Document:

ex10x27.htm

Exhibit 10.27

 

 

	 	

  

P.O. Box 17805

Denver, CO 80217

tel (303) 292-1206

fax (800) 886-3898

www.ensignenergy .com

 

April 19, 2013

 

Synergy Resources Corporation 

20203 Hwy 60

Platteville, CO 80651

 

Attn: Mr. Ed Holloway and Mr. Bill Scaff

 

	

Re: 

	
Drilling Contract -Ensign USD Rig 17 

Horizontal 4-well Drilling Program 

Weld County, Colorado

Dear Mr. Holloway and Mr. Scaff:

 

 

Please find enclosed two copies of the Drilling Contract covering your referenced program.  Upon execution of both copies, please return one copy to my attention at your earliest convenience.

 

Ensign looks forward to the opportunity of assisting you to fulfill your drilling program goals.

 

Should you have any questions or concerns, please call me at (303)292-1206.

Sincerely,

 

 

/s/ Brandon Lorenz

Brandon Lorenz 

Drilling Manager

 

BL/hh Enclosures

 

 

"Performance Excellence - Second to None"

 

  

  

  

 

	

      United States Drilling

	DRILLING CONTRACT

 

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:	Synergy Resources Corporation 
	 	Address:	

20203 Hwy 60

Platteville, CO 8065 l

 

  

  

	 	OPERATOR:	Ensign United States Drilling Inc.
	 	Address:	

1700 Broadway, Suite 777

Denver, CO 80290

  

IN CONSIDERATION of the mutual promises, conditions and agreements herein contained and the specifications and special .provisions set 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 in search of oil or gas on a Turnkey Basis.

For purposes hereof, the term "Turnkey" or "Turnkey Basis" means Contractor shall furnish equipment, labor, and perform services as herein provided to drill a well, as specified by Operator, to the Turnkey Depth. Subject to terms and conditions hereof, payment to Contractor at a stipulated price is

earned upon attaining such Turnkey Depth and completion of the other obligations of Contractor hereunder. While drilling on a Turnkey Basis, Contractor shall direct, supervise and control drilling operations and assumes certain liabilities to the extent specifically provided herein. Notwithstanding that this is   a Turnkey Contract, Contractor and_ Operator recognize that certain portions of the operations as hereinafter designated, may be performed 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 as being applicable during Daywork operations. 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:                        Horizontal  4 well program         (B.L.)     (W.S.)

Parish/County :       Weld             State:       CO          Field Name:  __________________________

Well location and land description:                T2-6NR64-68W                        

The above is 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:

2.1.  Contractor agrees to use reasonable efforts to commence operations for the drilling of the well by the     15      day  of   May     , 20    13       or   _______________________.

2.2 Notwithstanding any provision in this Contract to the contrary, in the event Operator fails, for any reason (including, but not limited to, Force Majeure), to permit Contractor to commence operations for the drilling of the well by Contractor may, at its option, elect to terminate this Contract, and Contractor's right to compensation shall be as set forth herein.

 

3.  FURNISHED ITEMS:

All items to be furnished by OPERATOR pursuant to Exhibit A and any additional material, equipment, special tools, supplies and services not specifically required to be furnished by CONTRACTOR but proper to the drilling and completion of the well shall be timely furnished at the drill site by the OPERATOR at OPERATOR'S cost. Time lost because of the failure of OPERATOR to furnish timely any items required to be furnished by OPERATOR according to Exhibit A, shall be paid for at daywork rates applicable when the time is lost.

 

4.  OPERATOR agrees:

(a) To pay CONTRACTOR for the work performed, services rendered, rig time, and the materials, equipment and supplies furnished by CONTRACTOR according to the rates specified in Exhibit A. Daywork rates and the daywork provisions of this contract shall apply to any work requested by OPERATOR and performed by CONTRACTOR when the work exceeds the limits provided for in Exhibit A Payment due hereunder shall be made within thirty (30) days of receipt of CONTRACTOR'S invoices. Amounts not paid within said time shall bear interest from the due date at the rate of fifteen percent (15%) per annum not to exceed the legal rate of interest.

 

(b) OPERATOR shall reimburse CONTRACTOR for the cost of material, equipment, work or services which are to be furnished by OPERATOR as provided herein but which for convenience are actually furnished by CONTRACTOR. Such charges shall be subject to an additional charge by CONTRACTOR of 15% of such costs for arranging or handling such material, equipment, work or services.

(c) To protect, indemnify and save CONTRACTOR harmless from and against all claims, demands and causes of action of every kind and character arising in favor of OPERATOR'S employees, its subcontractors, or third parties on account of bodily injuries, death or damages to property.

(d)  To carry Comprehensive General Bodily Injury and Property Damage Insurance with limits of at least $1,000,000 aggregate and to carry Workers ' Compensation Insurance with limits not less than required by the laws of the State in which the well is to be drilled.

 

(e) To reimburse CONTRACTOR for additional costs incurred due to engaging CONTRACTOR to drill within the boundaries of any Colorado cities which impose additional taxes ("Home Rule Cities") on the value of the specialized drilling equipment or on the amounts charged under the drilling contract.

(f) To prepare a sound location adequate in size and capable of properly supporting the drilling rig, unless otherwise provided herein.

5.  CONTRACTOR  agrees:

(a) To perform all work to be conducted by it under the terms of this Agreement and the specifications set forth in Exhibit A in accordance with good drilling practices in the area in which the well is to be drilled.

(b) To pay all claims for labor, material, services, and supplies furnished by CONTRACTOR hereunder to allow no lien or charge to be filed on the lease, the well, the land on which the well is to be drilled or other property of OPERATOR, for labor, material, services or supplies furnished by any employee, SUBCONTRACTOR, or agent of the CONTRACTOR and if such lien is filed, to indemnity, protect, and save OPERATOR harmless from and against all such claims and liens.

(c) To protect, indemnify and save OPERATOR harmless from and against all claims, demands and causes of action of every kind and character arising in favor of CONTRACTOR'S employees, or its subcontractors on account of bodily injuries, death or damages to property.

(d) To carry Comprehensive General Bodily Injury and Property Damage Insurance with limits of at least $1,000,000 aggregate and to carry Workers' Compensation Insurance with limits not less than required by the laws of the State in which the well is to be drilled.

 

6.  RESPONSIBILITY FOR LOSS OR DAMAGE:

(a)  CONTRACTOR'S SURFACE EQUIPMENT :CONTRACTOR shall be liable, regardless of whether the work is on a turnkey, footage or daywork basis, for damages to or destruction of CONTRACTOR'S equipment when located on the surface, including but not limited to all drilling tools, machinery and appliances for use above the surface, regardless of when or how such damage or destruction occurs, except OPERATOR shall reimburse CONTRACTOR for any such loss or damage thereto caused by negligence, carelessness, recklessness, or intentional acts or omissions of OPERATOR or OPERATOR'S agents, or employees.

(b)  CONTRACTOR's "IN-HOLE" EQUIPMENT - TURNKEY OR FOOTAGE BASIS: CONTRACTOR shall be liable, for damage to or destruction of CONTRACTOR'S in-hole equipment while work is being performed on a turnkey or footage basis including but not limited to drill pipe, drill collars, and tool

 

  

  

  

United States Drilling

 

 

joints; except OPERATOR shall reimburse CONTRACTOR for any such loss or damage thereto caused by negligence, carelessness, recklessness, or intentional acts or omissions of OPERATOR or OPERATOR'S agents, or employees.

(c)  CONTRACTOR'S "IN-HOLE" EQUIPMENT - DAYWORK BASIS: OPERATOR shall be liable, for damage to or destruction of CONTRACTOR's in-hole equipment including but not limited to drill pipe, drill collars, and tool joints, while work is being performed on a daywork basis, and

OPERATOR shall,reimburse CONTRACTOR for any such loss.                                                                                                ·           ·

(d)  OPERATOR'S EQUIPMENT: OPERATOR shall be liable for damage to or destruction of OPERATOR'S equipment or equipment of OPERATOR'S SUBCONTRACTOR, including but not limited to casing, tubing, well head equipment, and tankage, and CONTRACTOR shall be under no liability to reimburse OPERATOR for any such loss other than CONTRACTOR’S gross negligence or willful misconduct.

(e)  THE HOLE - TURNKEY BASIS: CONTRACTOR shall be liable while work is being performed on a turnkey basis and before the well reaches contract depth, for any loss or damage to the hole, except for consequential damages, and except loss or damage thereto caused by negligence, carelessness, recklessness or intentional acts or omissions of OPERATOR or OPERATOR'S agents, or employees. As to such loss OPERATOR shall be liable.

(f) THE HOLE - FOOTAGE BASIS: CONTRACTOR shall be liable while work is being performed on a footage basis and before the well reaches contract depth, for any loss or damage to the hole except for consequential damages, attributable to CONTRACTOR'S operations; except loss or damage to the hole by reason of the failure of casing or equipment furnished by OPERATOR or by reason of the failure of  a cementing job or by reason of any negligence, carelessness, recklessness or intentional acts or omissions of OPERATOR or OPERATOR'S agents or employees. As to such loss OPERATOR shall be liable. If CONTRACTOR  is liable for the loss. or damage and if the hole is not in condition to be carried to the contract depth provided for in Exhibit A, CONTRACTOR shall plug and abandon the hole and if requested by OPERATOR, commence a new hole at the terms and conditions of this contract. In such case, CONTRACTOR shall not be entitled to any payment or compensation for its expenditures in connection with the abandoned ,hole, except for daywork earned for which CONTRACTOR would have been compensated had such hole not been lost and abandoned.

