	 	USA, Ross Hill
	Number of SCR’s
	 	4: sufficient exits to install/for 16 trailers
	Transformers:
	 	600V/380V/220V
	Notes: Electrical connection should

have the capacity to hookup 16

trailers and all the equipment

of the business
contractors and all the solids

control and treatment of discharge

fluids and solids.
	F.  AUXILIARIES

	F.1  Handling Tools	 	 
	Pipe:
	 	Pipe Wrenches 12, 24 ,36, 48 and 60 (2 Each)

Chain tongs (2)

Hammer wrenches

Crescents wrench (Adjustable)
	Miscellaneous:
	 	Made for general use
	Brass sledge Hammer
	 	Min. 2, 4.5 and 8 Lbs Size
	Sledge Hammer
	 	Min. 2, 4.5 and 8 Lbs Size
	Industrial Brushes
	 	2
	F.2  Dog House	 	 
	Description:
	 	Complete with digital instruments the show the drilling parameters. Remote control

for the operation of BOP
	Type
	 	9m × 3m
	Make
	 	Baoji petroleum Machinery Plant
	F.3  Other Equipment	 	 
	Cat Walk
	 	70 ft Divide in two sections
	Pipe Racks
	 	Capable of holding 14,000’, Casing of 13 3/8”
	G.  WELL CONTROL SYSTEMS

	G.1  Diverter Lines System	 	 
	Type:
	 	5” drill pipe
	Characteristics:
	 	6” and 8” minimal angle to Vent
	Amount:

G.2  Mud cross 21 1/4
	 	Sufficient as required
	Characteristic
	 	21 1/4” with 6 and 8” lateral exits with their respective valves.
	G.3  Diverter Hydrill 21 1/4”	 	 
	Type:
	 	21 1/4”
	Working Pressure:
	 	2,000 psi
	Top Connection:
	 	21 1/4” × 2,000 PSI
	Bottom Connection:
	 	21 1/4” × 2,000 PSI
	Rubbers/Spacer
	 	21 1/4” × 2000 psi × 3 ft
	G.4  Annular Hydrill 13 5/8”	 	 
	Type:
	 	13 5/8”
	Working Pressure
	 	5000 psi
	Top Connection:
	 	13 5/8” × 5,000 psi flange
	Adapter:
	 	13 5/8” × 5,000 psi top/bottom flange,
	Bottom Connection:
	 	10000 psi
	Rubbers
	 	For Neoprene Yes
	G.5  BOP rams for 13 5/8”	 	 
	Amount:
	 	1 Double & Single
	Type:
	 	13 5/8”
	Working Pressure:
	 	10000 psi
	Top Connection:
	 	13 5/8” × 10,000 psi flange
	Bottom Connection:
	 	13 5/8” × 10,000 psi flange
	Adapter
	 	As required
	Rubbers
	 	Neoprene
	Note: Required to have scaffolding
for the installation of BOP’s

Each bracket flange should have all
nuts and bolts according to API standard.

Adapters for 3000 to 5000 psi
and 5000 to 10000 psi

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	G.6  BOP Rams for 13 5/8”	 	 
	5” rams
	 	2 sets
	Blind Rams
	 	1 set
	9 5/8, 7,5 1/2”	 	 
	5,4 1/2”, 3 1/2, 2 7/8” rams
	 	1 set each
	G.7  Mud Cross 13 5/8”	 	 
	Characteristics
	 	13 5/8” × 10000 psi with lateral exits 2 1/16” × 10000 psi choke line and 2 1/16 × 10000 psi kill line
	G.8  Kill Line	 	 
	Kill Lines
	 	3 1/16” × 10000 psi
	Kill Valve
	 	3 1/16” × 10000 psi manual
	Check valve
	 	2 9/16” × 10000 psi
	G.9  Choke Lines	 	 
	Choke Lines:
	 	3-1/16” × 10,000 psi (hose) 3 1/16” flange
	Choke Valves
	 	2-9/16” × 10000 psi psi manual
	HCR:
	 	2-9/16” × 10000 psi psi hydraulics
	G.10  Emergency Line	 	 
	Emergency line
	 	2 1/16” × 10000 psi
	Manual Valve
	 	(1) 2 1/16” × 10000psi
	Check Valve
	 	(1) 2 1/16” × 10000psi
	G.11  Bell Nipple	 	 
	Type:
	 	Vertical schedule 40 with flange head
	Characteristics:
	 	Minimum Diameter compatible with the size of BOP’s
	G.12  Accumulator	 	 
	Type:
	 	Air-drive and hydraulic-control, FKQ6407
	Make:
	 	Beijing, China
	Pressure of Accumulator:
	 	3000 psi
	No of Bottles:
	 	16 pieces, 40 liters each
	Measure of the Accumulator flow
	 	Air/electric motor
	Reserve Capacity:
	 	640 liters
	Electrical Pumps:
	 	(1) Triplex with 25 HP motors
	Number of Air Pumps:
	 	2
	Location of Control:
	 	Rig Floor
	G.13  Choke Manifold	 	 
	Characteristics:
	 	3-1/16” × 10,000 psi, H2S resistant
	Choke (Manual):
	 	(2xmin.) 2-9/16” × 10000 psi H2S resistant.
	Automatic Choke Valve:
	 	2-9/16 × 10,000 psi, H2S resistant
	Control Panel
	 	Hydraulic remote control panel 5000 psi. With two 5000 psi gauge

