Document:

Exhibit 4.55

Exhibit 4.55

Form 3200-24

			
	(November 2001) 

	UNITED STATES

	 

DEPARTMENT OF THE INTERIOR

BUREAU OF LAND MANAGEMENT

OFFER TO LEASE AND LEASE FOR GEOTHERMAL RESOURCES Serial No. N80159

The undersigned (see reverse) offers to lease all or any of the lands in item 2 that are available for lease pursuant to the Geothermal Steam Act of 1970 (30 U.S.C  1001-10025)

Read Instructions Before Completing

1. Name Noramex Corp

Street 900 – 409 Granville Street

City, State, Zip Code Vancouver, B. C. Canada V6C 1TC

2. Surface managing agency if other than BLM:                                          Unit/ Project                                           

 

	
	RECEIVED NSO BLM

2005 JUN-6 AM11:12

 

Legal description of land requested (segregate by public domain and acquired lands):

T.

R.

Meridian  

State

County  

36N

34E

Mt. Diablo

Nevada

Humboldt

Section 28

All

640.00 Acres

				
	 
	 
	 
	Total acres applied for 640.00    

Percent U.S interest               

	Amount remitted:  Filing fee $ 75.00

	Rental fee $ 715.00

	 
	Total $   715.00                 

DO NOT WRITE BELOW THIS LINE

3. Land included in lease:

T. 

R.

 Meridian 

State 

County

	
	T. 36 N., R. 34 E., MDM Nevada

   sec 28, all.

Humboldt County

640.00 acres

Rental retained $640.00

		
	Described lands are not within a KGS/KGRA

	as of

	JUL 27 2006

	/s/

	Acting Deputy State Director, Minerals Management

Total acres in lease        

Rental retained $                          

In accordance with the above offer, or the previously submitted competitive bid, this lease is issued granting the exclusive right to drill for, extract, product, remove, utilize, sell, and dispose of all the geothermal resources in the lands described in item 3 together with the right to build and maintain necessary improvements thereupon, for a primary term of 10 years.  Rights granted are subject to applicable laws, the terms, conditions, and attached stipulations of this lease, the Secretary of the Interior’s regulations and formal orders in effect as of lease issuance and, when not inconsistent with lease rights granted or specific provisions of this lease, regulations and formal orders hereafter promulgated.

THE UNITED STATES OF AMERICA

Type of lease:

By                          /s/                                  

(Signing officer)

[    ] Noncompetitive

ACTING Deputy State Director, Minerals Management

JUL 27 2006

     

(Title)

(Date)

[    ] Competitive

EFFECTIVE DATE OF LEASE

AUG 01 2006

[    ]Other                                                            

        

(Continued on page 2)

4. 

(a) Undersigned certifies that:

(1) Offeror is a citizen of the United States; an association of such citizens; a municipality; or a corporation organized under the laws of the United States, any State or the District of Columbia; (2) All parties holding an interest in the offer are in compliance with 43 CFR 3200 and the authorizing Act; (3) Offeror’s chargeable interests, direct and indirect, do not exceed that allowed under the Act; and (4) Offeror is not considered a minor under the laws of the State in which the lands covered by this offer are located.

(b) 

Undersigned agrees that signature to this offer constitutes acceptance of this lease, including all terms, conditions and stipulations of which offeror has been given notice, and any amendment or separate lease that may cover any land described in this offer open to lease application at the time this  offer was filed but omitted for any reason from this lease.  The offeror further agrees that this offer cannot be withdrawn, wither in whole or part, unless the withdrawal is received by the BLM State Office before this lease, an amendment to this lease, or a separate lease, whichever covers the land described in the withdrawal, has been signed on behalf of the United States.

This offer will be rejected and will afford the offeror no priority if it is not properly completed and executed in accordance with the regulations, or if it is not accompanied by the required payments.  Title 18 U.S.C Sec. 1001 makes it a crime for any person knowingly and willfully to make to any Department or agency of the United States any false, fictitious or fraudulent statements or representations as to any matter within its jurisdiction.

		
	Duly executed this     3   day of June    xx 2005 

	/s/ Kim Niggemann

	 
	(Signature of Lessee or Attorney-in-fact)   

LEASE TERMS

			
	Sec. 1.  Rentals- Rentals shall be paid to the proper office of lessor in advance of each lease year until there is production in commercial quantities from the leased lands.  Annual rental rates per acre or fraction thereof are: $1 for noncompetitive leases and $2 for competitive leases.

     If this lease or a portion thereof is committed to an approved cooperative or unit plan which includes a well capable of producing leased resources, and the plan contains a provision for allocation of production, royalties shall be paid on the production allocated to this lease.  However, annual rentals shall continue to be due for those lands not within a participating area.

  Failure to pay annual rental, if due, on or before the anniversary date of this lease (or next official working day if office is closed) shall automatically terminate this lease by operation of law.  Rentals may be suspended by the Secretary upon a sufficient showing by lessee.

Sec. 2.  Royalties- Royalties shall be paid to proper office of lessor.  Royalties shall be computed in accordance with regulations and orders.  Royalty rates on production are: 10 percent for steam, heat, or energy; 5 percent for byproducts; and 5 percent for demineralized water

     Lessor reserves the right to establish reasonable minimum values on production after giving lessee notice and an opportunity to be heard.  Royalties shall be due and payable on the last day of the month following the month in which production occurred.

     A minimum royalty shall be due for any lease year beginning on or after the commencement of production in commercial quantities in which royalty payments aggregate less than $2 per acre.  Lessee shall pay such difference at the end of lease year.  This minimum royalty may be waived, suspended, or reduced, and the above royalty rates may be reduced for all or portions of this lease if the Secretary determines that such action is necessary to encourage the greatest ultimate recovery of the leased resources, or is otherwise justified.

Sec. 3.  Bonds- Lease shall file and maintain any bond required under regulations.

Sec. 4.  Diligence, rate of development, unitization, and drainage- Lessee shall perform diligent exploration as required by regulations and shall prevent unnecessary damage to, lost of, or waste or leased resources.  Lessor reserves right to specify rates of development and production in the public interest and to require lessee to subscribe to a cooperative or unit plan, within 30 days of notice, if deemed necessary for proper development and operation of the area, field, or pool embracing these leased lands.  Lessee shall drill and produce wells necessary to protect leased lands from drainage or pay compensatory royalty for drainage in amount determined by lessor.

Sec. 5.  Documents, evidence, and inspection- Lessee shall file with proper office of lessor, not later than (30) days, after effective date thereof, any contract or evidence of other arrangement for the sale or disposal of production.  At such times and in such form as lessor may prescribe, lessee shall furnish detailed statements showing amounts and quality of all products removed and sold, proceeds therefrom, and amount used for production purposes or unavoidably lost.  Lessee may be required to provide plats and schematic diagrams showing development work and improvements, and reports with respect to parties in interest, expenditures, and depreciation costs.

     In the form prescribed by lessor, lessee shall keep a daily drilling record, a log, and complete information on well surveys and tests and keep a record of subsurface investigations and furnish copies to lessor when required.  Lessee shall keep open at all reasonable times for inspection by any authorized officer of lessor, the leased premises and all wells, improvements, machinery, and fixtures thereon, and all books, accounts, maps, and records relative to operations, surveys, or investigations on or in the leased lands.  Lessee shall maintain copies of all contracts, sales agreements, accounting records, and documentation such as billings, invoices, or similar documentation that support costs claimed as manufacturing, preparation, and/or transportation costs.  All such records shall be maintained in lessee’s accounting offices for future audit by lessor.  Lessee shall maintain required records for 6 years after they are generated or, if an audit or investigation is underway, until released of the obligation to maintain such records by lessor.

     During existence of this lease, information obtained under this section shall be closed to inspection by the public in accordance with the Freedom of Information Act (5 U.S.C. 552)

Sec.6.  Conduct of operations- Lessee shall conduct operations in a manner that minimizes adverse impacts to the land, air, and water, to cultural, biological, visual, and other resources, and to other land uses or users.  Lessee shall take reasonable measures deemed necessary by

	 
	lessor to accomplish the intent of this section.  To the extent consistent with leased rights granted, such measures may include, but are not limited to, modification to siting or design of facilities, timing of operations, and specification of interim and final reclamation measures.  Lessor reserves the right to continue existing uses and to authorize future uses upon or in the leased lands, including the approval of easements or right-of-ways.  Such uses shall be conditioned so as to prevent unnecessary or unreasonable interference with rights of lessees.

     Prior to disturbing the surface of the leased lands, lessee shall contact lessor to be apprised of procedures to be followed and modifications or reclamation measures that may be necessary.  Areas to be disturbed may require inventories or special studies to determine the extent of impacts to other resources.  Lessee may be required to complete minor inventories or short term special studies under guidelines provided by lessor.  If in the conduct of operations, threatened or endangered species, objects of historic or scientific interest, or substantial unanticipated environmental effects are observed, lessee shall immediately contact lessor.  Lessee shall cease any operations that would result in the destruction of such species or objects.

Sec. 7.  Production of byproducts- If the production, use, or conversion of geothermal resources from these leased lands is susceptible of producing a valuable byproduct or byproducts, including commercially demineralized water for beneficial uses in accordance with applicable State water laws, lessor may require substantial beneficial production or use thereof by lessee.

