Document:

exv10w13

 

Exhibit 10.13

INTRODUCTION

Pan American Energy LLC (Sucursal Argentina), an oil and natural gas production company that
operates several areas within the Gulf of San Jorge in the Republic of Argentina (“PAE”) and DLS
Argentina Limited – Sucursal Argentina, a company specialized in the drilling and completion of oil
wells and in the rendering of other services related therewith (“DLS”), have decided by mutual
agreement to form a long term strategic alliance for the drilling of wells for the production of
oil and/or natural gas and for the carrying out of eventual workover activities, declaring to
pursue the following purpose:

	 	–	 	To drill as many wells as possible, of a quality that suits the needs of Pan
American, under the required safety, health and environment protection conditions and at
a cost convenient for both parties against different market conditions.

To that end the parties intend:

	•	 	To plan, jointly and in the long term, the best and most rational use of the equipment
available;

	•	 	To promote the integration and development of both companies’ personnel in order to achieve
the most efficient performance of such personnel;

	•	 	To permanently optimize the levels of operational excellency; and

	•	 	To harmonize both companies Security, Health, Environment and Management systems by
defining common processes in order to rationalize such systems and make them more efficient for the
achievement of the proposed goals.

For the purpose of executing this proposal, the parties agree to remain subject to the model
agreement transcribed in the following chapter.

 

 

EXHIBIT “A”

MODEL AGREEMENT

City of Buenos Aires, July 1, 2003.

Messrs.

Pan American Energy LLC Sucursal Argentina

Av. Leandro N. Alem 1180

(1001) Buenos Aires

By hand

			
	Re:	 	Strategic Agreement for the rendering of Drilling, Completion and Workover Services of oil
and gas wells

Dear Sirs,

We hereby submit to your consideration our sole Strategic Agreement proposal for the rendering of
Drilling, Completion and Workover Services of wells located in the area of the Gulf of San Jorge,
Provinces of Chubut and Santa Cruz, and other services related therewith, as such services may be
requested by Pan American Energy LLC (Sucursal Argentina) according to its operation needs; the
text of the Strategic Agreement is transcribed herein below:

“WHEREAS, for the performance of its activities in the Gulf of San Jorge, PAE (as this term is
defined below) requires the performance of Drilling, Completion and Workover services of wells and
other services related therewith;

“WHEREAS DLS (as this term is defined below) is familiar with the rendering of drilling, completion
and workover services of oil wells and with the rendering of other services related therewith, it
has the necessary know-how and experience, capacity and availability to perform such services and
it also has experienced personnel and sufficient equipment to do so;

“WHEREAS DLS has economic and financial capacity to perform the services and to that effect wishes
to render the services to PAE (as this term is defined below);

“WHEREAS it is the PARTIES intention to formalize a collaboration relationship based on
institutional trust;

“WHEREAS it is the PARTIES intention to work together in order to achieve mutual benefits by
developing ongoing improvements and optimizing the use of the resources;

“WHEREAS by implementing a long term Strategic Agreement the PARTIES shall be able to optimize the
use of the resources; and

“WHEREAS by means of such long term Strategic Agreement, both DLS and PAE shall be able to obtain
mutual benefits in different areas both economic as well as operational and managerial;

THEREFORE the PARTIES agree to execute a Strategic Agreement (hereinafter referred to as “the
Agreement”) subject to the following terms:

1. PARTIES

DLS Argentina Limited – Sucursal Argentina, with legal domicile at Av. Pueyrredón 1770,
4th Floor of the City of Buenos Aires, hereinafter referred to as “DLS” and PAN
AMERICAN ENERGY LLC – Sucursal Argentina, with legal domicile at Av. Leandro N. Alem 1180 of
the City of Buenos Aires, hereinafter referred to as “PAE” (both parties jointly referred to as
the “PARTIES” and individually as “PARTY”).

 

 

2. PURPOSE

The purpose of this Agreement is for DLS to perform the necessary works for the rendering of
drilling, completion and workover services of wells located in the area of the Gulf of San
Jorge, in the provinces of Chubut and Santa Cruz and other related services, as such services
are more thoroughly described in Appendix II of this Agreement (hereinafter, the “SERVICES”);
this description of the purpose shall not be construed to exclude other works contributing to
or related with the purposes of this Agreement.

3. RENDERING OF THE SERVICES

The Services that constitute the subject matter of this Agreement shall be rendered exclusively
to the extent to which they are required by PAE and in the amount determined by the latter, in
accordance with the guidelines set forth by section 4 below.

The services shall be performed by DLS taking into consideration the conditions established in
this Agreement and its Appendixes (all of them hereinafter referred to as the “Documents of the
Agreement”), composed by the following:

Appendix I: Prices

Appendix II: Technical Appendix

Appendix III: PAE’s General Bidding Terms and Conditions Applicable to Works and
Services Agreements. Subcontractors management SSA system. (both documents
hereinafter referred to as the “Bidding Terms”).

4. AMOUNT OF EQUIPMENT

DLS shall guarantee the availability of at least three (3) pieces of drilling equipment, eight
(8) pieces of workover equipment and five (5) pieces of light pulling equipment in order to
satisfy PAE requirements; in turn and provided there are no significant changes in the oil
price or adverse results different from the production estimations, PAE shall make available to
DLS a sufficient number or sites so as to permanently maintain all of the said equipment in
operation during the term of the Agreement.

There are no limitations on the maximum amount of equipment to be provided by DLS, provided
however that the equipment is required by PAE.

The PARTIES agree to notify the other party at least thirty (30) days in advance prior to
requesting that the party adds or removes a piece of equipment.

5. TERM

This Agreement shall be in force for a period of five (5) years as from its Effective Date and
shall remain in force until the completion of the referred term, date on which it shall be
automatically terminated without any prior notice.

The above referred term, however, shall be subject to the early termination provisions set
forth by the Documents of the Agreement.

6. PRICE

See Appendix I.

7. CERTIFICATION

DLS shall use the electronic work certification system contained in PAE’s operative accounting
system called “LABS”, which consists on the generation of work certificates called “work
tickets” based on daily reports, and which DLS shall cause the team leader to enter through a
computer terminal; the work tickets shall be electronically delivered to the Agreement leader
for approval and subsequent preparation of an invoice. On the basis of the work tickets
approved by the Agreement leader, DLS shall prepare and present the invoices, which shall be
payable in accordance with section 8 “Way of Payment”. In the cases of Work Over and Pulling,
DLS shall present up to a maximum of one invoice per week.

 

 

8. WAY OF PAYMENT

	 	8.1	 	Thirty (30) days following the electronic entry into the e-commerce system LABS of an
invoice duly documented as provided by Section 7 above; within 24 hours DLS shall, at its
own option, deliver a hard copy of the invoice to Buenos Aires or to the Gulf of San Jorge
Management Unit.
	 
	 	8.2	 	At PAE’s request, DLS shall provide PAE with all the documentation required by the
Bidding Terms prior to the payment of invoices. In case PAE objected an invoice, PAE shall
pay the non-objected portion of the same and shall notify DLS about the objected items.
The objection shall only be acceptable if made on the basis of calculation errors or
errors in the preparation of the invoice.
	 
	 	8.3	 	A payment made by PAE shall in no way imply acceptance of the amendment to the
invoice and shall not mean a waiver to any right or recourse PAE may be entitled to under
this Agreement according to the law.

9. DLS TAX IDENTIFICATION NUMBER

30-64074560-2

10. NECESSARY DOCUMENTS

Regardless of the document requirements established by the Bidding Terms, which PAE may request
at any time, DLS shall keep in its possession the documents described below regarding all of
the personnel appointed to fulfill the Agreement (including its own subcontractors’ personnel)
and shall keep such documents permanently updated during the entire term of the Agreement:

	 	(a)	 	Copy of their ID.
	 
	 	(b)	 	Work permits issued by the National Immigration Office in the case of foreign
employees. DLS hereby represents that it is aware of the provisions of Section 71 of Act
17.319 and committed to complying with them.
	 
	 	(c)	 	Updated certificates of social security contributions.
	 
	 	(d)	 	Registration of the personnel with a Labor Risk Insurance Company.
	 
	 	(e)	 	Medical center specialized in labor medicine assisting all personnel appointed to
fulfill the Agreement.
	 
	 	(f)	 	Receipts for working clothes and personal safety items signed by all personnel
appointed to fulfill the Agreement.
	 
	 	(g)	 	List of vehicles and/or road equipment and insurances, as required by the Bidding
Terms, corresponding to the company that will transport DLS personnel and to DLS fleet of
vehicles.
	 
	 	(h)	 	Drivers license of DLS personnel and of the personnel of the company that will
transport DLS personnel.

PAE may at any time perform an audit and request the above described documents; in case PAE
verified that there is no objective evidence about the existence of such documents, its shall
proceed in accordance with the provisions of the Bidding Terms.

The PARTIES undertake to comply at every time with the labor, health and safety, insurance and
social security provisions set forth by the national, provincial and local legislation, as well
as with their internal corporate regulations, which they declare to know.

 

 

11. INSURANCES

DLS shall provide PAE with a copy of the insurance policies signed by the insurance company and
executed in accordance with the provisions of the Bidding Terms or the equivalent certificates
issued by the insurance company, with the specifications described hereunder:

	 	a)	 	The General Civil Liability Insurance shall be executed for an amount of
US$1,000,000.00 per claim and shall include, in addition to the ordinary provisions
contained in this type of policy
	 
	 	 	 	Specific reference to the fact that the policy covers damages eventually caused to
landowners who are not a party to the Agreement during the fulfillment of the same.
	 
	 	 	 	Extension of the coverage to whatever amounts DLS had to pay as a result of damages to
elements or goods that were in its possession under any legal title, or under its
supervision, even if such elements or goods were used by DLS in carrying out its duties but
they were the property of PAE.
	 
	 	 	 	Inclusion of PAE as a third party covered by the insurance policy.
	 
	 	 	 	Neither DLS nor the insurance company shall be entitled to exercise any compensation or
reimbursement rights against PAE for any damages or losses to DLS or PAE’s goods which had
been used in order to fulfill this Agreement.

12. ASSIGNMENT OF THE AGREEMENT

Taking into consideration the nature of the Agreement and the relationship between the PARTIES,
none of the PARTIES may assign the Agreement, in part or as a whole, nor may DLS subcontract
all or part of the works that constitute the subject matter of the same, without prior written
authorization by the other PARTY. For the purposes of the Agreement, all of the obligations of
DLS shall be deemed to be also its subcontractors obligations and DLS shall be jointly and
severally responsible with them for damages caused to PAE, even when PAE had authorized the
subcontracting.

The section above shall not apply in case the assignment by PAE was part of a greater
transaction (internationally known as a “package deal”), resulting either from a spin off,
merger, sale of all or of a substantial part of PAE’s rights or assets and only in the event
that the assignment of the Agreement by PAE represented less than 30% (thirty percent) of the
value of the said greater transaction.

13. FORCE MAJEURE

None of the PARTIES shall be liable for failing to comply with the terms of the Agreement when
compliance with its obligation was impeded, prevented or delayed by an extraordinary event
constituting an event of force majeure or Act of God according to sections 513/514 of the Civil
Code. Each PARTY shall give the other party notice of the occurrence of such events within
forty eight (48) hours following such occurrence and immediately after their disappearance in
order to resume the fulfillment of the Agreement. The PARTY affected by the event of force
majeure or Act of God shall make its best efforts to mitigate the effects of the same.

14. RESPONSIBILITIES

	 	14.1	 	Responsibility for complying with the Laws of the Republic of Argentina. DLS shall
perform all the works specified in the Agreement complying with all the laws and
regulations of the Republic of Argentina, any applicable geopolitical subdivision thereof,
including but not limited to the observance of the provisions related to the way the
operations should be conducted and to the employer’s obligations regarding safety,
salaries, social security contributions and insurances in connection with its own or its
subcontractors personnel. DLS further undertakes to maintain and immediately communicate
PAE about, and to hold PAE harmless against any claim, penalty, lawsuit or action of any
nature based on laws, regulations or bargaining agreements that may be applicable as a
result of the operations performed under the Agreement.

 

 

	 	14.2	 	Responsibility for taxes. Each PARTY shall be responsible for paying all national,
provincial and municipal charges, taxes and fees applicable as a result of their
activities.

15. APPENDIXES THAT FORM PART OF THE AGREEMENT

Appendixes I, II and III (Prices, Technical Appendix and Bidding Terms) shall be regarded as
part of the Agreement as if they were incorporated in the body of the same.

In case of conflict between the provisions of the Agreement and the provisions of the
Appendixes, however, or between the Appendixes themselves, the Agreement shall prevail over the
Appendixes and an Appendix shall prevail over the other ones according to the order in which
they are listed in the present section.

16. HEADINGS – INDIVISIBLE AGREEMENT

The headings preceding each section are included for the purpose of facilitating their reading
only and shall not be used to interpret the Agreement.

The Agreement constitutes the entire agreement of the PARTIES and supersedes all prior
agreement or communication, and may only be amended through a document executed by the
authorized representatives of the PARTIES.

17. INDEMNITY

	 	17.1	 	The terms stated herein below, when used in this Section or in any other part of
this Agreement, shall have the following meanings:

	 	(a)	 	“Affiliate” of a PARTY means an individual or entity who directly or
indirectly controls such PARTY, is controlled by such PARTY o is controlled by the
same individual or entity controlling such PARTY. For the purpose of the present
definition, the term control means direct or indirect ownership by the controlling
entity of fifty percent (50%) or more of the capital stock or participating interest
and of the voting rights of or in the controlled entity, or the capacity to direct
the management of such PARTY. In the events of indirect ownership of capital stock
or participating interest and voting rights, the above referred minimum percentage
required must be verified among the Bidder, the Subcontractor or the Company and
each of the individuals, entities, companies or associations involved in the chain
of control.
	 
	 	(b)	 	The “COMPANY GROUP” is formed by the following individuals and entities,
either individually or collectively considered: PAE and its Affiliates, its partners
and its Affiliates and the directors, executives, employees, agents and insurance
companies of such entities.
	 
	 	(c)	 	The “CONTRACTOR GROUP” is formed by the following individuals and
entities, either individually or collectively considered: DLS and its Affiliates,
its subcontractors and its Affiliates and the directors, executives, employees,
agents and insurance companies of such entities.
	 
	 	(d)	 	The “THIRD PARTIES” are all individuals and entities not included neither
in the COMPANY GROUP nor in the CONTRACTOR GROUP.

	 	17.2	 	Notwithstanding any other provision on the indemnities owed by DLS contained in the
present Agreement, DLS agrees to defend, protect and indemnify and hold the COMPANY GROUP
harmless and therefore waives its right to present PAE with any reimbursement or refund
claim for any costs, damages or losses arising from any lawsuit, liability, damage and
expense (including but not limited to lawyers fees and defense costs), and notwithstanding
the insurance policies in effect at the time and even for amounts exceeding the insurance
policies limits (if the latter were lower than the amounts actually claimed), in the
following cases:

 

 

	 	(i)	 	against all types of injury, death or disease of the individuals
conforming the CONTRACTOR GROUP; and
	 
	 	(ii)	 	against all types of damage or loss to the goods of the CONTRACTOR
GROUP; and
	 
	 	(iii)	 	with the exception of the provision of Section 17.3(iii), against all
types of injuries, death or disease of THIRD PARTIES; and
	 
	 	(iv)	 	with the exception of the provision of Section 17.3(iii), against all
types of damage or loss to the goods of THIRD PARTIES;

when the same are originated or result from negligence, gross negligence or willful misconduct
by the CONTRACTOR GROUP, taking into account that in the event of concurring negligence or
gross negligence by the CONTRACTOR GROUP and the COMPANY GROUP, the indemnification obligations
by the CONTRACTOR GROUP shall be limited to its part of concurring negligence or gross
negligence.

It is the PARTIES intention that, to the extent that it is permitted by the applicable
legislation, the compensations prescribed by this Section 17.2 are applied either if the
lawsuit, liability, damage or expenses in question (a) are based or not on negligence,
extra-contractual responsibility, obligations established by law, or contractual compensations
or (b) are directly or indirectly claimed by any individual or entity against the CONTRACTOR
GROUP or the COMPANY GROUP by way of exercising reimbursement, compensation or contribution
actions.

	 	17.3	 	Notwithstanding any other provision on the indemnities owed by PAE contained in the
present Agreement, PAE agrees to defend, protect and indemnify and hold the CONTRACTOR
GROUP harmless and therefore waives its right to present the CONTRACTOR GROUP with any
reimbursement or refund claim for any costs, damages or losses arising from any lawsuit,
liability, damage and expense (including but not limited to lawyers fees and defense
costs), and notwithstanding the insurance policies in effect at the time and even for
amounts exceeding the insurance policies limits (if the latter were lower than the amounts
actually claimed), in the following cases:

	 	(j)	 	against all types of injury, death or disease of the individuals
conforming the COMPANY GROUP; and
	 
	 	(ii)	 	against all types of damage to the goods of the COMPANY GROUP; and
	 
	 	(iii)	 	subject to the terms and conditions of the Agreement, against all
damage or loss to any drilling site, reservoir or underground minerals and all
damage or loss caused to the COMPANY GROUP or to a THIRD PARTY as a result of a well
out of control or of an emission, leak or contamination coming from any well as
described in section 17.6(b); and
	 
	 	(iv)	 	all types of injury, death or disease of THIRD PARTIES; and
	 
	 	(v)	 	all types of damage or loss to the goods of THIRD PARTIES;

when the same are originated or result from negligence, gross negligence or willful
misconduct by the COMPANY GROUP, taking into account that, except for the provisions of
Section 17.3(iii) and 17.6(b), in the event of concurring or joint negligence or gross
negligence by the COMPANY GROUP and the CONTRACTOR GROUP, the indemnification obligations
by the COMPANY GROUP shall be limited to its part of concurring or joint negligence or
gross negligence.

It is the PARTIES intention that, to the extent that it is permitted by the applicable
legislation, the compensations prescribed by this Section 17.3 are applied either if the
lawsuit, liability, damage or expenses in question (a) are based or not on negligence,
extra-contractual responsibility, obligations established by law, or contractual
compensations or (b) are directly or indirectly claimed by any individual or entity
against the CONTRACTOR GROUP or the

 

 

COMPANY
GROUP by way of exercising reimbursement, compensation or
contribution actions.

	 	17.4	 	The CONTRACTOR or the COMPANY, as the case may be, shall immediately give the other
PARTY notice of any lawsuit brought, or administrative or judicial action or claim filed
against it by virtue of which the CONTRACTOR or the COMPANY claim to be indemnified under
the terms of the present Agreement (hereinafter, a “Claim”). Such notice shall state as
comprehensively as possible the facts and circumstances originating the Claim and shall be
delivered to the other PARTY as soon as possible after the PARTY that received the Claim
(for the purposes of this Section 17.4, the “Indemnified Party”) becomes aware of the
existence of the Claim. The PARTY that receives the notice from the Indemnified Party
(for the purposes of this Section 17.4, the “Indemnifying Party”) shall meet with the
Indemnified Party in order to discuss the defense of such Claim, but the Indemnifying
Party or its insurance company, as the case may be, shall maintain control over such
defense, including but not limited to the selection and direction of its legal advisers.
Notwithstanding the foregoing, none of the PARTIES shall agree to any conciliation,
settlement or agreement, whether judicial or extrajudicial, regarding such Claim without
prior written consent by the other PARTY; taking into account that in the event that the
Indemnified Party did not consent to a conciliation, settlement or agreement that the
Indemnifying Party is willing to accept, the responsibility of the Indemnifying Party
shall be limited to the amount for which the Claim could have been settled. The
Indemnified Party may, in turn, by giving the Indemnifying Party notice and at the sole
cost and expense of the Indemnified Party, choose its own defense to challenge the Claim,
provided however that during the course of the discussions of the Claim such defense does
not carry out any action that harms the defense of such Claim.
	 
	 	17.5	 	None of the PARTIES shall be responsible before the other PARTY for any kind of
indirect , punitive, special or consequential damages arising from or in any way related
to the present Agreement and each PARTY agrees to defend, indemnify and exempt the other
PARTY from such responsibility.
	 
	 	17.6	 	(a) The CONTRACTOR GROUP shall be responsible for controlling and suppressing the
damages and shall defend, hold harmless and prevent the COMPANY GROUP from suffering any
damages arising from losses or damages claimed or lawsuits brought on the basis of
contamination originated in fuels, lubricants, motor oils, pipe grease, paint, dirt, waste
or any other substance produced by any equipment, instrument or tool used in the
performance of the SERVICES, or by the CONTRACTOR GROUP’s equipment or material.
	 
	 	 	 	(b) The COMPANY GROUP shall be responsible for controlling and suppressing the damages
and shall defend, hold harmless and prevent the CONTRACTOR GROUP from suffering any
damages arising from losses or damages claimed or lawsuits brought on the basis of
contamination caused by events not contained in Section 17.6(a), including fire, blow
out, crack, leak or any other uncontrolled flow of oil, gas or well water occurred during
the operations which is not attributable to negligence or gross negligence by the
CONTRACTOR GROUP.
	 
	 	 	 	Notwithstanding the PARTIES obligations under the provisions of section 13.2 of Appendix
II A, it is hereby agreed that in the event of a blow out, PAE shall be exclusively in
charge of the operations and shall be responsible for controlling and capping the well
either by itself or through subcontractors specialized in this type of operations. Except
in case the blow out resulted from gross negligence or willful misconduct by the
CONTRACTOR GROUP, the COMPANY GROUP shall be responsible for the damages or injuries
caused to THIRD PARTIES and to the CONTRACTOR GROUP or to their goods as a consequence of
the blow out, loss of control, damage and/or destruction of the well.

18. BREACH OF CONTRACT

Notwithstanding other rights held by PAE under the governing law or the Documents of the
Agreement, breach by DLS of any of its obligations, or late or inadequate fulfillment of such
obligations shall grant PAE the following rights, which shall be exercised prior notification
to DLS at least thirty (30) days in advance in order for DLS to remedy the breach within such
term:

 

 

	 	(a)	 	to retain any sums owed to DLS for any cause up to the amount necessary to remedy the
breach, either by itself or through subcontractors hired to that effect.
	 
	 	(b)	 	to terminate the Agreement by operation of law after the expiration of the referred
term if the notified breach is not remedied.

DLS obligations deriving from its performance in SSA, established in the Documents of the
Agreement, shall be deemed included in the DLS prime obligations described in this Section.

19. JURISDICTION

The PARTIES undertake to resolve their differences regarding the interpretation and execution
of this Agreement in good faith and under the principle of mutual cooperation, understanding
and consultation. To this effect, they shall hold the necessary meetings in order to resolve
their differences within thirty (30) days as from the moment such differences arise.

For all the purposes of the present Agreement, the Bidding Terms and the Bidding
Specifications, and in the event the PARTIES were unable to resolve their differences in the
way and within the term specified above, the PARTIES agree to be subject to the Jurisdiction of
the competent Courts of the City of Buenos Aires and expressly waive any other competent
jurisdiction that may correspond.