(g)  THE HOLE - DAYWORK BASIS: OPERATOR shall be liable for any loss or damage to the hole while work .is being performed on a daywork basis.

(h)  MATERIALS FURNISHED BY OPERATOR : OPERATOR shall be liable for any personal injuries and for any damage or loss caused in whole or in part to the hole or to any property, equipment or material, of  CONTRACTOR, because of defective materials furnished by or through OPERATOR

Damages or reimbursement as herein required shall be on the basis of actual replacement cost as if delivered at the drill site.

7.  DIFFICULT OR HAZARDOUS DRILLING:

(a) In the event, pyrite, quartzite, granite, igneous rock or other impenetrable substance is encountered while drilling on the footage basis, and the footage   drilled during each 24-hour period multiplied by the footage rate does not at least equal the applicable daywork rate plus the CONTRACTOR'S cost of bits, mud and water used during the 24 hour period, all subsequent drilling operations shall be conducted on :a daywork basis at the - applicable daywork rate, with OPERATOR furnishing the bits, mud, and water, until normal drilling operations. and procedures can be resumed. No footage charge shall be made for footage drilled while on daywork rates; If such conditions are encountered while drilling on the turnkey basis,  all subsequent drilling operations shall be conducted on a daywork basis at the applicable daywork rate, with OPERATOR furnishing the bits, mud, and water until normal drilling operations and procedures can be resumed. The turnkey charge shall be adjusted by a negotiated amount to reflect the portion of the drilling operation drilled at daywork rates.

(b)  In the event water flow, domal, steeply dipping or faulted formation, abnormal pressure, underground mine or cavern, heaving formation, salt or other conditions are encountered which makes drilling abnormally difficult or hazardous, causes sticking of drill pipe or casing, or other difficulty occurs which precludes drilling ahead under reasonably normal procedures, CONTRACTOR shall, in all such cases, without undue delay, exert reasonable efforts to overcome such difficulty, When such condition is encountered, further operations shall be conducted on a daywork basis at the applicable daywork rate, with OPERATOR furnishing the bits, mud and water, until such conditions have been overcome and normal drilling operations can be resumed. OPERATOR shall assume the .risk of loss or damage to the hole and to CONTRACTOR'S equipment in the hole from the time such condition is encountered. If.the drilling is being   performed on a footage basis, no charge shall be made for footage drilled while on daywork rates. Ifdrilling is being performed on a turnkey basis, the daywork charge incurred hereunder shall be a separate charge to the OPERATOR and the turnkey charge shall be adjusted by a negotiated amount to reflect the portion of the drilling operations drilled at daywork rates.

(c)  In the event loss of circulation is encountered, CONTRACTOR shall, without undue delay, exert reasonable effort to overcome such condition. When such condition is encountered, OPERATOR shall assume and bear the risk of loss or damage to the hole and to CONTRACTOR'S equipment in the hole. Should such conditions persist in spite of CONTRACTOR'S efforts to overcome it, then after the period of time specified in Exhibit A under "Lost Circulation" is consumed in such efforts, further operations shall be conducted on a daywork basis at the applicable daywork rate, with OPERATOR furnishing the bits, mud and water until such condition has been overcome and normal drilling operations can be resumed. If the drilling is being performed on a footage basis, no footage charge shall be made for footage drilled while on daywork rates. If the drilling is performed on a turnkey basis, the daywork charge incurred hereunder shall be separate charge to the OPERATOR and the turnkey charge shall be adjusted by a negotiated amount to reflect the portion of the drilling operation drilled at daywork rates.

8.  POLLUTION  OR CONTAMINATION:

Notwithstanding anything to the contrary contained herein, it is understood and agreed by and between CONTRACTOR and OPERATOR that the responsibility for pollution or 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 the reserve pits, fire, blowout, cratering, seepage or any other uncontrolled flow of oil, gas, water or other substance, as well as the 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. OPERATOR 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 is performed had performed the same and all the obligations respecting protection, defense, indemnity and limitation of responsibility and liability, as set forth in (a) and (b) above, shall be specifically applied.

9.  INDEPENDENT   CONTRACTOR:

CONTRACTOR is an Independent CONTRACTOR with respect to performance of work hereunder. Neither CONTRACTOR'S nor OPERATOR'S employees, agents,or representatives shall be deemed to be that of the other. OPERATOR'S representative or representatives shall have access to the premises for the purpose  of observing tests or inspecting the work and shall be empowered to act for OPERATOR in all matters relating to CONTRACTOR'S performance of the work. On a daywork basis the OPERATOR shall have the right and responsibility to exercise those controls and direct the operations to the extent necessary to accomplish the result desired by the OPERATOR with such control and direction of the OPERATOR limited to the custom in the industry in the area in which the work is  performed, to the safety of the CONTRACTOR'S equipment or to the safety of personnel at the drill site.

 

l 0. COMPLIANCE WITH LAW:

CONTRACTOR and OPERATOR respectively agree to comply with all laws, rules and regulations, federal, state and 111unicipal, which are now or may become applicable to operations covered by this Agreement or arising out of the performance of such operations. The contact is to be interpreted by the substantive laws of the State of Colorado in effect at the time of the execution of this Agreement. CONTRACTOR agrees, in its performance of this Agreement, to comply with all of the provisions of Part 11, Section 202(1) to (7), inclusive, of Executive Order 11 246 (30F.R. 12319), and any present or future amendments, supplements, substitutes or revisions thereof, and with the Equal Opportunity claims prescribed in 41 CFR 60-1.4, the Affirmative Action Clause prescribed in 41 CFR 60-250.4, the Affirmative Action Clause prescribed in 41 CFR 60-741.4 and the Certification of Compliance with Environmental Laws prescribed in 40 CFR 15.20 which are hereby incorporated by reference in this Agreement.

 

  

  

  

United States Drilling

 

 

11. FORCE MAJEURE:

CONTRACTOR shall not be liable to OPERATOR for any delays, damages, or any failure to perform caused by reason of Federal or State laws of the rules, regulations or orders of any governmental agency purporting to exercise authority or control respecting the operations covered hereby, or because of strikes, or causes beyond the control of the CONTRACTOR. Delays due to the above causes, or any of them, shall not be deemed to be a breach of, or :failure 1;o perform under, this Agreement.

 

12.  ACCESS TO SITE:

OPERATOR shall secure for CONTRACTOR rights of ingress and egress to the location on which the well is to be drilled. Should CONTRACTOR be denied free and easy access to or from the location, or should CONTRACTOR be prevented from performance of the drilling contemplated by this Agreement by any order of court or by order of any governmental agency or body or because of any reason not within the control of CONTRACTOR, time lost because of such order or because of such reason shall be paid by OPERATOR at the applicable daywork rates.

 

13.  WORK STOPPAGE:

If OPERATOR directs stoppage of work prior to reaching a depth which is less than 100% of the contract depth specified in Exhibit A, CONTRACTOR shall discontinue the drilling of the well and shall abandon or complete the same as directed. If CONTRACTOR has not reached the percentage of contract depth provided above, OPERATOR will compensate CONTRACTOR for all CONTRACTOR'S costs and expenses as shall be determined by the books and records of the CONTRACTOR maintained in accordance with its established practices, plus 20% on account of profit unless the parties shall agree upon another basis prior to stoppage of work.

 

14.  DEFAULT:

 

In the event OPERATOR defaults .in any payment or fails to perform any condition herein required or if a proceeding ii) bankruptcy or receivership is instituted against or by OPERATOR or if CONTRACTOR shall feel unsafe or insecure.in the ability of  OPERATOR to p  perform, then CONTRACTOR may suspend its performance until security deemed adequate to CONTRACTOR is given to assure performance by OPERATOR, or CONTRACTOR may terminate this Agreement. The right of CONTRACTOR to either suspend or terminate is cumulative. In the event of termination of this Agreement pursuant to this Paragraph 14, OPERATOR WILL compensate CONTRACTOR for all CONTRACTOR'S costs and expenses as shall be determined by the books and records of the CONTRACTOR maintained in accordance with its established practices plus twenty percent (20%) on account of profit, unless the parties shall agree upon another basis prior to stoppage of work.

15.  COST INCREASE:

In the event the cost to CONTRACTOR of a) labor, including benefits, b) supplies, services, repair parts or materials, and/or c) fuel increase from the date of this Agreement to the date when such labor is performed or supplies, services, repair parts, materials or fuel are furnished to CONTRACTOR at the location described in the Exhibit A, then the amount agreed to be paid by OPERATOR to CONTRACTOR shall be increased by the amount of such increase in costs to CONTRACTOR attributable to such of the above items as are furnished to or used by CONTRACTOR in connections with the drilling of the well.

 

16. WRITTEN WAIVER:

None of the requirements of this Agreement shall be considered as waived by either party unless the waiver is in writing, and signed by the persons executing this Agreement, or other duly authorized agent representative of the party.

17.  SPECIAL PROVISIONS:

See attached Exhibits Al and B1  and C which must be executed by both parties.