Manual control valve with 5000 psi gauge mounted on the truck
manifold, Open and close

gauge
	G.14  Inside BOP	 	 
	Type:
	 	Inside BOP
	Connections:
	 	4 1/2 and 3 1/2 IF
	Amount:
	 	2
	Dimensions
	 	6-5/8” × 20” / 4-3/4” × 18”
	Minimal internal Diameter
	 	1-3/8”
	G.15  Kelly Cock Valve	 	 
	Type:
	 	Kelly Cock — 10,000 psi
	Connections:
	 	(1) 6 5/8”, (2) 3 1/12 IF and (2) 4 1/2” IF
	G.16  Landing Sub Valve	 	 
	Characteristic:
	 	3 1/2” IF and 4 1/2” IF with a series 43 torpedo and fish
	G.17  Float Valves	 	 
	Dimensions:	 	 
	Connections:
	 	float subs 7 5/8”, 6 5/8”, 5 1/2”, × 4 1/2” Reg or equivalent. All required valve

with a pressure port outlet (Weep Hole)

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	G.18  Circulation Swedge	 	 
	Make:
	 	MuDanJiang,CHINA
	Connection:
	 	3 1/2 × 2” Weco (1502) and 4 1/2 × 2” Weco (1502)
	G.19  Hoist for lifting

BOP’sys
	 	yes
	G.20  Circulation Sub	 	 
	Connection
	 	4 1/2IF with a 2” side exit.
	H. RIG FLOOR EQUIPMENT

	H.1  Side Door Casing

Elevators	 	 
	Type:
	 	Side door
	Make:
	 	TaiXing,CHINA
	Casing Size:
	 	20”, 13 3/8”, 9
5/8”, 7”, 5”, 4 1/2”
	Capacity:
	 	150 ton, minimum
	Amount:
	 	2 for each casing size
	H.2  Casing Slips	 	 
	Type:
	 	Multivalve leaf type
	Make:
	 	TaiXing,CHINA
	Casing Size:
	 	20”, 13 3/8”, 9 5/8”, 7”, 5”, 4 1/2”
	Amount:
	 	1 for each casing size
	H.3 Single Joint Casing Elevators	 	 
	Type:
	 	Multivalve leaf type
	Make:
	 	TaiXing,CHINA
	Casing Sizes:
	 	20”, 13 3/8”, 9
5/8”, 7”, 5”, 4 1/2”
	Amount
	 	1 for each casing
	H.4  Casing Elevators/Slips

(Pneumatic)	 	 
	Type:
	 	RuDong, CHINA
	Make:
	 	Pneumatic Casing Elevator
	Capacity:
	 	450 ton
	Casing:
	 	13 3/8”, 11-3/4”, 9 5/8”, 7”, 5-1/2”, 5” and 4 1/2”
	Amount:
	 	One set (2 Slips and 1 elevator)
	H.5  Elevator Links	 	 
	Type:
	 	Single-joint
	Characteristics
	 	3 1/2” × 180”, 3 1/2” × 132” and 2-3/4” × 108”
	Capacity:
	 	500 ton and 350 tons
	Amount:
	 	1 of each type
	H.6  Drill Pipe and

Casing Tongs	 	 
	Type:
	 	“B”
	Make:
	 	RuDong, CHINA
	Range:
	 	2 3/8” — 20”
	H.7  DP Elevators	 	 
	Tubing Range
	 	2 3/8” — 5”
	Type:
	 	Drilling Pipe19.5 bls/ft
	Capacity
	 	350 Tons
	Amount
	 	1 set for each size
	H.8  Tubing Elevators	 	 
	Tubing Range
	 	2 3/8” — 5 1/2”
	Type:
	 	Tubing pipe
	Capacity
	 	250 Tons
	Amount
	 	1 of each
	H.9  Slips for DP	 	 
	Type:
	 	Tri-pieces type
	Make:
	 	RuDong, CHINA
	Tubing:
	 	3-1/2, 5”
	Amount:
	 	2 for each DP size

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 51

 

	 	 	 
	H.10  Drill Collar Slips	 	 
	Type:
	 	Mul-pieces type
	Make:
	 	RuDong, CHINA
	Portable Mechanisms:
	 	Compatible to the drill dollars and this annex
	Amount:
	 	1 for each drill collar
	H.11  Safety

Clamps/Drill collar clamp	 	 
	Type:
	 	Mul-pieces type
	Make:
	 	CHINA
	Characteristics:
	 	Compatible with the tubulars in annex A
	H.12  Internal

Calibre — Guage (Calipers)	 	 
	Characteristic
	 	Center Orifice
	Range
	 	For the tubulars in annex A
	H.13  Bit Breaker	 	 
	Type:
	 	Tricone Bits
	Sizes:
	 	26", 17-1/2", 12-1/4", 8-1/2", 6",
5-7/8"
	Amount:
	 	1 for each Bit size
	H.14  Mud Buckets	 	 
	Type:
	 	FP-5"/FP-4"
	Utilization:
	 	Drill Pipe sizes 5", 3-1/2",

with the collection/discharge hose
	H.15  Drill Pipe

Power Tong	 	 
	Type:
	 	ZQ203-100
	Range:
	 	5"-7"
	Description
	 	16.6Mpa, Torque 10-100kN.m
	H.16  Casing Power Tong	 	 
	Type:
	 	TQ13-3/8"-20
	Range:
	 	4"-13-3/8"
	Description
	 	16.6Mpa, Torque 10-100kN.m
	H.17  Bit Gauge and

Nozzle Pliers
	 	Available for all bit and nozzle size
	H.18  Casing/tubing

Drifts
	 	2-7/8" 6.5ppf tubing; 4-1/2" 11.6&13.5ppf; 7" 29&32ppf; 9-5/8" 47&53.5ppf; 13-3/8"
54.5&68ppf; 20" 106.5&133ppf casing.