Sec. 8.  Damages to property-Lessee shall pay lessor for damage to lessor’s improvements, and shall save and hold lessor harmless from all claims for damage or harm to persons or property as a result of lease operations.

Sec. 9.  Protection of diverse interests and equal opportunity- Lessee shall maintain a safe working environment in accordance with standard industry practices and take measures necessary to protect the health and safety of the public.  Lessor reserves the right to ensure that production is sold at reasonable prices and to prevent monopoly.

     Lessee shall comply with Executive Order No. 11246 of September 24, 1965, as amended, and regulations and relevant orders of the Secretary of Labor issued pursuant thereto:  Neither lessee nor lessee’s subcontractor shall maintain segregated facilities.

Sec. 10.  Transfer of lease interests and relinquishment of lease- As required by regulations, lessee shall file with lessor, any assignment or other transfer of an interest in this lease.  Lessee may relinquish this lease or any legal subdivision by filing in the proper office a written relinquishment, which shall be effective as of the date of filing, subject to the continued obligation of the lessee and surety to pay all accrued rentals and royalties.

Sec.11.  Delivery of premises- At such time as all or portions of this lease are returned to lessor, lessee shall place all wells in condition for suspension or abandonment, reclaim the land as specified by lessor, and within a reasonable period of time, remove equipment and improvements not deemed necessary by lessor for preservation of producible wells or continued protection of the environment.

Sec.12.  Proceedings in case of default- If lessee fails to comply with any provisions of this lease, and the noncompliance continues for 30 days after written notice thereof, this lease shall be subject to cancellation in accordance with the Act.  However, if this lease includes land known, to contain a well capable of production in commercial quantities, it may be cancelled only by judicial proceedings.  This provision shall not be construed to prevent exercise by lessor or any other legal and equitable remedy, including waiver of the default.  Any such remedy or waiver shall not prevent later cancellation for the same default occurring at any other time.

     Whenever the lessee fails to comply in a timely manner with any of the provisions of the Act, this lease, the regulations, or formal orders, and immediate action is required, the Lessor may enter on the leased lands and take measures deemed necessary to correct the failure at the expense of the Lessee.

Sec. 13.  Heirs and successors-in-interest- Each obligation of this lease shall extend to and be blinding upon, and every benefit hereof shall inure to, the heirs, executors, administrators, successors, or assigns of the respective parties hereto.

	 
	 
	(Form 3200-24, page 2)

NVN- 80159

BLM WINNEMUCCA FIELD OFFICE

GEOTHERMAL LEASE STIPULATIONS

Noncompetitive areas and all Known Geothermal Resource Areas (KGRA) will be open to geothermal leasing with the following restrictions:

Sage grouse: The following stipulations apply to protect sage grouse and their habitat. Known habitat is defined as those areas where sage grouse have been observed. Potential habitat is an areas where sage grouse may occur. Known Breeding habitat and Leks: February through June, but may vary on site specific basis. Avoid all activity within 3.3 km. (2 miles) of known leks during the mating season - March through May, or as determined by Field Office and Wildlife Personnel. No surface occupancy within 3.3 km (2 miles) of known leks at all times. Nesting Habitat and Brood-rearing habitats: (April through August per Interim NV Guidelines) and Winter Habitats: (October through March). Known Habitat: Avoid all development or exploration activities within 3.3 km (2 miles) or other appropriate distance based on site-specific conditions, of leks, or within 1 km. (0.6 mi.) of known nesting, brood-rearing and winter habitat. Potential Habitat: Avoid permanent occupancy of potential habitat. General Sage Grouse Stipulations: Prior to entry on any lease areas which include known or potential habitat, the lessee (operator) shall contact the appropriate BLM Field Office to discuss any proposed activities.

Controlled Or Limited Surface Use: (avoidance and/or required mitigation measures to be developed) Are applicable for all leases proposed in areas of crucial deer, antelope, and big horn sheep habitat during migration and critical fawning and kidding areas.

Other Biota: Prior to site development, a survey for invertebrates will be conducted on areas where geothermal surface expressions occur.

Threatened, Endangered or Sensitive Species:

No surface occupancy: No surface occupancy within 1 mile of occupied or identified potential Lahontan Cutthroat Trout (LCT) habitat.

Controlled Or Limited Surface Use: (avoidance and/or mitigation measures to be developed) The lease area may now or hereafter contain plants, animals, or their habitats determined to be threatened, endangered, or other special status species. BLM may recommend modifications to exploration and development proposals to further its conservation and management objective to avoid BLM-approved activity that will contribute to a need to list such a species or their habitat. BLM may require modifications to or disapprove proposed activity that is likely to result in jeopardy to the continued existence of a proposed or listed threatened or endangered species or result in the destruction or adverse modifications of a designated or proposed critical habitat. BLM will not approve any ground-disturbing activity that may affect any such species or critical habitat until it completes its obligations under applicable requirements of the Endangered Species Act, 16 U.S.C. 1531, as amended, including completion of any required procedure for conference or consultation.

	
	

RECEIVED

Bur. of Land Management

7:30 AM JUL 2 7 2006

NEVADA STATE OFFICE

RENO, NEVADA

Wild Horse and Burros.

Controlled or Limited Surface Use: (avoidance and/or mitigation measures to be developed.) If wild horse or burro populations are located on sites proposed for development, it may be necessary to avoid or develop mitigation measures to reduce adverse impacts to horses. These measures may include providing alternative water sources for horses of equal quality and quantity,

Migratory Birds: Surface disturbing activities during the migratory bird nesting season (March to July) may be restricted in order to avoid potential violation of the Migratory Bird Act. Appropriate inventories of migratory birds shall be conducted during analysis of actual site development. If active nests are located, the proponent shall coordinate with BLM to establish appropriate protection measures for the nesting sites which may include avoidance or restricting or excluding development during certain areas to times when nests and nesting birds will not be disturbed. During development and production phases, if artificial ponds potentially detrimental to migratory birds are created, these shall be fitted with exclusion devices such as netting or floating balls.

Vegetation

Controlled Or Limited Surface Use: (avoidance and/or mitigation measures to be developed). All areas of exploration and or development disturbance will be reclaimed including re-contouring disturbed areas to blend with the surrounding topography and using appropriate methods to seed with a diverse perennial seed mix. The seed mix used to reclaim disturbed areas would be "certified" weed free.

Riparian Areas: No surface occupancy within 650 feet (horizontal measurement) of any surface water bodies, riparian areas, wetlands, playas or 100-year floodplains to protect the integrity of these resources (as indicated by the presence of riparian vegetation and not actual water). Exceptions to this restriction maybe considered on a case-by-case basis if the BLM determines at least one of the following conditions apply: I) additional development is proposed in an area where current development has shown no adverse impacts, 2) suitable off-site mitigation will be provided if habitat loss is expected, or 3) BLM determines development proposed under any plan of operations ensures adequate protection of the resources. Noxious Weeds: During all phases of exploration and development, the lessee shall maintain a noxious weed control program consisting of monitoring and eradication for species listed on the Nevada Designated Noxious Weed List (NRS 555.010).

Cultural Resources

No surface occupancy: No surface occupancy within the setting of National Register eligible sites where integrity of setting is critical to their eligibility.

Controlled Or Limited Surface Use: (avoidance and/or mitigation measures to be developed). All surface disturbing activities proposed after issuance of the lease are subject to compliance with Section 106 of the National Historic Protection Act (NHPA) and it's implementation through the protocol between the BLM Nevada State Director and the Nevada State Historic Preservation Officer.

Native American

No surface occupancy: No surface occupancy within the setting of National Register eligible Traditional Cultural Properties (TCPs) where integrity of the setting is critical to their eligibility. For development and production phases, surface occupancy may be limited to a specific distance or precluded at hot springs, pending conclusion of the Native American consultation process.

All development Activities proposed under the authority of this lease subject to the requirement for Native American consultation prior to BLM authorizing the activity. Depending on the nature of the lease developments being proposed and the resources of concerns to tribes potentially effected, Native American consultation and resulting mitigation measures to avoid significant impacts may extend time frames for processing authorizations for development activities, as well as, change in the ways in which developments are implemented.

Paleontological Resources

Where significant paleontological resources are identified, mitigating measures such as

data recovery, restrictions on development, and deletion of some areas from development may be required on a case by case basis.

Water Resources

As exploration and development activities commence, the operator shall institute a hydrologic monitoring program. The details of the monitoring programs will be site specific and the intensity shall be commensurate with the level of exploration. For example, if the proponent will be conducting seismic studies the monitoring would be limited to the identification of water resources to be monitored as activities continue; if a drilling program were to be undertaken the number of aquifers encountered, their properties, their quality, and their saturated thickness would be documented. The information collected will be submitted to the Bureau of Land Management and will be used to support future NEPA documentation as development progresses. Adverse impacts to surface expressions of the geothermal reservoir (hot springs), and Threatened and Endangered Species habitat are not acceptable. The lessee will monitor the quality, quantity, and temperature of any hot springs or other water resource within the project area whenever they are conducting activities which have the potential to impact those resources. If adverse impacts do occur, BLM will require the lessee to take corrective action to mitigate the impact. Corrective action may include shutting down the operation. These are in addition to the other stipulations. These are LEASE stipulations, not operational, the information gathered under the monitoring stipulation will be used to identify future impacts at the operational stage.