18. TURNKEY  COMMITMENTS AND  LIABILITY:

Upon completion by Contractor of all operations to be performed by it under the Turnkey Basis as Specified in Exhibit "A", Contractor shall notify Operator of such completion by noting the date and hour of such completion upon the daily drilling  Report form. No later than twenty-four (24) hours after Operator's receipt of such notification, Operator shall advise Contractor in writing of any Objections it may have with respect to Contractor's performance hereunder. Operator's failure to so object to Contractor's performance within the Specified period shall be conclusive proof of Operator's acceptance of the well and Contractor's performance hereunder. Upon acceptance of the work by Operator pursuant to Subparagraph 18 hereinabove, all risk of loss with respect to the well drilled hereunder and goods and services provided by Contractor shall pass to Operator. Contractor shall have no liability for any defects in such completed operations. Notwithstanding anything else Contained herein to the contrary, Operator accepts all materials, supplies, equipment and services furnished or performed by Contractor as is and Where is. CONTRACTOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, OR FITNESS OF ANY MATERIALS, SUPPLIES OR EQUIPMENT FOR ANY PURPOSE. NO WARRANTY OF GOOD AND WORKMANLIKE PERFORMANCE IS GIVEN BY THE CONTRACTOR BY VIRTUE OF THIS CONTRACT FOR ANY PERFORMANCE ACCEPTED BY OPERATOR.

19.  GOVERNING LAW:

This contract shall be construed and governed under the laws of the State of Colorado.

20.  EXECUTION:

This Agreement shall not be binding upon CONTRACTOR until executed by OPERATOR and a duplicate original executed by OPERATOR is returned to and received by CONTRACTOR.

 

WITNESS the signatures of the parties hereto in DUPLICATE ORIGINALS, this        19th         day of     April     , 2013.

	
OPERATOR: 

 

Synergy Resources Corporation

 

	 	
CONTRACTOR:

 

Ensign United States Drilling Inc.

	 
	By: 	
William E. Schaff Jr.

	 	By:	
/s/ Brandon Lorenz

	 
	Print Name:	
William E. Scaff, Jr.

	 	Print Name:	
Brandon Lorenz

	 
	 Title:	
Vice President

	 	Title:	
Drilling Manager

	 

  

  

  

Exhibit A1

 

	
OPERATOR: Synergy Resources Corporation 

 

    Address:  20203 Hwy 60

                      Platteville, CO 80651

 

Contract Type: Turnkey    Rig Number - 17     Crew Size - 5

Depth - 12000 feet into the Niobrara Horizontal formation

Deviation Limit - Per Directional Plan degrees

Hole Size 13-1/2"/8-3/4"/6-1/8"

	
Date of Bid: 4/19/2013

 

WELL NAME:  NIOBRARA HORIZONTAL

 

Location: -T2-6N -R64-68W 

 

County: Weld

 

State: CO.

 

	 	 	Furnished by	 	 	 	 
	Materials and Supplies	 	Operator	 	 	Contractor	 	 	Remarks	 
	Wells Permits	 	 	X	 	 	 	 	 	 	 
	
Stake Location

	 	 	X	 	 	 	 	 	 	 
	
Surface Damages & Right of Way

	 	 	X	 	 	 	 	 	 	 
	
Road, Location & Maintenance

	 	 	X	 	 	 	 	 	 	 
	
Mud Pits, EARTH or STEEL

	 	 	 	 	 	 	X	 	 	Per Inventory	 
	
Reserve Pits

	 	 	X	 	 	 	 	 	 	 	 
	
Backfill Pits

	 	 	X	 	 	 	 	 	 	 	 
	
Surface Casing - 9-5/6" & Intermediate Casing - 7"

	 	 	 	 	 	 	X	 	 	 	 
	
Rig Time to Run

	 	 	 	 	 	 	X	 	 	 	 
	
Cementing end Cementing Services

	 	 	 	 	 	 	X	 	 	

Halliburton

	 
	
W.O.C. Time prior to Drilling Plug

	 	 	 	 	 	 	X	 	 	

Min 6 hrs

	 
	
Power Tongs

	 	 	 	 	 	 	X	 	 	 	 
	
Production Casing - 4.5", 11.6 #/ft, N-80

	 	 	X	 	 	 	 	 	 	 	 
	
Rig Time to Run

	 	 	 	 	 	 	X	 	 	

• See Note

	 
	
Cementing and Cementing Services

	 	 	X	 	 	 	 	 	 	 	 
	
W.O.C. Time

	 	 	 	 	 	 	X	 	 	
• See Note

	 
	
Power Tongs, Casing Crews, Lay-Down Machine, and Crews

	 	 	 	 	 	 	X	 	 	 	 
	
Fuel

	 	 	 	 	 	 	X	 	 	 	 
	
Boiler Fuel

	 	 	 	 	 	 	X	 	 	 	 
	
Water - Source

	 	 	 	 	 	 	X	 	 	 	 
	
Hauling or Pump, Free Tanks, Transfer Pumps

	 	 	 	 	 	 	X	 	 	 	 
	
After Cum. Hrs. Lost Circ.

	 	 	X	 	 	 	 	 	 	
0 Cum

	 
	
Mud (Mud up depth per Contractor)

	 	 	 	 	 	 	X	 	 	
Baroid - subject to change based on performance

	 
	After ___0 ___ cum. hrs lost circulation	 	 	X	 	 	 	 	 	 	0 Cum	 
	Coring - Rig Time, 3rd Part	 	 	X	 	 	 	 	 	 	 	 
	Reaming Cored Hole	 	 	X	 	 	 	 	 	 	 	 
	Testing - Rig Time	 	 	 	 	 	 	X	 	 	

• See Note

	 
	BOP Test 	 	 	 	 	 	 	X	 	 	 	 
	3rd Party Services 	 	 	X	 	 	 	 	 	 	 	 
	Logging - Rig time 	 	 	 	 	 	 	X	 	 	• See Note	 
	3rd Party Services	 	 	X	 	 	 	 	 	 	 	 
	Lost Circulation	 	 	X	 	 	 	 	 	 	 	 
	After initial ___/___ cum. hrs. furnished bv Contractor 	 	 	X	 	 	 	 	 	 	0/0	 
	Plugging - Rig Time 	 	 	 	 	 	 	X	 	 	

• See Note

	 
	3rd Party Services	 	 	X	 	 	 	 	 	 	 	 
	Well Head	 	 	X	 	 	 	 	 	 	 	 
	Directional Services + Trailer	 	 	 	 	 	 	X	 	 	 	 
	W.O.O. or any Operator Supplied Services 	 	 	X	 	 	 	 	 	 	 	 
	Circulate Samples	 	 	 	 	 	 	X	 	 	

• See Note

	 
	Daywork Repair Time:  ___ hrs. / job ___ hrs. / well	 	 	 	 	 	 	X	 	 	 	 
	Rental Drill Pipe DS-36 S-135	 	 	 	 	 	 	X	 	 	 	 
	Mob-Demob, Move Rig, Moving Permits	 	 	 	 	 	 	X	 	 	See Exhibit B1	 
	Trash, Sanilet, Trenching, Camp Generator	 	 	 	 	 	 	X	 	 	 	 
	▪Note: Contractor will provide 48 hrs daywork at TD	 	 	 	 	 	 	 	 	 	 	 

A TURNKEY AMOUNT of $1094300 for work performed on a turnkey basis as herein provided.

Daywork Rates per 24 Hour day:

$28000 With Drill Pipe             $ 28000 Without Drill Pipe

$28000 Standby with crews   $ 25200 Standby without crews 

Boiler Rate: $35 per hour.

 

Drill Stem Test - Daywork terms apply to waiting on service company to get into operating position and/or waiting on daylight to open or pull Drill Stem Test.

 

(Abnormal pressure as used in this Contract shall mean any pressure for which a mud excess of 11 lb/gal. is used to gain control of said pressure.)

 

	 See Attached Exhibit B1	 	 	 	 
	Operator	 	 	ENSIGN UNITED STATES Dirlling Inc.	 
	 	 	 	 	 
	
/s/ William E. Scaff Jr.

	 	 	
/s/ Brandon Lorenz

	 
	
 

	 	 	
 

	 
	
 

	 	 	
 

	 

 

 

This is a bid and not a contract until executed by both parties and made a part of the Drilling Contract.

  

  

  

Exhibit B1

1.  Contract term is for 4 wells commencing about May 15, 2012 for Ensign Rig 17.

2.  Any labor increase will be charged to Operator at actual cost. Any wage scale over standard Ensign payscale (including processing charges) will be rebilled to the Operator

3.  Mobilization Trucking in excess of $15,000 will be rebilled at cost. A $5,000 credit shall be given to Operator on skid moves (well to well moves within a pad) when the rig skids up to 50 feet between well centers.  Moving equipment other than regular moving trucks (i.e. bulldozers/CATS) required to effectively skid  the rigs shall be provided by the Operator. If no other location to take the rig after completion of a well, Operator to pay demob to Ensign LaSalle Truck Yard.

4.  Standby, waiting on location, well permits or weather will be charged at 90% of dayrate.

5.  Ensign will provide mud cleaning services (Close Loop) and chemicals at the expense of the Contractor. Operator will be responsible for cleaning, hauling and disposing or all water, drilling fluids, and solids for each well.

6.  Ensign United States Drilling Inc. will not be liable for any problems associated with Operator's casing unless the problem is due to gross negligence or willful misconduct of Ensign United States Drilling Inc.

7.  Prior to the rig setting surface casing, Operator is required to supply a wellhead to NU BOP onto. Integrity of the wellhead provided must be suitable for BOP test or if head does not meet Ensign's standards, a new head will be provided for you by ENSIGN at approximately $600 (rebilled at cost).