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 52

 

	 	 	 	 	 	 	 	 	 
	I. DRILL PIPE

	I.1.  Drill Pipe
	 	 	 	 	 	 	 	 
	Amount:
	 	16,000 ft	 	10,000 ft
	OD, #/ ft, Range, Grade:

	 	5", 19.5lbs/ft, R-o
or N,
S-135
	 	3.5" 15.5lbs/ft, R-II, S-135

	Type Connection:

	 	4.5" IF (NC-50)
	 	3.5" IF (NC-38)

	Thread Protector

	 	Pin + box
	 	Pin + box

	Hardbanding:

	 	smooth
	 	smooth

	I.2  Pup Joints
	 	 	 	 	 	 	 	 
	OD, #/ft, Range, Grade:

	 	5", 19.5 lbs/ft, R-11, S-135
	 	3.5" 15.5 lbs/ft, R-11, S-135

	Length:

	 	4 1/2" IF (NC-50)
	 	3 1/2" IF (NC-38)

	5 ft long — Amount:
	 	1	 	1
	10 ft long — Amount:
	 	1	 	 	 	 
	15 ft long — Amount:
	 	1	 	 	 	 
	Pipe Thread Protectors:

	 	Pin + box
	 	Pin + box

	Hardbanding:

	 	Smooth
	 	Smooth

	I.3.  HWDP
	 	 	 	 	 	 	 	 
	Amount
	 	40	 	 	 	 
	OD, Range:

	 	5", R-o
	 	 	 	 
	Length:

	 	4 1/2" IF (NC-50)
	 	 	 	 
	Pipe Protectors

	 	Pin + box
	 	 	 	 
	Hardbanding:

	 	Smooth
	 	 	 	 
	I.4.  Drill Collars
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	OD

	 	9"
	 	8"

	ID:

	 	3"
	 	2-13/16"

	Long:

	 	30 ft
	 	30 ft

	Connection:

	 	7-5/8" Reg.
	 	6-5/8" Reg.

	Amount:
	 	6	 	12	 	 
	Low Torque:

	 	No
	 	No

	Spiral:

	 	Yes
	 	Yes

	Stress Relive Cut:

	 	Yes
	 	Yes

	Pipe Protectors:

	 	Pin + box
	 	Pin + box

	Elevator Recess:

	 	No
	 	no

	Lift Subs:

	 	Yes
	 	Yes

	Recessed Cut

	 	Yes
	 	Yes

	BSR

	 	2.25 - 2.75	 	 	 	 
	OD

	 	4 3/4"
	 	6 1/4"

	ID:

	 	2 1/4"
	 	2-13/16"

	Long:

	 	30 ft
	 	30 ft

	Connection:

	 	3 1/2" IF
	 	4IF(NC46)

	Amount:

	 	15	 	20
	Low Torque:

	 	No
	 	No

	Spiral:

	 	Yes
	 	Yes

	Stress Relive Cut:

	 	Yes
	 	Yes

	Pipe Protectors:

	 	Pin + box
	 	Pin + box

	Elevator Recess:

	 	no
	 	no

	Lift Subs:

	 	Yes
	 	Yes

	Recessed Cut

	 	Yes
	 	Yes

	BSR

	 	2.3 - 2.7	 	 	 	 
	Note this 2 sets above pipe should have internal plastic cover

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 53

 

	 	 	 	 	 
	I.5.  Bit Sub
	 	 	 	 
	Characteristics:

	 	2 per following
sizes, 7 5/8 Reg, 6 5/8 Reg, 4 1/2 Reg, 3 1/2 Reg
With a float valve recess cut each

	I.6.  X-O Subs
	 	 	 	 
	Characteristics:

	 	For all the Contractors equipment

	Shock sub & drilling jar

	 	Suitable to the BHA used

	J. INSTRUMENTATION

	J.1.  Driller’s Console
	 	 	 	 
	Model:

	 	Shanghai ShenKai

	Include:

	 	Weight Indicator EB

Mud pump Pressure Gauge

Pipe Tong wrench Torque Gauge

Rotary Torque gauge

(2) Stroke Counter

RPM

	J.2  Weight Indicator:
	 	 	 	 
	Type:

	 	EB

	Make:

	 	Shenkai

	J.3  Mud Pressure Gauge
	 	 	 	 
	Type:

	 	YT160A

	Make:

	 	BaoJi, China

	Description:

	 	0-5000 psi

	J.4  Torque Indicator
	 	 	 	 
	Make:

	 	Shenkai

	Capacity

	 	0-73809lb/ft

	J.5  RotaryTorque
Indicator
	 	 	 	 
	Type:

	 	USA, Varco

	Make:

	 	USA, Varco

	Range:

	 	0 — 500scale/0-36904 ft. lbs

	J.6  RPM Gauge
	 	 	 	 
	Make:

	 	USA, Varco

	Description:

	 	0-300RPM

	J.7.  Pumps Stroke
Counter
	 	 	 	 
	Type:

	 	Shanghai ShenKai

	Make:

	 	Shanghai ShenKai/China

	Description:

	 	0-200spm

	Amount:

	 	3
	J.8.  PVT System
(mud volume)
	 	 	 	 
	Type:

	 	Simens

	Make:

	 	Germany

	Description:

	 	Yes

	J.9.  Return Flow
Indicator
	 	 	 	 
	Type:

	 	Shanghai ShenKai

	Make:

	 	Shanghai ShenKai/China

	J.10.  Drilling
Indicator( Digital)
	 	 	 	 
	Type:

	 	Shanghai ShenKai

	Make:

	 	Shanghai ShenKai/China

	Capable of Recording:

	 	Weight of string

Hook load

Rotary RPM

Rotary Torque

ROP

Pump Pressure

Pumps strokes in operation

Tank level (PVT) with Sound Alarm

PumpStoke in Operation #2 (GPM)

	J.11.  TOTCO Deviation
Tool
	 	 	 	 
	Make & Type:

	 	Beijing China

	Range:

	 	0-10/0-20 Degrees. With clock and fishing head and fishing tool

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 54

 

	 	 	 	 	 
	K.  SAFETY EQUIPMENT

	K.1.  Personnel Protection
	 	 	 	 
	Coveralls

	 	Yes

	Gloves:

	 	Yes

	Hard Hat:

	 	Yes

	Steel Toed Boots:

	 	Yes

	Safety Glasses:

	 	Yes

	Safety Belts

	 	Yes

	Dust mask (Chemical)

	 	Yes

	Ear Plugs

	 	Yes

	K.2.  Eye Wash Station
	 	 	 	 
	Eye Wash Station

	 	Yes

	Amount:

	 	3
	Location:

	 	1 drill floor, 1 shaker, 1 mud mixing area

	K.3.  Fire Extinguishers
	 	 	 	 
	CO2:

	 	4kg 8 sets

	Large Powder

	 	Class ABC 35 kg portable wheel mounted 2 sets

	Small Powder

	 	8kg 18 units

	Foam

	 	Foam Actuators

	Fire Fighting water supply

	 	From rig drill water tank

	K.4.  Portable Fire Pump
	 	 	 	 
	Type:
	 	 	 	 
	Make:

	 	Shanghai, China

	Hoses:

	 	1 set of hoses to reach all areas of the rig

	Jets:

	 	Water

	K.5.  Fire Detection
System
	 	 	 	 
	Description:

	 	Smoke detector

	Location:

	 	Entire camp offices, eating areas, sleepers and trailers

	K.6.  H2S Detection
System
	 	 	 	 
	Make & Description:

	 	Fixed Installation, USA

	Amount & Location:

	 	(2) LEL, (2) H2S. On the rig floor and shakers

	K.7.  Portable Gas
Detector
	 	 	 	 
	Type:

	 	USA

	Description:

	 	Explosive digital detector of flammable vapors, Oxygen deficiency, toxicity and
presence of H2S with memory and transferable to microcomputer.

	K.8.  First Aid Equipment
	 	 	 	 
	Resuscitator

	 	1 x 30 min resuscitator

	Stretcher

	 	1 set

	Burn Protector

	 	5 set

	Portable Breathing Equipment

	 	5 set

	First Aid Kit

	 	2 set

	K.9.  Alarm System
	 	 	 	 
	Description:

	 	1 Set in English

	K.10.  30 minute portable
breathing system
	 	 	 	 
	Make:
	 	 	 	 
	Type:

	 	SCBA positive pressure

	Amount of equipment and
regulators

	 	10 — SCBA x 30 min.

	Amount of bottles:

	 	6
	Rechargeable tanks:

	 	Rechargeable

	K.11.  Breathing Mask
	 	 	 	 
	Description:

	 	Escape Mask (H2S & Hydrocabon)

	Amount:

	 	10
	K.12  Connections,
plugs, light switches etc
	 	 	 	 
	Type

	 	Anti-explosive

	L.  MISCELLANEOUS
	 	 	 	 
	L.1.  Platform Air
Compressors Station
	 	 	 	 
	Type:

	 	LS12-50HH

	Dimensions:

	 	9.5m x 3m
	Description:

	 	2 X electric air compressors

1 X cold start compressor

1 X air heater

2 X air tanks

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 55

 

	 	 	 	 	 
	L.2.  Air Compressor
	 	 	 	 
	Type:

	 	LS12-50HH,

	Make:

	 	America sullair

	Amount:

	 	2
	Motor:

	 	50HP

	Location:

	 	Air source purified device

	Air Heater

	 	Air cooler

	Characteristics

	 	230 STF at 125 psi

	L.3.  Cold Start
Compressor
	 	 	 	 
	Type:

	 	YAMAHA electrical/manual

	Make:

	 	YAMAHA

	Amount

	 	1
	L.4.  Sub-Structure
Air Tanks
	 	 	 	 
	Type:
	 	 	 	 
	Amount:

	 	2, 4 + 2.5m3
	Location:

	 	At rear of the Sub-Structure

	L.5.  Internal
Communications(No providing)
	 	 	 	 
	Type:
	 	 	 	 
	Utilization:
	 	 	 	 
	Location:
	 	 	 	 
	Amount

	 	6
	L.6.  Radio Stations
	 	 	 	 
	Type:

	 	Anti-explosive

	Antenna:

	 	9
	Amount:
	 	 	 	 
	L.7.  Speaker System

	 	yes

	Type:
	 	 	 	 
	Make:
	 	 	 	 
	Location:

	 	Rig floor

	Amount:
	 	 	 	 
	L.8.  Front End
Loader Forklift
	 	 	 	 
	Type

	 	Capacity 5 ton

	Make

	 	China

	Description

	 	Drilling Tubular Handling with Safety clamp

	Characteristics

	 	Four Wheel drive, Front loading

	Amount

	 	1
	L.9.  Portable
Water Tanks
	 	 	 	 
	Capacity of portable water tanks

	 	1 tank 250Bls and 1 tank 62bbl

	Filter System:

	 	1 X water filter system

	Hydo-Pneumatic Pump

	 	yes

	Electric Pump Motor

	 	Yes

	L.10 Industrial Water Tank Pumps
	 	 	 	 
	Make

	 	China

	Characteristic

	 	With exit connection to fire fighting system

	Type

	 	3" x 2" with 9" impeller

	Motor

	 	20 HP, 2900RPM

	Amount

	 	2
	L.11.  High Pressure
Cleaning System
	 	 	 	 
	Make:

	 	China

	Type:

	 	Multi use high pressure with hoses

	Capacity:

	 	36 gallons per min. 1500 psi

	Characteristics:

	 	Motor Insulated against explosion

	L.12.  Diesel System
	 	 	 	 
	Type:

	 	80m3
	Description:

	 	Necessary for rig operation w/pump

	L.13.  Storage House
(Dry Mud and Chemical)
	 	 	 	 
	Capacity

	 	400 sacks

	L.14.  Ditch Magnets
	 	 	 	 
	Amount

	 	1
	M. Top Drive
	 	 	 	 
	Make:

	 	VARCO

	Type:

	 	TDS-11SA

	Amount

	 	1
	Capacity

	 	800HP and 55,000lb.ft

	N. CEMENT SYSTEM

	 	Not applicable

	N.1 CEMENTING UNIT
	 	 	 	 
	type
	 	 	 	 
	Make
	 	 	 	 
	Maximum working pressure
	 	 	 	 
	Recirculating mixer, Make &

type, Capacity/performance
	 	 	 	 
	Displacement tanks, Number,

Volume/calibration
	 	 	 	 
	Supply lines for, mix

water, drilling water, mud
	 	 	 	 
	Discharge manifold, Lines

number & diameter, Working

pressure
	 	 	 	 
	Gauges, Make & type, Number,

Pressure range/units, Pressure

recording device
	 	 	 	 
	Densimeter
	 	 	 	 
	N.2 CEMENTING MANIFOLD ON
RIG FLOOR
	 	 	 	 
	Make & type

	 	No available

	Working pressure
	 	 	 	 
	End connection
	 	 	 	 
	N.3 CEMENT HEADS Working
pressure
	 	 	 	 

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 56

 

	 	 	 	 	 	 	 	 	 
	O. FISHING TOOLS

	Note: Fishing tools for all the contractor’s down hole equipments. As per equipment list of GW89. Please be kindly noted
that one set of fishing tool is used by both rigs.
	Taper taps

	 	3 1/2"
	 	 	2	 
	Taper taps

	 	4 1/2"
	 	 	2	 
	Taper taps

	 	5"
	 	 	2	 
	Die collars

	 	5"
	 	 	2	 
	Junk mills

	 	Φ290	 	 	2	 
	Junk mills

	 	Φ195	 	 	4	 
	Junk mills

	 	Φ145	 	 	2	 
	Junk sub

	 	280	 	 	1	 
	Junk sub

	 	195	 	 	1	 
	Junk sub

	 	143	 	 	1	 
	Fishing Magnet

	 	Φ200	 	 	1	 
	Fishing Magnet

	 	Φ290	 	 	1	 
	Fishing Magnet

	 	For 17-1/2" hole size
	 	 	1	 
	Fishing Magnet

	 	Φ195	 	 	1	 
	Reverse circulation junk basket

	 	Φ280	 	 	1	 
	Reverse circulation junk basket

	 	Φ195	 	 	1	 
	Reverse circulation junk basket

	 	Φ140	 	 	1	 
	Super fishing jar

	 	6-1/2"
	 	 	1	 
	Fishing bumper sub

	 	6-1/2"
	 	 	1	 
	Super fishing jar

	 	8"
	 	 	1	 
	Fishing bump sub

	 	8"
	 	 	1	 
	Overshot

	 	11-1/4"
	 	 	1	 
	Basket grapple

	 	Φ225.5	 	 	1	 
	Overshot

	 	10 3/4"
	 	 	1	 
	Basket grapple

	 	Φ200	 	 	2	 
	Mill control packer

	 	Φ206	 	 	2	 
	Basket grapple

	 	Φ174	 	 	1	 
	Mill control packer

	 	Φ181	 	 	1	 
	Basket grapple

	 	Φ156	 	 	1	 
	Mill control packer

	 	Φ162	 	 	1	 
	Overshot

	 	7 7/8"
	 	 	1	 
	Spiral grapple

	 	Φ156	 	 	2	 
	Spiral grapple control

	 	Φ161	 	 	2	 
	Spiral grapple

	 	Φ154	 	 	1	 
	Basket grapple

	 	Φ123	 	 	1	 
	Mill control packer

	 	Φ129	 	 	1	 
	Overshot

	 	5 5/8"
	 	 	1	 
	Basket grapple

	 	Φ57	 	 	1	 
	Mill control packer

	 	Φ62	 	 	1	 
	Basket grapple

	 	Φ70	 	 	2	 
	Mill control packer

	 	Φ75	 	 	1	 
	5 5/8" basket grapple

	 	Φ86	 	 	2	 
	Mill control packer

	 	Φ91	 	 	1	 
	5 5/8" Spiral grapple

	 	Φ117	 	 	1	 
	Spiral grapple control

	 	Φ122	 	 	1	 
	Releasing spear

	 	9 5/8"
	 	 	1	 
	Grapple

	 	Φ230	 	 	1	 
	Grapple

	 	Φ228	 	 	1	 
	Grapple

	 	Φ224	 	 	1	 
	Releasing spear

	 	7"
	 	 	1	 
	Grapple

	 	Φ163	 	 	1	 
	Grapple

	 	Φ160	 	 	1	 
	Releasing spear

	 	5 1/2"
	 	 	1	 
	Grapple

	 	Φ127	 	 	1	 
	Grapple

	 	Φ124	 	 	1	 

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 57

 