Lands & Realty

No drilling, including exploration or development activities within linear Rights-of-Way

Hazardous Materials

Prior to exploration and development, an emergency response plan will be developed to include contingencies for hazardous material spills and disposal.

			
	/s/ Brian D. Fairbank

	 
	July 26, 2006

	Signature of Lessee

	 
	Date

NVN-80159

BLM WINNEMUCCA FIELD OFFICE

GEOTHERMAL LEASE STIPULATION

FOR SPECIAL STATUS SPECIES

Orcytes (Orcytes nevadansis), a sensitive species, has been identified in the area of this lease. Prior to approval of any ground disturbing activities BLM will require a field inventory to determine the presence of this species. If the species are present in the inventory area, BLM will require avoidance and/or mitigation measures.

			
	/s/ Brian D. Fairbank

	 
	July 26, 2006

	Signature of Lessee

	 
	Date

	
	

RECEIVED

Bur. of Land Management

7:30 AM JUL 2 7 2006

NEVADA STATE OFFICE

RENO, NEVADAExhibit 4.56

Exhibit
  4.56

  

Revised April, 2003

NOTE: This form contract is a suggested guide only and use of this form or any variation thereof shall be at the sole discretion and risk of the user parties.  Users of the form contract or any portion or variation thereof are encouraged to seek the advice of counsel to ensure that their contract reflects the complete agreement of the parties and applicable law.  The International Association of Drilling Contractors disclaims any liability whatsoever for loss or damages which may result from use of the form contract or portions or variations thereof. Computer generated form, reproduced under license from IADC.

INTERNATIONAL ASSOCIATION OF DRILLING CONTRACTORS

DRILLING BID PROPOSAL

AND

DAYWORK DRILLING CONTRACT – U.S.

		
	TO:

	Nevada Geothermal Power

	 
	Vancouver, BC

Please submit bid this drilling contract form for performing the work outlined below, upon the terms and for the consideration set forth, with the understanding that if the bid is accepted by

this instrument will constitute a contract between us.  Your bid should be mailed or delivered not later than 5 P.M. on August 17, 2006

to the following address:

590 E. St. George Blvd.

St. George, Utah 84770

THIS CONTRACT CONTAINS PROVISIONS RELATING TO INDEMNITY,

RELEASE OF LIABILITY, AND ALLOCATION OF RISK –

SEE PARAGRAPHS 4.9, 6.3(c), 10, 12, AND 14

This Contract is made and entered into on the date hereinafter set forth by and between the parties herein designated as “Operator” and “Contractor”

		
	OPERATOR:

	Nevada Geothermal Power

	Address:

	900 – 409 Granville Street

	 
	Vancouver, BC V6C 1T2

	CONTRACTOR:

	Black Gold Equipment &  Leasing LLC

	Address:

	590 E. St. George Blvd.

	 
	St. George, Utah 84770

IN CONSIDERATION of the mutual promises, conditions and agreements herein contained and the specifications and special provisions sat forth in Exhibit “A” and Exhibit “B” attached hereto and made a part hereof (The “Contract”), Operator engages Contractor as an Independent Contractor to drill the hereinafter designated well or wells in search of oil or gas on a Daywork Basis. 

For purposes hereof, the term “Daywork” or “Daywork Basis” means Contractor shall furnish equipment, labor, and perform services as herein provided, for a specified sum per day under the direction, supervision and control of Operator (inclusive of any employee, agent, consultant or subcontractor engaged by Operator to direct drilling operations).  When operating on a daywork basis, Contractor shall be fully paid at the applicable rates of payment and assumes only the obligations and liabilities stated herein.  Except for such obligations and liabilities specifically assumed by Contractor, Operator shall be solely responsible and assumes liability for all consequences of operations by both parties while on a Daywork basis, including results and all other risks or liabilities incurred in or incident to such operations. 

								
	1.

	LOCATION OF WELL:

	 
	 
	 
	 
	 

	 
	Well Name

	 
	 
	 
	 
	 

	 
	and Number:

	66 - 14

	 
	 
	 
	 

	 
	Parish/

	 
	 
	 
	Field

	 

Revised April, 2003

							
	 
	

County:

	

Humboldt

	

State:

	

Nevada

	

Name:

	

Blue Mountain Geothermal Project

	 
	Well location and 

	 
	Land description:

	T36N, R34E

	 
	 

	 
	 
	 
	 

	 
	 
	 

	 
	1.1 Additional Well Location or Areas:

	 
	 
	Well 38 – 14 Humboldt County, Nevada

Locations described above are for well and Contract Identification only and Contractor assumes no liability whatsoever for a proper survey or location stake on Operator’s lease.

2.

COMMENCEMENT DATE:

Contractor agrees to use reasonable efforts to commence operations for the drilling of the well by the _________ day of __________ 20 

or

Mutually agreeable date.    

3.

DEPTH:

3.1 Well Depth: The well(s) shall be drilled to a depth of approximately 4,000 feet, or to the production formation, whichever is deeper, but the Contractor shall not be required hereunder to drill said well(s)  below a maximum depth of negotiable feet, unless Contractor and Operator mutually agree to drill to a greater depth. 

4.

DAYWORK RATES:

Contractor shall be paid at the following rates for the work performed hereunder.

4.1 Mobilization: Operator shall pay Contractor a mobilization fee of $ -------- or a mobilization day rate of $ 16,500.00 day.  This sum shall be due and payable in full at the time the rig is rugged up or positioned at the well site ready to spud.  Mobilization shall include:

	
	Actual cost of trucks and cranes.

	 

4.2 Demobilization: Operator shall pay Contractor a demobilization fee of $ 33,000.00 or a demobilization day rate during tear down of $ ----------- day, provided however that no demobilization fee shall be payable if the Contract is terminated due to the total loss or destruction of the rig.  Demobilization shall include: See Exhibit “B” – Page 4; 7. OTHER PROVISION:

4.3 Moving Rate: During the time the rig is in transit to or from a drill site, or between drill sites, commencing on mutually agreeable date Operator shall pay Contractor a sum of $ 16,500.00 per twenty-four (24) hour day. 

4.4 Operating Day Rate: For work performed per twenty-four (24) hour day with 4 to 5 man crew the operating day rate shall be: 

									
	Depth intervals

	 
	 
	 
	 
	 
	 

	From

	 
	To

	 
	Without Drill Pipe

	 
	With Drill Pipe

	0

	 
	TD

	 
	$ 18,000.00

	per day

	 
	$ 18,000.00

	per day

	 
	 
	 
	 
	$

	per day

	$

	per day

	 
	 
	 
	 
	$

	per day

	 
	$

	per day

Using Operator’s drill pipe $ 18,000.00 per day.  Boiler $ N/A per hour utilized  

The rate will begin when the drilling unit is rigged up at the drilling location, or positioned over the location during marine work, and ready to commence operations and will cease when the rig is ready to be moved off the location. 

If under the above column “With Drill Pipe” no day rates are specified, the rate per twenty-four hour day when drill pipe is in use shall be the applicable rate specified in the column “Without Drill Pipe” plus compensation 

for any drill pipe actually used at the rates specified below, computed on the basis of the maximum drill pipe in use at any time during each twenty-four hour day.

Revised April, 2003

DRILL PIPE RATE PER 24-HOUR DAY

														
	 
	 
	 
	 
	 
	 
	 
	Directional or

Uncontrollable Deviated Hole

	 
	 
	 
	 

	Straight Hole

	 
	Size

	 
	Grade

	 
	 
	Size

	 
	Grade

	$

	per ft.

	 
	 
	 
	 
	 
	$

	per ft.

per ft.

	 
	 
	 
	 

	$

	per ft.

	 
	 
	 
	 
	 
	$

	 
	 
	 

	$

	per ft.

	 
	 
	 
	 
	 
	$

	per ft.

	 
	 
	 

Directional or uncontrolled deviated hole will be deemed to exist when deviation exceeds _________ degrees or when the change of angle exceeds ________ degrees per one hundred feet. 

Drill pipe should be considered in use not only when in actual use but also while it is being pocked up or laid down.  When drill pipe is standing in the derrick, it shall not be considered in use, provided, however, that if Contractor furnishes special strings of drill pipe, drill collars, and handling tools as provided for in Exhibit “A” , the same shall be considered in use at all times when on location or until released by Operator.  In no event shall fractions of an hour be considered in computing the amount of time drill pipe in use but such time shall be computed to the nearest hour, with thirty minutes or more being considered a full hour and less than thirty minutes not to be counted. 

4.5 Repair Time; In the event it is necessary to shut down Contractor’s rig for repairs, excluding routine rig servicing, Contractor shall be allowed compensation at the applicable rate for such shut down time up to a maximum of 4 hours for any one rig repair job, but not exceed 24 hours of such compensation for any calendar month.  Thereafter, Contractor shall be compensated at a rate of $ 8,000.00 per twenty-four (24) hour day.  Routine rig servicing shall include, but not be limited to, outing and slipping drilling line, changing pump or swivel expendables testing BOP equipment, lubricating rig, and 

4.6 Standby Time Rate: $ 15,840.00 per twenty-four (24) hour day.  Standby time shall be defined to include time when the rig is shut sown although in readiness to begin or resume operations but Contractor is waiting on orders of Operator or on materials, services or other items to be furnished by Operator. 