20. NOTICES

Notices and other communications required under the present Agreement shall be given in writing
and shall be deemed sufficient for any purposes when received by hand, certified mail, courier
or fax, at the recipient’s address established hereunder, (taking into consideration that any
of the PARTIES may change the address by giving notice) or when delivered by hand to the
authorized representative of the receiving PARTY. Each notice delivered by any of the ways
described above shall be effective on the effective date of reception by the receiving PARTY.

			
	Notices to PAE:	 	Pan American Energy LLC (Sucursal Argentina)

Av. Leandro N. Alem 1180, 8th Floor

(1001) Buenos Aires City

Atn.: Mr. Ricardo Paladino

Fax: 011-4310-4101

E-mail for operation matters:

rpaladino@pan-energy.com

			
	Notices to DLS:	 	DLS Argentina Limited Sucursal Argentina

Pueyrredón 1770, 4th Floor

Buenos Aires City

Atn.: Mr. Jorge Mauri

Fax: 4829-2460

E-mail for operation matters:

jmauri@dls-argentina.com.ar

In order to facilitate the prompt and fluent communication between the PARTIES, it is hereby
agreed that the use of the e-mail system for operation and routine matters shall also be
accepted as a means of communication among the PARTIES; all other matters shall require written
notice.

The present offer shall be deemed accepted by You to the extent that Pan American Energy LLC
(Sucursal Argentina) pays Invoice # A0002-00001846, presented by DLS Limited Argentina
(Sucursal Argentina) on June 13, 2003.

For the purposes of this Agreement, the payment date shall be regarded as the “Effective Date”
of the Agreement.

Sincerely,

/s/ Martin Zoldi

Martin Zoldi

Vice-president

 

 

APPENDIX I – PRICES

The present Appendix I forms part of the “Strategic Agreement for the rendering of Drilling,
Completion and Workover Services of oil and gas wells” dated July 1, 2003 (hereinafter, the
“Agreement” or the “Alliance”). All capitalized terms that are not expressly defined by the present
instrument shall have the meaning assigned to them by the Agreement.

1. INTRODUCTION

The PARTIES acknowledge that the compensation scheme described below has been designed by
mutual agreement for the purpose of facilitating the achievement of the goals set for the
Alliance and, to this effect, such scheme may be revised and amended at the request of any of
the PARTIES, on the basis that the operation practices and/or a change in the external
conditions during the term of the Agreement reveal a discrepancy between the intended results
and the results actually achieved.

Likewise, at any time during the term of the Agreement any PARTY may propose any amendment to
the present compensation scheme that might reinforce the effective achievement of the intended
goals.

In any case, the proposed amendments shall require both PARTIES approval in order to be
incorporated to the Agreement.

2. QUOTATION CURRENCY AND ADJUSTMENT FOR INFLATION

2.1. Mixed Unit

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

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

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

For the purpose of clarifying the meaning and application of the MU, the following two examples
may be used:

Case 1: 100 MU(30%USD) are equivalent to USD30 + $70

Case 2: 200 MU (60%USD) are equivalent to USD120 + $80

In this Agreement, when a price is expressed in MU(X%USD), the amount corresponding to USD
shall be referred to as USD Portion and the amount corresponding to $ shall be referred to as $
Portion.

In the examples above, in the first case the USD Portion is 30 and the $ Portion is 70; in the
second case, the USD Portion is 120 and the $ Portion is 80.

2.2. Ii Adjustment Index

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

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

 

 

	 	 	 	 	 	 	 
	Ii = A x

	 	IFASPi-1
	 	IGOILi-1
	 	IPPi-1
	 	 

	 	 

	 	 

	 

	 	IFASP0
	 	IGOIL0
	 	IPP0

	 	 	 	where
	 
	 	 	 	IFASP: Cost in $ of an intervention crew composed or 1 driller, 1 derrickman and 3
roughnecks as stated in the Services Salary Table of the Collective Bargaining
Agreement for the FASPyGP, considering the agreement’s basic gross salaries (no extras)
plus employer’s contributions to the Retirement Fund, Act 19.032, Medical Care and
Labor Risk Insurance. The annual statutory bonus and employer’s contributions
percentages shall also be added, including the Cuota Solidaridad (Solidarity
Contribution) minus the recovery of tax credits.
	 
	 	 	 	IGOIL: Price in $ of diesel oil in bulk in Comodoro Rivadavia
	 
	 	 	 	IPP: Producer’s Basic Prices Index
	 
	 	 	 	Sub-indexes ‘i-1’ indicate that the value corresponds to the period preceding the ‘i’
period regarding which the Adjustment Index is being calculated.
	 
	 	 	 	Sub-indexes ‘0’ indicate that the value corresponds to the initial month, defined as
July, 2003.
	 
	 	 	 	Coefficients A, B and C shall be defined for each particular tariff.
	 
	 	2.2.2.	 	The ‘i’ period adjusted tariff shall result from multiplying the $ Portion of the tariff
by the Ii Adjustment Index calculated in accordance with section 2.2.1 above.
	 
	 	 	 	In the explanatory examples used in section 2.1, if for a particular month the
Adjustment Index was Ii = 1.05, the payable amounts would be the following:
	 
	 	 	 	Case 1: 100 MU(30%USD) are equivalent to USD30 +
$70    USD30    +    $73.5    are payable

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

3. COMPENSATION SCHEME

3.1. Drilling Service

Compensation to be paid by PAE to DLS for the drilling service rendered in accordance with the
scope, terms and conditions of the Agreement and its Appendixes shall be subject to the
following scheme:

3.1.1. Wells between 900 and 2,700 mts. depth / Conventional drilling

 

 

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

LS = K x TStd

where:

LS = Lump Sum [MU(30%USD)]

K = Standard Hourly Rate = 847.00 MU (30%USD)/hour

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

TStd = hi x119xEXP(0.00044xTD)

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

	 	 	 	 	 
	hi = hi-1 x {1- [(1-

	 	å TReal
	 	)x 0.5]}
	 

	 	å TStd(i-1)	 	 
	 

	 	 

	 	 

where:

å TReal is the summation of the time actually used in the drilling of all the
wells carried out during the past 12 months of operation.

å T Std(i-1) is the summation of the time anticipated by the function TStd in
effect during the period immediately prior to the period for which the efficiency is being
calculated, applied to the same wells as referred above.

hi-1 is the efficiency corresponding to the immediately previous period. It is
hereby established that the efficiency corresponding to the initial 6 months period equals
1 (one).

For the purposes of the present section, the referred drilling times comprise as from the
beginning of the dismantling of the equipment at one site up to the beginning of the
dismantling of the equipment at the next site, including transport time from one site to
the other one.

3.1.2. Wells over 2,700 mts. depth and TESTS

Wells of a projected final depth exceeding 2,700m or wells in which the PARTIES decide
to use technologies or procedures as TESTS shall be compensated through the Hourly Rate
plus reimbursable costs system.

TNP is the Net Drilling Time measured in hours as from the well spuding up to the
completion of the works and dismantling of the equipment; the amount PAE shall pay DLS
in order to compensate the use of the drilling equipment shall be calculated as the
result of TNP x OHR, where:

OHR = Operation Hourly Rate = 541.50 MU(37%USD)/hour

The materials and services actually employed during the drilling and not included in
the equipment’s hourly compensation shall be reimbursed by PAE to DLS at the
presentation of the corresponding expenses vouchers or through the use of unit price
lists approved by the PARTIES in due time.

 

 

Such materials and services comprise, among others: DTA, Drill Bits, Mud Materials,
Water Transport, Rents, etc.

3.1.3. Deepenings exceeding 2,700 mts. depth

In case of deepenings exceeding 2,700m for all types of wells having an original final
depth of less than 2,700m, the total compensation shall be calculated as the summation
of the LS (Lump Sum) corresponding to 2,700m, calculated as described in 2.1.1, plus
the amount resulting of applying the Hourly Rate plus Reimbursable Costs system defined
in 2.1.2, applied as from 2,700m depth up to the completion of the well.

3.1.4. Stand By Rate

The Stand By Rate applicable as provided for by the Technical Appendix shall be:

SHO = Stand By Hourly Rate = 498.18 MU(37%USD)/hour

3.1.5. Coefficients for calculating the Adjustment Index

The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.1 are:

	 	 	 
	A =
	 	0.35
	B =
	 	0.20
	C =
	 	0.45

3.2. Completion and Workover service

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

3.2.1. Operation Hourly Rate

The hourly rate that shall be used to compensate the use of Completion equipment shall
be:

OHR = Operation Hourly Rate = 276.50 MU(19%USD)/hour

3.2.2. Stand By and Climate Factor Hourly Rate

The Stand By and Climate Factor Hourly Rate applicable as provided for by the Technical
Appendix shall be:

SHR = Stand By Hourly Rate = 253.55 MU(19%USD)/hour

CFHR = Climate Factor Hourly Rate = 138.25 MU(19%USD)/hour

3.2.3. DTA Rate

Compensation that PAE shall pay DLS for the Dismantling, Transport and Assemblage (DTA)
of Completion equipment shall be:

DTA(=f) = DTA between wells located on the same flange = 4,012.20 MU(19%USD) +
[Distance in excess of 20Km] x 59.44 MU(19%USD)/Km

 

 

DTA(1f) = DTA between wells located on different flanges = 10,818.08 MU(19%USD)

3.2.4. Coefficients for calculating the Adjustment Index

The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.2 are:

	 	 	 
	A =
	 	0.45
	B =
	 	0.10
	C =
	 	0.45

3.3. Pulling Service

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

3.3.1. Operation Hourly Rate

The hourly rate that shall be used to compensate the use of Pulling equipment shall be:

Light Pulling

OHR = Operation Hourly Rate = 224.00 MU(16%USD)/hour

Heavy Pulling

OHR = Operation Hourly Rate = 253.12 MU(16%USD)/hour

3.3.2. Stand By and Climate Factor Hourly Rate

The Stand By and Climate Factor Hourly Rate applicable as provided for by the Technical
Appendix shall be:

Light Pulling

SHR = Stand By Hourly Rate = 201.60 MU(16%USD)/hour

CFHR = Climate Factor Hourly Rate = 112.00 MU(16%USD)/hour

Heavy Pulling

SHR = Stand By Hourly Rate = 227.81 MU(16%USD)/hour

CFHR = Climate Factor Hourly Rate = 126.56 MU(16%USD)/hour

3.3.3. DTA Rate

Compensation that PAE shall pay DLS for the Dismantling, Transport and Assemblage (DTA)
of Pulling equipment shall be:

Light Pulling

DTA(=area A/B) = DTA between wells located on the same area = 631.96 MU(16%USD)

 

 

DTA(1area C/D) = DTA between wells located on different areas = 1,053.26 MU(16%USD)

Heavy Pulling

DTA(=area A/B) = DTA between wells located on the same area = 1.199,10 MU(16%USD)

DTA(1area C/D) = DTA between wells located on different areas = 1.996,34 MU(16%USD)

3.3.4. Coefficients for calculating the Adjustment Index

The values of the A, B and C coefficients as defined in 2.2.1 applicable to all rates
detailed in 3.3 are:

	 	 	 
	A =
	 	0.50
	B =
	 	0.10
	C =
	 	0.40

 

 

APPENDIX II: TECHNICAL APPENDIX

II.A – DRILLING IN THE GULF OF SAN JORGE 

MANAGEMENT UNIT

The present Appendix II.A forms part of the “Strategic Agreement for the rendering of Drilling,
Completion and Workover Services of oil and gas wells” executed between DLS and PAE (in this
Appendix, hereinafter referred to as the “Agreement” or the “Alliance”). All capitalized terms that
are not expressly defined by the present Appendix shall have the meaning assigned to them by the
Agreement.

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	SECTION 1:

	 	LOCATION OF THE WELLS.
	 	 	 	Page 3
	 
	 	 	 	 	 	 
	SECTION 2:

	 	PERFORMANCE OF THE WORKS.
	 	 	 	Page 3
	 
	 	 	 	 	 	 
	SECTION 3:

	 	DEPTHS AND DIAMETER.
	 	 	 	Page 3
	 
	 	 	 	 	 	 
	SECTION 4:

	 	TARIFFS.
	 	 	 	Page 4
	 
	 	 	 	 	 	 
	SECTION 5:

	 	MATERIALS, SUPPLIES, EQUIPMENT,

SERVICES, PERSONNEL, ETC.

PROVIDED BY DLS.
	 	 	 	Page 5
	 
	 	 	 	 	 	 
	SECTION 6:

	 	MATERIALS, SUPPLIES, EQUIPMENT,

SERVICES, PERSONNEL, ETC.

PROVIDED BY PAE.
	 	 	 	Page 10
	 
	 	 	 	 	 	 
	SECTION 7:

	 	DRILLING METHODS AND
PRACTICES.
	 	 	 	Page 11
	 
	 	 	 	 	 	 
	SECTION 8:

	 	CASING.
	 	 	 	Page 14
	 
	 	 	 	 	 	 
	SECTION 9:

	 	SAMPLES AND LOGGING.
	 	 	 	Page 14
	 
	 	 	 	 	 	 
	SECTION 10:

	 	DRILLING RECORDS.
	 	 	 	Page 15
	 
	 	 	 	 	 	 
	SECTION 11:

	 	CONDITION OF THE EQUIPMENT –
REPAIRS.
	 	 	 	Page 15
	 
	 	 	 	 	 	 
	SECTION 12:

	 	SITE – TRANSIT PERMIT.
	 	 	 	Page 15
	 
	 	 	 	 	 	 
	SECTION 13:

	 	MISCELLANEOUS LIABILITIES.
	 	 	 	Page 16
	 
	 	 	 	 	 	 
	SECTION 14:

	 	RELATIONSHIPS WITH DLS.
	 	 	 	Page 17
	 
	 	 	 	 	 	 
	SECTION 15:

	 	AMENDMENTS TO THE SCHEDULE.
	 	 	 	Page 17
	 
	 	 	 	 	 	 
	SECTION 16:

	 	RECORDING SYSTEM OF THE
ALLIANCE.
	 	 	 	Page 18
	 
	 	 	 	 	 	 
	SECTION 17:

	 	CONFIDENTIAL INFORMATION.
	 	 	 	Page 18
	 
	 	 	 	 	 	 
	APPENDIX 1:

	 	Description of the Technical
Equipment	 	 	 	 
	 
	 	 	 	 	 	 
	APPENDIX 2:

	 	Joint installation of the B.O.P.	 	 	 	 

 

 

APPENDIX II: TECHNICAL APPENDIX

II.A – DRILLING OF WELLS IN THE GULF OF SAN JORGE 

MANAGEMENT UNIT

SECTION 1

LOCATION OF THE WELLS.

The sites designed and provided by PAE shall be located within the area of the Gulf of San Jorge
Management Unit, which comprise the areas of Cerro Dragón, Anticlinal Grande and Anticlinal Funes
corresponding to the North flange and Piedra Clavada and Koluel Kaike corresponding to the South
flange.

SECTION 2

PERFORMANCE OF THE WORKS.

DLS shall begin and carry on the operations with due diligence and without improper delays or
interruptions and shall perform such operations on the basis of a seven (7)-days-week and twenty
four (24)-hours-working days.

If an unplanned interruption of the operations extends for a period exceeding 30 days, DLS shall
provide a replacement; planned interruptions shall be communicated by DLS two months in advance.

In order to ensure the fulfillment of the technical requirements established in the present
Appendix and maintain control over the processes affecting the standards of Quality and Safety set
with respect to the contractual obligations, for the purposes of the Alliance, the Quality Plan
(PG-AE-GC-02) is hereby implemented. This Quality Plan describes the way in which the requirements
of the Agreement are fulfilled and contains the description of how operations are carried out, also
referring to the applicable procedures and instructions to that effect.

SECTION 3

DEPTHS AND DIAMETER.

	3.1	 	General provisions.
	 
	 	 	Wells shall drilled up to final depths between 900 and 2,700 meters.

PAE reserves the right to complete the drilling at a greater or lower depth in accordance
with the provisions of the present bidding terms.
	 
	3.2	 	Minimum depth of the wells.
	 
	 	 	In the event that a well is abandoned at PAE’s request and not as a result of improper
performance by DLS or malfunction of its equipment, at a depth lower than 900 meters, PAE
shall compensate DLS with the Hourly Rate for the amount of time employed in assembling the
drilling equipment, drilling the well, abandoning the well, dismantling the equipment and
transporting the same to the next well or to the base.
	 
	3.3	 	In case it was necessary to drill a well to a depth exceeding 2,700 meters, DLS consent shall
be required. The drilling equipment provided by DLS shall have a nominal drilling capacity of
3,000 meters.
	 
	3.4	 	Diameter of the Wells.
	 
	 	 	The project well shall be drilled with drill bits of 12 1/4” up to a depth between 100 and
500 meters and cased with casing of 9 5/8” O.D. The rest of well shall be drilled with
drill bits of 8 1/2” – 8 3/4” and shall be cased with casing of 5 1/2” O.D.

	 
	 	 	In some cases the following shall be necessary:

a) to start the well with drill bits of 17 1/2” and case with casing of 13 3/8”.

b) to case the insulation span with casing of 7” O.D.

 

 

SECTION 4

TARIFFS.

	4.1	 	General provisions
	 
	 	 	PAE shall pay DLS for the services rendered on the basis of the tariffs established in
Appendix I of the Agreement and the ones defined herein below:
	 
	4.2	 	Waiting Hourly Rate (WHR)
	 
	 	 	This rate shall be applied when the continuance of the drilling works is delayed at PAE’s
instruction due to the fact that PAE is waiting for instructions, materials, locations,
roads and other circumstances to be defined and which do not constitute an event of force
majeure or Act of God. PAE may decide to put one or more pieces of equipment “on hold” and
during such period DLS shall be paid the Waiting Hourly Rate. There are no time limitations
with respect to “on hold” situations and the equipment may remain assembled on the well, on
the Oilfield or at DLS’s yard while such situations remain.
	 
	4.3	 	Conventional Drilling Rate
	 
	 	 	The conventional drilling rate shall be applicable to all drilling operations of regular
wells between 900 and 2,700 meters (See

Appendix I – Prices –Section 2.1.1).

The depths shall be determined by the measurement of the drill pipes through the use of
steel tape.

All these measurements shall be taken from the kelly drive bushing and the distance in
meters between the bushing and the ground level shall be deducted from the calculation.
The provision of drill bits, water and mud materials shall be DLS’ responsibility.
	 
	4.4	 	Operation Hourly Rate (OHR)
	 
	 	 	This hourly rate shall be applicable during the performance of wells of a programmed final
depth exceeding 2,700 meters. The same rate shall be applicable to the drilling of test
wells as provided by the PG-AE-PF-01 Alliance Procedure. In both cases the DTA shall be
charged in accordance with Appendix I – Prices, Section 2.1 Price List.

The provision of drill bits, water and injection materials shall be PAE’s responsibility.
With respect to the OHR, PAE shall recognize up to 15 minutes per each eight hour shift, up
to a maximum of forty five minutes per day for maintenance and equipment repair works.

Greater costs associated with additional works required to be carried out due to equipment
malfunctions shall be shared by the parties on the basis of the determining causes of such
malfunction and the parties corresponding responsibilities.

SECTION 5

MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC. TO BE PROVIDED BY DLS.

DLS shall provide the main and auxiliary equipment necessary to comply with the work schedule. In
particular, the drilling equipment shall have a nominal drilling capacity of 3,000 meters and shall
meet the API standards. Likewise, PAE’s “Wells Operation and Drilling Policies” shall be observed
where applicable.

PAE reserves the right to expressly accept an amount of equipment not strictly suitable to fulfill
this condition according to its drilling program.

In addition, PAE requires at least the following:

	 	–	 	Application of the “Technical and Basic Safety Rules for Drilling Operations”
(PG-AE-SE-03 Procedure) for the PAE-DLS Strategic Alliance.
	 
	 	–	 	Check list to verify the fulfillment of the PG-AE-SE-03 Procedure.
	 
	 	–	 	Dismantling, Transport and Assemblage of Tower Equipment Safety (PG-AE-SE-01 Procedure).
	 
	 	–	 	Trucks and hoisting elements Certification and Audit Procedure (IT-AE-TR-05).

 

 

	5.1	 	Equipment

	 	5.1.1	 	Drilling equipment:

	 	–	 	hydromatic brake for the drawworks
	 
	 	–	 	Crown block proximity indicator in the hoisting gear
	 
	 	–	 	Stand pipe, gooseneck, flexible pipe and rotary swivel guaranteed 3,000 psi working pressure.

	 	5.1.2	 	Mud system:

	 	–	 	Triplex mud pumps 2,200 psi working pressure and 525 GPM flow rate.
	 
	 	–	 	Tanks and/or pits (minimum capacities)

	 	–	 	120m3 water storage tank
	 
	 	–	 	100m3 water treating pit
	 
	 	–	 	40m3 shaker pit for mud preparation
	 
	 	–	 	40m3 decanting tank
	 
	 	–	 	40m3 double suction pit
	 
	 	–	 	10m3 shaker pit for pill preparation
	 
	 	–	 	3m3 travel tank with graduated scale visible to the driller
	 
	 	–	 	Two (2) linear shakers with a minimum treatment capacity of 500
GPM (Brandt LCM-2D-I; Swaco ALS-II or similar). DLS shall provide the screens
necessary to operate between 80 and 210 mesh.
	 
	 	–	 	The transfer pumps must pump the mud filtered by the shakers
into the settling tank at all times and particularly when gasified mud is
received.
	 
	 	–	 	Desander with a minimum treatment capacity of 850 GMP.
	 
	 	–	 	Desilter with 16 cones of 4”.
	 
	 	–	 	Atmospheric degasser
	 
	 	–	 	Degasser.
	 
	 	–	 	Testing laboratory

	 	 	 	DLS shall have adequate laboratory items so as to comply with the drilling fluids
testing procedures indicated by the API RP 13B rule, which comprise the following:

	 	 	 
	Determination	 	                        Minimum Equipment
	A) Density

	 	a) Conventional mud scale
	 
	 	 
	B) Viscosity and 

     Gel Strength

	 	a) Marsh funnel viscosimeter

b) 6 velocity FANN VG meter with Calibration kit
	 
	 	 
	C) Filtration

	 	a) filter press with a working pressure rating of 100 psi
	 
	 	 
	D) Sand

	 	a) Sand screen to determine the sand content
	 
	 	 
	E) Liquids and
solids contents

	 	a) Mud retort
	 
	 	 
	F) Ph

	 	a) Ph test paper of 0.2 units scale. Various ranges.
	 
	 	 
	G) Resistivity

	 	a) Resistivity meter
	 
	 	 
	H) Chemical analysis

	 	a) Complete equipment to determine the following:
	 

	 	1. Chlorides

2. Alkalinity and calcium content

3. Total Ca and Mg hardness

4. Cation exchange capacity (methylene blue)

	5.1.3	 	B.O.P.

	 	–	 	B.O.P. installation assembled and connected as indicated in
Appendix B 3,000 psi of 11” comprising:

 

 

	 	a.	 	two shut-in valves or one double valve with two sets of rams, one of
blind rams and one for the drill string in use.
	 
	 	b.	 	one bag type valve (Hydrill or similar)
	 
	 	c.	 	Drilling spool with one 2” side outlet and
another 3” outlet and adapter flanges for installation.

	 	–	 	Hydraulic operation of the three valves with pressure accumulator
and at least two remote controls, one of which over 25 meters away from the
equipment.
	 