	 	 	 
	P.  COMPARTMENTS AND TRAILERS
	P.1.  Compartment

	 	Each trailer with 2 air conditioners
	Trailer 1: (Operator)

	 	8ft x 30ft. w/two compartments, One compartment for Company supervisors with
sufficient size to include radio/communication equipment, another compartment sleeper
with shower and toilet
	Trailer 2: (Operator)

	 	8ft x 30ft.w/two compartments, One compartment for Company geologists with
sufficient size to include radio/communication equipment, another compartment sleeper
with shower and toilet
	Trailer 1: (Meeting room)

	 	8ft x 30ft Office w/Meeting room

Note: 3 tables with chairs, 4 drawer file cabinet, 3 chairs for visitors, drinking
water dispenser, coffee table, coffee maker and 2 acrylic boards.
	Trailer 2: (Contractor)

	 	8ft x 30ft.w/two compartments. One compartment for senior personnel with shower and
toilet. Another compartment for chief mechanic and chief electrician
	Trailer 3-6: (Contractor)

	 	8ft x 30ft 2 rooms w/2 singles beds, 2 lockers and bath
Note: 2 room each with closet, 1 room with 2 single beds. Other room with lockers and
2 baths.
	Trailer 7-8: (Contractor)

	 	9ft x 30ft four compartments with 4 beds each compartment
each compartment with heater and air conditioner
	Trailer 9: (Contractor)

	 	9ft x 40ft two compartments. One for local kitchen, other for storage.
	Trailer 10: (Contractor)

	 	9ft x 40ft two compartments. One for local dining room, other for storage.
	Trailer 11: (Contractor)

	 	9ft x 40ft two compartments. One for laundry room, other for local employee’s bath
	Trailer 12: (Contractor)

	 	10ft x 33ft Chinese dining room with TV and air conditioner
	Trailer 13: (Contractor)

	 	10ft x 33ft Chinese kitchen
	Trailer 14: (Contractor)

	 	10ft x 33ft Chinese storage
	P.2 Tool shed
	 	 
	Type:
	 	 
	Dimensions:

	 	7m x 2.4m
	Description:

	 	Contractors parts and equipment
	P.3. Shop
	 	 
	Type:
	 	 
	Dimensions:

	 	7m x 2.4m
	Description:

	 	Mechanical and Electrical Shed and Clean and orderly Ventilation
	Q.WOOD-STEEL SUBSTRUCTURE BASE

	Description

	 	Wood-steel matting will be available for rig substructure, mud tanks, mud pumps, and
power plant

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 58

 

PART 2

CONTRACTORS PERSONNEL

The Contractor’s Commercial and Technical Representative in Georgia is Liu
Baihong, located in Patardzeuli, Georgia.

There are 48 rig personnel for the rig and 3 management personnel.

Details of positions are shown as the following:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Position
	 	Number Assigned to Job
	 	Nationality
	 	Total Assigned

	TOTAL
	 	 	27	 	 	 	 	 	 	 	51	 
	RIG:
	 	 	24	 	 	 	 	 	 	 	48	 
	Superintendent
	 	 	1	 	 	Chinese	 	 	2	 
	Toolpusher
	 	 	2	 	 	Chinese	 	 	4	 
	Chief Mechanic
	 	 	1	 	 	Chinese	 	 	2	 
	Chief Electrician
	 	 	1	 	 	Chinese	 	 	2	 
	Driller
	 	 	2	 	 	Chinese	 	 	4	 
	Asst Driller
	 	 	2	 	 	Georgia	 	 	4	 
	Derrickman
	 	 	2	 	 	Georgia	 	 	4	 
	Floorman
	 	 	4	 	 	Georgia	 	 	8	 
	Roustabout
	 	 	2	 	 	Georgia	 	 	4	 
	Mechanic
	 	 	2	 	 	Georgia	 	 	4	 
	Electrician
	 	 	2	 	 	Georgia	 	 	4	 
	Welder
	 	 	1	 	 	Georgia	 	 	2	 
	Rig Medic/HSE officer
	 	 	1	 	 	Chinese	 	 	2	 
	Camp Boss
	 	 	1	 	 	Chinese	 	 	2	 
	MANAGEMENT:
	 	 	3	 	 	 	 	 	 	 	3	 
	Project manager
	 	 	1	 	 	Chinese	 	 	1	 
	Deputy project manager
	 	 	1	 	 	Chinese	 	 	1	 
	Administrative manager
	 	 	1	 	 	Georgia	 	 	1	 

Note: the crew rotation schedule is 90 days on and 90 days off.