4.7 Drilling Fluid Rates: When drilling fluid of a type and characteristic that increases Contractor’s cost of performance hereunder, including, but not limited to oil-based mud or potassium chloride, are in use, Operator shall pay Contractor in addition to the operating rate specified above:

(a) $ --------- per man per day for Contractor’s rig-site personnel subsistence. 

(b) $ --------- per day additional operating rate: and 

(c) Cost of labor, material and services plus ---------- hours operating rate to clean rig and related equipment. 

4.8 Force Majeure Rate: $ 15,840.00 per twenty-four (24) hour day for any continuous period that normal operations are suspended or cannot be carried on due to conditions of Force Majeure as defined on Paragraph 17 hereof.  It is, however, understood that subject to Subparagraph 6.3 below, Operator can release the rig in accordance with Operator’s right to direct stoppage of the work, effective when conditions will permit the rig to be moved from the location.

4.9 Reimbursable Costs: Operator shall reimburse Contractor for the costs of material, equipment, work or services which are to be furnished by Operator as provided for herein but which for convenience are actually furnished by Contractor at Operator’s request, plus 10 percent for such cost of handling.  

When, at Operator’s request and with the Contractor’s agreement, the Contractor furnishes or subcontractors for certain items or services which Operator is required herein to provide, for purposes of the indemnity and release provisions of this Contract, said items or services shall be deemed to be Operator furnished items or 

services.  Any subcontractors so hired shall be deemed to be Operator’s contractor, and Operator shall not be relieved of any of its liabilities in connection therewith. 

4.10 Revision in Rates: The rates and/or payments herein set forth due to Contractor from Operator shall be revised to reflect the change in costs if the costs of any of the items hereinafter listed shall vary by more than five percent from the costs thereof on the date of this Contract or by the same percent after the date of any revision pursuant to this Subparagraph:

(a) Labor costs, including all benefits, of Contractor’s personnel;

(b) Contractor’s cost of insurance premiums;

(c) Contractor’s cost of fuel, including all taxes and fees; the cost per gallon//MCF being $ ---------; Operator furnishes fuel.

(d) Contractor’s cost of catering, when applicable;

(e) If Operator requires Contractor to increase or decrease the number of Contractor’s personnel; 

(f) Contractor’s cost of spare parts and supplies with the understanding that such spare parts and supplies constitute ------------ percent of the operating rate and that the parties shall use the U.S. Bureau of Labor Statistics Oil Field and Gas Drilling Machinery Producer Price Index (Series ID WPU119102) to determine to what extent a price variance has occurred in sold spare parts and supplies;

(g) If there is any change in legislation or regulations in the area in which Contractor is working or other unforeseen, unusual event that alters Contractor’s financial burden. 

Revised April, 2003

5.

TIME OF PAYMENT

Payment is due by Operator to Contractor as follows: 

5.1 Payment for mobilization, drilling and other work performed at applicable day rates, and all other applicable charges shall be due, upon presentation of invoice therefore, upon completion of mobilization, demobilization, rig release or at the end of the month in which such work was performed or other charges are incurred, whichever shall first occur.  All invoice may be mailed to Operator at the address hereinabove shown, unless Operator does hereby designates that such invoices shall be mailed as follows: See Exhibit “B” Page 4-7. Other Provision.  

5.2 Disputed Invoices and Late Payment: Operator shall pay all invoices within 30 days after receipt except that if Operator disputes an invoice or any part of thereof, Operator shall, within fifteen days after receipt of the invoice, notify Contractor of the item disputed, specifying the reason therefore, and payment of the disputed item may be withheld until settlement of the dispute, but timely payment shall be made of any undisputed portion.  Any sums (including amounts ultimately paid with respect to a disputed invoice) not paid within the above specified days shall bear interest at the rate of 1.5 percent of the maximum legal rate, whichever is less, per month from the due date until paid.  If Operator does not pay undisputed items within the above stated time, Contractor may suspend operations or terminate this Contract as specified under Subparagraph 6.3.

6.

TERM:

6.1 Duration of Contract: This Contract shall remain in full force and effect until drilling operations are completed on the well or wells specified in Paragraph 1 above, or for term of ----------, commencing on the date specified in Paragraph 2 above.

6.2 Extension of Term: Operator may extend the term of this Contract for ----------well(s) or for a period of ----------by giving notice to Contractor at least ------------days prior  to completion of the wall then being drilled or by ______________________________________________________________________________

 

6.3 Early Termination: 

(a) By Either Party: Upon giving of written notice, either party may terminate this Contract when total loss or destruction of the rig, or a major breakdown with indefinite repair time necessitate stopping operations hereunder.

(b) By Operator: Notwithstanding the provisions of Paragraph 3 with respect to the depth to be drilled, Operator shall have the right to direct the stoppage of the work to be performed by contractor hereunder at any time prior to reaching the specified depth, and even though Contractor has made no default hereunder.  In such event, Operator shall reimburse Contractor as set forth in Subparagraph 6.4 hereof. 

(c) By Contractor: Notwithstanding the provisions of Paragraph 3 with respect to the depth to be drilled, in the event Operator shall become insolvent, or be adjudicated a bankrupt, or file, by way of petition or answer, a debtor’s petition or other pleading seeking adjustment of Operator’s debts, under any bankruptcy or debtor’s relief laws now or hereafter prevailing, or if any such be filed against Operator, or incase a receiver be appointed of Operator or Operator’s property, or  any part thereof, or Operator’s affairs be placed in the hands of a Creditor’s Committee, or, following three business days prior written notice to Operator if Operator does not pay Contractor within the time specified in Subparagraph 5.2 all undisputed items due and owing.  

Revised April, 2003

Contractor may, at its option, elect to terminate further performance of any work under this Contract and Contractor’s right to compensation shall be as set forth in Subparagraph 6.4 hereof, or (2) suspend operations until payment is made by Operator in which event the standby time rate contained in Subparagraph 4.6 shall apply until payment is made by Operator and operations are resumed.  In addition to Contractor’s rights to suspend operations or terminate performance under this Paragraph, Operator hereby expressly agrees to protect, defend and indemnify Contractor from and against any claims, demands and causes of action, including all costs of defense, in favor of Operator, Operator’s co-venturers, co-leasees and joint owners, or any other parties arising out of any drilling commitments or obligations contained in any lease, farmout agreement or other agreement, which may be affected by such suspension or termination of performance hereunder.   

6.4 Early Termination Compensation:

(a) Prior to Commencement: In the event Operator terminates this Contract prior to commencement of operations hereunder, Operator shall pay Contractor as liquidated damages and not as a penalty a sum equal to the standby rate (Subparagraph 4.6) for a period of ------------ days or a lump sum of  $ ---------------

(b) Prior to Spudding: If such termination occurs after commencement of operations but prior to the spudding of the well, Operator shall pay to Contractor the sum of the following: (1) all expenses reasonably and necessarily incurred and to be incurred by Contractor by reason of the Contract and by reason of the premature termination of the work, including the expense of drilling or other crew members end supervision directly assigned to the rig; (2) ten percent (10%) of the amount of such reimbursable expenses: and (3) a sum calculated at the standby time rate for all time from the date upon which Contractor commences any operations hereunder down to such date subsequent to the date of termination as will afford Contractor reasonable time to dismantle its rig and equipment provided, however, it this Contract is for a term of more than one well or for a period of time, Operator shall pay Contractor, in addition to the above, the Force Majeure Rate, less any unnecessary labor, from that date subsequent to termination upon which Contractor completes dismantling its rig and equipment until the end of the term or -----------     

(c) Subsequent to Spudding: If such termination occurs after the spudding of the well, Operator shall pay Contractor (1) the amount for all applicable rates and all other charges and reimbursements due to Contractor; but  in no event shall such sum, exclusive of reimbursements due, be less than would have been earned for ----------- days at the applicable day rate “Without Drill Pipe: and the actual amount due for drill pipe used in accordance with the above rates: or (2) at the election of Contractor and in lieu of  the foregoing, Operator shall pay Contractor for all expenses reasonably and necessarily incurred and to be incurred by reason of this Contract and by reason of such premature termination plus a lump sum of $ ------------- provided, however, if this Contract is for a term of more than one well or for a period if time, Operator shall pay Contractor, in addition to the above , the Force Majeure Rate less any unnecessary labor from the date of termination until the end of the term or ----------------

7.

CASING PROGRAM

Operator shall have the right to designate the points at which casing will be set and the manner of setting, cementing and testing. Operator may modify the casing program, however, any such modification which materially increases Contractor’s hazards or costs can only be made by mutual consent of Operator and Contractor and upon agreement as to the additional compensation to be paid Contractor as a result thereof. 

8.

DRILLING METHODS AND PRACTICES:

8.1 Contractor shall maintain well control equipment in good condition at all times and shall use all reasonable means to prevent and control fires and blowouts and to protect the hole.

8.2 Subject to the terms hereof, and at Operator’s cost, at all times during the drilling of the well, Operator shall have the right to control the mud program and the drilling fluid must be of a type and have characteristics and be maintained by Contractor in accordance with the specifications shown in Exhibit “A” .