	 	–	 	Choke manifold for 3,000 psi, in accordance with API RP53. Choke
lines manifold 3” diameter.
	 
	 	–	 	Kelly cock valve.
	 
	 	–	 	B.O.P. test plugs.
	 
	 	–	 	To make available at the C. Rivadavia base a 13 5/8” 500 psi
DIVERTER equipment with 6” line and remote control activated valve.
	 
	 	–	 	50 m (min) line to the burner.
	 
	 	–	 	DLS shall make available (at PAE’s request and free of charge)
equipment capable of operating at pressures up to 5,000 psi in accordance with
the A.P.I. RP 53 rule.

5.1.4 Auxiliary equipment:

	 	–	 	Hydraulic or pneumatic tongs for casing of 9 5/8”, 7” and 5 1/2”.
	 
	 	–	 	Pipe elevators, slips and collars of 13 3/8”, 9 5/8”, 7” and 5 1/2”.
	 
	 	–	 	Snap on casing thread protector of 13 3/8”, 9 5/8”, 7” and 5 1/2”.
	 
	 	–	 	Hydraulic or pneumatic tongs for the drill string (the use of the
spinning chain shall not be allowed).

DLS shall provide the casing tong service at PAE’s entire satisfaction. In case this
service does not meet the required safety or technical standards, PAE may require DLS to
hire a Company approved by PAE to perform the service and the resulting costs shall be
borne by DLS.
In case this situation was verified again, PAE may require that a Company approved by PAE
provides this service on a permanent basis and the resulting costs shall be borne by DLS.

5.1.5 Tools:

	 	–	 	Weight, penetration, pump pressure and torque , RPM, strokes per minute and stroke
counter indicators.
	 
	 	–	 	Deviation meter. At PAE’s request and free of charge DLS shall make available at
the C. Rivadavia base a Mathey type wire winch.

All the tools required to control the drilling processes and the tools to control the
quality of the mud shall be comprehended within the calibration and tools control ISO
procedure agreed in the Alliance.

5.1.6 Fishing tools

	 	–	 	Fishing and surface bumper sub and jar.
	 
	 	–	 	Overshots for equipment in use.
	 
	 	–	 	Taper taps.
	 
	 	–	 	One set of washing pipes and washover shoes.
	 
	 	–	 	Mills.
	 
	 	–	 	Baskets.
	 
	 	–	 	Safety joint.
	 
	 	–	 	Fishing magnet.
	 
	 	–	 	Necessary crossovers.

5.1.7 Drill string:

	 	–	 	Inside B.O.P.
	 
	 	–	 	Drill string safety valve (Hydril type full-flow valve)
	 
	 	–	 	Necessary amount of 4 1/2” or 5” drill pipes apt for drilling up to 3,000 meters
	 
	 	–	 	A minimum of 25 6 1/2” spiral drill collars
	 
	 	–	 	A minimum of 3 8” spiral drill collars
	 
	 	–	 	A minimum of 9 4 1/2” or 5” HW drill pipes according to the drill string in use
	 
	 	–	 	Upper or lower kelly cock

 

 

	 	–	 	A set of floating valves available at the C. Rivadavia base with its corresponding
replacement.

	 	5.1.8	 	Various materials and equipment at the sites:

	 	–	 	Wood boarding (It shall be used for all pieces of equipment
operating at problematic areas, in accordance with the procedure: (“Sites
Construction Procedure” PG-AE-FA-01).
	 
	 	–	 	Casing racks.
	 
	 	–	 	Covered semitrailer for mud material storage.
	 
	 	–	 	Electric welding equipment.
	 
	 	–	 	Oxyacetylene equipment.

	5.2	 	Consumables.

	 	–	 	Rubber stabilizer on the kelly sub to protect the casing conductor.

	 
	 	–	 	Fuels and lubricants.
	 
	 	–	 	All other necessary supplies to maintain DLS equipment in good
operating conditions.
	 
	 	–	 	Drill bits: 17 1/2”, 12 1/4”, 8 3/4” and 8 1/2”.
	 
	 	–	 	Drilling mud: The drilling mud materials and service shall be
provided by DLS. The mud to be used is bentonitic mud, low polymeric solids
content (not dispersed).
	 
	 	–	 	Water: the water to be used in the operations, either salt or
fresh water, shall be carried by DLS. PAE shall indicate the loading points
where water may be obtained.

	5.3	 	Transport.

	 	–	 	The following transport procedures and instruction manuals agreed by the
Alliance shall apply:

	 	–	 	“Tower equipment Dismantling, Transport and Assemblage” (PG-AE-SE-01)
	 
	 	–	 	“Control of hours actually worked by the transport personnel” (IT-AE-TR-01)
	 
	 	–	 	“..Support” (IT-AE-TR-02)
	 
	 	–	 	“Transport units control list” (IT-AE-TR-03)
	 
	 	–	 	“Drivers Authorization” (IT-AE-TE-04)
	 
	 	–	 	All transport of DLS equipment into the area of the
Agreement, transport between sites and removal of equipment at the termination
of the Agreement.
	 
	 	–	 	In case roads are in bad conditions, PAE shall assist DLS in
carrying out the transport.
	 
	 	–	 	All transport of DLS materials and personnel necessary for
the operations.

	5.4	 	Personnel and Camp.
	 
	 	 	Personnel shall comply with sections 7.1 and 13.3 of these Bidding Terms and furthermore:

	 	–	 	Working days shall be divided into 8 (eight) or 12 (twelve)
hour shifts. 12 x 12 regimes are not allowed (12 hours rest x 12 hours work).
	 
	 	–	 	Camps to host personnel within the area of the Agreement are
not allowed.
	 
	 	–	 	1 office-bedroom Trailer with two (2) beds, fully-equipped
kitchen and bathroom for the Team Leader with heating and cooling system.
	 
	 	–	 	1 office-bedroom Trailer with two (2) beds, fully-equipped
kitchen and bathroom for personnel training and well logging activities with
heating and cooling system.

	5.5	 	Communications.

	 	–	 	DLS shall maintain permanent radio contact between the
drilling teams and PAE’s camp at Cerro Dragón. PAE shall provide voice and
data communication among the Drilling teams.
	 
	 	–	 	DLS shall comply with:

	 	–	 	“DIMS operation procedure” (PG-AE-AD-01)
	 
	 	–	 	“Data quality control and handling of information” (IT-AE-AD-01)
	 
	 	–	 	“Mandatory reports to be entered on DIMS” (IT-AE-AD-02)
	 
	 	–	 	Intercom for risk areas between driller and
derrickman at the racking platform and two (2) Walkie Talkie units
for risk areas available for the team.

	5.6	 	Safety gear and working clothes.

	 	–	 	Safety glasses for all personnel.

 

 

	 	–	 	Ear protectors to use at all places where noise level exceeds 85 decibels.
	 
	 	–	 	In vehicles or fixed premises, personnel shall wear the gear
prescribed by the corresponding Safety Regulations.
	 
	 	–	 	Electronic speed recorder in vehicles (digital speed meter)
	 
	 	–	 	In addition, all other gear required by legal regulations in force

	5.7	 	Fire equipment.

	 	a.	 	Three dry chemical powder ABC type, potassium base, fire trucks of 100 Kg.
capacity or three dry chemical powder fire trucks of 70 Kg. capacity.
	 
	 	b.	 	Six dry chemical powder ABC type, potassium base, manual extinguishers of 10
Kg. capacity or six dry chemical powder manual extinguishers of 7 Kg. capacity.
	 
	 	c.	 	All the equipment described in a. and b. above shall be nitrogen pressurized
and have a pressure control gauge.
	 
	 	d.	 	Two carbon dioxide extinguishers of 5 Kg. capacity each.
	 
	 	e.	 	The equipment shall be placed at strategic places. The trucks shall not be
over 20 meters away from the drilling equipment.
	 
	 	f.	 	In addition, all other equipment required by legal regulations in force.
	 
	 	g.	 	The team shall hold safety meetings once a week (each shift) during free
working time.

	5.8	 	Fire Prevention Training.
	 
	 	 	During the drilling of a well, different shifts of personnel shall be trained on fire
prevention, as provided for by the simulation plan. Written records of the dates and
training issues shall be kept.
	 
	5.9	 	Electric safety equipment.

	 	–	 	Stakes.
	 
	 	–	 	Explosion proof electric installation.
	 
	 	–	 	In addition, all other equipment required by legal regulations in force.

	5.10	 	First Aid Equipment.

	 	–	 	Medicine cabinet with the items necessary to provide immediate aid.
	 
	 	–	 	Stretcher to carry injured persons.
	 
	 	–	 	In addition, all other equipment required by legal regulations in force.

	5.11	 	Training in and correct use of the STOP Safety system.

	5.12	 	Updated certificates of Wells’ Control Courses, Supervisor level, for Team Leaders, Shift
Heads and Mud Engineers. Wells’ Control Courses, Basic level, for Drillers and Derrickmen.

SECTION 6

MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC. TO BE PROVIDED BY

PAE.

PAE shall provide the following services and materials:

	6.1	 	Services:

	 	–	 	Wire line service, including indication of the free point and breakout. In case of
fishing attributable to DLS, DLS shall provide such services at its own cost, if required.
	 
	 	–	 	Cementing service.
	 
	 	–	 	Formation testing and production measurement services.

	6.2	 	Materials:

	 	–	 	Pipe cementing centralizers, collars and shoes.
	 
	 	–	 	Pipes.
	 
	 	–	 	Operating nipple.
	 
	 	–	 	Well heads with their corresponding valves.
	 
	 	–	 	Baker Lock.

 

 

	6.3	 	Water supply

	 	–	 	PAE shall make available loading points conveniently located within the working area in
order to guarantee the supply of water during drilling operations.
	 
	 	–	 	The water used in the operations, either salt or fresh water, shall be carried by DLS.
The cost of such transport shall be included in the conventional Drilling tariff according
to Section 4.3.
	 
	 	 	 	PAE shall indicate the loading racks where water can be obtained.
	 
	 	 	 	DLS shall take the necessary measures to rationalize the use of water and, if possible, use
mud in tank cleaning.
	 
	 	 	 	DLS shall raise its personnel awareness in order to minimize the volumes of wasted water
for different reasons, such as centrifugal pump packing condition, state of hoses and
joints, avoiding overflows, etc.

	6.3	 	Surface works.

	 	PAE shall provide the following surface works, duly completed, for the wells to be drilled:
	 
	 	–	 	Completed compacted and properly leveled site in the assemblage area,
equipment anchorage (“Site Construction Procedures” PG-AE-FA-01).
	 
	 	–	 	Derrick cellar and conductor pipe.
	 
	 	–	 	Mud pit for injection.
	 
	 	–	 	Access road to location.
	 
	 	–	 	Road and access to water loading racks.

SECTION 7

DRILLING METHODS AND PRACTICES.

	7.1	 	Due diligence.
	 
	 	 	DLS shall commence the works on the date indicated by PAE and shall continue to perform
them with due diligence and care, in accordance with good oilfields practices, keeping the
equipment in optimum working conditions and using competent personnel.
	 
	 	 	DLS shall employ all necessary care and diligence (in particular but not limited to, the
closure of valves), in order to avoid contamination of the phreatic layers, the
deterioration of the land, field, livestock, premises and, in general, in order to avoid
damages to PAE and to third parties. The protection of the environment shall be governed by
the ISO 14001 Environmental Management System, certified by PAE.

	7.2	 	Required quality

	 	7.2.1	 	Caliper within the zone of interest:
	 
	 	 	 	DLS shall monitor the process so that the caliper diameter within the zone of
interest is not higher than 9” or lower than 8 1/2” (with +1/4” / -0 tolerance),
avoiding caves and surface rugosity affecting the data recording quality of the
logging tools. All records exceeding the specified limits (process control range)
shall be analyzed and the causes of such circumstances shall be identified and deemed
as a lesson for the application of counter-measures in new wells.
	 
	 	7.2.2	 	Hole deviation
	 
	 	 	 	DLS shall take the necessary measures, according to good drilling practices used in
oilfields, so that the well is not deflected beyond the following limits:
	 
	 	a.	 	A maximum of two (2) degrees beyond the vertical for each fifty (50) meters.
	 
	 	b.	 	A maximum of one and a half (1.5) degrees from the wellhead to the total
depth of the guide pipe.
	 
	 	c.	 	A maximum of four (4) degrees from guide pipe shoe to the final depth of the
well.

 

 

	 	 	 	DLS shall measure the deviation from the vertical at each drill bit change or when
the drilling schedule so requires, by using adequate tools in accordance with the ISO
Tools Calibration and Control procedure.

	 
	 	 	 	
The resulting values shall be verified every time dip meter surveys are performed.
	 
	 	7.2.3	 	Water loss at the zone of interest
	 
	 	 	 	A water loss value of 8cc/30min. (API) is hereby established as an empirical
reference for the Gulf of San Jorge. This value may be revised and controlled tests
under the (PG-AE-PF-01) procedure the optimum water loss value may be defined, so
that penetration speed may be maximized without affecting the caliper and minimizing
the damages to the formation.
	 
	 	7.2.4	 	Drilling mud salinity
	 
	 	 	 	Mud containing 3,000 ppm chloride ion by adding KCI shall be used at the zone of
interest.
	 
	 	7.2.5	 	Drilling mud density
	 
	 	 	 	The density value shall be the minimum possible value compatible with the well’s
safety conditions.
	 
	 	 	 	For the purpose of minimizing the damage to the formation, a maximum % of solids of
7%-8% without increasing the density is hereby defined. The use of mud-weighting
materials shall be allowed only as an exception for problem wells or wells with
neighboring problem wells.

	7.3	 	Controlled tests
	 
	 	 	For the purpose of facilitating ongoing improvements to the drilling processes defined in
the Agreement, changes in the methodology, introduction of technologies, change of
practices, new mud formulas, etc. shall be carried out through Controlled Tests (according
to the PG-AE-PF-01 procedure) and the results shall determine the adoption or rejection of
the proposed changes.
	 
	 	 	The performance of these controlled tests shall be compensated under the OHR tariff
modality as provided for by Appendix I – Prices 2.1.2.

	7.4	 	Fire and blow outs prevention

	 	a.	 	DLS shall use all possible means to control and avoid fires and blow outs and
to protect the well. No fire shall be allowed within a 50 meter perimeter around the
well. In case it was necessary to perform welding works on the equipment or in the
surrounding area, an “authorization to perform hot working” from the representative in
the Area (Team Leader).
	 
	 	b.	 	The B.O.P. shall be placed in the 9 5/8” guide pipe during all drilling
operations and shall be kept in optimum working conditions. In this respect, DLS shall
examine and test the working conditions of the B.O.P. valves and other equipment
following each assemblage and record the results of such tests on the drilling
records.
	 
	 	 	 	DLS shall perform at its own expense well control simulations through well known
procedures; simulations shall involve all working shifts and shall be carried out
once for every well; the results shall be entered in the drilling records.
	 
	 	c.	 	B.O.P Tests

	 	–	 	Immediately following installation, test the rams, annulus,
Lines and flow manifold, according to DLS procedure.
	 
	 	–	 	Prior to commencing the drilling of the 8 1/2” diameter well
and completed the cement setting time, the guide pipe tightness and the
pipe-B.O.P. connection shall be tested as indicated by the drilling schedule.
	 
	 	–	 	In case it is necessary to replace parts of the B.O.P. or of
the surface equipment during the operations, the disassembled section shall be
tested again.
	 
	 	In addition, PAE may request the B.O.P. test at any time deemed convenient.

	7.5	 	Drilling Schedule

 

 

	 	 	The Alliance Engineering Department shall prepare the drilling schedule for each well and 2
weeks in advance shall provide the Team Leader with the information regarding neighboring
wells with respect to layer pressures, loggings and lessons learned.
	 
	 	 	Changes to the drilling schedule shall be authorized by the Alliance Leader.
	 
	 	 	DLS shall test the drilling mud at least every eight hours in order to verify its
properties and shall record the results of such tests in the DIMS with the same frequency
as well as every time changes of parameters are introduced. The API drilling mud report
shall be delivered to the Cerro Dragón of Koluel Kaike offices, as the case may be, on a
daily basis.
	 
	 	 	Use of DIMS to record mud and losses volumes.

	 
	 	 	
Upon completion o the well, DLS shall deliver to the offices a summary of the materials
used, water consumption to prepare the mud and the equipment total water consumption
together with the rest of the documents related to the well. Water volumes shall be
recorded by zones in cases of loss by circulation.
	 
	 	 	DLS shall keep the well, pipe and annular spaces full of drilling mud at all times. The
change of drill bit jobs shall be controlled by using the trip tank and the trip
spreadsheet shall be kept in the files to evidence its use.

	 
	 	 	Prior to carrying out the round-trip operation, weight up mud pills (barite) shall be used
in the drill string in order to avoid mud losses and have better control over the filling
of the well.
	 
	7.6	 	Depth records and drill string.
	 
	 	 	DLS shall maintain at all time accurate records of the following:

	 	a.	 	Drilling depths by controlling the quantity and length of the drill string
lowered into the well.
	 
	 	b.	 	Dimensions and physical characteristics of all items lowered into the well.
	 
	 	c.	 	Changes to the drilling and drilling mud parameters.

SECTION 8

CASING.

PAE shall prepare the casing program. The maximum cement setting time for the guide pipe shall be
eight (8) hours. The guide pipe shall not be moved during the first eight (8) setting hours
unless PAE requests to reduce such time. In case PAE changes the diameter of the well or of the
casing and this change resulted in additional costs to DLS, the parties shall agree the
compensation amount.

SECTION 9

SAMPLES AND LOGGING.

	9.1	 	Samples.
	 
	 	 	PAE may request cuttings samples at regular intervals during the drilling, which shall be
placed in bags provided by PAE. In addition, PAE may request the drilling to be interrupted
in order to circulate drilling mud and obtain such samples, which DLS shall take, wash,
identify, keep and preserve for PAE. The time spend during the performance of this service
shall be paid at the OHR tariff.
	 
	9.2	 	Logging.
	 
	 	 	PAE shall choose, at its own decision, one development well out of ten wells drilled, in
order to log the respective guiding well. In each exploration well, the guiding well shall
be logged.

 

 

	 	 	In every case and regardless of the final well depth, DLS shall deliver the well in such
conditions so as that it can be logged.

SECTION 10

DRILLING RECORDS.

DLS shall enter in the DIMS all the drilling process and drilling mud variables defined as critical
by the Information systems Group at least every two hours (metric cost spreadsheet) or when changes
to parameters are introduced. In addition DLS shall provide a report on the mud properties and use
of materials, using spreadsheets approved by DLS, indicating the depth drilled, formations
encountered and penetrated, data on the drill bit, string of drillpipe, depth at which control
samples were taken and recovered, accidents, equipment tests and all other pertinent information.
Special spreadsheets to be filled in are attached to the appendix. The spreadsheets, forms and
reports created at the completion of the well shall be delivered together with the isolation
cementing reports and forms (PG-AE-AD-01).

SECTION 11

CONDITION OF THE EQUIPMENT –

REPAIRS.

	11.1	 	Condition of the Equipment.
	 
	 	 	Drilling equipment availability, reliability and servicing indexes shall be kept;
interruptions to the service due technical failures or programmed maintenance works shall
also be recorded. (PG-AE-MA-01 “Equipment failure analysis”).
	 
	11.2	 	Repairs.
	 
	 	 	During operation DLS shall perform its equipment maintenance in order for them to carry out
their functions without wasting time. DLS shall perform all repairs immediately and at its
own expense and risk.
	 
	11.3	 	Suspension of the Works.
	 
	 	 	In case deficiencies in the equipment that cause unnecessary delays or involve risks to the
personnel are identified, PAE may suspend the works until such deficiencies are eliminated.

SECTION 12

SITE – TRANSIT PERMIT.

PAE shall produce the access, exit and permanence permits to, from and in the area of location of
the well for the performance of all the works included in these bidding terms. In case of
impossibility to obtain such permits or in case such permits are subject to restrictions or
limitations, PAE shall give DLS immediate written notice. Time lost by DLS as a result shall be
compensated at the Waiting Day tariff.

SECTION 13

MISCELLANEOUS LIABILITIES.

	13.1	 	Responsibility for Damages or Losses to the Equipment.

	 	13.1.1	 	DLS surface equipment.

 

 

	 	 	 	DLS shall be responsible at all time for damages or losses to its surface
equipment, tools, machinery and utensils, whatever the time or way in which the
damage is caused and PAE shall in no way be responsible for reimbursing DLS.
	 
	 	13.1.2	 	DLS equipment in the Well.
	 
	 	 	 	DLS shall be responsible for damages to or destruction of its equipment in the
well, except in case they are attributable to a borehole obstruction for
differential pressure or force majeure.

	13.2	 	Damage to the Well.
	 
	 	 	In case of fire or blow out or if the well is lost or damaged for causes attributable to
DLS, its subcontractors or employees, the consequences of such loss or damage shall be
borne by DLS; in case that, as a result thereof, the well cannot be drilled up to the
programmed depth, at PAE’s, DLS shall immediately at its own expense commence the drilling
of a new well up to the same depth reached by the damaged or lost well. If the well is lost
or damaged without negligence by DLS, however, but as a result of PAE’s pipe or equipment
failure, whether during or after the installation of the pipes, or as a consequence of
failures occurred during the cementing operation that result in pipe breakage, such loss
shall be borne by PAE and DLS shall be compensated for:

	 	a.	 	All the works performed by DLS prior to such loss at the OHR tariff;
	 
	 	b.	 	All the works performed in an attempt to restore the well to normal
conditions, at the OHR.

	13.3	 	Materials Provided by PAE.
	 
	 	 	DLS agrees to carefully inspect at the site all the materials and equipment for the well
provided by PAE and to notify PAE in writing about any apparent defects found, in the way
and within the timeframe necessary for PAE to be able to replace such defective materials
or equipment. Failure by DLS to give notice the materials and equipment shall be deemed
free of apparent defects.
	 
	 	 	DLS shall be responsible for the preservation of the materials, equipment, tools and all
other items provided by PAE, and shall keep them in good condition in order to return them
or respond for them as the case may be. While in DLS’s possession, such elements shall be
deemed under DLS’s custody.

SECTION 14

RELATIONSHIPS AMONG THE PARTIES.

	14.1	 	The creation of an alliance between PAE and DLS may lead to the development of new
relationships based on mutual trust, the sharing of operation information and, above all, it
may raise both companies awareness on the need to insure their personnel and goods, to
preserve the environment and to constantly improve themselves for the benefit of the
companies and personnel involved.
	 
	14.2	 	Both companies shall share all the operation information related to the activities of the
Alliance. This information may be transmitted or accessed through common databases to which
access shall be granted via authorizations or passwords.
	 
	14.3	 	Each company organizing a technical training activity involving the interests of the
Alliance shall invite representatives of the other company to attend.
	 
	14.4	 	For the purposes of training of personnel and prior agreement and scheduling, any company
may assign its own personnel specific tasks to be performed at the other company.
	 
	14.5	 	Both companies undertake to systematically analyze the performance of the Alliance in
order to benefit from its achievements and prevent possible errors.

 

 

	14.6	 	In order to ensure the consolidation of the management model proposed for the Alliance
and the goals described above, the parties agree, whenever deemed necessary and by mutual
agreement, to adjust the organization of the activities to be performed so that it better
suits the Alliance needs.
	 