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 59

 

PART 3

CONTRACTORS BASE

The Contractor’s Office Bases are located in: Patardzeuli, Georgia

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 60

 

SCHEDULE VII

Checklist of Responsibilities for Services and Materials (for day rate contract only)

	 	 	 	 	 	 	 	 	 
	To be provided by Company, at Company cost 1
	To be provided by Contractor, reimbursed by Company 2
	To be provided by Contractor, at Contractor cost 3
	1.	 	EQUIPMENT	 	 	 	 
	1.1	 	Well Equipment	 	 	 	 
	1.1.1	 	Wellheads and associated equipment including:-	 	 	 	 
	

	 	(a)
	 	Wellhead Housings
	 	 	1	 
	

	 	(b)
	 	Casing Hangers
	 	 	1	 
	

	 	(c)
	 	Spacer Spools for BOP/Wellhead space out
	 	 	3	 
	

	 	(d)
	 	Wellhead Seal Assemblies
	 	 	1	 
	

	 	(e)
	 	Wear bushings
	 	 	1	 
	

	 	(f)
	 	Bell Nipples
	 	 	3	 
	

	 	(g)
	 	Xmas Tree
	 	 	1	 
	

	 	(h)
	 	X Overs to wellhead housings
	 	 	1/2	 
	1.1.2	 	Wellhead and Xmas Tree testing tools	 	 	1	 
	1.1.3	 	Cementing Unit	 	 	1	 
	1.1.4	 	Production tubing, cementing and associated Equipment
including:	 	 	1	 
	

	 	(a)
	 	Production tubing, sucker rods	 	 	 	 
	

	 	(b)
	 	Cement retainers	 	 	 	 
	1.1.5	 	Completion tools and equipment including:-	 	 	1	 
	

	 	(a)
	 	Packers, downhole pumps	 	 	 	 
	

	 	(b)
	 	Valves	 	 	 	 
	

	 	(c)
	 	Installation tools	 	 	 	 
	1.1.6	 	Permanent or special installations including services
and equipment for controlling blowouts	 	 	1	 
	1.17	 	Well testing equipment	 	 	1	 
	1.2	 	Downhole equipment	 	 	 	 
	1.2.1	 	Drill String items not listed in Schedule VI including:	 	 	 	 
	

	 	(a)
	 	Bits
	 	 	1	 
	

	 	(b)
	 	Stabilizers
	 	 	1	 
	

	 	(c)
	 	Reamers, under reamers
	 	 	1	 
	

	 	(d)
	 	Junk subs, casing scrapers
	 	 	3	 
	

	 	(e)
	 	Drill Collars
	 	 	3	 
	

	 	(f)
	 	Crossovers for Contractor’s
	 	 	3	 
	

	 	(g)
	 	Downhole equipment
	 	 	1	 
	1.2.2	 	Repair or replacement of drill string items lost
or damaged in hole	 	 	 	 
	

	 	(a)
	 	Due to Contractor’s default
	 	 	3	 
	

	 	(b)
	 	Due to Company’s default
	 	1 or 2

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	1.2.3	 	Coring equipment including:	 	 	1	 
	

	 	(a)
	 	Core Barrel	 	 	 	 
	

	 	(b)
	 	Coring bits	 	 	 	 
	1.2.4	 	Fishing tools as specified in Schedule VI	 	 	3	 
	1.2.5	 	Use of fishing tools as in case of
Contractor’s negligence.	 	 	3	 
	1.2.6	 	Inspection/Repair/replacement of fishing tools
in Schedule VI
except when fishing due to Contractors negligence.	 	 	2	 
	1.2.7	 	Fishing tools other than those specified in
Schedule VI as agreed by
Company Representative	 	1 or 2

	1.2.8	 	Swabbing equipment	 	1 or 2

	1.2.9	 	Special drill string and associated equipment not
listed in Schedule VI:	 	 	 	 
	

	 	(a)
	 	drill pipe, drill collars x over subs etc.
	 	1 or 2

	

	 	(b)
	 	fishing tools and jars
	 	1 or 2

	

	 	(c)
	 	tongs, slips and elevators
	 	1 or 2

	

	 	(d)
	 	B.O.P. pipe rams
	 	1 or 2

	

	 	(e)
	 	inspection of small drill string
pre-hire and post hire
	 	1 or 2

	

	 	(f)
	 	transport and handling of special drill string
	 	1 or 2

	1.3	 	Mud system equipment	 	 	 	 
	1.3.1	 	Basic mud test kit	 	 	3	 
	1.3.2	 	Vibrating screens for shale shakers and solids
control unit	 	1 or 2

	1.3.3	 	Mud pump fluid end parts	 	 	3	 
	1.3.4	 	Mud logging equipment	 	 	1	 
	1.4	 	BOP Equipment	 	 	 	 
	1.4.1	 	Seals in BOP equipment, initial supply in good condition	 	 	3	 
	1.4.2	 	Seals in BOP replacements including:	 	 	 	 
	

	 	(a)
	 	ram rubbers
	 	 	3	 
	

	 	(b)
	 	ram door seals
	 	 	3	 
	

	 	(c)
	 	ring gasket (bop to wellhead and between bops)
	 	 	3	 
	

	 	(d)
	 	kill and choke line gates, seals
	 	 	3	 
	

	 	(e)
	 	upper and lower kelly cocks
	 	 	3	 
	1.4.3	 	BOP control system parts and maintenance	 	 	3	 
	1.4.4	 	BOP control system and valve repair kits	 	 	3	 
	1.5	 	Miscellaneous equipment	 	 	 	 
	1.5.1	 	All spares, parts and services required for care
and maintenance of Company’s equipment	 	 	1	 
	1.5.2	 	Radio and communication equipment and charges for
Company use	 	 	1	 
	1.5.3	 	Well logging equipment	 	 	1	 
	

	 	(electric wireline services), including tool rental	 	 	 	 

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

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	1.5.4	 	Forklift	 	 	3	 
	1.5.5	 	Firefighting equipment — Location & camp	 	 	3	 
	1.5.6	 	Craneage for Contractor’s and Company’s equipment and
services at well Location	 	1 or 2

	1.5.7	 	Office/Living accommodation for Contractor Personnel	 	 	3	 
	1.5.8	 	Office/Living accommodation for Company and
other Contractor Personnel	 	 	 	 
	