8.3 Each party hereto agrees to comply with all laws, rules, and regulations of any federal, state or local governmental authority which are now or may become applicable to that party’s operations covered by or arising out of the performance of this Contract.  When required by law, the terms of Exhibit “B”  shall apply to this Contract.  In the event any provision of this Contract is inconsistent with or contrary to any applicable federal, state or local law, rule or regulation, said provision shall be deemed to be modified to the extent required to comply with said law, rule or regulation, and as so modified said provision and this Contract shall continue in full force and effect.

Revised April, 2003

8.4 Contractor shall keep and furnish to Operator and accurate record of the work performed and formations drilled on the IADC-API Daily Drilling Report Form or other form acceptable to Operator.  A legible copy of said form shall be furnished by Contractor to Operator. 

8.5 If requested by Operator, Contractor shall furnish Operator with a copy of delivery tickets covering any material or supplies provided by Operator and received by Contractor. 

9.

INGRESS, EGRESS, AND LOCATION: 

Operator hereby assigns to Contractor all necessary rights of ingress and egress with respect to the tract on which the well is to be located for the performance by Contractor of all work contemplated by this Contract.  Should Contractor be denied free access to the location for any reason not reasonably within Contractor’s control, any time lost by Contractor as a result of such denial shall be paid for at the standby time rate.  Operator agrees at all times to maintain the road and location in such a condition that will allow free access and movement to and from the drilling site in an ordinarily equipped highway type vehicle.  If Contractor is required to use bulldozers, tractors, four-wheel drive vehicles, or any other specialized transportation equipment for the movement of necessary personnel, machinery, or equipment over access roads or on the drilling location, Operator shall furnish the same at its expense and without cost to Contractor.  The actual cost of repairs to any transportation equipment furnished by Contractor or its personnel damaged as a result of improperly maintained access roads or location will be charged to Operator.   Operator shall reimburse Contractor for all amounts reasonably expended by Contractor for repairs and/or reinforcement of reads, bridges and related or similar facilities (public and private) required as a direct result of a rig move pursuant to performance hereunder. Operator shall be responsible for any costs associated with leveling the rig because of location setting. 

10.

SOUND LOCATION:

Operator shall prepare a sound location adequate in size and capable of properly supporting the drilling rig, and shall be responsible for a casing and cementing program adequate to prevent soil and subsoil wash out.  It is recognized that Operator has superior knowledge of the location and access routes to the location, and must advise Contractor of any subsurface conditions, or obstructions (including, but not limited to, mines, caverns, sink holes, streams, pipelines, power lines and communication lines) which Contractor might encounter while on route to the location or during operations hereunder.  In the event subsurface conditions cause a cratering or shifting of the location surface, or if seabed conditions prove unsatisfactory to properly support the rig during marine operations hereunder, and loss or damage to the rig or its associated equipment results therefrom, Operator shall, without regard to other provisions of this Contract, including Subparagraph 14.1 hereof, reimburse Contractor for all such loss or damage including removal of debris and payment of Force Majeure Rate during repair and/or demobilization if applicable.   

11.

EQUIPMENT CAPACITY:

Operations shall not be attempted under any conditions which exceed the capacity of the equipment specified to be used hereunder or where canal or water depths are in excess of ------------feet.  Without prejudice to the provisions of paragraph 14 hereunder, Contractor shall have the right to make the final decision as to when an operation or attempted operation would exceed the capacity of specified equipment. 

12.

TERMINATION OF LOCATION LIABILITY:

When Contractor has concluded operations at the well location, Operator shall thereafter be liable for damage to property, personal injury or death of any person which occurs as a result of conditions of the location and Contractor shall be relieved of such liability: provided, however, if Contractor shall subsequently reenter upon the location for any reason. Including removal of the rig, any term of the Contract relating to such reentry shall become applicable during such period. 

13.

INSURANCE:

During the life of this Contract, Contractor shall at Contractor’s expense maintain, with an insurance company or companies authorized to do business in the state where the work is to be performed or through a self-insurance program, insurance coverages of the kind and in the amount set forth in Exhibit “A”, insuring the liabilities specifically assumed by Contractor in Paragraph 14 of this Contract.  Contractor shall procure from  the company or companies writing said insurance a certificate or certificates that said insurance is in full force and effect and that the same shall not be canceled or materially changed without ten (10) days prior written notice to Operator.  For liabilities assumed hereunder by Contractor, its insurance shall be endorsed to provide that the underwriters waive their right of subrogation against Operator.  Operator will, as well, cause its insurer to waive subrogation against Contractor for liability it assumes and shall maintain, at Operator’s expense, or shall self insure, insurance coverage as set forth in Exhibit “A” of the same amount as is required of Contractor, insuring the liabilities specifically assumed by Operator in Paragraph 14 of this Contract.  Operator shall procure from the company or companies writing sold insurance a certificate or certificates that sold insurance is in full force and effect and that the same shall not be canceled or materially changed without (10) days prior written notice to Contractor.  Operator and Contractor shall cause their respective underwriters to name the other additionally insured but only to the extent of the indemnification obligations assumed herein. 

Revised April, 2003

14.

RESPONSIBILITY FOR LOSS OR DAMAGE, INDEMNITY, RELEASE OF LIABILITY AND ALLOCATION OF RISK:

14.1 Contractor’s Surface Equipment: Contractor shall assume liability at all times for damage to or destruction of Contractor’s surface equipment, regardless of when or how such damage or destruction occurs, and Contractor shall release Operator of any liability for any such loss, except loss or damage under the provisions of Paragraph 10 or Subparagraph 14.3.

14.2 Contractor’s In-Hole Equipment: Operator shall assume liability at all times for damage to or destruction of Contractor’s in-hole equipment, including, but not limited to, drill pipe, drill collars, and tool joints, and Operator shall reimburse Contractor for the value of any such loss of damage: the value to be determined by agreement between Contractor and Operator as current repair costs or 100 percent of current new replacement cost of such equipment delivered to the well site. 

14.3 Contractor’s Equipment - Environmental Loss of Damage: Notwithstanding the provisions of Subparagraph 14.1 above, Operator shall assume liability at all times for damage to or destruction of Contractor’s equipment, resulting from the pressure of H2S, CO2 or other corrosive elements that enter the drilling fluids from subsurface formations or the use of corrosive, destructive or abrasive additives in the drilling fluids. 

14.4 Operator’s Equipment: Operator shall assume liability at all times for damage to or destruction of Operator’s or its co-ventures’, co-leasees’ or joint owners’ equipment, including, but not limited to, casing, tubing, well head equipment, and platform if applicable, regardless of when or how such damage or destruction occurs, and Operator shall release Contractor of any liability for any such loss or damage.

14.5 The Hole: In the event the hole should be lost or damaged, Operator shall be solely responsible for such damage to or loss of the hole, including the casing therein.  Operator shall release Contractor and its suppliers, contractors and subcontractors of any tier of any liability for damage to or loss of the hole, and shall protect, defend and indemnify Contractor and its suppliers, contractors and subcontractors of any tier from and against any and all claims, liability, and expense relating to such damage to or loss of the hole. 

14.6 Underground Damage: Operator shall release Contractor and its suppliers, contractors and subcontractors of any tier of any liability for, and shall protect, defend and indemnify Contractor, and its suppliers, contractors and subcontractors of any tier from and against any and all claims, liability, and expense resulting from operations under this Contract on account of injury to, destruction of, or loss or impairment of any property right in or to oil, gas, or other mineral substance or water, if at the time of the act or omission causing such injury, destruction, loss, or impairment, said substance had not been reduced to physical possession above the surface of the earth, and for any loss or damage to any formation,strate, or reservoir beneath the surface of the earth. 

14.7 Inspection of materials Furnished by Operator: Contractor agrees to visually inspect all materials furnished by Operator before using same and to notify Operator of any apparent defects therein.  Contractor shall not be liable for any loss or damage resulting from the use of materials furnished by Operator, and Operator shall release Contractor from, and shall protect, defend and indemnify Contractor from and against any such liability. 

14.8 Contractor’s Indemnification of Operator: Contractor shall release Operator of any liability for, and shall protect, defend and indemnify Operator from and against all claims, demands, and cause of action of every kind and character, without limit and without regard to the causes thereof or the negligence of any party or parties, arising in connection herewith in favor of Contractor’s employees or Contractor’s subcontractors of any tier (inclusive of any agent or consultant engaged by Contractor) or their employees, or Contractor’s invitees, on account of bodily injury, death or damage to property.  Contractor’s indemnity under this Paragraph shall be without regard to and without any right to contribution from any insurance maintained by Operator pursuant to Paragraph 13.  If it is judicially determined that the monetary limits of insurance required hereunder or of the indemnities voluntarily assumed under Subparagraph 14.5 (which Contractor and Operator hereby agrees will be supported either by available liability insurance, under which the insurer has no right of subrogation against the indemnities, or voluntary self-insured, in part of whole) exceed the maximum limits permitted under applicable law, it is agreed that said insurance requirements or indemnities shall automatically be amended to conform to the maximum monetary limits permitted under such law.  