	 	 	An Alliance Leader, reporting simultaneously to PAE’s GSJ Development Management and to the
DLS Base Management, shall be appointed by mutual agreement.

	 
	 	 	The following staff shall also be appointed: a Leader and Co-Leader for each Drilling Team,
employed by DLS; a Drilling Engineering team composed of 1 Engineering Leader and 2
Engineers, all of whom shall be proposed by PAE; 2 Engineers proposed by DLS and a
supervisor from SSA. All these officers shall report to the Alliance Leader.

SECTION 15

AMENDMENTS TO THE SCHEDULE.

DLS shall perform the works and operations in accordance with the schedule provided by PAE and
with the programs prepared by the Alliance Engineering Department. Such programs may be amended
in reasonable ways and timeframes and, in such case, such amendments shall be approved by the
Alliance Leader.

SECTION 16

RECORDING SYSTEM OF THE

ALLIANCE.

The Alliance records system shall be composed of the DLS Quality Management System, the PAE
Environmental Management System, the PAE Safety Management System and the procedures and
guidelines prepared under the scope of the Alliance.

This system takes into consideration the preparation of special documentation for this Agreement
in particular. The operation procedures that require to be reviewed and that fall within the
scope of the PAE/DLS Alliance shall be jointly considered by both Companies. The preparation of
the same shall be subject to the “Preparation of the Procedures Created under the Scope of the
PAE-DLS Alliance” procedure (PG-AE-GC-01).

In case of conflict between the latter and PAE’s and DLS’s own procedures, the Alliance
procedures shall prevail.

The procedures and guidelines describe the records created and provide objective guarantee and
evidence that the required quality and safety standards were met and that the quality system has
been properly put in practice.

SECTION 17

CONFIDENTIAL INFORMATION.

Any data or information deriving from or related to the drilling operations and other oil activity
in the area, of whatever kind or nature, shall be treated by the parties as strictly confidential.
The contents of such information shall under no circumstances be revealed to third parties, either
in whole or in part. The same obligation applies to the parties employees, subcontractors and their
employees and any other individual or entity related to the parties.

 

 

Exhibit 1:

Technical Description of the Equipment.

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY – CHECK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-101

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                     Date: 06-30-03

A. Casing or drill pipe manoeuvring capacity 280 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	1.	 	Pipes maximum capacity on the setback 270 M lb
	 
	 	2.	 	Rotary table maximum bearing capacity regardless of the load on setback 350 M lb
	 
	 	3.	 	Side load capacity (only for towers) ___ lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

	 	 	 	 	 
	HP HOOK

	 	HOOK LOAD
	 	HOOK VELOCITY

Performance
observed pulling ___ M lb ___ ft/min.                     ft/min.

Auxiliary
brake performance Max. hook Load ___ M lb ___ ft/min.

Mud pumps (observed) performance capacity

 

 

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	High Flow Service	 	 	High Pressure Service	 
	 	 	Gal/min.	 	 	psi	 	 	HHp	 	 	gal/min	 	 	psi	 	 	HHp	 
	Main Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

E. Rotary table performance

Continuous Spinning rate

1. Rotary table : Brand : Ideco Model : RT 20.5 API opening 20 1/2”

2. Independently commanded table, max.                    RPM

3. Independent command unit, Brand                     Model:                    

4. Command unit, engine, Brand, Model:                     HP Continuous capacity.

5. Table commanded through the switchboard

Change I 0 RPM to 120 RPM Change III ___ RPM to  ___ RPM

Change II 0 RPM to 220 RPM Change IV  ___ RPM to                     RPM

F. Specifications of string of drillpipe

	 	 	 	 	 
	Drill Pipe
String:
	 	 	1	 
	Nominal diameter:
	 	4 1/2  Inches	 
	Weight per foot:
	 	19.5 lb/ft	 
	API degree:
	 	 	E-75;G-105	 
	Overall Length
	 	9900 feet	 
	Joints size and type:
	 	 	NC46	 
	Outside diameter:
	 	6.25 inches	 
	Last inspection date
	 	 	 	 
	Inspection method
	 	 	 	 
	Class
	 	 	 	 

	 	 	 	 	 
	N° of tubes per inspection	 	 	 	Premium
	 
	 	 	 	1
	 	 	 	 	2
	 	 	 	 	3
	 	 	 	 	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

 

 

	 	 	 	 	 	 	 	 	 
	Quantity
	 	 	3	 	 	 	25	 
	Max. Diam. Ext (1/16 inches)
	 	 	8	 	 	 	6.5	 
	Min. Int. diam (1/6 inches)
	 	 	3	 	 	 	2 1/4	 
	Average length
	 	 	30	 	 	 	30	 
	Approx. string of drill pipe weight
	 	13.5 M LB	 	 	76.5M LB	 
	Joints, size and type
	 	6 5/8 RAG	 	 	 	NC46	 

G. Auxiliary equipment

	 	 	 	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1
	 	 	 	37 m3
	2
	 	 	 	43 m3
	3
	 	 	 	20 m3

Mud mixing equipment

     a. Pumps

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	Capacity
	1

	 	Kayac
	 	6 X 5
	 	1000 GPM
	2

	 	Kayac
	 	6 X 5
	 	1000 GPM

     b. Drive impeller

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	HP
	1

	 	Siemens
	 	Triphasic 3x380V
	 	30 HP
	2

	 	Siemens
	 	Triphasic 3x380V
	 	30 HP

Mud Agitator equipment – Description

5 Electric agitator Boston 7,5 HP each

Vibrating Screen: Brand Fluid System Linear model

	 	 	 	 	 	 	 	 	 
	Desander:	 	Brand	 	Model	 	Capacity gal/min
	 

	 	Type Swaco
	 	2X 10
	 	 	1000	 
	 
	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Desander Pump:	 	Brand	 	Type	 	Capacity gal/min
	 

	 	Mission
	 	6 X 5
	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 
	Brand	 	Model	 	HP
	Weg

	 	Triphasic 3x380V
	 	60 HP

Well control equipment

BOP

	 	 	 	 	 	 	 	 	 	 	 	 	 
	N° Brand	 	Model	 	Size of flange	 	Interior Diam	 	Working pressure
	HYDRILL

	 	GK
	 	Annular
	 	 	11	 	 	 	3,000	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	N° Brand	 	Model	 	Size of flange	 	Interior Diam	 	Working pressure
	SHAFFER

	 	LWS
	 	DOUBLE
	 	 	11	 	 	 	3,000	 

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:

	 	Brand Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	Brand Omsco
	 	Model Lower
	 
	 	 	 	 
	Degasser:

	 	Brand SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output

BOP closing unit

Brand KOOMEY Model                      N° outputs 6 N° of stations 3

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with

liquid) 3,000 psi.

Reducing and regulator valve?            YESþ         Noo

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	Type	 	Capacity, KW
	1

2

	 	Cramaco

Caterpillar
	 	G2R

SR4
	 	3x380/220V-50Hz

3x380/220V-50Hz
	 	320 KVA

205 KVA

Generator impellers

	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	HP
	1

2

	 	Scania

Caterpillar
	 	DS11

3406
	 	360

300

Antiexplosive lighting system:            YES þ      No o

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container                                                                               
  

Cement storage capacity                                                                            
  

Fresh water storage capacity Two 60 m3 tanks

Diesel oil storage capacity One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC46 or NC50

Hydrill or Omsco type boring safety valve.

Varco SlX type elevator 100/150 Tn for casing 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges CMS-XL for casing 13 1/8”, 9 5/8”, 7”

Varco Series S auxiliary elevator for casing

Varco MG 18° type elevators for casing 150/250 for 4 1/2” bars

Varco SDXL or SDML type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Varco bars or hawk type or chain weatherford type
bars.

6600 Varco Type Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque

indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment indetification: DLS-101

The equipment hook load capacity, for the string of drill pipe is 280M pounds, limited by Hook
capacity                      below
(weakest link)

The equipment hook load capacity when moving casing is 280M pounds, limited by hook capacity
                    
below

1. Mast or Tower                                                             
                                        
                                        
                    
                   Capacity

	 	 	 	 	 
	wind load capacity, without drill pipe stow
	 	100 mph
	Wind load capacity whit 9900 feet in drill pipe stow
	 	80 mph

Stowage capacity of drill pipe of 4 1/2 inches 10800 feet

Hook’s static load capacity (whit 8 lines holding 280M pounds travelling block)

	 	 	 	 	 	 	 	 	 
	2. Crown block

	 	Lee C. More
	 	 	6	 	 	190 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	3. Traveling Block

	 	Ideco
	 	 	5	 	 	160 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 	 	 
	1.

	 	Hook: Unitized
	 	160 tons
	2.

	 	Plushing head: National 69
	 	300 tons
	3.

	 	Lifting arms: 2 1/4” x 108”
	 	250 tons
	4.

	 	Drillpipe elevator: Varco
	 	250 tons
	5.

	 	Casing elevators: BK
	 	150 tons
	6.

	 	Drilling line (hook load capacity)
	 	292 M pounds

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 x 19

	 	1 1/8
	 	EIPS
	 	IWRC
	 	130 M LB
	 	 	3	 	 	 	8	 
	Classification

	 	Diam.
	 	Degree
	 	Care
	 	Api breakage
Resistivity
	 	Safety factor
	 	N° of Lines

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

Substructure: Brand Lee C. Moore                                                                   
              

Brand Model or type                                                                            
    

	 	 	 	 	 
	Ground height
	 	10 feet
	Width
	 	22 feet
	Length
	 	8 feet
	Rotary table ground level height up to bellow the beans
	 	8 feet 2 inches
	To use with towers (masts) with gook load capacity
	 	280 M pounds
	 
	Maximum mean lower low water pipe capacity
	 	270 M pounds
	Maximum bearing capacity
	 	350 M pounds
	Side load capacity (Only for towers)
	 	___ M pounds
	Loads imposes by tensioning items
	 	___ M pounds
	Additional loads
	 	___ M pounds

 

 

FORM. API N° D-C

PROGRAM C

Lifting and braking capacity

Equipment
identification: DLS- 101
_____________________________________________________________

Maximum observed power at hook
                                                            
at a hook load of                                                           

Date                                                             
at the site                                                             
and observed by                                                       

Equipment assembled as follows

	 	 	 
	Equipment

	 	Description (type, brand, model, size, etc)
	 
	 	 
	Drawworks

	 	Mid continental U-36 , 600 HP
	Auxiliary broke

	 	Parmac V80
	 
	 	 
	Transmission system engine elevation

	 	Chains
	 
	 	 
	Elevation engines

	 	Two Caterpillar D-353; 460HP @ 1200 RPM
	 
	 	 
	Observed test information – elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift
1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 	 	 	travelling	 	 
	 	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-101

 

 

	 	 	 	 	 	 	 
	Specifications Pumps	(1) Principal	 	(2) Auxiliary	 	(3) Auxiliary	 
	Brand (manufacturer)

	G. DENVER
	 	G. DENVER	 	 	 
	Model

	PZ-8
	 	PZ-9	 	 	 
	Input Power

	750 HP
	 	1000 HP	 	 	 
	RPM

	140 x 8 Inches

	 	130 x 9 Inches	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.
	Jacket diameter
Max.- Min.

	 	 	6 1/2	 	 	 	5	 	 	 	7	 	 	 	5 1/2	 	 	 	 	 
	Corresp. Working
Pressure (measure)

	 	 	2315	 	 	 	3912	 	 	 	2639	 	 	 	4274	 	 	 	 	 
	 

	 	 	483@140	 	 	 	286@140	 	 	 	585@130	 	 	 	361@130	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Pressure on stand
pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated......%ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Continuous performance tested
	 	 	 	 	 	 	by manufacturer at the speed
	 	 	 	 	 	 	stated by the owner’s instruction
	N°	 	Brand	 	Model	 	manual
	1

2

	 	Catepillar

Catepillar
	 	D-398

D-399
	 	800_HP

1060_HP
	 	a 1200 RPM

a 1200 RPM

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY – CHEEK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-102

Area of use of the equipment: PAE-Cerro Dragón

Data provided by: DLS                              Date: 06-30-03

A.
Manoeuvring capacity casing or drill pipe 280 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	4.	 	Pipes maximum capacity on the setback 270 M lb
	 
	 	5.	 	Rotary table maximum bearing capacity regardless of the load on setback 350 M lb
	 
	 	6.	 	Side load capacity (only for towers)                      lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

					
	 	 	 	 	 
	HP HOOK
	 	HOOK LOAD
	 	HOOK VELOCITY

Performance
observed pulling ___M min/min. ___ ft/min.

Auxiliary
brake performance Max. hook Load ___M lb___ft/min.

Mud pumps (observed) performance capacity

 

 

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	High Flow Service	 	 	High Pressure Service	 
	 	 	Gal/min.	 	 	psi	 	 	HHp	 	 	gal/min.	 	 	psi	 	 	HHp	 
	     7. Main Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	     8. Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	     9. Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

E. Rotary table performance

Continuous Spinning rate

1. Rotary table : Brand : G. Denver Model :RT 22.5 API opening: 22 1/2”

2. Independently commanded table, max.                    RPM

3. Independently command unit, Brand                     Model:                    

4. Command unit, engine, Brand, Model:                     HP Continuous capacity.

5. Table commanded through the switchboard

Change I 0 RPM to 120 RPM Change III ____RPM to ____ RPM

Change II 0 RPM to 220 RPM Change IV _____RPM to ____ RPM

F. Specifications of string of drillpipe

	 	 	 	 	 	 	 	 	 
	Drill Pipe
	 	 	 	 	 	 	 	 
	String:
	 	 	 	1	 	 	 	 
	Nominal diameter:
	 	 	 	4 1/2	 	Inches	 	
	Weight per foot:
	 		 	19.5	 	lb/ft	 	 
	API degree:
	 	 	 	E-75;G-105	 	 	 	 
	Overall Length
	 		 	9900	 	Feet	 	 
	Joints size and type:
	 	 	 	NC46	 	 	 	 
	Outside diameter:
	 	 	 	6.25	 	Inches	 	
	Last inspection date
	 	 	 	 	 	 	 	 
	Inspection method
	 	 	 	 	 	 	 	 
	Class
	 	 	 	 	 	 	 	 
	N° of tubes per inspection
	 	 	 	 	 	Premium	 	 
	 
	 	 	 	300	 	1	 	 
	______
	 	 	 	                    	 	2	 	 
	______
	 	 	 	                    	 	3	 	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

 

 

	 	 	 	 	 
	Quantity
	 	3	 	25
	Max. Diam. Ext (1/16 inches)
	 	8	 	6.5
	Min. Int. diam (1/6 inches)
	 	3	 	2 1/4
	Average length
	 	30	 	30
	Approx. string of drill pipe weight
	 	13.5 M LB	 	76.5M LB
	Joints, size and type
	 	6 5/8 REG	 	NC46

G. Auxiliary equipment

	 	 	 	 	 	 	 	 	 
	Mud Pits	 	 	 	 	 	 
	Number	 	Dimensions	 	 	Capacity (per unit)	 
	1
	 	 	                    	 	 	 	35 m3	 
	2
	 	 	                    	 	 	 	35 m3	 
	3
	 	 	                    	 	 	 	32 m3	 

Mud mixing equipment

c. Pumps

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	Capacity	 
	1
	 	Kayac	 	 	6 X 5	 	 	1000 GPM
	2
	 	Kayac	 	 	6 X 5	 	 	1000 GPM

d. Drive impeller

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	HP	 
	1
	 	Siemens	 	Triphasic 3x380V	 	30 HP
	2
	 	Siemens	 	Triphasic 3x380V	 	30 HP

Mud Agitator equipment – Description

5 Electric agitator Boston 7,5 HP each

Vibrating
Screen: Brand Fluid System Linear model

	 	 	 	 	 	 	 
	Desander:
	 	Brand	 	Model	 	Capacity gal/min
	 
	 	Type Swaco	 	2X 10	 	1000
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Desander Pump:
	 	Brand	 	Type	 	Capacity gal/min
	 
	 	Mission	 	6 X 5	 	1000
	 
	 	 	 	 	 	 
	Desander pump drive impeller
	 	Brand	 	Model	 	HP
	 
	 	Weg	 	Triphasic 3x380V	 	60 HP
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 

Well control equipment

BOP

									
	N° Brand
	 	Model
	 	Size of flange
	 	Interior Diam
	 	Working pressure
	HYDRILL
	 	GK
	 	Annular
	 	11
	 	3,000

 

 

									
	N° Brand
	 	Model
	 	Size of flange
	 	Interior Diam
	 	Working pressure
	SHAFFER
	 	LWS
	 	DOUBLE
	 	11
	 	3,000
	 	 	 	 	 	 	 	 	 

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:

	 	Brand Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	brand Omsco
	 	Model Lower
	Degasser:

	 	Brand SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output 3

BOP closing unit

Brand
KOOMEY Model __ N° outputs 6 N° of stations 3

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with
liquid) 3,000 psi.

	 	 	 	 	 
	Reducing and regulator valve?

	 	Si þ
	 	No o

Generators

	 	 	 	 	 	 	 	 	 	 	 	 	 
	NumberBrand	 	Model	 	 	Type	 	 	Capacity, KW	 
	1
	 	Cramaco G2R	 	3x380/220V-50Hz	 	320 KVA
	2
	 	Caterpillar SR4	 	3x380/220V-50Hz	 	205 KVA

Generator impellers

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Model	 	 	HP	 
	1
	 	Volvo	 	TAD 1631	 	 	660	 
	2
	 	Scania	 	DS 11	 	 	360	 

	 	 	 	 	 
	Antiexplosive lighting system:

	 	YES þ
	 	No o

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container                                                             

Cement storage capacity                                                             

Fresh water storage capacity Two 60 m3 tanks

Diesel oil storage capacity One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC 46

Varco type elevator csg 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges for casing csg 13 1/8”, 9 5/8”, 7”

Auxiliary elevator for casing Varco Series S

Varco type elevators for casing 18 ° 150/250 for 4 1/4” bars

SDXL or SDML Varco type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Klampon to chain

6600 Varco Type Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque

indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment indetification: DLS-102

The equipment hook load capacity, for the string of drill pipe is _280M_pounds, limited by Hook

capacity ___ below

(weakest link)

The equipment hook load capacity when moving casing is 280M pounds, limited by hook capacity
___ below

	 	 	 
	1. Mast or Tower

	 	Capacity
	wind load capacity, without drill pipe stow

	 	100 mph
	Wind load capacity whit 9900 feet in drill pipe stow

	 	80 mph
	Stowage capacity of drill pipe of 4 1/2 inches 10800 feet
	 	 
	Hooks’s static load capacity (whit 8 lines holding 280M pounds travelling block)
	 	 

	 	 	 	 	 	 	 	 	 
	2. Core bit

	 	Lee C. More
	 	 	6	 	 	190 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	 
	 	 	 	 	 	 	 	 
	3. Traveling Block

	 	Ideco
	 	 	5	 	 	160 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 
	10. Hook: Unitized
	 	160 tons
	11. Plushing head: National 69
	 	300 tons
	12. Lifting arms: 2 1/4” x 108”
	 	250 tons
	13. Drillpipe elevator: Varco
	 	250 tons
	14. Casing elevators: BK
	 	150 tons
	15. Drilling line (hook load capacity)
	 	292 M pounds

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 x 19

	 	1 1/8
	 	EIPS
	 	IWRC
	 	130 M LB
	 	 	3	 	 	 	8	 
	Classification

	 	Diam.
	 	Degree
	 	Care
	 	Api breakage

Resistivity
	 	Safety factor
	 	N° of Lines

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 
	Substructure: Brand Lee C. Moore
	 	 
	 

	Substructure: Brand Model or type
	 	 
	 

	Ground height:
	 	10 feet
	Width:
	 	22 feet
	Length:
	 	8  feet
	 
	Rotary table ground level height up to bellow the beans
	 	8 feet 2 inches
	To use with towers (masts) with gook load capacity
	 	280 M lb
	 
	Maximum mean lower low water pipe capacity
	 	270 M lb
	Maximum bearing capacity
	 	350 M lb
	Side load capacity (for only towers)
	 	____M lb
	Loads imposes by tensioning items
	 	____M lb
	Additional loads
	 	____M lb

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment identification: DLS- 102

Maximum observed power at hook                     at a hook load of                                        

Date                     at the site                     and observed by                                    
    

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description(type, brand, model, size, etc.)
	 
	 	 
	Drawworks

	 	Mid continental U-36 , 600 HP 
	Auxiliary broke

	 	Parmac V80
	 
	 	 
	Transmission system engine elevation

	 	Chain
	 
	 	 
	Elevation engines

	 	Two Caterpillar D-353; 460HP @ 1200 RPM
	Observed test information – elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift
1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 	 	 	travelling	 	 
	 	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-102

	 	 	 	 	 	 	 
	Specifications Pumps

	 	(1) Principal
	 	(2) Auxiliary
	 	(3) Auxiliary
	Brand (manufacturer)

	 	G. DENVER
	 	G. DENVER	 	 
	Model

	 	PZ-8
	 	PZ-9	 	 
	Input Power

	 	750 HP
	 	750 HP	 	 
	RPM

	 	140 x 8 Inches
	 	140 x 8 Inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	High	 
	Service conditions	 	High Vol.	 	 	High Press.	 	 	High Vol.	 	 	High Press.	 	 	High Vol.	 	 	Press.	 
	Jacket diameter
Max.- Min.
	 	 	6 1/2	 	 	 	5	 	 	 	6 1/2	 	 	 	5	 	 	 	 	 	 	 	 	 
	Corresp. Working
Pressure (measure)
	 	 	2315	 	 	 	3912	 	 	 	2315	 	 	 	3912	 	 	 	 	 	 	 	 	 
	 
	 	 	483@140	 	 	 	286@140	 	 	 	483@140	 	 	 	286@140	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand
pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated......%ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

SHAFFER LWS DOUBLE 11 3,000

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:

	 	Brand Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	brand Omsco
	 	Model Lower
	 
	Degasser:

	 	Brand SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output

BOP closing unit

Brand
KOOMEY Model ___ N° outputs 6 N° of stations 3

Accumulator Volume (liquid and gas) 100 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with liquid) 3,000 psi.

	 	 	 	 	 
	Reducing and regulator valve?