 

8.  Any services charges in excess of the limits listed in Exhibit A will be rebilled to Operator. 

 

9.  Drill Stem Tests:

The initial opening of a drill stem test tool will take place during daylight hours. 

Drill stem tests will be reversed out prior to pulling test tool.

ENSIGN Drilling may allow Operator to pull test free and remove 1500 feet of pipe prior to reversing out.

10.All rig modifications necessary to install additional equipment or to drill the Operator's Program will be at the expense of the Operator. This includes, but not limited to, rig time, labor, materials, any third party charges, and any repair to Contractor's equipment associated with said modification. At Contractor's discretion, the Operator will restore the rig to its original condition when said modifications are no longer necessary, at the Operator's expense.  Prior to initiating any rig modification for Operator, Operator must approve the expenditure .

11.  No PDC bits to be run on ENSIGN owned drill pipe or other drill pipe without the use of a mud motor.

12.  Pumps will be limited to 80% of the manufacturer's specifications. Ensign shall provide a second 1OOOHP pump.

13.  Tubulars will be limited to 80% of manufacturer's specifications.

14.  Forklifts used on Ensign rigs will have grapples on forks. Forklift operator shall be certified.

15.  Operator agrees that Operator's personnel as well as third party services shall be subject to Ensign's policies and regulations regarding safety (including full use of PPE), environmental and health, including drug and alcohol use. Operations may be suspended if no corrective action is taken.

16.  The drill sting including BHA but excluding Contractor's directional tools and all related handling tools used to drill the lateral will be provided by the Operator. If Operator wishes to have Contractor provide such Items, the cost of the related Items will be billed to the Operator

17.  Directional Stipulations:

Directional costs are based on conventional directional services from surface to TD. TD is end of lateral section. Included is Gamma services through the curve and the lateral section.

Ensign reserves the right to reject any well plan.

18.  In line with Ensign's policy to conduct SAFE operations and horizontal well requirements, this rig operating in the Wattenberg Field-DJ Basin.

whether on Turnkey or Daywork, shall mud-up and weight-up to 9.2ppg 200 feet above the Teepee Buttes formation and to 1O.Oppg before the Sharon Spring formation. Should the top of the Teepee Buttes formation be unknown, the mud-up and weight-up depth shall be 1,000 feet above the top of the Niobrara formation.

19.  24 hour Rig Manager. Rig Manager and Drillers will have Well Control Certificates.

20. Drilling Stipulations:

(a). Curve Section - Before beginning to drill the curve section of the well, Synergy Resources shall provide Ensign a TYD +/- 5 feet to land the curve section. Both parties shall provide written approval of subject well plan, with email acceptance as approved method of acceptance.

(b). Trip time for BHA changes to achieve newly revised TYO shall be on the Operator.

(c). Subject to Ensign following well plan to 7" casing landing point, and should the TYO be changed during drilling of the curve section, and that Ensign cannot achieve the new TVD due to excessive doglegs, sidetracks shall be performed on daywork. Excessive doglegs are defined as those greater than 16"1120 feet. However, if no changes are made to the agreed to well plan, and Ensign must exceed these limits to land the curve, then sidetracks will be done on turnkey.

(d). Lateral Section - Any geological side tracks shall be performed on Daywork.

(e). Contractor shall be responsible for sidetracks and/or redrills as a result of failure or Contractor’s equipment, downhole tools, and personnel, which are operating within specifications of accepted well plan by Operator and Contractor.

(f). When abnormal, difficult or hazardous drilling conditions occur operations shall commence under a daywork basis and at daywork rates. Refer to Section 7 of the Tumkey Contract.

the Turnkey Contract.

 

	

Operator

  

 

By: /s/ William E. Scaff Jr.

	
ENSIGN United States Drilling Inc.

 

/s/ Brandon Lorenz

 

 

  

  

  

Exhibit A-1

	
OPERATOR: Synergy Resources Corporation 

 

    Address: 20203 Hwy 60

                     Platteville, CO 80651

 

Contract Type: Turnkey    Rig Number - 17    Crew Size - 5

Depth - 12000 feet into the Codel Horizontal formation

Deviation Limit - Per Directional Plan degrees

Hole Size 13-1/2"/8-3/4"/6-1/8"

	
Date of Bid: 4/19/2013

 

WELL NAME: CODELL HORIZONTAL

 

Location: -T2-6N -R64-68W 

 

County: Weld

 

State: CO.

 

	 	 	Furnished by	 	 	 	 
	Materials and Supplies	 	Operator	 	 	Contractor	 	 	Remarks	 
	Wells Permits	 	 	X	 	 	 	 	 	 	 
	
Stake Location

	 	 	X	 	 	 	 	 	 	 
	
Surface Damages & Right of Way

	 	 	X	 	 	 	 	 	 	 
	
Road, Location & Maintenance

	 	 	X	 	 	 	 	 	 	 
	
Mud Pits, EARTH or STEEL

	 	 	 	 	 	 	X	 	 	Per Inventory	 
	
Reserve Pits

	 	 	X	 	 	 	 	 	 	 	 
	
Backfill Pits

	 	 	X	 	 	 	 	 	 	 	 
	
Surface Casing - 9-5/8" & Intermediate Casing - 7"

	 	 	 	 	 	 	X	 	 	 	 
	
Rig Time to Run

	 	 	 	 	 	 	X	 	 	 	 
	
Cementing end Cementing Services

	 	 	 	 	 	 	X	 	 	

Halliburton

	 
	
W.O.C. Time prior to Drilling Plug

	 	 	 	 	 	 	X	 	 	

Min 8 hrs

	 
	
Power Tongs

	 	 	 	 	 	 	X	 	 	 	 
	
Production Casing - 4.5", 11.6 #/ft, N-80

	 	 	X	 	 	 	 	 	 	 	 
	
Rig Time to Run

	 	 	 	 	 	 	X	 	 	

• See Note

	 
	
Cementing and Cementing Services

	 	 	X	 	 	 	 	 	 	 	 
	
W.O.C. Time

	 	 	 	 	 	 	X	 	 	
• See Note

	 
	
Power Tongs, Casing Crews, Lay-Down Machine, and Crews

	 	 	 	 	 	 	X	 	 	 	 
	
Fuel

	 	 	 	 	 	 	X	 	 	 	 
	
Boiler Fuel

	 	 	 	 	 	 	X	 	 	 	 
	
Water - Source

	 	 	 	 	 	 	X	 	 	 	 
	
Hauling or Pump, Free Tanks, Transfer Pumps

	 	 	 	 	 	 	X	 	 	 	 
	
After Cum. Hrs. Lost Circ.

	 	 	X	 	 	 	 	 	 	
0 Cum

	 
	
Mud (Mud up depth per Contractor)

	 	 	 	 	 	 	X	 	 	
Baroid - subject to change based on performance

	 
	After ___0 ___ cum. hrs lost circulation	 	 	X	 	 	 	 	 	 	0 Cum	 
	Coring - Rig Time, 3rd Part	 	 	X	 	 	 	 	 	 	 	 
	
Reaming Cored Hole

	 	 	X	 	 	 	 	 	 	 	 
	Testing - Rig Time	 	 	 	 	 	 	X	 	 	

• See Note

	 
	
BOP Test 

	 	 	 	 	 	 	X	 	 	 	 
	
3rd Party Services 

	 	 	X	 	 	 	 	 	 	 	 
	Logging - Rig time 	 	 	 	 	 	 	X	 	 	• See Note	 
	
3rd Party Services

	 	 	X	 	 	 	 	 	 	 	 
	Lost Circulation	 	 	X	 	 	 	 	 	 	 	 
	
After initial ___/___ cum. hrs. furnished bv Contractor 

	 	 	X	 	 	 	 	 	 	0/0	 
	Plugging - Rig Time 	 	 	 	 	 	 	X	 	 	

• See Note

	 
	
    3rd Party Services

	 	 	X	 	 	 	 	 	 	 	 
	Well Head	 	 	X	 	 	 	 	 	 	 	 
	Directional Services + Trailer	 	 	 	 	 	 	X	 	 	 	 
	W.O.O. or any Operator Supplied Services 	 	 	X	 	 	 	 	 	 	 	 
	Circulate Samples	 	 	 	 	 	 	X	 	 	

• See Note

	 
	Daywork Repair Time: ___ hrs. / job ___ hrs. / well	 	 	 	 	 	 	X	 	 	 	 
	Rental Drill Pipe DS-38 S-135	 	 	 	 	 	 	X	 	 	 	 
	Mob-Demob, Move Rig, Moving Permits	 	 	 	 	 	 	X	 	 	See Exhibit B1	 
	Trash, Sanilet, Trenching, Camp Generator	 	 	 	 	 	 	X	 	 	 	 
	▪ Note: Contractor will provide 48 hrs daywork at TD	 	 	 	 	 	 	 	 	 	 	 

 

A TURNKEY AMOUNT of $1139100 for work performed on a turnkey basis as herein provided.

Daywork Rates per 24 Hour day:

$28000 With Drill Pipe          $ 28000 Without Drill Pipe

  

$28000 Standby with crews $ 25200 Standby without crews 

Boiler Rate: $35 per hour.

 

Drill Stem Test - Daywork terms apply to waiting on service company to get into operating position and/or waiting on daylight to open or pull Drill Stem Test.