14.9 Operator’s indemnification of Contractor: Operator shall release Contractor of any liability for, and shall protect, defend and indemnity Contractor from and against all claims, demands, and causes of action of every kind and character, without limit and without regard to the cause or causes thereof or the negligence of any party or parties, arising in connection herewith in favor of Operator’s employees of Operator’s contractors of any tier (inclusive of any agent, consultant or subcontractor engaged by Operator) or their employees, or Operator’s invitees, other than those parties identified in Subparagraph 14.8 on account of bodily injury, death or damage to property.  Operator’s indemnity under this Paragraph shall be without regard to and without any fight to contribution from any insurance maintained by Contractor pursuant to Paragraph 13.  If it is judicially determined that the monetary limits of insurance required hereunder or of the indemnities voluntarily assumed under Subparagraph 14.9 (which Contractor and Operator hereby agree will be supported either by available liability insurance, under which the insured has not right of subrogation against the indemnities, or voluntarily self-insured, in part or whole) exceed the maximum limits permitted under applicable law, it is agreed that said insurance requirements or indemnities shall automatically be amended to conform to the maximum monetary limits permitted under such law. 

Revised April, 2003

14.10 Liability for Wild Well: operator shall be liable for the cost of regaining control of any wild well, as well as for cost of removal of any debris and cost of property remediation and restoration, and Operator shall release, protect, defend and indemnify Contractor and its suppliers, contractors and subcontractors of any tier from and against any liability for such cost. 

14.11 Pollution and Contamination: Notwithstanding anything to the contained herein, except the provisions of Paragraphs 10 and 12, it is understood and agreed by and between Contractor and Operator that the responsibility for pollution and contamination shall be as follows:

(a) Contractor shall assume all responsibility for, including control and removal of, and shall protect, defend and indemnify Operator from and against all claims, demands and causes of action of every kind and character arising from pollution or contamination, which originates above the surface of the land or water from spills of fuels, lubricants, motor oils, pipe dope, paints, solvents, ballast, bilge and garbage, except unavoidable pollution from reserve pits, wholly in Contractor’s possession and control and directly associated with Contractor’s equipment and facilities. 

(b) Operator shall assume all responsibility for, including control and removal of, and shall protect, defend and indemnify Contractor and its suppliers, contractors and subcontractors of any tier from and against all claims, demands, and causes of action of every kind and character arising directly or indirectly from all other pollution or contamination which may occur during the conduct of operations hereunder, including, but not limited to, that which may result from fire, blowout, cratering, seepage or any other uncontrolled flow of oil, gas, water or other substances, as well as use or disposition of all drilling fluids, including, but not limited to, oil emulsion, oil base or chemically treated drilling fluids, contaminated cuttings or cavings, lost circulation and fish recovery materials and fluids. Operators shall release Contractor and its suppliers, contractors and subcontractors of any tier of any liability for the foregoing. 

(c) In the event a third party commits an act or omission which results in pollution or contamination for which either Contractor or Operator, for whom such party is performing work, is held to be legally liable, the responsibility therefore shall be considered, as between Contractor and Operator, to be the same as if the party for whom the work was performed had performed the same and all of the obligations respecting protection, defense, indemnity and limitation of responsibility and liability, as sat forth in (a)  and (b) above, shall be specifically applied. 

14.12 Consequential Damages: Subject to and without affecting the provisions of this Contract regarding the payment right and obligations of the parties or the risk of loss, release and indemnify rights and obligations of the parties, each party shall at all timed be responsible for and hold harmless and indemnify the other party from and against its own special, indirect or consequential damages, and the parties agree that special , indirect or consequential damages shall be deemed to include, without limitation, the following: loss of profit or revenue; costs and expenses resulting from business interruptions; loss of or delay in production; loss of or damage to the leasehold; loss of or delay in drilling or operation rights; cost of or loss of use of property; equipment, materials and services, including without limitation those provided by contractors or subcontractors of every tier or by third parties.  Operator shall at all times be responsible for and hold harmless and indemnify Contractor and its suppliers, contractors and subcontractors of any tier from and against all claims, demands and causes of action of every kind and character in connection with such special, indirect or consequential damages suffered by Operator’s co-owners, co-ventures, co-leasees, farmers, farmees, partners and joint owners.  

14.13 Indemnity Obligation: Except as otherwise expressly limited in this Contract, it is the intent of parties hereto that all releases, indemnity obligations and/or liabilities assumed by such parties under terms of this Contract,  including, without limitation, Subparagraphs 4.9 and 6.3 (c), Paragraphs 10 and 12, and Subparagraphs 14.1 through 14.12 hereof, be without limit and without regard to the cause or causes thereof, including, but not limited to, pre-existing conditions, defect or ruin of premises or equipment, strict liability, regulatory or statutory liability, products liability, breach of representation or warranty (express or implied), breach of duty (whether statutory, contractual or otherwise) any theory of sort, breach of contract, fault, the negligence of any degree or character (regardless of whether such negligence is sole, joint or concurrent, active, passive or gross) of any party or parties, including the party seeking the benefit of the release, indemnity or assumption of liability.  The indemnities, and releases and assumptions of liability extended by the parties hereto under the provisions of Subparagraphs 4.9 and 6.3 and Paragraphs 10,12 and 14 shall inure to the benefit of such parties, their co-ventures, co-leasees, joint owners, their parent, holding and affiliated companies and the officers, directors, stockholders, partners, managers representatives, employees, consultants, agents, servants and insurers of each.  Except as otherwise provided herein, such indemnification and assumptions of liability shall not be deemed to create any rights to indemnification in any person or entity not a party to this Contract, either as a third party beneficiary or by reason of any agreement of any agreement of indemnity between one of the parties hereto and another person or entity not a party to this Contract.

Revised April, 2003

15

AUDIT:

If any payment provided for hereunder is made on the basis of contractor’s costs, Operator shall have the right to audit Contractor’s books and records relating to such costs.  Contractor agrees to maintain such books and records for a period of two (2) years from the date such costs were incurred and to make such books and records readily available to Operator at any reasonable time within the period.

16.

NO WAIVER EXCEPT IN WRITING:

It is fully understood and agreed that none of the requirements of this Contract shall be considered as waived by either party unless the same is done in writing, and than only by the persons executing this Contract, or other duly authorized agent or representative of the party.

17.

FORCE MAJEURE:

Except as provided in this Paragraph 17 and without prejudice to the risk of loss, release and indemnity obligations under this Contract, each party to this Contract shall be excused from complying with the terms of this Contract, except for the payment of monies when due, if and for so long as such compliance is hindered or prevented by a Force Majeure Event.  As used in this Contract, “Force Majeure Event” includes: acts of God, action of the elements, wars (declared and undeclared), insurrection, revolution, rebellions or civil strife, piracy, civil war or hostile action, terrorist acts, riots, strikes, differences with workmen, acts of public enemies, federal or state laws, rules, regulations dispositions or orders of any governmental authorities having jurisdiction in the premises or of any other group, organization or informal association (whether or not formally recognized as a government), inability to procure material, equipment fuel or necessary labor in the open market, acute and unusual labor or material, equipment or fuel shortages, or any other causes (except financial) beyond the control of either party.  Neither Operator nor Contractor shall be required against its will to adjust any labor or similar disputes except in accordance with applicable law.  In the event that either party hereto is rendered unable, wholly or in part, by any of these causes to carry out its obligations under this Contract, it is agreed that such party shall give notice and details of Force Majeure in writing to the other party as promptly as possible after its occurrence.  In such cases, the obligations of the party giving the notice shall be suspended during the continuance of any inability so caused except that Operator shall be obligated to pay to Contractor the Force Majeure Rate provided for in Subparagraph 4.6 above.

18.

GOVERNING LAW:

This Contract shall be constructed, governed, interpreted, enforced and litigated, and the relations between the parties determined in accordance with the laws of Nevada. 

19.

INFORMATION CONFIDENTIAL:

Upon written request by Operator, information obtained by Contractor in the conduct of drilling operations on this well, including, but not limited to, depth, formations penetrated, the results of coring, testing and surveying, shall be considered confidential and shall not be divulged by Contractor or its employees, to any person, firm, or corporation other than Operator’s designated representatives. 

20.

SUBCONTRACTS:

Either party may employ other contractors to perform any of the operations or services to be provided or performed by it according to Exhibit “A”.

21.

ATTORNEY’S FEES:

If this Contract is placed in the hands of any attorney for collection of any sums due hereunder, or suit is brought on same, or sums due hereunder are collected through bankruptcy or arbitration proceedings, then the prevailing party shall be entitled to reasonable attorney’s fees and costs. 

22.

CLAIMS AND LIENS:

Contractor agrees to pay all valid claims for labor, material, services, and supplies to be furnished by Contractor hereunder, and agrees to allow no lien by such third parties to be fixed upon the lease, the well, or other property of the Operator of the land upon which said well is located. 

23.

ASSIGNMENT:

Neither party may assign the Contract without the prior written consent of the other, and prompt notice of any such intent to assign shall be given to the other party.  In the event of such assignment, the assigning party shall remain liable to the other party as a guarantor of the performance by the assignee of the terms of this Contract.  If any assignment is made that materially alters Contractor’s financial burden, Contractor’s compensation shall be adjusted to give effect to any increase or decrease in Contractor’s operating costs. 

Revised April, 2003

24.