	 	Si þ
	 	No o

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	Type	 	Capacity, KW
	1

	 	Cramaco
	 	G2R
	 	3x380/220V-50Hz
	 	400 KVA
	2

	 	Caterpillar
	 	SR4
	 	3x380/220V-50Hz
	 	250 KVA

Generator impellers

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	HP
	1

	 	Scania
	 	DS-11
	 	 	360	 
	2

	 	Caterpillar
	 	SR 4
	 	 	250	 

	 	 	 	 	 
	Antiexplosive lighting system:

	 	YES þ
	 	No o

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container                                                                               
  

Cement storage capacity                                                              
                   

Fresh water storage capacity Two 60 m3 tanks

Diesel oil storage capacity One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC 46

Varco type elevator csg 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges for casing csg 13 1/8”, 9 5/8”, 7”

Auxiliary elevator for casing Varco Series S

Varco type elevators for casing 18 ° 150/250 for 4 1/2” bars

SDXL or SDML Varco type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Varco

International Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque

indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment
identification: DLS-104

The equipment hook load capacity, for the string of drill pipe is
280M pounds, limited by Hook
capacity ___below

(weakest link)

The equipment hook load capacity when moving casing is 280M pounds, limited by hook capacity
___below

	 	 	 
	1. Mast or Tower

	 	          Capacity
	wind load capacity, without drill pipe stow

	 	100 mph
	Wind load capacity whit 9000 feet in drill pipe stow

	 	80 mph
	Stowage capacity of drill pipe of 4 1/2 inches

	 	          10800 feet
	Hooks’s static load capacity (whit 8 lines holding 280M pounds travelling block)

	 	 	 	 	 	 	 	 	 
	2. Core bit

	 	Lee C. More
	 	 	 	 	 	6 190 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	 
	 	 	 	 	 	 	 	 
	3. Traveling Block

	 	UTB160
	 	 	5	 	 	160 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 
	4. Hook: Unitized
	 	160 tons
	5. Plushing head: Ideco TL 200
	 	200 tons
	6. Lifting arms: BUJ 2 1/4” x 108”
	 	250 tons
	7. Drillpipe elevator: Varco
	 	250 tons
	8. Casing elevators: BUJ
	 	150 tons
	9. Drilling line (hook load capacity)
	 	292 M pounds

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6
x 19

	 	1 1/8

	 	EIPS
	 	IWRC
	 	130 M LB
	 	 	 	3	 	     8	 
	Classification

	 	Diam.
	 	Degree
	 	Care
	 	Resistivity
	 	Api breakage
	 	Safety factor
	 	N° of Lines	 

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 
	Substructure: Brand Lee C. Moore                                                                  
	Brand Model or type                                                                                          
	Ground height:
	 	10   feet
	With:
	 	22   feet
	Length:
	 	8  feet
	 
	 	 
	Rotary table ground level height up to bellow the beans
	 	8 feet 2 inches
	 
	 	 
	To use with towers (masts) with gook load capacity
	 	280 M lb
	 
	 	 
	Maximum mean lower low water pipe capacity
	 	250M lb
	 
	 	 
	Maximum bearing capacity
	 	300M lb
	 
	 	 
	Side load capacity (for only towers)
	 	______ M lb
	 
	 	 
	Loads imposes by tensioning items
	 	______ M lb
	 
	 	 
	Additional loads
	 	______  M lb

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment identification: DLS 101

Maximum observed power at hook                      at a hook load of                     

Date         
                        at the site                      and observed by                     

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description (type, brand, model, size, etc.)
	Drawworks

	 	Ideco 525; 750 HP                                   
	Auxiliary broke

	 	Parmac V80 Hydromantic                       

Transmission system engine elevation                                                                                    Chains                                                       

Elevation engines            Two Caterpillar D-353; 460HP @ 1200 RPM___

Observed test information – elevation

	 	 	 	 	 	 	 	 	 
	Drawworks	 	Hook load	 	Sec. to Hook speed	 	Hook	 	N° of
	Relation M pounds	 	Lift 1(one)	 	foot/min calculated	 	lines	 	
		 	Bar	 	 	 	Power	 	
	                    

	 	                    
	 	                    	 	 	 	 
	                    

	 	                    
	 	                    	 	 	 	 
	                    

	 	                    
	 	                    	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 
	 	 	 	 	N° lines	 	 
	 	 	Sec. to Hook speed	 	to the	 	 
	Hook load	 	1(one)	 	travelling	 	 
	M lb	 	bar	 	block	 	Observations
	                    

	 	                    
	 	                    
	 	                    
	                    

	 	                    
	 	                    
	 	                    
	                    

	 	                    
	 	                    
	 	                    

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-104

	 	 	 	 	 	 	 
	Specifications Pumps	 	(1) Principal	 	(2) Auxiliary	 	(3) Auxiliary
	 	 	 	 	 	 	 
	Brand (manufacturer)	 	G. DENVER	 	G. DENVER	 	 
	CODEL

	 	PZ-8
	 	PZ-9	 	 
	Input Power

	 	750 HP
	 	1000 HP	 	 
	RPM

	 	140 x 8 Inches
	 	130 x 9 Inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.
	Jacket diameter
Max.- Min.

	 	 	6 1/2	 	 	 	5	 	 	 	7	 	 	 	5 1/2	 	 	 	 	 
	Corresp. Working
Pressure (measure)

	 	 	2315	 	 	 	3912	 	 	 	2639	 	 	 	4274	 	 	 	 	 
	 

	 	 	483@140	 	 	 	286@140	 	 	 	585@130	 	 	 	361@130	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand
pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated......%ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Continuous performance tested
	 	 	 	 	 	 	 	 	by manufacturer at the speed stated by
	N°	 	Brand	 	Model	 	the owner’s instruction manual
	1

	 	Catepillar
	 	D-398
	 	800 HP
	 	a 1200 RPM
	2

	 	Catepillar
	 	D-399
	 	800 HP
	 	a 1200 RPM

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY – CHEEK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-104

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                      Date: 06-30-03

A.
Manoeuvring capacity casing or drill pipe 280 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	7.	 	Pipes maximum capacity on the setback 250 M lb
	 	8.	 	Rotary table maximum bearing capacity regardless of the load on setback 300 M lb
	 	9.	 	Side load capacity (only for towers)                      lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

	 	 	 	 	 
	HP HOOK

	 	HOOK LOAD
	 	HOOK VELOCITY

	Performance observed
pulling ______ M lb ____ ft/min. ____ ft/min.

Auxiliary
brake performance        Max. hook Load ________ M lb ___ ft/min.

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

 

 

High Flow Service                      High Pressure Service

Gal/min.      psi       HHp       gal/min psi       HHp

	 	16.	 	Main Pump
	 	17.	 	Auxiliary Pump
	 	18.	 	Auxiliary Pump                                                                                 
                                             

E. Rotary table performance

Continuous Spinning rate

	 	5.	 	Rotary table : Brand : G. Denver Model :RT 22.5 API opening:
22 1/2”
	 	6.	 	Independently commanded table, max.                      RPM
	 	7.	 	Independently command unit, Brand                      Model:                     
	 	8.	 	Command unit, engine, Brand, Model: HP Continuous capacity.
	 	5.	 	Table commanded through the switchboard
	 	Change I 0 RPM to 130 RPM Change III___RPM to___RPM
	 	Change II 0 RPM to 250 RPM Change IV___RPM to___RPM

F. Specifications of string of drillpipe

					
	Drill Pipe
	 	 	 	 
	String:

	 	1	 
	Nominal diameter:

	 	4 1/2 Inches

	Weight per foot:

	 	19.5 lb/ft

	API degree:

	 	E-75;G-105	 
	Overall Length

	 	9900 Feet

	Joints size and type:

	 	NC46

	Outside diameter:

	 	6.25 Inches

	Last inspection date
	 	 	 	 
	Inspection method
	 	 	 	 
	Class
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	N° of tubes per inspection	 	 	 	 	 	Premium
	 

	 	 	330	 	 	 	1	 
	___

	 	 	___	 	 	 	2	 
	___

	 	 	___	 	 	 	3	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

 

 

	 	 	 	 	 	 	 	 	 
	Quantity
	 	 	3	 	 	 	25	 
	Max. Diam. Ext (1/16 inches)
	 	 	8	 	 	 	6.5	 
	Min. Int. diam (1/6 inches)
	 	 	3	 	 	 	2 1/4	 
	Average length
	 	 	30	 	 	 	30	 
	Approx. string of drill pipe weight
	 	13.5 M LB	 	76.5M LB
	Joints, size and type
	 	6 5/8 REG	 	 	NC46	 

G. Auxiliary equipment

	 	 	 	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1
	 	                    	 	28 m3
	2
	 	                    	 	28 m3
	3
	 	                    	 	28 m3

Mud mixing equipment

     e. Pumps

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	Capacity
	1

	 	Kayac
	 	6 X 5
	 	1000 GPM
	2

	 	Kayac
	 	6 X 5
	 	1000 GPM

     f. Drive impeller

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	HP
	1

	 	Siemens
	 	3x380V
	 	30 HP
	2

	 	Siemens
	 	3x380V
	 	30 HP

     Mud Agitator equipment – Description

     5 Electric agitator Boston 7,5 HP each                     

Vibrating
Screen: Brand Fluid System                      Linear model

	 	 	 	 	 	 	 	 	 
	Desander:

	 	Brand
	 	Model
	 	Capacity gal/min

	 

	 	MK 10
	 	2X 10
	 	 	1000	 
	 

	 	                    
	 	                    
	 	                    

	 	 	 	 	 	 	 	 	 
	Desander Pump:

	 	Brand
	 	Type
	 	Capacity gal/min

	 

	 	Mission
	 	6 X 5
	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 
	Brand
	 	Model
	 	HP
	Weg
	 	Triphasic 3x380V
	 	60 HP
	                    
	 	                    
	 	                    

	 	 	 	 	 	 	 
	Well control equipment	 	 	 	 
	BOP
	 	 	 	 	 	 
	N° Brand

	 	Model
	 	Size of flange
	 	Interior Diam Working pressure

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Continuous performance tested	 	 
	 	 	 	 	 	 	 	 	by manufacturer at the speed stated by	 	 
	N°	 	Brand	 	Model	 	the owner's instruction manual	 	 
	1

	 	Catepillar
	 	D-398
	 	800 HP
	 	a 1200 RPM
	 	 
	2

	 	Catepillar
	 	D-399
	 	1060 HP
	 	a 1200 RPM
	 	 

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY – CHEEK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-111

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                      Date: 06-30-03

A. Manoeuvring capacity casing or drill pipe 280 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	10.	 	Pipes maximum capacity on the setback 300 M lb
	 	11.	 	Rotary table maximum bearing capacity regardless of the load on setback 500 M lb
	 	12.	 	Side load capacity (only for towers)                      lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

	 	 	 	 	 
	HP HOOK
	 	HOOK LOAD
	 	HOOK VELOCITY

	Performance observed
pulling ______ M min/min. ____ ft/min.

Auxiliary
brake performance
        Max. hook Lo                      M lb ___ ft/min.

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

 

 

(From ND10-E, D program)

High Flow Service                      High Pressure Service

        Gal/min.       psi       HHp                       gal/min psi               HHp

	 	19.	 	Main Pump
	 	20.	 	Auxiliary Pump
	 	21.	 	Auxiliary Pump                                                                                 
                                             

E. Rotary table performance

Continuous Spinning rate

	 	9.	 	Rotary table : Brand : G. Denver Model :RT 22.5 API opening:
22 1/2"
	 	10.	 	Independently commanded table, max.                     RPM
	 
	 	11.	 	Independent command unit, Brand                      Model:                     
	 
	 	12.	 	Command unit, engine, Brand, Model:
                     HP Continuous capacity.
	 
	 	13.	 	Table commanded through the switchboard

Change I 0 RPM to 82 RPM Change III 0 RPM to 161 RPM

Change II 0 RPM to 114 RPM Change IV 0 RPM to 224 RPM

F. Specifications of string of drillpipe

					
	Drill Pipe
	 	 	 	 
	String:

	 	1	 
	Nominal diameter:

	 	4 1/2 Inches

	Weight per foot:

	 	19.5 lb/ft

	API degree:

	 	E-75;G-105	 
	Overall Length

	 	9900 Feet

	Joints size and type:

	 	NC46

	Outside diameter:

	 	6.25 Inches

	Last inspection date
	 	 	 	 
	Inspection method
	 	 	 	 
	Class
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	N° of tubes per inspection	 	 	 	 	 	Premium
	

	 	 	330	 	 	 	1	 
	                    

	 	                    
	 	 	2	 
	                    

	 	                    
	 	 	3	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

 

 

	 	 	 	 	 	 	 	 	 
	Quantity
	 	 	3	 	 	 	25	 
	Max. Diam. Ext (1/16 inches)
	 	 	8	 	 	 	6.5	 
	Min. Int. diam (1/6 inches)
	 	 	3	 	 	 	2 1/4	 
	Average length
	 	 	30	 	 	 	30	 
	Approx. string of drill pipe weight
	 	13.5 M LB	 	76.5 M LB
	Joints, size and type
	 	6 5/8 REG	 	 	NC46	 

G. Auxiliary equipment

	 	 	 	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1

	 	                    
	 	28 m3 
	2

	 	                    
	 	28 m3
	3

	 	                    
	 	28 m3

Mud mixing equipment

     g. Pumps

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	Capacity	 
	1
	 	Kayac	 	 	6 X 5	 	 	1000 GPM
	2
	 	Kayac	 	 	6 X 5	 	 	1000 GPM

     h. Drive impeller

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	HP	 
	1
	 	Weg	 	 	3x380V	 	 	60 HP
	2
	 	Electromac	 	 	3x380V	 	 	30 HP

     Mud Agitator equipment – Description

     5 Electric agitator Boston 7,5 HP each

     Vibrating
Screen: Brand Fluid System            Linear model

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Desander:	 	Brand	 	 	Model	 	 	Capacity gal/min	 
	 
	 	MK 10	 	 	2X 10	 	 	 	1000	 
	 
	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	Desander Pump: Brand	 	Type	 	 	Capacity gal/min	 
	Mission
	 	 	6 X 5	 	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 	 	 	 	 
	Brand	 	Model	 	 	HP	 
	Weg
	 	 	3x380V	 	 	60 HP
	                    
	 	 	                    	 	 	 	                    	 

Well control equipment

BOP

N° Brand            Model       Size of flange      Interior Diam Working pressure

 

 

	 	 	 	 	 	 	 	 	 
	HYDRILL GK ANNULAR

	 	 	11	 	 	 	3,000	 
	SHAFFER LWS DOUBLE

	 	 	11	 	 	 	3,000	 

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:
	 	Brand   Omsco	 	Model Upper
	Drill pipe safety valve:
	 	brand   Omsco	 	Model Lower
	 
	 	 	 	 
	Degasser:
	 	Brand SWACO	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output

BOP closing unit

Brand KOOMEY Model Type 80 N° outputs 8 N° of stations 4

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with
liquid) 3,000 psi.

Reducing and regulator valve? YES þ No o

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	Type	 	Capacity, KW
	1
	 	Cramaco	 	G2R	 	3x380/220V-50Hz	 	500 KVA
	2
	 	Kato	 	SR4	 	3x380/220V-50Hz	 	205 KVA

Generator impellers

	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	HP
	1
	 	Volvo	 	TDA 1631	 	660
	2
	 	Caterpillar	 	3406	 	360

Antiexplosive lighting system: YES þ No o

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container                                         

Cement storage capacity                           

Fresh water storage capacity            Two 60 m3 tanks

Diesel oil storage capacity       One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC46

Hydrill or Omsco type boring safety valve.

Varco SlX type elevator 100/150 Tn for casing 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges CMS-XL for casing 13 1/8”, 9 5/8”, 7”

Varco Series S auxiliary elevator for casing

Varco MG 18° type elevators for casing 150/250 for 4 1/2” bars

Varco SDXL or SDML type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Varco

6600 Varco Type Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque

indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment indetification: DLS-111

The equipment hook load capacity, for the string of drill pipe is
280M pounds, limited by Hook
capacity below

(weakest link)

The
equipment hook load capacity when moving casing is 280M pounds, limited by hook capacity
___ below

	 	 	 	 	 	 	 	 	 
	1. Mast or Tower

	 	Capacity	 	 	 	 	 	 
	wind load capacity, without drill pipe stow

	 	100 mph	 	 	 	 	 	 
	Stowage capacity of drill pipe of 4 1/2 inches 11000 feet	 	 	 	 	 	 
	Hook’s static load
capacity (whit 10 lines holding 550M pounds travelling block)	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	2. Core bit

	 	Lee C. More
	 	 	6	 	 	350 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	 
	 	 	 	 	 	 	 	 
	3.Traveling Block

	 	Ideco
	 	 	5	 	 	250 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 
	22. Hook: Unitized
	 	250     tons
	23. Plushing head: National 69
	 	300     tons
	24. Lifting arms: 2 1/4” x 108”
	 	250     tons
	25. Drillpipe elevator: Varco
	 	250     tons
	26. Casing elevators: BK
	 	350     tons
	27. Drilling line (hook load capacity)
	 	432     M pounds

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 x 19

	 	1 1/4
	 	EIPS
	 	IWRC
	 	158,8 M LB
	 	 	3	 	 	 	10	 
	Classification

	 	Diam.
	 	Degree
	 	Care
	 	Api breakage
	 	Safety factor
	 	N° of Lines

	 

	 	 	 	 	 	 	 	Resistivity	 	 	 	 	 	 	 	 

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 	 	 
	Substructure: Brand Lee C. Moore                     
	 	 	 	 
	Brand Model
or type                     
	 	 	 	 
	Ground height
	 	10        feet
	Width
	 	22        feet
	Length
	 	8        feet

Rotary table ground level height up to bellow the bean 7 feet 6 inches

	 	 	 	 	 
	To use with towers (masts) with gook load capacity
	 	550     M lb
	Maximum mean lower low water pipe capacity
	 	300    M lb
	Maximum bearing capacity
	 	500     M lb
	Side load capacity (for only towers)
	 	                       M lb
	Loads imposes by tensioning items
	 	                     M lb
	Additional loads
	 	                    M lb

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment identification: DLS- 111

Maximum power observed                     at a hook load of                                        

Date                     at the site                     and observed by                                    
    

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description (type, brand, model, size, etc.)
	Drawworks

	 	G. Denver 700; 800 HP
	Auxiliary broke

	 	Parmac 
	 
	 	 
	Transmission system engine elevation

	 	Chains
	 
	 	 
	Elevation engines

	 	Two Caterpillar 3406 E; 420 HP@
1800 RPM

 
	Observed test information — elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift
1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 		 	 
	 	 		 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 		 	travelling	 	
	 
	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-111

	 	 	 	 	 	 	 
	Specifications Pumps

	 	(1) Principal
	 	(2) Auxiliary
	 	(3) Auxiliary
	Brand (manufacturer)

	 	National
	 	G. Denver	 	 
	CODEL

	 	9-P-100
	 	PZ-8	 	 
	Input Power

	 	1000 HP
	 	750 HP	 	 
	RPM

	 	140 X 9 1/4 inches
	 	140 X 8 inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	High	 	 	 	High
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	Press.	 	High Vol.	 	Press.
	Jacket diameter

Max.- Min.

	 	 	6 1/4	 	 	 	5	 	 	 	6 1/2	 	 	 	5	 	 	 
	 	 
	Corresp. Working

Pressure (measure)

	 	 	2790	 	 	 	4360	 	 	 	2639	 	 	 	4274	 	 	 	 	 
	 

	 	 	516@140	 	 	 	330@140	 	 	 	483@140	 	 	 	286@130	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand 

pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated.....%ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Continuous performance tested
	 	 	 	 	 	 	by manufacturer at the speed stated by the
	 	 	 	 	 	 	owner’s
	N°	 	brand	 	Model	 	instruction manual
	1

	 	Catepillar
	 	D-3512
	 	1000 HP
	 	a 1200 RPM
	2

	 	Catepillar
	 	D-398
	 	800 HP
	 	a 1200 RPM

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY — CHECK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-136

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                                         Date: 06-30-03

A. Manoeuvring capacity casing or drill pipe 216 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

13. Pipes maximum capacity on the setback 203 M lb

14. Rotary table maximum bearing capacity regardless of the load on setback 305 M lb

15. Side load capacity (only for towers)                      lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

HP HOOK                                         HOOK LOAD                                        HOOK VELOCITY

Performance observed pulling
                    
M min/min.                      ft/min.

Auxiliary brake performance      Max. hook Load                      M lb                     ft/min.

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	High Flow Service 	 	 	 	High Pressure Service	 	 
	 	 	Gal/min.	 	psi	 	HHp	 	gal/min	 	psi	 	HHp
	Main Pump
	 	 	 	 	 	 	 	 	 	 
	Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 
	Auxiliary Pump

	 	                    
	 	                    
	 	                    
	 	                    
	 	                    	 	                    

E. Rotary table performance

Continuous Spinning rate

1. Rotary table : Brand : Ideco Model :RT 20.5 API opening: 17 1/2”

2. Independently commanded table, max.
                     RPM

3. Independent command unit, Brand                      Model:                    

4. Command unit, engine, Brand, Model:                      HP Continuous capacity.

5. Table commanded through the switchboard

Change
I 0 RPM to 130 RPM Change III                     RPM to                      RPM

Change II 0 RPM to 250 RPM Change
IV                     RPM to                      RPM

	 	 	 	 	 	 	 
	F. Specifications of string of drillpipe
	 	 	 	 	 	 
	Drill Pipe
	 	 	 	 	 	 
	String:

	 	 	1	 	 	 
	Nominal diameter:

	 	 	4 1/2	 	 	Inches
	Weight per foot:

	 	 	19.5	 	 	lb/ft
	API degree:

	 	 	E-75;G-105	 	 	 
	Overall Length

	 	 	9900	 	 	Feet
	Joints size and type:

	 	 	NC46
	 	 	 
	Outside diameter:

	 	 	6.25	 	 	Inches
	Last inspection date
	 	 	 	 	 	 
	Inspection method
	 	 	 	 	 	 
	Class
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	N° of tubes per inspection

	 	 	 	 	 	Premium
	 	 
	 

	 	 	300	 	 	 	1	 	 	 
	                    

	 	                    
	 	 	2	 	 	 
	                    

	 	                    
	 	 	3	 	 	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

     

 

	 	 	 	 	 	 	 	 	 
	Quantity

	 	3	 	25
	Max. Diam. Ext (1/16 inches)

	 	8	 	6.5
	Min. Int. diam (1/6 inches)

	 	3	 	2 1/4
	Average length

	 	30	 	30
	Approx. string of drill pipe weight

	 	13.5 M LB
	 	76.5M LB

	Joints, size and type

	 	6 5/8 REG
	 	NC46

	 	 	 	 	 
	G. Auxiliary equipment	 	 	 	 
	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1

	 	                                      
	 	25 m3
	2

	 	                                      
	 	40 m3
	3

	 	                                      
	 	40 m3

Mud mixing equipment

i. Pumps

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	Capacity	 
	1
	 	Kayac	 	 	6X5	 	 	1000 GPM
	2
	 	Kayac	 	 	6X5	 	 	1000 GPM

j. Drive impeller

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Type	 	 	HP	 
	1
	 	Weg	 	 	3x380V	 	 	60 HP
	2
	 	Weg	 	 	3x380V	 	 	60 HP

Mud Agitator equipment — Description

5 Electric agitator Boston 7,5 HP each

Vibrating Screen:Brand Fluid System Linear model

	 	 	 	 	 	 	 	 	 
	Desander:	 	Brand	 	Model	 	Capacity gal/min
	 

	 	MK 10
	 	2 x 10
	 	 	1000	 
	 

	 	 
	 	 
	 	 	 	 

	 	 	 	 	 	 	 
	Desander Pump: Brand	 	Type	 	Capacity gal/min
	Kayac

	 	6 X 5
	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 
	Brand	 	Model	 	HP
	Siemens

	 	3x380V
	 	60 HP
	 	 
	 
	 	 	 	 

Well control equipment

BOP

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N° Brand	Model	 Size of flange	 	Interior Diam	 	Working pressure	 	 	 	 
	HYDRILL

	  GK	Annular
	 	 	11	 	 	 	3,000	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	N° Brand	 	Model Size of flange	 	Interior Diam	 	Working pressure	 	 	 	 
	SHAFFER

	 	LWS      DOUBLE
	 	 	 	11	 	3,000	 	 	 	 

Choke manifold — Description: 3” — 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:

	 	Brand Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	brand Omsco
	 	Model Lower
	 
	 	 	 	 
	Degasser:

	 	Brand SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output

BOP closing unit

Brand KOOMEY Model Type 80 N° outputs 8 N° of stations 4x

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with
liquid) 3,000 psi.