 

 

 

(Abnormal pressure as used in this Contract shall mean any pressure for which a mud excess of 9.5 lb/gal. is used to gain control of said pressure.)

 

  

	See Attached Exhibit B1	 	 	 	 
	Operator	 	 	ENSIGN UNITED STATES Dirlling Inc.	 
	 	 	 	 	 
	
/s/ William E. Scaff Jr.

	 	 	
/s/ Brandon Lorenz

	 
	
  

	 	 	
  

	 
	 	 	 	 	 

This is a bid and not a contract until executed by both parties and made a part of the Drilling Contract.

  

  

  

Exhibit B1

 

1.  Contract term is for 4 wells commencing about May 15, 2012 for Ensign Rig 17.

2.  Any labor increase will be charged to Operator al actual cost. Any wage scale over standard Ensign payscale (including processing charges) will be rebilled to the Operator.

3.  Mobilization Trucking in excess of $15,000 will be rebilled at cost. A $5,000 credit shall be given to Operator on skid moves (well to well moves within a pad) when the rig skids up to 50 feet between well centers.  Moving equipment other than regular moving trucks (i.e. bulldozers/CATS) required to effectively skid the rigs shall be provided by the Operator. If no other location to take the rig after completion of a well , Operator to pay demob to Ensign l.aSaile Truck Yard.

4.  Standby, waiting on location, well permits or weather will be charged at 90% of dayrate.

5.   Ensign well provide mud cleaning services {Close Loop) and chemicals at the expense of the Contractor. Operator will be responsible for cleaning, hauling and disposing of all water, drilling fluids, and solids for each well.

6.  Ensign United States Drilling Inc. will not be liable for any problems associated with Operator's casing unless the problem is due to gross negligence or willful misconduct of Ensign United States Drilling Inc.

7.  Prior to the rig setting surface casing, Operator is required to supply a wellhead to NU BOP onto. Integrity of the wellhead provided must be suitable for BOP test or if head does not meet Ensign's standards, a new head will be provided for you by ENSIGN at approximately $600 (rebilled at cost).

8.  Any services charges in excess of the limits listed in Exhibit A will be rebilled to Operator.

9.  Drill Stem Tests:

The initial opening of a drill stem test tool will take place during daylight hours. 

Drill stem tests will be reversed out prior to pulling test tool.

ENSIGN Drilling may allow Operator to pull test free and remove 1500 feet of pipe prior to reversing out.

10.  All rig modifications necessary to install additional equipment or to drill the Operator's Program will be at the expense of the Operator. This includes, but not limited to, rig time, labor, materials, any third party charges, and any repair to Contractor's equipment associated with said modification. At Contractor's discretion, the Operator will restore the rig to Its original condition when said modifications are no longer necessary, at the Operator's expense.  Prior to initiating any rig modification for Operator, Operator must approve the expenditure.

11.  No PDC bits to be run on ENSIGN owned drill pipe or other drill pipe without the use of a mud motor.

12.  Pumps will be limited to 80% of the manufacturer's specifications. Ensign shall provide a second 1OOOHP pump.

13.  Tubulars will be limited to 80% of manufacturer's specifications.

14.  Forklifts used on Ensign rigs will have grapples on forks . Forklift operator shall be certified.

15.  Operator agrees that Operator's personnel as wen as third party services shall be subject to Ensign's policies and regulations regarding safety (including full use of PPE), environmental and health, including drug and alcohol use. Operations may be suspended if no corrective action is taken.

16.  The drill sting including BHA but excluding Contractor's directional tools and all related handling tools used to drill the lateral will be provided by the Operator. If Operator wishes to have Contractor provide such items, the cost of the related items will be billed to the Operator

17.  Directional Stipulations :

Directional costs are based on conventional directional services from surface to TD. TD is end of lateral section. Included is Gamma services through the curve and the lateral section.

Ensign reserves the right to reject any well plan.

18.  In line with Ensign's policy to conduct SAFE operations and horizontal well requirements, this rig operating in the Wattenberg Field-DJ Basin, whether on Turnkey or Daywork, shall mud-up and weight-up to 9.2ppg 200 feet above the Teepee Buttes formation and to 1O.Oppg before the Sharon Spring formation. Should the top of the Teepee Buttes formation be unknown, the mud-up and weight-up depth shall be 1,000 feet above the top of the Niobrara formation.

19.  24 hour Rig Manager. Rig Manager and Drillers will have Well Control Certificates.

20.  Drilling Stipulations:

(a). Curve Section - Before beginning to drill the curve section of the well, Synergy Resources shall provide Ensign a TVD +/- 5 feet to land the curve section.

Both parties shall provide written approval of subject well plan, with email acceptance as approved method of acceptance. 

(b). Trip time for BHA changes to achieve newly revised TVD shall be on the Operator.

(c). Subject to Ensign following well plan to 7" casing landing point, and should the TVD be changed during drilling of the curve section, and that Ensign cannot achieve the new TVD due to excessive doglegs, sidetracks shall be performed on daywork. Excessive doglegs are defined as those greater than 16"/120 feet. However, if no changes are made to the agreed to well plan, and Ensign must exceed these limits to land the curve ,then sidetracks will be done on turnkey.

(d). Lateral Section - Any geological side tracks shall be performed on Daywork.

(e). Contractor shall be responsible for sidetracks and/or redrills as a result of failure or Contractor's equipment, downhole tools, and personnel, which are operating within specifications of accepted well plan by Operator and Contractor.

(f). When abnormal, difficult or hazardous drilling conditions occur operations shall commence under a daywork basis and at daywork rates. Refer to Section 7 of

the Turnkey Contract.

the Turnkey Contract.

 

	

Operator

 

  

  

By: /s/ William E. Scaff Jr.

	
ENSIGN United States Drilling Inc.

 

/s/ Brandon Lorenz

 

 

 

  

  

  

 

NOTE: THIS AGREEMENT CONTAINS PROVISIONS WHICH INDEMNIFY AND/OR RELEASE THE INDEMNIFIED AND/OR RELEASED PARTY FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE AND OTHER LEGAL FAULT.

 

ENSIGN DIRECTIONAL  SERVICES TERMS AND CONDITIONS UNDER  ENSIGN  TURNKEY  CONTRACT-EXHIBIT  C

 

 

Ensign United States Drilling, Inc., ("ENSIGN") under Turnkey Contract Dated April  19, 2013.  will  also  provide  services  by ENSIGN DIRECTIONAL SERVICES ("DIRECTIONAL SERVICES") to its Operators (each an "OPERATOR"), which are further governed by the terms and conditions stated herein and any additional terms proposed or agreed to in writing by an  authorized representative of the Operator and Ensign (these terms and conditions and any such additional terms collectively referred to herein as the "Agreement'). Any additions to or modifications of these terms and conditions, or any terms and conditions contained in OPERATOR's order inconsistent herewith, shall not bind ENSIGN unless accepted in writing by an authorized representative of ENSIGN.

I.    LIABILITIES, RELEASES AND INDEMNIFICATION:

Liabilities, releases and indemnification terms shall be as stated under the Turnkey Contract, with the addition of:

OPERATOR shall release, defend, indemnify and hold ENSIGN harmless from and against any Claims arising out of, or related to, subsurface trespass arising out of directional drilling operations or other operations performed by ENSIGN DIRECTIONAL or its employees, OPERATOR or its employees, or other contractors or their employees. OPERATOR shall furnish ENSIGN DIRECTIONAL with a well location plan (certified by OPERATOR as correct) setting out the surface location of the well, the lease, license, or property boundary lines, and the bottom hole location of OPERATOR's directionally drilled well. If in the course of drilling the well, it becomes evident to ENSIGN DIRECTIONAL that the certified plan is in error, ENSIGN DIRECTIONAL shall at once notify OPERATOR of the error, and OPERATOR shall be responsible to regulate all directional drilling factors so that OPERATOR's well bottom hole location will be situated on OPERATOR's property, license, or leasehold at total depth of the well being drilled.

While on a Daywork basis under the direction and control of OPERATOR, any loss or damage to in-hole property of ENSIGN DIRECTIONAL or ENSIGN subcontractors shall be borne by OPERATOR.

2.  OPERATOR WARRANTY/BINDING  AUTHORITY

If OPERATOR is not the sole owner of the mineral interests, the well or the field, OPERATOR's request for Services, Equipment or Products shall constitute OPERATOR's warranty that OPERATOR is the duly constituted agent of each and every owner and has full authority to represent the interests of the same with respect to all decisions taken throughout the provision of any Services, Equipment or Products hereunder.

OPERATOR will defend, release, indemnify and hold ENSIGN harmless from and against all Claims resulting from the allegation by any person that OPERATOR has misrepresented or lacked sufficient authority to represent such person as warranted by OPERATOR in this Article.

3.  PATENTS

ENSIGN DIRECTIONAL warrants that the use or sale of Equipment or Products hereunder will not infringe patents of others by reason of the use or sale of such Equipment or Products per se, and hereby agrees to hold OPERATOR harmless against judgment for damages for infringement of any such patent, provided that OPERATOR shall promptly notify ENSIGN DIRECTIONAL in writing upon receipt of any claim for infringement, or upon the filing of any such suit for infringement, whichever first occurs, and shall afford ENSIGN DIRECTIONAL full opportunity, at ENSIGN DIRECTIONAL's option and expense, to answer such claim or threat of suit, assume the control of the defense of such suit, and settle or compromise same in any way ENSIGN DIRECTIONAL sees fit. ENSIGN DIRECTIONAL does not warrant that such Equipment or Products: (a) will not infringe any such patent when not of ENSIGN DIRECTIONAL's manufacture , or specially made, in whole or in part, to the OPERATOR's design specifications; or (b) if used or sold in combination with other materials or apparatus or used in the practice of processes , will not, as a result of such combination or use, infringe any such patent, and ENSIGN DIRECTIONAL shall not be liable and does not indemnify OPERATOR for damages or losses of any nature whatsoever resulting from actual or alleged patent infringement arising pursuant to (a) and (b) above. THIS PARAGRAPH STATES THE ENTIRE RESPONSIBILITY OF ENSIGN DIRECTIONAL CONCERNING PATENT INFRINGEMENT.