NOTICES AND PLACE OF PAYMENT:

Notices, reports, and other communications required or permitted by this Contract to be given or sent by one party to the other shall be delivered by hand, mailed, digitally transmitted or telecopied to the address hereinabove shown.  All sums payable hereunder to Contractor shall be payable at its address hereinabove shown unless otherwise specified herein. 

25.

CONTINUING OBLIGATIONS: 

Notwithstanding the termination of this Contract, the parties shall continue to be bound by the provisions of this Contract that reasonably require some action or forbearance after such termination. 

26.

ENTIRE AGREEMENT:

The Contract constitutes the full understanding of the parties, and a complete and exclusive statement of the terms of their agreement, and shall exclusively control and govern all work performed hereunder.  All representations, offers, and undertakings of the parties made prior to the effective date hereof, whether oral or in writing, are merged herein, and no other contracts, agreements or work orders, executed prior to the execution of this Contract, shall in any way modify, amend, alter or change any of the terms or conditions set out herein.

27.

SPECIAL PROVISIONS:

All time spent waiting on trucks will be invoiced at standby rate.   

28.

ACCEPTANCE OF CONTRACT:

The foregoing Contract, including the provisions relating to indemnity, release of liability and allocation of risk of Subparagraphs 4.9 and 6.3(c), Paragraph 10 and 12, and Subparagraph 14.1 through 14.12, is acknowledged, agreed to and accepted by Operator this _______ day of _____ 20

		
	OPERATOR:

	Nevada Geothermal Power Company

	By:

	/s/ Brian D. Fairbank

	Title:

	President

The foregoing Contract, including the provisions relating to indemnity, release of liability and allocation or risk of subparagraphs 4.9, 6.3(c), Paragraphs 10 and 12, and Subparagraphs 14.1 through 14.12, is acknowledged, agreed to and accepted by Contractor this 17 day of August 2006

which is the effective date of this Contract, subject to rig availability, and subject to all of its terms and provisions, with the understanding that it will not be binding upon Operator until Operator has noted its acceptance, and with the further understanding that unless said Contractor thus executed by Operator within ____________ days of the above date Contractor shall be in no manner bound by its signature thereto. 

		
	CONTRACTOR:

	Black Gold Equipment & Leasing LLC

	By:

	/s/

	 
	 

	Title:

	Managing Partner

Revised April, 2003

EXHIBIT “A”

To Daywork Contract dated August 11, 2006

Operator Nevada Geothermal Power Contractor Black Gold Equipment & Leasing LLC

Well Name and Number Blue Mountain Geothermal Project 66-14

SPECIFICATIONS AND SPECIAL PROVISIONS

1.

CASING PROGRAM (See Paragraph 7)

OPERATOR’S DISCRETION

													
	 
	Hole

Size

	 
	Casing Size

	 
	Weight

	 
	Grade

	 
	Approximate

Setting Depth

	 
	Walt on Cement

Time

	 

	Conductor

	36

	in.

	30

	in.

	 
	lbs/ft.

	J-55

	 
	40

	ft.

	AS PER OPERATOR

	hrs.

	Surface

	26

	in.

	20

	in.

	55

	lbs/ft.

	K-55

	 
	250

	ft.

	 
	hrs.

	Protection

	17.5

	in

	13 3/8

	in.

	68

	lbs/ft.

	K-55

	 
	2500

	ft.

	 
	hrs.

	 
	 
	in

	 
	in.

	 
	lbs/ft.

	 
	 
	 
	ft.

	 
	hrs.

	Production

	121⁄2 

	in

	9 5/8 

	in.

	40

	lbs/ft.

	J-55

	 
	4000

	ft.

	 
	hrs.

	Liner

	 
	in

	 
	in.

	 
	lbs/ft.

	 
	 
	 
	ft.

	 
	hrs.

	 
	 
	in

	 
	in.

	 
	lbs/ft.

	 
	 
	 
	ft.

	 
	hrs.

2.

MUD CONTROL PROGRAM (See Subparagraph 8.2)

OPERATOR’S DISCRETION

											
	Depth Interval

(ft.)

	 
	 
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	Weight 

(lbs./gal.)

	 
	Viscosity 

(Secs)

	 
	Water Loss

(cc)

	From

	 
	To

	 
	Type Mud

	 
	 
	 
	 
	 
	 

	0

	 
	250

	 
	 

	 
	 

	 
	 

	 
	 

	250

	 
	1500

	 
	 

	 
	 

	 
	 
	 
	 

	1500

	 
	2500

	 
	 
	 
	 
	 
	 
	 
	 

	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

	 

	 
	 

	 
	 

	 
	 

	 
	 

	 
	 

		
	Other mud specifications:

	Operator to provide mud program with Mud Engineer.

	 

	 

	 

	 

INSURANCE (See Paragraph 13)

3.1 Adequate Workers’ Compensation Insurance complying with State Laws applicable or Employers’ Liability insurance with limits of $ 1,000,000 covering all of Contractor’s employees working under this Contract. 

3.2 Commercial  (or Comprehensive) General Liability Insurance, including contractual obligations as respects this Contract  and proper coverage for all other obligations assumed in this Contract.  The limit shall be $ 2,000,000 combined single limit per occurrence for Bodily Injury and Property Damage.

3.3 Automobile Public Liability Insurance with limits of $ 1,000,000 for the death or injury or each person and $ 1,000,000 for each accident: and Automobile Public Liability Property Damage Insurance with limits of $ 1,000,000 for each accident. 

3.4 In the event operations are over water, Contractor shall carry in addition to the Statutory Worker’s Compensation Insurance, endorsements covering liability under the Longshoremen’s & Harbor Worker’s Compensation Act and Maritime liability including maintenance and cure with limits of $ ----------- for each death or injury to one person and $ ------------- for any one accident. 

3.5 Other Insurance: Contractor shall provide certificates of insurance as per 13 of the Daywork Drilling Contract naming Nevada Geothermal Power Co. and Nevada Geothermal Power Inc. as additional insurers to the coverage required herein.

Revised April, 2003

4.

EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY CONTRACTOR:

The machinery, equipment, tools, materials, supplies, instruments, services and labor hereinafter listed, including any transportation required for such items, shall be provided at the well location at the expense of Contractor unless otherwise noted by this Contract. 

4.1 Drilling Rig

Complete drilling rig, designed by Contractor as its Rig No. 20X, the major items of equipment being:

Drawworks: Make and Model See attached inventory

Engines: Make, Model, and H.P. GMC 12V-71 500 HP

No. on Rig 1

Pumps: No. 1 Make, Size, and Power Ideco 700 mm 6”x16”,  Twin GMC 671 New Rebuilt 

No. 2 Make, Size, and Power GD GXN, 5.5”x14”, Twin GMC 671 New Rebuilt

Mud Mixing Pump: Make, Size, and Power Pump #2

Boilers: Number, Make, H.P. and W.P. N/A

Derrick or Mast: Make, Size, and Capacity Pemco Model 112-300c: 280,000 w/6 line block

    300,000 w/8 line block

Substructure; Size and Capacity

Rotary Drive: Type Driveline

									
	Drill Pipe: Size

	4 1⁄4 

	in.

	31

	ft.; Size:

	 
	in.

	 
	ft. x hole tool

Drill Collars: Number and Size 14 – 6” IF Tool Joint 

Blowout Preventers: TO BE FURNISHED BY OPERATOR

							
	Size

	 
	Series or Test Pr.

	 
	Make and Model

	 
	Number

	Per Operator

	 
	 
	 
	 
	 
	 

	 

	 
	 

	 
	 

	 
	 

	 

	 
	 

	 
	 

	 
	 

	 

	 
	 

	 
	 

	 
	 

	B.O.P. Closing Unit:

	 
	TO BE FURNISHED BY OPERATOR

	B.O.P. Accumulator:

	 
	TO BE FURNISHED BY OPERATOR

		
	4.2

	Derrick timbers.

	4.3

	Normal strings of drill pipe and drill collars specified above.

	4.4

	Conventional drift indicator.

	4.5

	Circulating mud pits.

	4.6

	Necessary pipe racks and rigging up material.

	4.7

	Normal storage for mud and chemicals.

	4.8

	Shale Shaker

	4.9

	4.3 Drill pipe 6,500’ of 4 1⁄2 x hole Drill collars 14-6”

	4.10

	 

	4.11

	 

	4.12

	 

	4.13

	 

	4.14

	 

	4.15

	 

	4.16

	 

	4.17

	 

Revised April, 2003

5.

EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY OPERATOR:

The machinery, equipment, tools, materials, supplies, instruments, services and labor hereinafter listed, including any transportation required for such items, shall be provided at the well location at the expense of Operator unless otherwise noted by this Contract.

		
	5.1

	Finish and maintain adequate readway and/or canal to location, right-of-way for fuel and water lines, river crossings, highway crossings, gates and cattle guards.

	5.2

	Stake location, clear and grade location, and provide turnaround, including surfacing when necessary.

	5.3

	Test tanks with pipe fittings.

	5.4

	Mud storage tanks with pipe and fittings. 

	5.5

	Separator with pipe and fittings.

	5.6

	Labor and materials to connect and disconnect mud tank, test tank, and separator.

	5.7

	Labor to disconnect and clean test tanks and separator.

	5.8

	Drilling mud, chemicals, lost circulation materials and other additives.