Reducing
and regulator valve?  Si þ  No o

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	        Brand	 	Model	 	Type	 	Capacity, KW
	1

	 	Cartepillar
	 	SR4
	 	3x380/220V-50Hz
	 	400 KVA
	2

	 	Caterpillar
	 	SR4
	 	3x380/220V-50Hz
	 	320 KVA

Generator impellers

	 	 	 	 	 	 	 
	Number	 	        Brand	 	Model	 	HP
	1

2

	 	Cartepillar

Caterpillar
	 	3408

3406
	 	420

300

Antiexplosive
lighting system:  YES
þ                       No o

Description

According to API RP-500 Recommended practices

 

 

	 	 	 
	Mud Material Storage — Description:
	 	 
	One 40 ft container                                                             
	Cement storage capacity                                                   

	 	 
	Fresh water storage capacity Two 60 m3 tanks

	 	 
	Diesel oil storage capacity One 40 m3 tanks

	 	 

Additional equipment — Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC46 or NC50

Hydrill or Omsco type boring safety valve.

Varco SlX type elevator 100/150 Tn for casing 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges CMS-XL for casing 13 1/8”, 9 5/8”, 7”

Varco Series S auxiliary elevator for casing

Varco MG 18° type elevators for casing 150/250 for 4 1/2” bars

Varco SDXL or SDML type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Varco bars

6600 Varco Type Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque

indicator regarding the M/D Totco Hidromech table.

Geolograph type channel — parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment indetification: DLS-136

The equipment hook load capacity, for the string of drill pipe is 21160M pounds, limited by
Hook capacity below

(weakest link)

The equipment hook load capacity when moving casing is 216M pounds, limited by hook capacity
                    
below

	 	 	 
	1. Mast or Tower

	 	Capacity
	Wind load capacity, without drill pipe stow

	 	100 mph
	Wind load capacity whit 7500 feet in drill pipe stow

	 	75 mph
	Stowage capacity of drill pipe of 4 1/2 inches

	 	7500 feet
	Hook’s static load capacity (whit 6 lines holding 250 M pounds travelling block)

	 	 	 	 	 	 	 
	2. Core bit

	 	Lee C. More
	 	 	 	5 120 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 	 	 	 	 
	3. Traveling Block

	 	Ideco UTB 160
	 	 	 	4 160 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 	 	 
	28.

	 	Hook: Unitized
	 	160 tons
	29.

	 	Plushing head: National 69
	 	200 tons
	30.

	 	Lifting arms: 2 1/4” x 108”
	 	250 tons
	31.

	 	Drillpipe elevator: Varco
	 	250 tons
	32.

	 	Casing elevators: BK
	 	150 tons
	33.

	 	Drilling line (hook load capacity)
	 	227 M pounds

6 x 19                 1 1/8       EIPS           IWRC    130 M LB            3                      6

Classification       Diam.       Degree                Care           Api breakage       Safety factor       N° of Lines

Resistivity

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 	 	 
	Substructure: Brand Ideco
	 	 	 	 
	 	 	 
	Brand Model or type
	 	 	 	 
	 	 	 
	Ground height

	 	 	 	11 feet
	Width

	 	 	 	6.5 feet
	Length

	 	 	 	18 feet

	 	 	 
	Rotary table ground level height up to bellow the beans

	 	6 feet 6 inches
	 
	 	 
	To use with towers (masts) with gook load capacity

	 	250 M lb
	 
	 	 
	Maximum mean lower low water pipe capacity

	 	203M lb
	 
	 	 
	Maximum bearing capacity

	 	305 M lb
	 
	 	 
	Side load capacity (for only towers)

	 	                     M lb
	 
	 	 
	Loads imposes by tensioning items

	 	                     M lb
	 
	 	 
	Additional loads

	 	                     M lb

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment
identification: DLS- 136 

Maximum observed power at hook ___ at a hook load of
                                                                                

Date                                         at the site                                        and observed by                                         

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description (type, brand, model, size, etc.)
	 
	 	 
	Drawworks

	 	Ideco H-40; 500 HP 
	Auxiliary broke

	 	Parmac 22” Hydromantic 
	 
	 	 
	Transmission system engine elevation

	 	Chains 
	 
	 	 
	Elevation engines

	 	Two x Scania DS-11, 360 HP, 1800
RPM 
	 
	 	 
	Observed test information – elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift 1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 		 	 
	 	 		 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 		 	travelling	 	
	 
	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-136                                        

	 	 	 	 	 	 	 
	Specifications Pumps

	 	(1) Principal
	 	(2) Auxiliary
	 	(3) Auxiliary
	Brand (manufacturer)

	 	G. DENVER
	 	G. DENVER	 	 
	CODEL

	 	PZ-8
	 	PZ-8	 	 
	Input Power

	 	750 HP
	 	1000 HP	 	 
	RPM

	 	140 x 8 Inches
	 	130 x 9 Inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	High	 	High
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.	 	Vol.	 	Press.
	Jacket diameter
Max.- Min.

	 	 	6 1/2	 	 	 	5	 	 	 	7	 	 	 	5	 	 	 	 	 
	Corresp. Working
Pressure (measure)

	 	 	2315	 	 	 	3912	 	 	 	2315	 	 	 	3912	 	 	 	 	 
	 

	 	 	483@140	 	 	 	286@140	 	 	 	483@140	 	 	 	286@140	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated...... %ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

** Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 
	N°

	 	Brand
	 	Model
	 	Continuous performance tested
	 

	 	 	 	 	 	by manufacturer at the speed stated by the
	 

	 	 	 	 	 	owner’s instruction manual

	 	 	 	 	 	 	 	 	 
	1

2

	 	Catepillar

Catepillar
	 	D-398

D-398
	 	800 HP

800 HP
	 	a 1200 RPM

a 1200 RPM

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY – CHEEK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-150

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                                                             Date: 06-30-03

A. Manoeuvring capacity casing or drill pipe 405 Mb/351 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	 	 	 
	 	1. Pipes maximum capacity on the setback

	 	350 M lb
	 	2. Rotary table maximum bearing capacity regardless of the load on setback

	 	450 M lb
	 	3. Side load capacity (only for towers)

	 	                     lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

	 	 	 	 	 
	HP HOOK
	 	HOOK LOAD
	 	HOOK VELOCITY
	Performance observed pulling   
 
             
     M min/min.       
      
         ft/min.

Auxiliary brake performance  
    Max. hook Load         
            
M lb             
         ft/min.

 

 

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

	 	 	 	 	 	 	 	 	 	 	 
	 	 	High Flow Service 	 	 	 	High Pressure Service	 	 
	 	 	Gal/min.	 	psi	 	HHp	 	gal/min	 	psi	 	HHp
	34. Main Pump
	 	 	 	 	 	 	 	 	 	 	 	 
	35. Auxiliary Pump
	 	 	 	 	 	 	 	 	 	 	 	 
	36. Auxiliary Pump

	 	                    
	 	                    
	 	                    
	 	                    
	 	                    	 	                    

E. Rotary table performance

Continuous Spinning rate

14. Rotary table : Brand : National Model : C-205 API opening: 20 1/2”

15. Independently commanded table, max.
                     RPM

16. Independent command unit, Brand
                     Model:                     

17. Command unit, engine, Brand, Model:                      HP Continuous capacity.

18. Table commanded through the switchboard

Change I 0 RPM to 120 RPM Change III                      RPM to                      RPM

Change II 0 RPM to 220 RPM Change IV                      RPM to                      RPM

	 	 	 	 	 	 	 
	F. Specifications of string of drillpipe
	 	 	 	 	 	 
	Drill Pipe
	 	 	 	 	 	 
	String:

	 	 	1	 	 	 
	Nominal diameter:

	 	 	4 1/2	 	 	Inches
	Weight per foot: 

API degree:

	 	 	19.5

E-75;G-105	 	 	lb/ft
	Overall Length

	 	 	9900	 	 	Feet
	Joints size and type:

	 	 	NC46
	 	 
	Outside diameter:

	 	 	6.25	 	 	Inches
	Last inspection date
	 	 	 	 	 	 
	Inspection method
	 	 	 	 	 	 
	Class
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	N° of tubes per inspection

	 	 	 	 	 	Premium
	 	 
	 

	 	 	330	 	 	 	1	 	 	 
	                    

	 	                    
	 	 	2	 	 	 
	                    

	 	                    
	 	 	3	 	 	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

 

 

Drill Collar

	 	 	 	 	 	 	 	 	 
	Quantity

	 	 	3	 	 	 	25	 
	Max. Diam. Ext (1/16 inches)

	 	 	8	 	 	 	6.5	 
	Min. Int. diam (1/6 inches)

	 	 	3	 	 	 	2 1/4	 
	Average length

	 	 	30	 	 	 	30	 
	Approx. string of drill pipe weight

	 	13.5 M LB
	 	76.5M LB

	Joints, size and type

	 	6 5/8 REG
	 	NC46

G. Auxiliary equipment

	 	 	 	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1

	 	                                        
	 	37 m3
	2

	 	                                        
	 	43 m3
	3

	 	                                        
	 	20 m3

Mud mixing equipment

     a. Pumps

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	Capacity
	1

	 	Kayac
	 	6 X 5
	 	1000 GPM
	2

	 	Kayac
	 	6 X 5
	 	1000 GPM
	 
	b. Drive impeller
	 
	Number	 	Brand	 	Type	 	HP
	1

	 	U.S. Electrical
	 	3x380V
	 	75 HP
	2

	 	U.S. Electrical
	 	3x380V
	 	75 HP

Mud Agitator equipment – Description

5 Electric agitator Boston 7,5 HP each

Vibrating
Screen: Brand Fluid System Linear model

	 	 	 	 	 	 	 
	Desander:	 	Brand	 	Model	 	Capacity gal/min
	 

	 	MK 10

                    
	 	2X 10

                    
	 	1000

                    

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Desander Pump:	 	Brand	 	Type	 	Capacity gal/min
	 
	 	Mission	 	 	6 X 5	 	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 
	Brand	 	Model	 	HP
	U.S. electrical

	 	3x340V
	 	75 HP
	                    

	 	                    
	 	                    

 

 

Well control equipment

BOP

	 	 	 	 	 	 	 	 	 	 	 	 	 
	N° Brand	 	Model	 	Size of flange	 	Interior Diam	 	Working pressure
	HYDRILL

	 	GK
	 	ANNULAR
	 	 	11	 	 	 	3,000	 
	SHAFFER

	 	LWS
	 	DOUBLE
	 	 	11	 	 	 	3,000	 

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 	 	 
	Kelly cock:

	 	Brand
	 	Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	brand
	 	Omsco
	 	Model Lower
	Degasser:

	 	Brand
	 	SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 28”; Height: 5,50.5m; Gas output 6

BOP closing unit

Brand KOOMEY Model Type 80 N° outputs 8 N° of stations 4

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with liquid) 3,000 psi.

Reducing
and regulator valve?      
      Si
þ No o

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	Type	 	Capacity, KW
	1

	 	Kato
	 	Brushless
	 	3x600 V/60 Hz
	 	1050 KVA
	2

	 	Kato
	 	Brushless
	 	3x600 V/60 Hz
	 	1050 KVA
	3

	 	Kato
	 	Brushless
	 	3x600 V/60 Hz
	 	1050 KVA
	 
	Generator impellers
	 
	Number	 	    Brand		Model	 	            HP		
	1
	 	Caterpillar		D-398	 	875@1200RPM		
	2
	 	Caterpillar		D-398	 	875@1200RPM		
	3
	 	Caterpillar		D-398	 	875@1200RPM		

Antiexplosive lighting system:       YES X    No_____

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container                                               

Cement storage capacity                                               

Fresh water storage capacity       Two 60 m3 tanks

Diesel oil storage capacity       One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Desilter with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 5”, NC50

Omsco type BOP inside valve, 10 m psi, NC 50

Varco type elevator csg 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges for casing csg 13 1/8”, 9 5/8”, 7”

Auxiliary elevator for casing Varco Series S

Varco type elevators for casing MG 18 ° 150/250 Tn for 5” bars

SDXL or SDML Varco type wedges for 5” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type or hawk type or chain

6600 Varco Type Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes pump, M/D Totco table RPM. Torque indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment
indetification: DLS-154

The equipment hook load capacity, for the string of drill pipe is 280M pounds, limited by Hook
capacity below

(weakest link)

The equipment hook load capacity when moving casing is 280M pounds, limited by hook capacity
below

	 	 	 
	1. Mast or Tower

	 	Capacity
	wind load capacity, without drill pipe stow

	 	100 mph
	Wind load capacity whit 9000 feet in drill pipe stow

	 	80 mph
	Stowage capacity of drill pipe of 4 1/2 inches 10800 feet

	 	 

Hooks’s static load capacity (whit 8 lines holding 280M pounds travelling block)

	 	 	 	 	 	 	 	 	 
	2. Core bit

	 	Lee C. More
	 	 	6	 	 	190 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	3. Traveling Block

	 	Ideco UTB 265
	 	 	5	 	 	265 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 
	4. Hook: Unitized
	 	265 tons
	5. Plushing head: National 69
	 	300 tons
	6. Lifting arms: 2 1/4” x 108”
	 	250 tons
	7. Drillpipe elevator: Varco
	 	250 tons
	8. Casing elevators: Varco
	 	150 tons
	9. Drilling line (hook load capacity)
	 	292 M pounds

	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 x 19
	 	1 1/8	 	EIPS	 	IWRC	 	130 M LB	 	3	 	8
	Classification
	 	Diam.	 	Degree	 	Care	 	Api breakage	 	Safety factor	 	N° of Lines
	 
	 	 	 	 	 	 	 	Resistivity	 	 	 	 

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 
	Substructure:
Brand Lee C. Moore _______________

	 	 
	Substructure:
Brand Model or type _______________
	 	 
	Ground height:
	 	12    feet
	Width:
	 	22    feet
	Length:
	 	8   feet
	 
	 	 
	Rotary table ground level height up to bellow the beans
	 	9 feet 10 inches
	 
	 	 
	To use with towers (masts) with gook load capacity
	 	280  M lb
	 
	 	 
	Maximum mean lower low water pipe capacity
	 	250 M lb
	 
	 	 
	Maximum bearing capacity
	 	300  M lb
	 
	 	 
	Side load capacity (for only towers)
	______	M lb
	 
	 	 
	Loads imposes by tensioning items
	______	M lb
	 
	 	 
	Additional loads
	______	M lb

 

 

N° D10-C API FORM.

A Program

Casing or drillpipe manoeuvring capacity

Equipment indetification: DLS-150 

The equipment hook load capacity, for the string of drill pipe is 351 Impounds, limited by
(Cable) below

(Weakest link)

The equipment hook load capacity when moving casing is 405M pounds, limited by hook capacity
                    
drawworks capacity

	 	 	 	 	 
	1. Mast or Tower
	 	Capacity
	wind load capacity, without drill pipe stow
	 	100 mph
	Wind load capacity whit 10000 feet in drill pipe stow
	 	80 mph
	Stowage capacity of drill pipe of 4 1/2 inches 10500 feet
	Hook’s static load capacity (whit 10 lines holding 500M pounds travelling block)

	 	 	 	 	 	 	 	 	 
	2. Core bit

	 	D.S.I
	 	5 x 42 “+1 x 60”
	 	320 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys
	3.Traveling Block

	 	Ideco UTB265
	 	 	5	 	 	265 tons
	 

	 	(1) Brand
	 	(2) weight
	 	(3) N° of pulleys

	 	 	 	 	 
	4. Hook: Unitized
	 	265 tons
	5. Plushing head: National P-300
	 	300 tons
	6. Lifting arms: Varco BUJ 2 1/4” x 108”
	 	250 tons
	7. Drillpipe elevator: Varco-BJ
	 	250 tons
	8. Casing elevators: Varco
	 	350 tons
	9. Drilling line (hook load capacity)
	 	351 M lb

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 x 19

	 	1 1/8
	 	EIPS
	 	IWRC
	 	130 M LB
	 	 	3	 	 	 	10	 
	Classification

	 	Diam.
	 	Degree
	 	Care
	 	Api breakage
	 	Safety factor
	 	N° of Lines

	 

	 	 	 	 	 	 	 	Resistivity	 	 	 	 	 	 	 	 

 

 

FORM. API N° D-C

PROGRAM B

Substructure bearing capacity

	 	 	 
	Substructure:
Brand D.S.I __________ 
	 	 
	Brand Model
or type _____________
	 	 
	Ground height:
	 	22    feet
	With:
	 	28   feet
	Length:
	 	20   feet
	 
	 	 
	Rotary table ground level height up to bellow the beans
	 	18 feet ___ inches
	 
	 	 
	To use with towers (masts) with gook load capacity
	 	500  M lb
	 
	 	 
	Maximum mean lower low water pipe capacity
	 	350 M lb
	 
	 	 
	Maximum bearing capacity
	 	450 M lb
	 
	 	 
	Side load capacity (for only towers)
	 	___ M lb
	 
	 	 
	Loads imposes by tensioning items
	 	___ M lb
	 
	 	 
	Additional loads
	 	___ M lb

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment identification: DLS- 150

Maximum observed power at hook                     at a hook load of                                         

Date                     
at the site                     
and observed by                                        

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description (type, brand, model, size, etc)
	Drawworks

	 	National 610-E; 750 HP
	Auxiliary broke

	 	Parmac V80 Hydromantic
	Transmission system engine elevation

	 	Chains
	Elevation engines

	 	G. Electric GE-752 1000 HP; 1000 RPM
	Observed test information – elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift 1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 		 	 
	 	 		 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 		 	travelling	 	
	 
	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT IDENTIFICATION: DLS-136

	 	 	 	 	 	 	 
	Specifications Pumps	 	(1) Principal	 	(2) Auxiliary	 	 
	Brand (manufacturer)	 	National	 	National	 	(3) Auxiliary
	Model

	 	8-P-80
	 	8-P-80	 	 
	Input Power

	 	800 HP
	 	800 HP	 	 
	RPM

	 	150 X 8 inches
	 	150 X 8 inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jacket diameter
Max.- Min.

	 	 	6 1/4	 	 	 	5	 	 	 	6 1/4	 	 	 	5	 	 	 	 	 
	Corresp. Working
Pressure (measure)

	 	 	2315	 	 	 	3912	 	 	 	2280	 	 	 	3560	 	 	 	 	 
	 

	 	 	508@150	 	 	 	324@150	 	 	 	508@150	 	 	 	324@150	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand 

pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated......%ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	Continuous performance tested
	 

	 	 	 	 	 	by manufacturer at the speed stated by
	N°

	 	Brand
	 	Model
	 	the owner’s instruction manual
	 
	 	 	 	 	 	 
	1

	 	G. Electric
	 	GE 752
	 	1000 HP a 1000 RPM
	2

	 	G. Electric
	 	GE 752
	 	1000 HP a 1000 RPM

 

 

CAPACITY OF THE DIFFERENT COMPONENTS OF THE EQUIPMENT

FORM API N° D10-B

EQUIPMENT CAPACITY — CHEEK LIST

Equipment Owner: DLS Argentina Limited

Equipment Identification: DLS-154

Area of use of the equipment: PAE-Cerro dragon

Data provided by: DLS                     Date: 30-06-03

A. Manoeuvring capacity casing or drill pipe 280 Mb

(From N° D10-c form, A program)

B. Bearing capacity

(From N° D10-C, B Program)

	 	1.	 	Pipes maximum capacity on the setback 250 M lb
	 
	 	2.	 	Rotary table maximum bearing capacity regardless of the load on setback 300 M lb
	 
	 	3.	 	Side load capacity (only for towers)                      lb

C. Lifting and breaking capacity

(From N° D10-D, C Program)

	 	 	 	 	 
	HP HOOK
	 	HOOK LOAD
	 	HOOK VELOCITY
	Performance observed pulling ______ M min/min.____ ft/min.	 	 

Auxiliary brake performance Max. hook Load                      M lb___ ft/min.

D. Mud pumps observed performance capacity

(From the N° D10-E, D Program)

 

 

                     High Flow Service           High Pressure Service

              Gal/min.       psi       HHp       gal/min psi       HHp

	37.	 	Main Pump
	38.	 	Auxiliary Pump
	39.	 	Auxiliary Pump                                                                                 
                                             

E. Rotary table performance

Continuous Spinning rate

	 	19.	 	Rotary table : Brand: G. Denver Model :RT 22.5 API opening: 22 1/2"
	 	20.	 	Independently commanded table, max.                     RPM
	 	21.	 	Independent command unit, Brand                      Model:                     
	 	22.	 	Command unit, engine, Brand, Model:                      HP Continuous capacity.
	 	23.	 	Table commanded through the switchboard

Change I 0 RPM to 114 RPM Change III 0 RPM to 224 RPM

Change II 0 RPM to 161 RPM Change IV___ RPM to ___ RPM

F. Specifications of string of drillpipe

	 	 	 	 	 
	Drill Pipe
	 	 	 	 
	String:

	 	1	 
	Nominal diameter:

	 	4 1/2 Inches

	Weight per foot:

	 	19.5 lb/ft

	API degree:

	 	 E-75;G-105

	Overall Length

	 	9900 Feet

	Joints size and type:

	 	NC46

	Outside diameter:

	 	6.25 Inches

	Last inspection date
	 	 	 	 
	Inspection method
	 	 	 	 
	Class
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	N° of tubes per inspection	 	 	 	 	 	Premium
	 

	 	 	330	 	 	 	1	 
	                    

	 	                    
	 	 	2	 
	                    

	 	                    
	 	 	3	 

Other Information on drill pipe conditions such as hard, material, protectors, etc.