	 	(a)
	 	up to ten persons
	 	 	3	 
	

	 	(b)
	 	more than ten persons
	 	1 or 2

	2.	 	CONSUMABLES	 	 	 	 
	2.1	 	Well consumables	 	 	 	 
	2.1.1	 	Mud related chemicals	 	 	1	 
	2.1.2	 	Cement	 	 	1	 
	2.1.3	 	Completion fluid	 	 	1	 
	2.1.4	 	Drilling water	 	 	1	 
	2.2	 	General consumables	 	 	 	 
	2.2.1	 	Lubes and greases for Contractor’s machinery
and equipment	 	 	3	 
	2.2.2	 	All other lubes, greases, etc. including:-	 	 	 	 
	

	 	(a)
	 	Production tubing thread lubricants
	 	 	1	 
	

	 	(b)
	 	B.O.P./Hydraulic fluid
	 	 	3	 
	2.2.3	 	Pipe dope	 	 	3	 
	2.2.4	 	Cleansing fluids, solvents etc.	 	 	3	 
	2.2.5	 	Supply of potable water	 	1 or 2

	2.2.6	 	Fuel	 	 	1	 
	2.2.7	 	Welding sets and consumables for maintenance
of Contractor’s equipment including:	 	 	3	 
	

	 	(a)	 	Gasses	 	 	 	 
	

	 	(b)	 	Rods	 	 	 	 
	

	 	(c)	 	Nozzles	 	 	 	 
	2.2.8	 	Welding consumable for Company’s requirement
including steel sheet, angles, pipe work etc.	 	1 or 2

	2.2.9	 	Fabrication materials including steel sheet,
angles, pipework etc. for Contractor’s requirements	 	 	3	 
	2.2.10	 	Fabrication materials including steel sheet,
angles, pipe work, etc. for Company’s requirements	 	 	2	 
	2.2.11	 	Paint and other surface coatings for
Contractor’s equipment	 	 	3	 

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

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	3.	 	SERVICES	 	 	 	 
	3.1	 	Well services	 	 	 	 
	3.1.1	 	Mud engineering and supervision	 	 	1	 
	3.1.2	 	Mud logging	 	 	1	 
	3.1.3	 	Electric logging services and perforating services	 	 	1	 
	3.1.4	 	Specialized fishing services	 	 	1	 
	3.1.5	 	Well testing services	 	 	1	 
	3.1.6	 	Geological services including log analysis
and core analysis	 	 	1	 
	3.1.7	 	Cementing, pumping services	 	 	1	 
	3.2	 	Inspection Services	 	 	 	 
	3.2.1	 	Drill string inspection prior to this Contract	 	 	3	 
	3.2.2	 	Drill string inspection during the currency of
this Contract and at completion of Work	 	1 or 2

	3.3	 	Rig services	 	 	 	 
	3.3.1	 	Drilling Location and access road	 	 	1	 
	3.3.3	 	Welding services beyond
those provided by any available Rig Welders	 	 	1	 
	3.4	 	Transport	 	 	 	 
	3.4.1	 	All road and rail transport for equipment and
services for
moving equipment of Company between Company’s
base and rig Location	 	 	1	 
	 	 	Transport of Contractor’s equipment to and
from well Location	 	 	3	 
	3.4.2	 	All road and air transport equipment and services for
moving personnel of Company	 	 	1	 
	 	 	Transport for Company’s rigsite equipment
during rig moves	 	1 or 2

	 	 	Transport for Contractor’s equipment during rig moves	 	 	3	 
	 	 	Transport for Contractor’s personnel during rig moves,
mobilization and demobilization operations	 	 	3	 
	3.5	 	Base and Site Facilities	 	 	 	 
	3.5.1	 	Base facilities including warehouse space
and open storage sufficient to meet Contractor’s
reasonable needs	 	 	3	 
	3.5.2	 	Site accommodation for Contractor’s personnel	 	 	3	 

Contract No. GN - 070/RIG/NOC

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	3.5.3	 	Site accommodation/facilities for Company’s personnel	 	1 or 2

	3.5.4.1	 	Toilet facilities	 	 	3	 
	3.5.4.2	 	Camp water	 	 	1	 
	3.5.5	 	Site Security	 	 	1	 
	3.5.6	 	Site services — drill water, waste/sewerage disposal	 	 	1	 
	3.5.8	 	Oil spill and clean up services for spills from
Contractor’s equipment	 	 	3	 
	3.6	 	Miscellaneous	 	 	 	 
	3.6.1	 	Overtime beyond normal work schedule and when
requested by Company	 	 	2	 
	3.6.2	 	Overtime and crew expenses arising from delay in
transport provided by Contractor	 	 	3	 
	3.6.3	 	Additional personnel required by Company	 	 	2	 
	3.6.4	 	At rig Location first aid medical services,
equipment and supplies	 	 	2	 
	3.6.5	 	All customs duties, fees, licences, taxes
or similar charges in connection with import
or export of equipment,
spare parts and supplies of Company and Contractor	 	 	1	 
	3.6.6	 	Care and cleaning of equipment of Company
placed at rig Location	 	 	3	 
	3.6.7	 	Labor at rig Location for loading and unloading
all equipment,
materials and supplies of Company and Contractor	 	 	3	 
	3.6.8	 	Automobile transport for Contractor’s personnel	 	 	3	 
	3.6.9	 	Fire fighting services for major incident	 	 	1	 

Contract No. GN - 070/RIG/NOC

Provision of Drilling Rig Services

Page 65

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