	5.9

	Pipe and connections for oil circulating lines.

	5.10

	Labor to lay, bury and recover oil circulation lines.

	5.11

	Drilling bits,reamers, reamers cutters, stabilizers and special tools.

	5.12

	Contract flashing tool services and tool rental.

	5.13

	Wire line core bits or heads, core barrels and wire line core catchers or required.

	5.14

	Conventional core bits, core catchers and core barrels.

	5.15

	Diamond core barrel with head.

	5.16

	Cement and cementing service.

	5.17

	Electrical wireline logging services.

	5.18

	Directional, callper, or other special services.

	5.19

	Gun or jet perforation services.

	5.20.

	Explosives and shooting devices.

	5.21

	Formation testing, hydraulic fracturing, acidizing and other related services.

	5.22

	Equipment for drill stem testing.

	5.23

	Mud logging services.

	5.24

	Sidewall coring services.

	5.25

	Welding service for welding bottom joints of casing, guide shoe, float shoe, float collar and in connection with installing of well head equipment if required.

	5.26

	Casing, tubing, liners, screen, float collars, guide and float shoes and associated equipment.

	5.27

	Casing scratches and centralizers. 

	5.28

	Well head connections and all equipment to be installed in or well or on the premises for use in connection with testing, completion and operation of well.

	5.29

	Special or added storage for mud and chemicals.

	5.30

	Casinghead, API series, to conform to that shown for the blowout preventers specified in Subparagraph 4.1 above.

	5.31

	Blowout preventer testing packoff and testing services.

	5.32

	Replacement of BOP rubbers, elements and seals, if required, after initial test. 

	5.33

	Casing Thread Protectors and Casing Lubricants.

	5.34

	H2S training and equipment as necessary or as required by law.

	5.35

	Site specific systems.

	5.36

	Conventional drift indicator.

	5.37

	Shale Shaker.

	5.38

	On Site Communication, type Cellular and Internet.

	5.39

	 

	5.40

	 

	5.41

	 

	5.42

	 

	5.43

	 

	5.44

	 

	5.45

	 

	5.46

	 

	5.47

	 

	5.48

	 

	5.49

	 

	5.50

	 

Revised April, 2003

6.

EQUIPMENT, MATERIALS, AND SERVICES TO BE FURNISHED BY DESIGNATED PARTY: 

The machinery, equipment, tools, materials, suppliers, instruments, services, and labor listed as the following numbered items, including any transportation required for such items unless otherwise specified, shall be provided at the well location and at the expense of the party hereto as designated by an X mark in the appropriate column. 

						
	 
	 
	 
	To Be Provided By And

At The Expense Of

	 
	Item

	 
	Operator

	 
	Contractor

	6.1

	Cellar and Runways 

	 
	X

	 
	 

	6.2

	Ditches and sumps 

	 
	X

	 
	 

	6.3

	Fuel (located at location)

	 
	X

	 
	 

	6.4

	Fuel Lines (length RIG PUMP GEN)

	 
	 
	 
	X

	6.5

	Water at source, including required permits

	 
	X

	 
	 

	6.6

	Water well, including required permits

	 
	X

	 
	 

	6.7

	Water lines, including required permits

	 
	X

	 
	 

	6.8

	Water storage tanks 300 bbl capacity

	 
	 
	 
	X

	6.9

	Potable water

	 
	X

	 
	 

	6.10

	Labor to operate water well or water pump

	 
	X

	 
	 

	6.11

	Maintenance or water well, if required

	 
	X

	 
	 

	6.12

	Water Pump

	 
	IF REQUIRED

	 
	 

	6.13

	Fuel for water pump

	 
	IF REQUIRED

	 
	 

	6.14

	Mats for engines and boilers, or motors and mud pumps

	 
	IF REQUIRED

	 
	 

	6.15

	Transportation of Contractor’s property:

	 
	 
	 
	 

	 
	Move in

	 
	X

	 
	 

	 
	Move out

	 
	X

	 
	 

	6.16

	Materials for “boxing in” rig and derrick 

	 
	N/A

	 
	 

	6.17

	Special strings of drill pipe and drill collars as follows:

	 
	X

	 
	 

	 
	 

	 
	 
	 
	 

	 
	 

	 
	 
	 
	 

	6.18

	Kelly joints, subs, elevators, tongs and slips and BOP rams for use with special drill pipe

	 
	X

	 
	 

	6.19

	Drill pipe protectors for Kelly joint and each joint of drilling pipe running inside of Surface Casing as required, for use with normal strings of drill pipe

	 
	IF REQUIRED

	 
	 

	6.20

	Drill pipe protectors for Kelly joint and drill running inside of Protection Casing

	 
	IF REQUIRED

	 
	 

	6.21

	Rate of penetration recording device

	 
	 
	 
	X

	6.22

	Extra labor for running and cementing casing (Casing crews)

	 
	X

	 
	 

	6.23

	Casing tools

	 
	X

	 
	 

	6.24

	Power casing tongs

	 
	X

	 
	 

	6.25

	Laydown and pickup machine

	 
	X

	 
	 

	6.26

	Tubing tools

	 
	X

	 
	 

	6.27

	Power tubing tong

	 
	X

	 
	 

	6.28

	Crew Boats, Number

	 
	N/A

	 
	 

	6.29

	Service Barge

	 
	N/A

	 
	 

	6.30

	Service Tug Boat

	 
	N/A

	 
	 

	6.31

	Rat Hole

	 
	X

	 
	 

	6.32

	Mouse Hole

	 
	X

	 
	 

	6.33

	Reserve Pits

	 
	X

	 
	 

	6.34

	Upper Kelly  Cock

	 
	 
	 
	X

	6.35

	Lower Kelly Valve

	 
	 
	 
	X

	6.36

	Drill Pipe Safety Valve

	 
	 
	 
	X

	6.37

	Inside Blowout Preventer

	 
	X

	 
	 

	6.38

	Drilling hole for or driving for conductor pipe

	 
	X

	 
	 

	6.39

	Charges, cost of bonds for public roads

	 
	X

	 
	 

	6.40

	Portable Toilet

	 
	X

	 
	 

	6.41

	Trash Receptacle 

	 
	X

	 
	 

	6.42

	Linear Motion Shale Shaker

	 
	X

	 
	 

	6.43

	Shale Shaker Screens

	 
	X

	 
	 

	6.44

	Mud Cleaner

	 
	IF REQUIRED

	 
	 

	6.45

	Mud/Gas Separator

	 
	IF REQUIRED

	 
	 

	6.46

	Desander

	 
	IF REQUIRED

	 
	 

	6.47

	Desilter

	 
	IF REQUIRED

	 
	 

	6.48

	Degasser

	 
	IF REQUIRED

	 
	 

	6.49

	Centrifuge 

	 
	X

	 
	 

	6.50

	Rotating Head

	 
	X

	 
	 

	6.51

	Rotating Head Rubbers

	 
	X

	 
	 

	6.52

	Hydraulic Adjustable Choke

	 
	X

	 
	 

	6.53

	Pit Volume Totalizer (if required)

	 
	X

	 
	 

	6.54

	Communication, type Cellular an Internet

	 
	X

	 
	 

	6.55

	Forklift, capacity if required

	 
	X

	 
	 

	6.56

	Corrosion inhibitor for protecting drill string

	 
	X

	 
	 

	6.57

	Drill pipe inspection at conclusion of project 

	 
	X

	 
	 

	6.58

	Trenching

	 
	X

	 
	 

	6.59

	Wildcat autodriller if required

	 
	X

	 
	 

	6.60

	Pason unit if required

	 
	X

	 
	 

Revised April, 2003

7.

OTHER PROVISION:

4.2 Demobilization:

Demobilization fee of $ 33,000.00 and actual cost of trucks and cranes for the rig to be demobilized to St. George, UT or actual cost of trucks and cranes to demobilize rig to highway I-80.

5.

Time of Payment

Payment for 30 days of Day Rate at $ 19,800.00 per day for a total of $ 594.000.00, plus Mobilization and Demobilization cost as per Paragraph 4.1 and 4.2  will be paid in advance at the time of contract acceptance by Operator .

Mud Pump expendables “High Temperature” will be furnished by Operator.

Drill pipe and drill collors will be inspected prior to commencement and will be paid for by Contractor for all Inspection Services.

Damages to drill pipe and drill collars will be the responsibility of Operator to repair or replace in like condition. 

Operator will inspect drill pipe and drill collars upon completion and will be paid for by Operator.

Damages to piping valves will be the responsibility of Operator. 

Additional Toolpusher will be an additional $ 1,800.00 per day.  If required by Operator. 

Subsistence: One Hundred $ 100.00 per man per day will be paid by Operator.

Revised April, 2003

EXHIBIT “B”

(See Subparagraph 8.3)

The following clauses, when required by law, are incorporated in the Contract by reference as if fully set out

(1)

The Equal Opportunity Clause prescribed in 41 CFR 80-1.4

(2)

The Affirmative Action Clause prescribed in 41 CFR 80-230.4 regarding veterans and veterans of the Vietnam era. 

(3)

The Affirmative Action Clause for handicapped workers prescribed in 41 CFR 80-741.4.

(4)

The Certification of Compliance with Environmental Land prescribed in 40 CFR 15.20.

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