Smooth hardbanding

Interior Plasticizer

Drill Collar

 

 

	 	 	 	 	 	 	 	 	 
	Quantity
	 	 	3	 	 	 	25	 
	Max. Diam. Ext (1/16 inches)
	 	 	8	 	 	 	6.5	 
	Min. Int. diam (1/6 inches)
	 	 	3	 	 	 	2 1/4	 
	Average length
	 	 	30	 	 	 	30	 
	Approx. string of drill pipe weight
	 	 	13.5 M LB	 	 	76.5M LB
	Joints, size and type
	 	 	6 5/8 REG	 	 	NC46	 

G. Auxiliary equipment

	 	 	 	 	 
	Mud Pits	 	 	 	 
	Number	 	Dimensions	 	Capacity (per unit)
	1

	 	                    
	 	28 m3
	2

	 	                    
	 	28 m3
	3

	 	                    
	 	28 m3

Mud mixing equipment

     k. Pumps

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	Capacity
	1

	 	Kayac
	 	6 X 5
	 	1000 GPM
	2

	 	Kayac
	 	6 X 5
	 	1000 GPM

     l. Drive impeller

	 	 	 	 	 	 	 
	Number	 	Brand	 	Type	 	HP
	1

	 	Marathon
	 	3x380V
	 	60 HP
	2

	 	Marathon
	 	3x380V
	 	60 HP

Mud Agitator equipment — Description

5 Electric agitator Boston 7,5 HP each

Vibrating Screen: Brand Swaco Linear model

	 	 	 	 	 	 	 	 	 
	Desander:	 	Brand	 	Model	 	Capacity gal/min
	 

	 	Swaco
	 	2 x 10
	 	 	1000	 
	 

	 	                    
	 	                    
	 	                    

	 	 	 	 	 	 	 	 	 
	Desander Pump:	 	Brand	 	Type	 	Capacity gal/min
	 

	 	Kayac
	 	6 x 5
	 	 	1000	 

Desander pump drive impeller

	 	 	 	 	 
	Brand	 	Model	 	HP
	Marathon
	 	3x380V
	 	60 HP
	                    
	 	                    
	 	                    

Well control equipment

BOP

N° Brand            Model            Size of flange            Interior Diam       Working pressure

 

 

	 	 	 	 	 	 	 	 	 
	HYDRILL GK ANNULAR
	 	 	11	 	 	 	3,000	 
	SHAFFER LWS DOUBLE
	 	 	11	 	 	 	3,000	 

Choke manifold – Description: 3” – 3,000 PSI

3” nominal diameter and 3,000 PSI working pressure, tow manual adjustable choke according to API
recommendation RP-53.

	 	 	 	 	 
	Kelly cock:

	 	Brand Omsco
	 	Model Upper
	Drill pipe safety valve:

	 	brand Omsco
	 	Model Lower
	Degasser:

	 	Brand SWACO
	 	Model Vacuum D-Gasser

Mud gas separator Description: DIA. 30”; Height: 4.5m; Gas output

BOP closing unit

Brand KOOMEY Model Type 80 N° outputs 8 N° of stations 4

Accumulator Volume (liquid and gas) 130 gal.

Pre-Load pressure (prior to adding liquid) 1100 psi.

Final pressure (when it is completely loaded with
liquid) 3,000 psi.

	 	 	 	 	 
	Reducing and regulator valve?

	 	Si þ
	 	No o

Generators

	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	Model	 	Type	 	Capacity, KW
	1

	 	Cramaco
	 	G2R
	 	3x380/220V/50Hz
	 	500 KVA
	2

	 	Caterpillar
	 	SR4
	 	3x380/220V/50Hz
	 	265 KVA
	 

	 	 	 	 	 	 	 	 

Generator impellers

	 	 	 	 	 	 	 	 	 	 	 
	Number	 	Brand	 	 	Model	 	 	 	HP	 
	1

	 	Volvo
	 	 
	TDA 1631	 	660	 
	2

	 	Caterpillar
	 	 	 	 	3406	 	360	 

Antiexplosive
lighting system:       
YES___X___
        NO___

Description

According to API RP-500 Recommended practices

 

 

Mud Material Storage — Description:

One 40 ft container ______________________________

Cement storage capacity __________________________

Fresh water storage capacity            Two 60 m3 tanks

Diesel oil storage capacity            One 40 m3 tanks

Additional equipment – Description:

Crown-on matic type

Trip tank of approx 3 m3 capacity with graduated scale

Destiler with 16 cones of 4”

Test laboratory according to the Technical appendix

Nine Hw 4 1/2”, NC46

Omsco type BOP inside valve, 10 m psi, NC46 or NC50

Hydrill or Omsco type boring safety valve.

Varco SlX type elevator 100/150 Tn for casing 13 1/8”, 9 5/8”, 7”and 5 1/2”

Varco type wedges CMS-XL for casing 131/8”, 9 5/8”, 7”

Varco Series S auxiliary elevator for casing

Varco MG 18° type elevators for casing 150/250 for 4 1/2” bars

Varco SDXL or SDML type wedges for 4 1/2” bars

Varco MP-R type casing clamp for drill collar

HT-55 Varco type set of manoeuvre wrenches

Pneumatic wrench for making up of rollers type Varco

International Hydraulic Kelly spinner.

Fishing tools according to the technical appendix.

Weight indicator, Torque adjustment tool, pump pressure, strokes
pump, M/D Totco table RPM. Torque indicator regarding the M/D Totco Hidromech table.

Geolograph type channel – parameter recorder.

Totco 0-8° deviation recorder

Pump jack for borehole or casing.

400A electric welding equipment.

Oxi-acetylene welding equipment.

 

 

FORM. API N° D-C

PROGRAM C

Lifting and breakage capacity

Equipment identification: DLS- 154

Maximum observed power at hook                     
at a hook load of                                        

Date                     
at the site                     
and observed by                                    
    

	 	 	 
	Equipment assembled as follows
	 	 
	Equipment

	 	Description (type, brand, model, size, etc.)
	 
	 	 
	Drawworks

	 	Card well DW 500 M; 650 HP
	Auxiliary broke

	 	Parmac V80 hydromatic
	 
	 	 
	Transmission system engine elevation

	 	Chains
	 
	 	 
	Elevation engines

	 	Two Scania DS-11; 360 HP; 1800
RPM

	Observed test information — elevation
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Drawworks	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Relation	 	Hook load	 	 	Sec. to	 	 	Hook speed	 	 	Hook calculated	 	 	N° of	 
	 	 	M pounds	 	 	Lift 1 (one) Bar	 	 	foot/min	 	 	power	 	 	lines	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Auxiliary brake observed performance

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 		 	 
	 	 		 	 	 	N° lines	 	 
	Hook load	 	Sec. to	 	 	 	to the	 	 
	M lb	 	1(one)	 		 	travelling	 	
	 
	 	bar	 	Hook speed	 	block	 	Observations
	 

	 	 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 

	 

	 	 
	 	 
	 	 	 	 

	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 

 

 

FORM. API N° D10-E

PROGRAM D

MUD PUMPS PERFORMANCE CAPACITY

EQUIPMENT
IDENTIFICATION: DLS-154____________

	 	 	 	 	 	 	 
	Specifications Pumps
	 	(1) Principal
	 	(2) Auxiliary
	 	(3) Auxiliary
	Brand (manufacturer)

	 	G. Denver
	 	G. Denver	 	 
	CODEL

	 	PZ-8
	 	PZ-9	 	 
	Input Power

	 	750 HP
	 	1000 HP	 	 
	RPM

	 	140 X 8 inches
	 	 130 X 9 inches	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Service conditions	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.	 	High Vol.	 	High Press.
	Jacket diameter
Max.- Min.

	 	 	6 1/2	 	 	 	5	 	 	 	7	 	 	 	5 1/2	 	 	 
	 	 
	Corresp. Working
Pressure (measure)

	 	 	2315	 	 	 	3912	 	 	 	2639	 	 	 	4274	 	 	 	 	 
	 

	 	 	483@140	 	 	 	286@140	 	 	 	585@130	 	 	 	361@130	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Observed Performance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tests Dates
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pumps RPM during
test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Engine during test
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pressure on stand
pipe PSI
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Measured GPM
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GPM
calculated ______ %ef.
Vol.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outpump HHP
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	**	 	Engines providing power to mud pump.

 

 

	 	 	 	 	 	 	 	 	 
	N°	 	Brand	 	Model	 	Continuous
performance tested

	 	 	 	 	 	 	by
manufacturer at the speed stated by the

	 	 	 	 	 	 	owner’s
instruction manual

	1

	 	Catepillar
	 	D-398
	 	800 HP
	 	a 1200 RPM
	2

	 	Catepillar
	 	D-398
	 	1060 HP
	 	a 1200 RPM

 

 

Exhibit 1:

B.O.P. Assemblage

 

 

APPENDIX II: TECHNICAL APPENDIX

II.B – WELL COMPLETION AND WORKOVER AT THE GULF OF SAN JORGE 

MANAGEMENT UNIT

TABLE OF CONTENTS

	 	 	 	 	 
	SECTION 1: LOCATION OF THE WELLS.
	 	Page 3
	 
	 	 	 	 
	SECTION 2: PERFORMANCE OF THE WORKS.
	 	Page 3
	 
	 	 	 	 
	SECTION 3: TARIFFS.
	 	Page 3
	 
	 	 	 	 
	SECTION 4: COMPLETION AND WORKOVER METHODS AND PRACTICES.
	 	Page 4
	 
	 	 	 	 
	SECTION 5: INFORMATION RECORDING ON COMPLETION AND WORKOVER OPERATIONS.
	 	 	 	 
	 
	 	 	 	 
	SECTION 6: MATERIALS, EQUIPMENT, SERVICES, PERSONNEL, ETC. PROVIDED BY DLS
DURING THE COMPLETION AND WORKOVER OPERATIONS.
	 	Page 5
	 
	 	 	 	 
	SECTION 7: MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC.
PROVIDED BY PAE DURING THE COMPLETION AND WORKOVER OPERATIONS.
	 	Page 10
	 
	 	 	 	 
	SECTION 8: CONDITION OF THE EQUIPMENT – REPAIRS.
	 	Page 15
	 
	 	 	 	 
	SECTION 9: SITE – TRANSIT PERMIT.
	 	Page 15
	 
	 	 	 	 
	SECTION 10: MISCELLANEOUS LIABILITIES.
	 	Page 16
	 
	 	 	 	 
	SECTION 11: RELATIONSHIPS WITH DLS.
	 	Page 17
	 
	 	 	 	 
	SECTION 12: AMENDMENTS TO THE SCHEDULE.
	 	Page 17
	 
	 	 	 	 
	SECTION 13: RECORDING SYSTEM OF THE ALLIANCE.
	 	Page 18
	 
	 	 	 	 
	SECTION 14: CONFIDENTIAL INFORMATION.
	 	Page 18

 

 

APPENDIX II: TECHNICAL APPENDIX

II.B – WELLS COMPLETION AND WORKOVER AT THE GULF OF SAN JORGE 

MANAGEMENT UNIT

SECTION 1

LOCATION OF THE WELLS.

The sites designed and provided by PAE shall be located within the area of the Gulf of San Jorge
Management Unit, which comprise the areas of Cerro Dragón, Anticlinal Grande and Anticlinal Funes
corresponding to the North flange and Piedra Clavada and Koluel Kaike corresponding to the South
flange.

SECTION 2

PERFORMANCE OF THE WORKS.

DLS shall begin and carry on the operations with due diligence and without improper delays or
interruptions and shall perform such operations on the basis of a seven (7)-days-week and twenty
four (24)-hours-working days.

If an unplanned interruption of the operations extends for a period exceeding 30 days, DLS shall
provide a replacement; planned interruptions shall be communicated by DLS two months in advance.

In order to ensure the fulfillment of the technical requirements established in the present
Appendix and maintain control over the processes affecting the standards of Quality and Safety set
with respect to the contractual obligations, for the purposes of the Alliance, the Quality Plan
(PG-AE-GC-02) is hereby implemented. This Quality Plan describes the way in which the requirements
of the Agreement are fulfilled and contains the description of how operations are carried out, also
referring to the applicable procedures and instructions to that effect.

SECTION 3

TARIFFS.

	3.1	 	General provisions
	 
	 	 	PAE shall pay DLS for the services rendered on the basis of the tariffs defined herein below:
	 
	3.2	 	Waiting Hourly Rate (Stand By). (According to Appendix I – Prices)
	 
	 	 	When the continuance of the completion and workover works is delayed at PAE’s instruction
due to the fact that PAE is waiting for instructions, materials, locations, roads, day
light to carry out transports and other circumstances that do not constitute an event of
force majeure or Act of God.
	 
	 	 	PAE may decide to put one or more pieces of equipment “on hold” and during such period DLS
shall be paid the Waiting Hourly Rate. There are no time limitations with respect to “on
hold” situations and the equipment may remain assembled on the well, on the Oilfield or at
DLS’s yard while such situations remain.
	 
	3.3	 	Operation Hourly Rate. According to Appendix I – Prices.
	 
	 	 	This hourly rate shall apply per each working hour, or a fraction thereof, of the equipment
working during the performance of workover or completion services in the well.
	 
	3.4	 	Climate Factor Rate. According to Appendix I – Prices.
	 
	 	 	This hourly rate shall apply when the working of the equipment is interrupted due to
climatic reasons that prevent the ordinary performance of the operation.

 

 

	3.5	 	Transport of Equipment Rate (along the same flange). According to Appendix I – Prices.
	 
	 	 	This rate comprises charges for transport and assemblage and dismantling of Completion
equipment and its accessories between two locations within the same flange at a distance
not exceeding 20Km.
	 
	3.6	 	Charge rate for distance in kilometers. According to Appendix I – Prices.
	 
	 	 	This rate shall apply for any distance in kilometers in excess of 20Km.
	 
	3.7	 	Transport of Equipment Rate (between the North and the South flanges). According to Appendix
I – Prices.
	 
	 	 	This rate comprises charges for transport and assemblage and dismantling of Completion
equipment and its accessories between two locations within different flanges.

SECTION 4

COMPLETION AND WORKOVER METHODS AND PRACTICES.

	4.1	 	Due diligence.
	 
	 	 	DLS shall commence the works on the date indicated by PAE and shall continue to perform
them with due diligence and care, in accordance with good oilfields practices, keeping the
equipment in optimum working conditions and using competent personnel.
	 
	 	 	DLS shall employ all necessary care and diligence (in particular but not limited to, the
closure of valves), in order to avoid contamination of the phreatic layers, the
deterioration of the land, field, livestock, premises and, in general, in order to avoid
damages to PAE and to third parties. The protection of the environment shall be governed by
the ISO 14001 Environmental Management System, certified by PAE.
	 
	4.2	 	Required quality
	 
	 	 	With the exceptions necessary for the Gulf of San Jorge, the BP well
operations policy shall apply.
	 
	 	 	PAE’s operation procedures and/or guidelines shall be used.
	 
	 	 	In the cases where there are no regulations in force, the minimum standards required are
the ones established by the API recommendations.
	 
	 	 	Simulation schedules regarding fire, wildwell, environment and first aids shall be duly
fulfilled and the results thereof shall be recorded and analyzed.
	 
	 	 	It is hereby agreed that the tools provided by DLS (test bridge plug and packer) shall be
able to be set and work properly at least in three (3) occasions. In case the tools can be
successfully set in less than 3 occasions, DLS shall be responsible of replacing such tools
and for the time spent as a result, which shall be recorded in the field report as no
charge (N/C).
	 
	4.3	 	Controlled tests
	 
	 	 	For the purpose of facilitating ongoing improvements to the completion and workover
processes defined in the Agreement, changes in the methodology, introduction of
technologies, change of practices, new mud formulas, etc. shall be carried out through
Controlled Tests (according to the PG-AE-PF-01 procedure) and the results shall determine
the adoption or rejection of the proposed changes.
	 
	4.5	 	Fire and blow outs prevention

	 	a.	 	DLS shall use all possible means to control and avoid fires and blow outs and
to protect the well. No fire shall be allowed within a 50 meter perimeter around the
well. In case it was necessary to perform welding works on the equipment or in the
surrounding area,

 

 

	 	 	 	an “authorization to perform hot working” from the representative in the Area (Team
Leader).
	 
	 	b.	 	The B.O.P. shall be placed at the well head in the 5 1/2 ” or 7” pipe during
all completion and workover operations and shall be kept in optimum working
conditions. In this respect, DLS shall examine and test the working conditions of the
B.O.P. valves and other equipment as provided for by the “BOP and Manifold Test –
Environmental Management System IO 22.05” guidelines.
	 
	 	 	 	DLS shall perform well control simulations through well known procedures;
simulations shall involve all working shifts and shall be carried out once for
every well; the results shall be entered in the completion and workover records.

SECTION 5

INFORMATION RECORDING ON COMPLETION AND WORKOVER OPERATIONS.

DLS shall keep a “daily record of completion and workover operations” where all operations
performed shall be entered. When perforated formations or layers are tested the following
information and tasks shall be particularly carefully recorded on PCs and printers compatible with
the DIMS:

	a)	 	In swabbing tests

	 	–	 	Depths of the tested interval
	 
	 	–	 	Number of swabbing strokes per hour
	 
	 	–	 	Fluids levels
	 
	 	–	 	Hourly production

	b)	 	In surge tests

	 	–	 	Hourly production
	 
	 	–	 	Nozzles used
	 
	 	–	 	Dynamic pressure
	 
	 	–	 	Static pressure
	 
	 	–	 	If gas wasburned
	 
	 	–	 	Gas sample (sample tube rack provided by PAE)

	c)	 	Of the obtained fluid

	 	–	 	Water, sediments and emulsion percentages.
	 
	 	–	 	Oil density.
	 
	 	–	 	Formation-water resistivity and pH
	 
	 	–	 	Temperatures at which the last two measurements were taken
	 
	 	–	 	Salinity measurement expressed as Sodium Chloride by titration with Silver Nitrate.
	 
	 	–	 	Concentration of potassium. The measuring kit shall be provided by PAE.

	d)	 	When samples are collected:
	 
	 	 	In completions of wells or in those repairs where completion is expressly required, the
produced fluid samples shall be preserved in brand new 10 liters polyethylene drums with double
cups for better sealing, on which the following information shall be stated: identification of
the well, hour and date on which the sample was produced, perforated intervals to which the
sample corresponds. This information shall be written on container’s surface with indelible
markers or equivalent method to avoid damage or loss of the identification. Samples shall be
taken following the methodology (see Instructions IO 22.03) and the instructions expressly
given by PAE’s Completion and Workover Department. (Drums and means of identification provided
by PAE).

All data that may contribute to a better knowledge of the tested zones shall be recorded.

SECTION 6

MATERIALS, EQUIPMENT, SERVICES, PERSONNEL, ETC. PROVIDED BY DLS DURING THE

COMPLETION AND WORKOVER OPERATIONS.

 

 

DLS shall provide the principal and auxiliary equipment necessary to comply with the working
schedule.
Likewise, PAE’s “Wells Operation and Drilling Policies” shall be observed where applicable.

PAE reserves the right to expressly accept an amount of equipment not strictly suitable to fulfill this condition according to its completion and workover program.

In addition, PAE requires at least the following:

	–	 	Application of the “Technical and Basic Safety Rules for Drilling, Workover and Pulling
Operations” (PG-AE-SE-03 Procedure) for the PAE-DLS Strategic Alliance.
	 
	–	 	Check list to verify the fulfillment of the PG-AE-SE-03 Procedure. (To be adapted in case
it is necessary)
	 
	–	 	Dismantling, Transport and Assemblage of Tower Equipment Safety (PG-AE-SE-01 Procedure).
	 
	–	 	Trucks and hoisting elements Certification and Audit Procedure (IT-AE-TR-05).
	 
	–	 	Truck drivers shall work a maximum of 12 hours a day.
	 
	6.1	 	Completion and Workover Equipment.
	 
	–	 	To operate with 2 7/8”, 2 3/8” or 3 1/2” tubing up to 3,500 meters
	 
	–	 	Swabbing line necessary to operate to such depth.
	 
	–	 	The capstan shall have a reverse motion (do not use maneuver rope).
	 
	–	 	The equipment shall contain all the gear to work with 5,000 psi.
	 
	6.2	 	Injection system
	 
	–	 	Triplex pump apt for operating under the following operation conditions:

	 
	–	 	a) Normal completion equipment operations: discharge 80 GPM – pressure 3,000 psi.
	 
	–	 	b) Operations in wells with pressures exceeding 3,000 psi at the well head or that are
defined as of possible high pressure: 80 GPM – pressure 5,000 psi.
	 
	6.3	 	B.O.P. and Test Shaft

	 	6.3.1	 	– B.O.P. installation, service pressure API 3,000 psi:

	 	–	 	two valves or one double valve with two sets of rams, one of blind rams and one for
the tubing in use. B.O.P. shall be assembled according to PAE’s specifications.
	 
	 	–	 	Annular preventor.
	 
	 	–	 	B.O.P. adapter flange
	 
	 	–	 	Hydraulic operation system of the B.O.P. with independent pressure
accumulator and remote controls from the stations, one of which at least over 15
meters away from the equipment.

	 	6.3.2	 	Test tree for 3,000 psi working pressure with maneuvering valve, manifold and
lines for 3,000 psi working pressure. The swab cup assembly shall have a swabbing rod
automatic trap.
	 
	 	When working with wells at pressures exceeding 3,000 psi at the well head or that are
defined as possibly high pressure wells, a test tree shall be used for 5,000 psi with
maneuvering valve and lines for 5,000 psi working pressure. The swab cup assembly shall
have a swabbing rod automatic trap.

	6.4	 	Auxiliary equipment.

	 	–	 	Hydraulic or pneumatic tongs for tubing of 2 7/8”, 2 3/8” and 3 1/2”.
	 
	 	–	 	Automatic slips, elevators and manual slipsfor the above referred tubing.
	 
	 	–	 	Hydraulic or pneumatic tong for pumping rods 3/4””, 7/8” and 1”.

	 
	 	–	 	Elevator, slipsand manual wrenches for the referred rods.
	 
	 	–	 	Valve and reductions of 3” for 3,000 psi working pressure to close the borehole
in use, 2 3/8”, 2 7/8” and 3 1/2” or 5,000 psi as the case may be.

	6.5	 	Swabbing Equipment.

	 	–	 	Hydraulic economizer for swabbing line and its packings.
	 
	 	–	 	Swabbing rods of 1 1/2”
	 
	 	–	 	Swab cup holder
	 
	 	–	 	Rubber-cupped seals and line and rods economizers

 

 

	6.6	 	Laboratory Tools and Equipment

	 	–	 	M. Decker type weight recorder.
	 
	 	–	 	Pressure gage in mud circuit.
	 
	 	–	 	Set of nozzles and nozzles holders for gas surge test.
	 
	 	–	 	Centrifugal sample separator.
	 
	 	–	 	Sample tubes heater.
	 
	 	–	 	Resistivity meter.
	 
	 	–	 	Injection Mud balance, pH testing paper, thermometers, test tubes.
	 
	 	–	 	API Density meters.
	 
	 	–	 	Titration kit for Potassium and Nitrates.

	6.7	 	In Fishing Tools
	 
	 	(which shall be available at the Operations Base at all times)

	 	–	 	Hydraulic and mechanic bumper jars.
	 
	 	–	 	Series 150 and 70 overshots for tubings and O’Bannon for rods in use (as many as
necessary).
	 
	 	–	 	Center spears for tubings in use
	 
	 	–	 	Adapters and reductions that may be necessary.
	 
	 	–	 	5 1/2” – 7” printers.
	 
	 	–	 	Taper taps.
	 
	 	–	 	Core bits — Mills
	 
	 	–	 	3 1/2” – 4 3/4”, drill collars 4 jts. of each of them with their respective substitutes and
clamps.

	6.8	 	Well Tools

	 	–	 	5 1/2” and 7” junk baskets for casing.

	 
	 	–	 	Casing scrapers for 5 1/2” and 7”.
	 
	 	–	 	Conventional recoverable plugs and packers for 5 1/2” and 7” to perform test,
cementing and stimulation works.
	 
	 	–	 	5 1/2” and 7” open hole packers. (Eventual use to be invoiced according to the Price List).
	 