4.  CONFIDENTIALITY

Each party shall maintain all data and information obtained from the other party in strict confidence, subject only to disclosure required by law or legal process. In the event that ENSIGN DIRECTIONAL owns copyrights to, patents to, or has filed patent applications on, any technology related to the Services, Products or Equipment furnished by ENSIGN DIRECTIONAL hereunder, and if ENSIGN DIRECTIONAL makes any improvements on such technology, then such improvements shall not fall within the confidentiality obligations included herein, and ENSIGN DIRECTIONAL shall own all such improvements, including drawings, specifications, calculations and other documents . The design, construction, application and operation of ENSIGN DIRECTIONAL's Services, Equipment and Products embody proprietary and confidential information. OPERATOR shall maintain this information in strict confidence and shall not disclose it to others, subject only to disclosure required by law or legal process.

 

 

  

1

  

 

 

 

 

5.  LIENS. ATTACHMENTS  AND ENCUMBRANCES

Should OPERATOR commit a material breach of any terms and conditions of this Agreement, become bankrupt, insolvent, go into receivership or should any creditor or other person attach or levy OPERATOR's property or equipment, ENSIGN DIRECTIONAL shall immediately have the right, without notice and without liability for trespass or damages, to retake and remove any of its Products or Equipment wherever it may be found. OPERATOR shall release, defend, indemnify and hold ENSIGN  DIRECTIONAL Indemnities harmless  from any and all liens and encumbrances against Products or Equipment furnished hereunder and shall return same promptly to ENSIGN DIRECTIONAL free of any liens or encumbrances.

6. DISPUTE RESOLUTION

Except for a dispute,  controversy, or claim (a "Dispute") arising out of this  Agreement  from  Services,  Equipment  or  Products provided , or to be provided, by ENSIGN DIRECTIONAL , the parties will attempt to resolve any Dispute between them which results from this Agreement in a spirit of cooperation. Accordingly, the parties agree to engage in good faith negotiations to reach a rapid and equitable solution. If the parties are unable to resolve a dispute through direct negotiation, they will use the services of a mediator. Each party will bear its own expenses and an equal share of the costs of the mediators and the body administering the mediation.

7.   GENERAL

Failure of OPERATOR or ENSIGN DIRECTIONAL to enforce any of the terms and conditions of this Agreement shall not prevent a subsequent enforcement of such terms and conditions or be deemed a waiver of any subsequent breach . Should any provision of this Agreement, or a portion thereof, be unenforceable or in conflict with governing country, state, province, or local Jaws, then the validity of the remaining provisions, and portions thereof, shall not be affected by such unenforceability or conflict, and this Agreement shall be construed as if such provisions, or portion thereof, were not contained herein. This Agreement contains all representations of the parties and supersedes all prior oral or written agreements or representations. OPERATOR acknowledges that it has not relied on any representations other than those contained in this Agreement. This Agreement shall not be varied, supplemented, qualified, or interpreted by any prior course of dealing between the parties or by any usage of trade and may only be amended by an agreement executed by both parties .

  

2Exhibit 4.2

 

EXECUTION VERSION

	
 
    

 

CAMERON INTERNATIONAL CORPORATION

as Issuer

 

and

 

UNION BANK, N.A.,

as Trustee

 

$250,000,000

 

1.40% SENIOR NOTES DUE 2017

 

SIXTH

 

SUPPLEMENTAL

 

INDENTURE

 

 

 

Dated as of June 20, 2014

	
 
    

 

 

TABLE OF CONTENTS

 

	
ARTICLE I ESTABLISHMENT OF   NEW SERIES
    	
1
    
	
Section 1.01.
    	
Establishment of New Series
    	
1
    
	
 
    	
 
    
	
ARTICLE II DEFINITIONS
    	
2
    
	
Section 2.01.
    	
Definitions in the Indenture
    	
2
    
	
Section 2.02.
    	
Other Definitions
    	
4
    
	
 
    	
 
    
	
ARTICLE III THE NOTES
    	
4
    
	
Section 3.01.
    	
Form
    	
4
    
	
Section 3.02.
    	
Issuance of Additional Notes
    	
5
    
	
 
    	
 
    
	
ARTICLE IV REDEMPTION
    	
5
    
	
Section 4.01.
    	
Optional Redemption
    	
5
    
	
Section 4.02.
    	
Mandatory Redemption
    	
5
    
	
 
    	
 
    
	
ARTICLE V COVENANT   SUPPLEMENTS
    	
5
    
	
Section 5.01.
    	
Covenants of the Company
    	
5
    
	
 
    	
 
    
	
ARTICLE VI ADDITIONAL EVENT   OF DEFAULT
    	
7
    
	
Section 6.01.
    	
Events of Default
    	
7
    
	
 
    	
 
    
	
ARTICLE VII MISCELLANEOUS
    	
7
    
	
Section 7.01.
    	
Integral Part
    	
7
    
	
Section 7.02.
    	
Adoption, Ratification and Confirmation
    	
7
    
	
Section 7.03.
    	
Counterparts
    	
7
    
	
Section 7.04.
    	
Governing Law
    	
7
    
	
Section 7.05.
    	
Trustee Makes No Representation; Trustee’s Rights and   Duties
    	
8
    
	
 
    	
 
    
	
EXHIBIT A:
    	
Form of   Note
    	
 
    
				

 

i

 

THIS SIXTH SUPPLEMENTAL INDENTURE dated as of June 20, 2014 (this “Supplemental Indenture”) between Cameron International Corporation, a Delaware corporation (the “Company” or the “Issuer”), and Union Bank, N.A., as trustee (the “Trustee”),

 

W I T N E S S E T H:

 

WHEREAS, the Issuer has entered into an Indenture, dated as of May 17, 2012 (the “Original Indenture”), with Union Bank, N.A., as trustee;

 

WHEREAS, the Original Indenture, as supplemented by this Supplemental Indenture, is herein called the “Indenture”;

 

WHEREAS, under Sections 201, 301 and 901 of the Original Indenture, the form and terms of a new series of Securities (as defined in the Original Indenture) may at any time be established by a supplemental indenture executed by the Issuer and the Trustee;

 

WHEREAS, the Issuer proposes to create under the Indenture a new series of Securities; and

 

WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Issuer have been done or performed.

 

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I
 ESTABLISHMENT OF NEW SERIES

 

Section 1.01.                          Establishment of New Series.

 

(a)                                 There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Issuer’s 1.40% Senior Notes due 2017 (the “Notes”).

 

(b)                                 There are to be authenticated and delivered $250,000,000 principal amount of Notes on the Issue Date, and from time to time thereafter there may be authenticated and delivered an unlimited principal amount of Additional Notes.

 

(c)                                  The Notes shall be issued initially in the form of one or more Global Securities in substantially the form set out in Exhibit A hereto.  The Depositary with respect to the Notes shall be The Depository Trust Company.

 

(d)                                 Each Note shall be dated the date of authentication thereof and shall bear interest as provided in paragraph 1 of the form of Note in Exhibit A hereto.

 

(e)                                  No Additional Amounts shall be payable in relation to the Notes.

 

 

(f)                                   If and to the extent that the provisions of the Original Indenture are duplicative of, or in contradiction with, the provisions of this Supplemental Indenture, the provisions of this Supplemental Indenture shall govern.

 

ARTICLE II
 DEFINITIONS

 

Section 2.01.                          Definitions in the Indenture.  All capitalized terms used herein and not otherwise defined below shall have the meanings ascribed thereto in the Original Indenture.  The following are additional definitions used in this Supplemental Indenture:

 

“Bankruptcy Act” means Title 11, United States Code, or any similar United States federal or state law (or any similar foreign law) for the relief of debtors.

 

The term “capital stock” of any Person means and includes any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (which includes, but is not limited to, common stock, preferred stock and partnership and joint venture interests) of such Person (excluding any debt securities that are convertible into, or exchangeable for, such equity).

 

“Below Investment Grade Rating Event” means the rating on the Notes is lowered by each of the Rating Agencies and the Notes are rated below Investment Grade by each of the Rating Agencies on any date from the date of the first public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the consummation of a Change of Control (which period shall be extended following the consummation of a Change of Control so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies);  provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if any of the Rating Agencies making the reduction in rating to which this definition would otherwise apply does not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

“Change of Control” means the occurrence of any of the following:

 

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation, arrangement or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and those of the Subsidiaries of the Company taken as a whole to any “person” or “group” (as those terms are used for purposes of Section 13(d)(3) of the Exchange Act), other than the Company or one or more of the Subsidiaries of the Company;

 

2

 

(2) the consummation of any transaction or series of related transactions (including, without limitation, any merger, amalgamation, arrangement or consolidation) the result of which is that any “person” or “group” (as those terms are used for purposes of Section 13(d)(3) of the Exchange Act), other than the Company or a Wholly Owned Subsidiary of the Company, becomes the beneficial owner, directly or indirectly, of a majority of the then outstanding Voting Stock of the Company, measured by voting power rather than number of shares;

 

(3) the Company consolidates, amalgamates or enters into an arrangement with, or merges with or into, any Person, or any Person consolidates, amalgamates or enters into an arrangement with, or merges with or into, the Company, in any such event pursuant to a transaction or series of transactions in which any of the outstanding Voting Stock of the Company or the Voting Stock of such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving or resulting Person (including any newly formed holding company that owns or controls at least a majority of the Voting Stock of the Company or such other Person) immediately after giving effect to such transaction;

 

(4) the first day on which a majority of the members of the Board of Directors of the Company is not comprised of Continuing Directors; or

 

(5) the adoption of a plan relating to the liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a transaction will not be considered to be a Change of Control under clause (2) above if (a) the Company becomes a direct or indirect Wholly Owned Subsidiary of a holding company and (b) (y) immediately following that transaction, the direct or indirect holders of the Voting Stock of the holding company are substantially the same as the holders of the Voting Stock of the Company outstanding immediately prior to that transaction or (z) the shares of Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the holding company immediately after giving effect to such transaction.

 

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 

“Continuing Directors” means, as of any date of determination, any member of the Company’s Board of Directors who (1) was a member of such Board of Directors on the date of the issuance of the Notes; or (2) was nominated for election, elected or appointed to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination, election or appointment (either by a specific vote or by approval of our proxy statement in which such member was named as a nominee for election as a director).

 

“Global Security” or “Global Note” means a Note that is executed by the Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with the Indenture, which shall be registered in the name of the

 

3

 

Depositary or its nominee and which shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all the Outstanding Notes or any portion thereof.

 

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) and a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) or the equivalent investment grade credit rating from any additional Rating Agency or Rating Agencies selected by the Company.

 

“Issue Date” means the date on which the Notes are initially issued under the Indenture.

 

“Moody’s” means Moody’s Investors Service Inc., or any successor to the rating agency business thereof.

 

“Notes” has the meaning assigned to it in Section 1.01(a) hereof, and includes both the Notes issued on the Issue Date and any Additional Notes.

 

“Rating Agency” means (1) each of Moody’s and S&P; and (2) if any of Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Company (as certified by a resolution of the Board of Directors) as a replacement agency for Moody’s or S&P, as the case may be, and that is reasonably acceptable to the Trustee.

 

“S&P” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc., or any successor to the rating agency business thereof.

 

“Voting Stock” means, with respect to any Person, capital stock of any class or kind the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

 

Section 2.02.                          Other Definitions.

 

	
Term
    	
 
    	
Defined in
   Section
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
“Additional Notes”
    	
 
    	
3.02
    	
 
    
	
“Change of Control Offer”
    	
 
    	
5.01
    	
 
    

 

ARTICLE III
 THE NOTES

 

Section 3.01.                          Form.  The Notes shall be issued initially in the form of one or more Global Securities, and the Notes and Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part of this Supplemental Indenture, and the Issuer and the Trustee, by their execution and

 

4

 

delivery of this Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

 

Section 3.02.                          Issuance of Additional Notes.  The Issuer may, from time to time, issue an unlimited amount of additional Notes (“Additional Notes”) under the Indenture, which shall be issued in the same form as the Notes issued on the Issue Date and which shall have identical terms as the Notes issued on the Issue Date other than with respect to the issue date, issue price and first payment of interest. The Notes issued on the Issue Date shall be limited in aggregate principal amount to $250,000,000, subject to the provisions of Section 306 of the Original Indenture.  The Notes issued on the Issue Date and any Additional Notes subsequently issued shall be treated as a single series for purposes of giving of notices, consents, waivers, amendments and taking any other action permitted under the Indenture and for purposes of interest accrual and redemptions.

 

ARTICLE IV
 REDEMPTION

 

Section 4.01.                          Optional Redemption.

 

(a)                                 At its option, the Issuer may choose to redeem all or any portion of the Notes, at once or from time to time.

 

(b)                                 To redeem the Notes, the Issuer must pay a Redemption Price in an amount determined in accordance with the provisions of paragraph number 5 of the form of Note in Exhibit A hereto.

 

(c)                                  Any redemption pursuant to this Section 4.01 shall be made pursuant to the provisions of Article Eleven of the Original Indenture.  The actual Redemption Price, calculated as provided in paragraph number 5 of the form of Note in Exhibit A hereto, shall be certified in writing to the Issuer and the Trustee by the Independent Investment Banker (as defined in such paragraph 5) no later than two Business Days prior to each Redemption Date.

 

Section 4.02.                          Mandatory Redemption.  Except as set forth in Section 5.01 below, the Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes and shall have no obligation to repurchase any Notes at the option of the Holders.

 

ARTICLE V
 COVENANT SUPPLEMENTS

 

Section 5.01.                          Covenants of the Company.  Article Ten of the Original Indenture is hereby supplemented, but only in relation to the Notes, by the addition of the following new Section 1010 at the end of Article Ten:

 

Section 1010.  Repurchase at the Option of Holders Upon Change of Control Repurchase Event.

 

5

 

(1)  Upon the occurrence of a Change of Control Repurchase Event, unless the Company has exercised its right pursuant to the provisions of paragraph 5 of the form of Note in Exhibit A hereto to redeem the Notes, the Company shall make an offer (the “Change of Control Offer”) to each Holder of Notes to repurchase all or any part (in amounts of $2,000 and integral multiples of $1,000 in excess thereof) of each Holder’s Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but excluding, the date of purchase (the “Change of Control Payment”).

 

(2)  Within 30 days following the consummation of any Change of Control Repurchase Event or, at the Company’s option, prior to the consummation of any Change of Control, but after the public announcement of an impending Change of Control, the Company shall mail a notice to each Holder, with a copy to the Trustee, describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase the Notes on the payment date specified in the notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required by the Notes and described in the notice. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice.

 

(3)  The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations promulgated thereunder, to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with this Section 1010, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 1010 by virtue of such conflict.

 

(4)  On the Change of Control Payment Date, the Company shall, to the extent lawful:

 

(i) accept for payment all Notes or portions of the Notes (in amounts of $2,000 and integral multiples of $1,000 in excess thereof) properly tendered pursuant to the Change of Control Offer;

 

(ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered and not withdrawn; and

 

(iii) deliver or cause to be delivered to the Trustee the Notes properly accepted, together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

 

(5)  The Paying Agent for the Notes shall promptly mail to each Holder of properly tendered Notes the repurchase price for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder

 

6

 

a new Note equal in principal amount to any unpurchased portion of any Notes surrendered; provided, that each new Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 above that amount.

 

(6)  The Company shall not be required to make a Change of Control Offer upon a Change of Control Repurchase Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under such Change of Control Offer.  In the event that such third party terminates or defaults on its Change of Control Offer, the Company shall be required to make a Change of Control Offer treating the date of such termination or default by such third party as though it were the date of the Change of Control Repurchase Event.

 

ARTICLE VI
 ADDITIONAL EVENT OF DEFAULT

 

Section 6.01.                          Events of Default.  In addition to the Events of Default set forth in the definition thereof contained in Section 501 of the Original Indenture, the term “Event of Default,” when used in the Indenture with respect to the Notes, shall mean any of the Events of Default set forth in Section 501 of the Original Indenture and shall also include any default in the performance, or breach, of the covenants set forth in Article V of this Supplemental Indenture.

 

ARTICLE VII
 MISCELLANEOUS

 

Section 7.01.                          Integral Part.  This Supplemental Indenture constitutes an integral part of the Indenture.

 

Section 7.02.                          Adoption, Ratification and Confirmation.  The Original Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed.

 

Section 7.03.                          Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed an original; and all such counterparts shall together constitute but one and the same instrument.  The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 7.04.                          Governing Law.  THIS SUPPLEMENTAL INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

7

 

The Company hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan in The City of New York in any action or proceeding arising out of or relating to the Notes or this Supplemental Indenture, and hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or federal court and hereby irrevocably waives, to the fullest extent that it may legally do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

 

Section 7.05.                          Trustee Makes No Representation; Trustee’s Rights and Duties.  The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture and shall not be liable in connection therewith. The rights and duties of the Trustee shall be determined by the express provisions of the Original Indenture and, except as expressly set forth in this Supplemental Indenture, nothing in this Supplemental Indenture shall in any way modify or otherwise affect the Trustee’s rights and duties thereunder.

 

[Signatures on following page]

 

8

 

SIGNATURES

 

 

	
 
    	
ISSUER:
    
	
 
    	
 
    
	
 
    	
CAMERON INTERNATIONAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles M. Sledge
    
	
 
    	
Name:
    	
Charles   M. Sledge
    
	
 
    	
Title:
    	
Senior   Vice President and Chief Financial
    
	
 
    	
 
    	
Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRUSTEE:
    
	
 
    	
 
    
	
 
    	
UNION BANK, N.A.
    
	
 
    	
as   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Lorraine McIntire
    
	
 
    	
Name:
    	
Lorraine   McIntire
    
	
 
    	
Title:
    	
Vice   President
    

 

Sixth Supplemental Indenture

 

 

EXHIBIT A

 

(Form of Face of Note)

 

	
CUSIP  13342B AN5
    	
 
    	
No.     
    
	
ISIN     US13342BAN55
    	
 
    	
$              
    

 

CAMERON INTERNATIONAL CORPORATION

 

1.40% Senior Note due 2017

 

Cameron International Corporation, a Delaware corporation, promises to pay to                     , or registered assigns, the principal sum of $                     Dollars [or such greater or lesser amount as may be endorsed on the Schedule attached hereto](1) on June 15, 2017.

 

Interest Payment Dates: June 15 and December 15

Record Dates: June 1 and December 1

 

 

	
 
    	
CAMERON INTERNATIONAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
UNION BANK, N.A.
    	
 
    
	
as Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    

 

(1)  To be included only if the Note is issued in global form.

 

 

(Back of Form of Note)

 

1.40% Senior Note due 2017

 

[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.](2)

 

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

 

1.              Interest; Additional Interest.  Cameron International Corporation, a Delaware corporation (the “Company” or the “Issuer”), promises to pay interest on the principal amount of this Note at 1.40% per annum from June 20, 2014 until maturity.  The Issuer shall pay interest semi-annually on June 15 and December 15 of each such year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”).  Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing default in the payment of interest, and if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be December 15, 2014.  The Issuer shall pay interest (including post-petition interest in any proceeding under the Bankruptcy Act) on overdue principal and premium, if any, from time to time on demand at the same rate; and it shall pay interest (including post-petition interest in any proceeding under the Bankruptcy Act) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.  Interest shall be computed on the basis of a 360-day year of twelve 30-day months.

 

(2)  To be included only if the Note is issued in global form.

 

A-2

 

 

2.              Method of Payment.  The Issuer shall pay interest on the Notes (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the June 1 or December 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 307 of the Original Indenture with respect to Defaulted Interest, and the Issuer shall pay principal (and premium, if any) of the Notes upon surrender thereof to the Trustee or a Paying Agent on or after the Stated Maturity thereof.  The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Trustee maintained for such purpose (which initially is c/o Union Bank, N.A., 120 South San Pedro Street, 4th Floor, Los Angeles, California 90012) or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds shall be required with respect to principal of, and interest and premium, if any, on, (a) each Global Security and (b) all other Notes aggregating at least $1,000,000 in principal amount the Holder of which shall have provided wire transfer instructions to the Issuer or the paying agent to an account in the United States on or prior to the applicable record date.  Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

3.              Paying Agent and Registrar.  Initially, Union Bank, N.A., the Trustee under the Indenture, shall act as Paying Agent and Security Registrar.  The Issuer may change any Paying Agent or Security Registrar without notice to any Holder.  The Issuer may act in any such capacity.

 

4.              Indenture.  The Issuer issued the Notes under an Indenture dated as of May 17, 2012 (the “Original Indenture”), as supplemented by the Sixth Supplemental Indenture dated as of June 20, 2014 (the “Supplemental Indenture” and, together with the Original Indenture, the “Indenture”), between the Issuer and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb).  The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.  The Notes are the obligation of the Issuer, initially in aggregate principal amount of $250,000,000.  The Issuer may issue an unlimited principal amount of Additional Notes under the Indenture.  Any such Additional Notes that are actually issued shall be treated as issued and outstanding Notes (and as the same series (with identical terms other than with respect to the issue date, issue price and first payment of interest) as the initial Notes for the purposes indicated in Section 3.02 of the Supplemental Indenture).

 

5.              Optional Redemption.  (a)  At its option, the Issuer may choose to redeem all or any portion of the Notes, at once or from time to time.

 

(b)                                 To redeem the Notes prior to June 15, 2017, the Issuer must pay a Redemption Price equal to the greater of (i) 100% of the principal amount of the Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (exclusive of interest accrued to the Redemption Date)

 

A-3

 

from the Redemption Date to June 15, 2017 computed by discounting such payments to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the sum of the Treasury Rate (as defined below) plus 5 basis points, plus in either case, any accrued and unpaid interest to, but excluding, the Redemption Date (subject to the right of Holders on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date).

 

For purposes of determining the Redemption Price, the following definitions shall apply:

 

“Comparable Treasury Issue” means the United States Treasury security or securities selected by the Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of the Notes to be redeemed.

 

“Comparable Treasury Price” means, for any Redemption Date, the average of the Reference Treasury Dealer Quotations for such Redemption Date.

 

“Independent Investment Banker”  means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.

 

“Reference Treasury Dealer” means each of Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC or their affiliates which are primary U.S. government securities dealers, and their respective successors;  provided, however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such Redemption Date.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual or equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate will be calculated on the third Business Day preceding the Redemption Date.

 

6.                                      Mandatory Redemption.  Except as set forth in Section 5.01 of the Supplemental Indenture, the Issuer shall not be required to make mandatory redemption or

 

A-4

 

sinking fund payments with respect to the Notes or to repurchase them at the option of the Holders.

 

7.                                      Notice of Redemption.  Notice of redemption shall be given at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed.  Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.  On and after the Redemption Date, interest shall cease to accrue on Notes or portions thereof called for redemption and with respect to which the Redemption Price has been paid.

 

8.              Denominations, Transfer, Exchange.  The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Security Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and the Issuer may require a Holder to pay any taxes or other governmental charges imposed in relation thereto.

 

9.              Persons Deemed Owners.  The registered Holder of a Note shall be treated as its owner for all purposes.

 

10.       Amendment, Supplement and Waiver.  Subject to certain exceptions, the Indenture may be amended or supplemented with the consent of the Holders of not less than a majority in principal amount of the then Outstanding Securities of each series affected thereby, any existing default relating to the Notes may be waived with the consent of the Holders of not less than a majority in principal amount of the then Outstanding Notes, and the Holders of not less than a majority in principal amount of all Outstanding Securities may on behalf of the Holders of all Outstanding Securities waive any other default under the Indenture.  Without the consent of any Holder of a Note, the Indenture may be amended or supplemented for any of the purposes set forth in Section 901 of the Indenture, including to cure any ambiguity, defect or inconsistency, to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Notes, to make any change that does not adversely affect the rights under the Indenture of any Holder of the Notes in any material respect, to comply with the requirements of the Commission to effect or maintain the qualification of the Indenture under the Trust Indenture Act, to evidence or provide for the acceptance of appointment under the Indenture of a successor or additional Trustee, to add to the covenants of the Issuer or any additional Events of Default, to secure the Notes or to establish the form or terms of any other series of Securities.

 

11.       Events of Defaults and Acceleration.  Events of Default with respect to the Notes include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when due at Stated Maturity, upon redemption or otherwise; (iii) default in the performance or breach of any covenant or warranty of the Company in the Indenture (other than a covenant or warranty referred to in clause (i) or (ii) or included in the Indenture for the sole benefit of a series of Securities other than the Notes), and continuance of such default for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the

 

A-5

 

Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of all series affected thereby a written notice specifying such default and requiring it to be remedied and stating that such notice is a “Notice of Default” under the Indenture; and (iv)  certain events of bankruptcy, insolvency or reorganization with respect to the Issuer.  If any Event of Default referred to in clause (i) or (ii) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then Outstanding Notes may declare all the Notes to be due and payable.  If an Event of Default referred to in clause (iii) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of all Outstanding Securities of all series affected by such default, including the Notes, may declare all such Securities to be due and payable.  Notwithstanding the foregoing, in the case of an Event of Default referred to in clause (iv), all Outstanding Securities shall become due and payable without further action or notice.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.

 

12.       Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

 

13.       Abbreviations.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

 

14.       CUSIP and ISIN Numbers.  Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP and corresponding ISIN numbers to be printed on the Notes, and the Trustee may use CUSIP and corresponding ISIN numbers in notices of redemption as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

The Issuer shall furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:

 

Cameron International Corporation

1333 West Loop South, Suite 1700

Houston, Texas   77027

Attention:  General Counsel

 

A-6

 

Assignment Form

 

To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to

 

	
 
    
	
(Insert assignee’s soc. sec. or tax I.D. no.)
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
 
    
	
(Print   or type assignee’s name, address and zip code)
    
	
 
    
	
and   irrevocably appoint
    	
 
    
	
agent   to transfer this Note on the books of the Issuer.  The agent may   substitute another to act for him.
    
	
 
    
	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Your   Signature:
    	
 
    
	
 
    	
(Sign exactly as your name appears on the face of this Note)
    
	
 
    
	
Signature   Guarantee:
    	
 
    
	
 
    	
(Signature   must be guaranteed by a financial institution that is a member of the   Securities Transfer Agent Medallion Program (“STAMP”), the Stock Exchange   Medallion Program (“SEMP”), the New York Stock Exchange, Inc. Medallion   Signature Program (“MSP”) or such other signature guarantee program as may be   determined by the Registrar in addition to, or in substitution for, STAMP,   SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as   amended.)
    
						

 

 

SCHEDULE OF INCREASES OR DECREASES IN THE GLOBAL NOTE(3)

 

The original principal amount of this Global Note is $250,000,000.  The following increases or decreases in this Global Note have been made:

 

	
Date of
   Exchange
    	
 
    	
Amount of
   decrease in
   Principal Amount
   of
   this Global Note
    	
 
    	
Amount of
   increase in
   Principal Amount
   of
   this Global Note
    	
 
    	
Principal
   Amount of
   this Global Note
   following such
   decrease
   (or increase)
    	
 
    	
Signature of
   authorized
   signatory of
   Trustee or Note
   Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(3)  To be included only if the Note is issued in global form.

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