	 	–	 	5 1/2” and 7” tension packers.
	 
	 	–	 	2 3/8”, 2 7/8”, 3 1/2” tubing calipers according to PAE requirements.

	6.9	 	Assorted Material and Equipment at the Site

	 	 	 	Anti-explosive fluorescent lighting.
	 
	 	 	 	Internal and external calipers for 2 3/8”, 2 7/8” and 3 1/2” tubings.
	 
	 	 	 	Assorted tools.
	 
	 	 	 	Fresh water tank of 30 m3 minimum capacity.
	 
	 	 	 	Catwalk with pipe racks for tubing.
	 
	 	 	 	Cloths to cover mud and cementing material.
	 
	 	 	 	Office-bedroom Trailer with two (2) beds, fully-equipped kitchen and bathroom with heating
and cooling system for inspection independent from the rest of the trailers.
	 
	 	 	 	Crew trailer with changing room and lab space.
	 
	 	 	 	Both trailers shall have electric heating.
	 
	 	 	 	2 3/8”, 2 7/8” and 3 1/2” SNAP ON type rubber protectors for tubing thread similar to the
ones used to jacket casing.

	 	 	During the term of the present contract PAE shall recognize 30 minutes per day up to a
maximum of twelve hours per month for maintenance works. According to strategies to be
defined by DLS Maintenance department.
	 
	6.10	 	Consumption material
	 
	 	 	All supplies necessary for the maintenance of DLS equipment in good operating conditions.
	 
	6.11	 	Transport

	 	–	 	The following transport procedures and guidelines agreed under the scope of
the Alliance shall be applied:

	 	–	 	“Tower equipment Dismantling, Transport and Assemblage Safety
procedure” (PG-AE-SE-01).
	 
	 	–	 	“Transport personnel effectively worked hours control” (IT-AE-TR-01).
	 
	 	–	 	“Road machinery support” (IT-AE-TR-03).
	 
	 	–	 	“Transport units control list” (IT-AE-TR-03)

 

 

	 	–	 	“Drivers authorization” (IT-AE-TR-04)

	 	–	 	All transport of DLS equipment to the area of the Agreement, transport
between sites and removal of equipment at the termination of the Agreement.
	 
	 	–	 	In case roads are in bad conditions, PAE shall assist DLS in carrying out the
transport.
	 
	 	–	 	All transport of DLS materials and personnel necessary for the operations.

	6.12	 	Personnel and Camp
	 
	 	Personnel shall comply with sections 4.1, 10.2 and 14 of this Appendix and furthermore:

	 	–	 	Working days shall be divided into 8 (eight) or 12 (twelve) hour shifts. 12 x
12 regimes are not allowed (12 hours rest x 12 hours work).
	 
	 	–	 	Camps to host personnel within the area of the Agreement are not allowed.

	6.13	 	Communications

	 	–	 	DLS shall maintain permanent radio contact between the completion and
workover teams and PAE’s camp at Cerro Dragón. PAE shall provide voice and data
communication among the Completion and Workover teams.
	 
	 	–	 	DLS shall comply with the following procedures for data use and entry on DIMS
once such system is implemented:
	 
	 	–	 	“DIMS operation procedure” (for completion) “Data quality control and
handling of information” (for completion)
	 
	 	–	 	“Mandatory reports to be entered on DIMS” (for completion)
	 
	 	–	 	Intercom for risk areas between the engine driver and the derrickman at the
racking platform and two (2) Walkie Talkie units for risk areas available for the
Team. The equipment are owned by PAE and shall be maintained by DLS.

	6.14	 	Safety gear and working clothes.

	 	–	 	Safety glasses for all personnel.

	 
	 	–	 	Ear protectors to use at all places where noise level exceeds 85 decibels.
	 
	 	–	 	In vehicles or fixed premises, personnel shall wear the gear prescribed
by the corresponding Safety Regulations.
	 
	 	–	 	Electronic speed recorder in vehicles (digital speed meter)

	 
	 	–	 	In addition, all other gear required by legal regulations in force
	 
	 	–	 	SH2 continuous monitoring detector and self-contained breathing apparatus
(quantity depending on commitment undertaken or request made to DLS).

	6.15	 	Fire equipment.

	 	a.	 	Three dry chemical powder ABC type, potassium base, fire trucks of 100 Kg.
capacity or three dry chemical powder fire trucks of 70 Kg. capacity.
	 
	 	b.	 	Six dry chemical powder ABC type, potassium base, manual extinguishers of 10
Kg. capacity or six dry chemical powder manual extinguishers of 7 Kg. capacity.
	 
	 	c.	 	All the equipment described in a. and b. above shall be nitrogen pressurized
and have a pressure control gauge.
	 
	 	d.	 	Two carbon dioxide extinguishers of 5 Kg. capacity each.
	 
	 	e.	 	The equipment shall be placed at strategic places. The trucks shall not be
over 20 meters away from the drilling equipment.
	 
	 	f.	 	In addition, all other equipment required by legal regulations in force.
	 
	 	g.	 	The team shall hold safety meetings once a week (each shift) during shifts
change.

	6.16	 	Fire prevention and surge control training.
	 
	 	 	During the drilling of a well, different shifts of personnel shall be trained on fire
prevention, as provided for by the simulation plan. Written records of the dates and
training issues shall be kept.

	6.17	 	Electric safety equipment.

	 	–	 	Stakes.
	 
	 	–	 	Explosion proof electric installation.
	 
	 	–	 	In addition, all other equipment required by legal regulations in force.

 

 

	6.18	 	First Aid Equipment.

	 	–	 	Medicine cabinet with the items necessary to provide immediate aid.
	 
	 	–	 	Stretcher to carry injured persons (foldable in halves).
	 
	 	–	 	In addition, all other equipment required by legal regulations in force.

	6.19	 	Training in and correct use of the STOP Safety system.
	 
	6.20	 	Compliance with API-Spec.8A Rule (Maintenance and inspection of the hoisting equipment).
	 
	6.21	 	Updated certificates of Wells’ Control Courses, Supervisor level, for Team Leaders, Shift
Heads and Mud Engineers. Wells’ Control Courses, Basic level, for Drillers and Derrickmen.

SECTION 7

MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC. PROVIDED BY PAE

DURING THE COMPLETION AND WORKOVER OPERATIONS.

	7.1	 	Services

	 	–	 	Wire line service, including indication of the free point and breakout.
In case of fishing attributable to DLS, DLS shall provide such services at its own
cost.
	 
	 	–	 	Fracturation and acidification with the necessary tools.
	 
	 	–	 	Fishing tools. In case of fishing attributable to DLS, DLS shall provide
such services at its own cost.

	7.2	 	Consumption materials
	 
	 	PAE shall provide the following materials at the well:

	 	–	 	Drill bits, core bits and mills.
	 
	 	–	 	Cement
	 
	 	–	 	Fracturing sand
	 
	 	–	 	Completion fluids materials and additives
	 
	 	–	 	Water
	 
	 	–	 	Tubing grease

	7.3	 	Well materials.
	 
	 	PAE shall provide the following materials at the well:

	 	–	 	Tubing
	 
	 	–	 	Pumping rods and pumps.
	 
	 	–	 	Re-drillable retainers and plugs.
	 
	 	–	 	Any other material that normal activities at the well may require.

	7.4	 	Surface works.
	 
	 	PAE shall provide the following surface works at the well.

	 	–	 	Site with anchorage for the equipment. (“Site Construction Procedure” PG-AE-FA-01)
	 
	 	–	 	Access roads
	 
	 	–	 	Containers for wastes and fluids.

SECTION 8

CONDITION OF THE EQUIPMENT – REPAIRS.

	8.1	 	Condition of the Equipment.

 

 

	 	 	Drilling equipment availability, reliability and servicing indexes shall be kept;
interruptions to the service due technical failures or programmed maintenance works shall
also be recorded. (PG-AE-MA-01 “Equipment failure analysis”).
	 
	8.2	 	Repairs.
	 
	 	 	During operation DLS shall perform its equipment maintenance in order for them to carry out
their functions without wasting time. DLS shall perform all repairs immediately and at its
own expense and risk.
	 
	8.3	 	Suspension of the Works.
	 
	 	 	In case deficiencies in the equipment that cause unnecessary delays in the works are
identified, the company may suspend the works and such suspension shall create no
obligations. Deficiencies involving risks to the personnel shall also cause suspension at
no cost.

SECTION 9

SITE – TRANSIT PERMIT.

PAE shall produce the access, exit and permanence permits to, from and in the area of location of
the well for the performance of all the works included in these bidding terms. In case of
impossibility to obtain such permits or in case such permits are subject to restrictions or
limitations, PAE shall give DLS immediate written notice. Time lost by DLS as a result shall be
compensated at the Waiting Hour tariff.

SECTION 10

MISCELLANEOUS LIABILITIES.

	10.1	 	Responsibility for Damages or Losses to the Equipment.

	 	10.1.1	 	DLS surface equipment.
	 
	 	 	 	DLS shall be responsible at all time for damages or losses to its surface
equipment, tools, machinery and utensils, whatever the time or way in which the
damage is caused and PAE shall in no way be responsible for reimbursing DLS.
	 
	 	10.1.2	 	DLS equipment in the Well.
	 
	 	 	 	PAE shall be responsible for damages to or destruction of DLS equipment in the
well, except in case they are not attributable to negligence or equipment failure
by DLS.

	10.2	 	Materials Provided by PAE.
	 
	 	 	DLS agrees to carefully inspect all the materials and equipment provided by PAE and to
notify PAE in writing about any apparent defects found, in the way and within the timeframe
necessary for PAE to be able to replace such defective materials or equipment. Failure by
DLS to give notice the materials and equipment shall be deemed free of apparent defects.
	 
	 	 	DLS shall be responsible for the materials, equipment and all other items provided by PAE,
and shall keep them in good condition in order to return them or respond for them as the
case may be. While in DLS’s possession, such elements shall be deemed under DLS’s custody.

SECTION 11

RELATIONSHIPS WITH DLS.

	11.1	 	The creation of an alliance between PAE and DLS may lead to the development of new
relationships based on mutual trust, the sharing of operation information and, above all, it
may raise both companies awareness on the need to insure their personnel and goods, to
preserve the

 

 

	 	 	environment and to constantly improve themselves for the benefit of the companies and
personnel involved.
	 
	11.2	 	Both companies shall share all the operation information related to the activities of
the Alliance. This information may be transmitted or accessed through common databases to
which access shall be granted via authorizations or passwords.
	 
	11.3	 	Each company organizing a technical training activity involving the interests of the
Alliance shall invite representatives of the other company to attend.
	 
	11.4	 	For the purposes of training of personnel and prior agreement and scheduling, any company
may assign its own personnel specific tasks to be performed at the other company.
	 
	11.5	 	Both companies undertake to systematically analyze the performance of the Alliance in
order to benefit from its achievements and prevent possible errors.

SECTION 12

AMENDMENTS TO THE SCHEDULE.

DLS shall perform the works and operations in accordance with the schedule provided by PAE and with
the programs prepared by the Completion and Workover Engineering Department. Such programs may be
amended in reasonable ways and timeframes and, in such case, such amendments shall be approved by
PAE’s completion and workover supervisor.

SECTION 13

RECORDING SYSTEM OF THE ALLIANCE.

The Alliance records system shall be composed of the DLS Quality Management System, the PAE
Environmental Management System, the PAE Safety Management System and the procedures and
guidelines prepared under the scope of the Alliance.

This system takes into consideration the preparation of special documentation for this Agreement
in particular. The operation procedures that require to be reviewed and that fall within the
scope of the PAE/DLS Alliance shall be jointly considered by both Companies. The preparation of
the same shall be subject to the “Preparation of the Procedures Created under the Scope of the
PAE-DLS Alliance” procedure (PG-AE-GC-01).

In case of conflict between the latter and PAE’s and DLS’s own procedures, the Alliance
procedures shall prevail.

The procedures and guidelines describe the records created and provide objective guarantee and
evidence that the required quality and safety standards were met and that the quality system has
been properly put in practice.

SECTION 14: CONFIDENTIAL INFORMATION.

Any data or information deriving from or related to the drilling operations and other oil activity
in the area, of whatever kind or nature, shall be treated by the parties as strictly confidential.
The contents of such information shall under no circumstances be revealed to third parties, either
in whole or in part. The same obligation applies to the parties employees, subcontractors and their
employees and any other individual or entity related to the parties.

 

 

APPENDIX II: TECHNICAL APPENDIX

II.C – WELL PULLING RIG SERVICE AT THE GULF OF SAN JORGE 

MANAGEMENT UNIT

TABLE OF CONTENTS

	 	 	 	 	 
	SECTION 1: LOCATION OF THE WELLS.
	 	Page 2
	 
	 	 	 	 
	SECTION 2: PERFORMANCE OF THE WORKS.
	 	Page 2
	 
	 	 	 	 
	SECTION 3: TARIFFS.
	 	Page 2
	 
	 	 	 	 
	SECTION 4: COMPLETION AND WORKOVER METHODS AND
PRACTICES.
	 	Page 3
	 
	 	 	 	 
	SECTION 5: INFORMATION RECORDING ON
COMPLETION AND WORKOVER
OPERATIONS.
	 	 	 	 
	 
	 	 	 	 
	SECTION 6: MATERIALS, EQUIPMENT, SERVICES,
PERSONNEL, ETC. PROVIDED BY DLS
DURING THE
                  COMPLETION AND WORKOVER OPERATIONS.
	 	Page 6
	 
	 	 	 	 
	SECTION 7: MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC.
PROVIDED BY PAE DURING

                  THE
COMPLETION AND WORKOVER OPERATIONS.
	 	Page 14
	 
	 	 	 	 
	SECTION 8: CONDITION OF THE EQUIPMENT – REPAIRS.
	 	Page 15
	 
	 	 	 	 
	SECTION 9: SITE – TRANSIT PERMIT.
	 	Page 15
	 
	 	 	 	 
	SECTION 10: MISCELLANEOUS LIABILITIES.
	 	Page 16
	 
	 	 	 	 
	SECTION 11: RELATIONSHIPS WITH DLS.
	 	Page 16
	 
	 	 	 	 
	SECTION 12: RECORDING SYSTEM OF THE ALLIANCE.
	 	Page 17
	 
	 	 	 	 
	SECTION 13: CONFIDENTIAL INFORMATION.
	 	Page 17

 

 

APPENDIX II: TECHNICAL APPENDIX

II.C – WELL PULLING RIG SERVICE AT THE GULF OF SAN JORGE 

MANAGEMENT UNIT

SECTION 1

LOCATION OF THE WELLS.

The sites designed and provided by PAE shall be located within the area of the Gulf of San Jorge
Management Unit, which comprise the areas of Cerro Dragón, Anticlinal Grande and Anticlinal Funes
corresponding to the North flange and Piedra Clavada and Koluel Kaike corresponding to the South
flange.

SECTION 2

PERFORMANCE OF THE WORKS.

DLS shall begin and carry on the operations with due diligence and without improper delays or
interruptions and shall perform such operations on the basis of a seven (7)-days-week and twenty
four (24)-hours-working days.

If an unplanned interruption of the operations extends for a period exceeding 30 days, DLS shall
provide a replacement; planned interruptions shall be communicated by DLS two months in advance.

In order to ensure the fulfillment of the technical requirements established in the present
Appendix and maintain control over the processes affecting the standards of Quality and Safety set
with respect to the contractual obligations, for the purposes of the Alliance, the Quality Plan
(PG-AE-GC-02) is hereby implemented. This Quality Plan describes the way in which the requirements
of the Agreement are fulfilled and contains the description of how operations are carried out, also
_deferring to the applicable procedures and instructions to that effect.

SECTION 3

TARIFFS.

	3.1	 	General provisions
	 
	 	 	PAE shall pay DLS for the services rendered by using light or heavy pulling equipment on
the basis of the tariffs defined herein below:
	 
	3.2	 	Waiting Hourly Rate.
	 
	 	 	This rate shall be applied to all operations performed at the well when the pulling unit is
idle , which may occur in situations such as: waiting for day light to perform transport
activities, waiting for the site with all personnel ready at the site, waiting for a work
order, change of site during DTM, waiting or operating service companies,

According to Appendix I — Prices
	 
	3.3	 	Operation Hourly Rate.
	 
	 	 	This hourly rate shall be applied to all operations performed with the equipment and all of
the personnel.
	 
	 	 	According to Appendix I – Prices.
	 
	3.4	 	Climate Factor Rate.
	 
	 	 	This hourly rate shall be applied in case of strong winds, snow or heavy rain.
	 
	 	 	According to Appendix I – Prices.
	 
	3.5	 	Transport of Equipment Rate (along the same flange). According to Appendix I – Prices.

 

 

	 	 	This rate comprises charges for transport and assemblage and dismantling of the pulling
unit and its accessories between two locations within the same flange at a distance not
exceeding 20Km.
	 
	3.6	 	Charge rate for distance in kilometers. According to Appendix I – Prices.
	 
	 	 	This rate shall apply for any distance in kilometers in excess of 20Km.
	 
	3.7	 	Transport of Equipment Rate (between the North and the South flanges). According to Appendix
I – Prices.
	 
	 	 	This rate comprises charges for transport and assemblage and dismantling of the pulling
unit and its accessories between two locations within different flanges.

SECTION 4

PULLING RIG SERVICE METHODS AND PRACTICES.

	4.1	 	Due diligence.
	 
	 	 	DLS shall commence the works on the date indicated by PAE and shall continue to perform
them with due diligence and care, in accordance with good oilfields practices, keeping the
equipment in optimum working conditions and using competent personnel.
	 
	 	 	DLS shall employ all necessary care and diligence (in particular but not limited to, the
closure of valves), in order to avoid contamination of the phreatic layers, the
deterioration of the land, field, livestock, premises and, in general, in order to avoid
damages to PAE and to third parties. The protection of the environment shall be governed by
the ISO 14001 Environmental Management System, certified by PAE.
	 
	4.2	 	Required quality
	 
	 	 	During the performance of the works DLS shall comply with the provisions of PAE’s “Pulling
intervention Program” as set forth by the PG-AE-TP-01 procedure.

For all operations involving the handling of rods the “Handling of rods” guidelines
(IT-AE-TP-04) shall apply.
	 
	 	 	Operations
	 
	 	 	Prior to transporting to a well Pan American supervisor shall deliver to DLS the
intervention program.
	 
	 	 	DLS shall inspect the roads, site and anchor of the well to be intervened in order to
verify the normal development of the transport.
	 
	 	 	The contractor shall issue the operation reports in three copies and shall provide detail
on each maneuver taking longer than 15 minutes; this information shall be updated and
available for the team at all times. At midnight the information shall be delivered to the
Pulling Coordination office at Cerro Dragón.
	 
	 	 	Pan American shall have 2 (two) working days to amend such reports and return them to DLS
duly approved stating the charges corresponding to the contractor.
	 
	 	 	DLS shall be responsible for checking all the materials located at the site against the
work order and for immediately giving Pan American Energy supervisor notice of any
irregularity or missing materials, if any.
	 
	4.3	 	Fire and blow outs prevention

	 	  a.	 	DLS shall use all possible means to control and avoid fires and blow outs and
to protect the well. No fire shall be allowed within a 50 meter perimeter around the
well. In case it was necessary to perform welding works on the equipment or in the
surrounding area, an “authorization to perform hot working” from the representative in
the Area (Team Leader).
	 
	 	  b.	 	Prior to commencing operations involving tubing movements, the B.O.P. shall
be properly installed with bolts at the well head and it shall be kept in optimum
working conditions. In this respect, DLS shall examine and test the working conditions
of the

 

 

	 	 	 	B.O.P. valves and other equipment following each assemblage and it shall record the
results of such tests in the register book. DLS shall perform well control
simulations through well known procedures and the results shall be entered in the
Pulling reports.
	 
	 	c.	 	B.O.P. Tests
	 
	 	 	 	– The equipment B.O.P. shall be tested at least once a month with 2,000 psi. There
shall be a record where the date, well, testing pressure, name of the attending
supervisor as well as any detected anomaly shall be recorded. There shall be 2
3/8”, 2 7/8” and 3 1/2” RAMS.

	4.4	 	Operation Standard Times

	 	 	 
	PULL OUT RODS (SINGLE)

	 	45 Rods / Hour
	 
	 	 
	PULL OUT RODS (DOUBLE)

	 	90 Rods / Hour
	 
	 	 
	RUN IN RODS (SINGLE) with cleaning and torque

	 	40 Rods / Hour
	 
	 	 
	RUN IN RODS (SINGLE) with cleaning and double torque included

	 	30 Rods / Hour
	 
	 	 
	RUN IN RODS (SINGLE) with cleaning and without torque

	 	45 Rods / Hour
	 
	 	 
	RUN IN RODS (DOUBLE) with cleaning and torque included

	 	80 Rods / Hour
	 
	 	 
	RUN IN RODS (DOUBLE) to fish with cleaning and without torque

	 	100 Rods / Hour
	 
	 	 
	PULL OUT TUBING (SINGLE)

	 	35 Tubing / Hour
	 
	 	 
	PULL OUT TUBING (DOUBLE)

Measuring.

	 	70 Tubing / Hour
	 
	 	 
	PULL OUT TUBING (DOUBLE)

	 	80 Tubing / Hour
	 
	 	 
	RUN IN TUBING (SINGLE)

Washing, measuring and calibrating

	 	30 Tubing / Hour
	 
	 	 
	RUN IN TUBING (SINGLE)

	 	35 Tubing / Hour
	 
	 	 
	RUN IN TUBING (DOUBLE)

Washing, measuring and calibrating

	 	55 Tubing / Hour
	 
	 	 
	RUN IN TUBING (DOUBLE)

	 	75 Tubing / Hour

 

 

	 	 	 
	BOP ASSEMBLING OR DISMANTLING

	 	1 hour
	 
	 	 
	RUN IN TUBING (DOUBLE)

CLAMPING CABLE

	 	28 Tubing per hour

4.5 Liabilities

The ISO 14001 Environmental Management System certified by PAE shall be applicable. DLS shall clean
oil and other fluids spills and repair the damages caused at the site during operations in a well,
provided however such damages are attributable to DLS. The contractor shall employ special care
with respect to countryside gates and shall also avoid water contamination and damage to the land,
fences, livestock or any other property, owned either by third parties or by Pan American and
shall, at its own cost and expense, repair all damages caused by reasons attributable to its
personnel or subcontractors.

The inspection, supervision or presence of one or more supervisors of Pan American shall not exempt
the contractor from its responsibilities and obligations.

The contractor shall cause Pan American operation and safety rules to be fulfilled by any person
accessing the site where the pulling equipment is in operation. In addition, the team’s personnel
shall have all the safety items in optimum conditions.

SECTION 5

INFORMATION RECORDING ON COMPLETION AND WORKOVER OPERATIONS.

DLS shall keep a “daily record of pulling operations” according to the (PG-09-DO-02) procedure,
where all operations performed shall be entered, (PE-09-DO-02/03A2) register. This register shall
be deliver to PAE Pulling Coordinator on a daily basis.

All the information shall be entered in a PC in order for it to be available in digital version
(Diskette) or CD.

SECTION 6

MATERIALS, EQUIPMENT, SERVICES, PERSONNEL, ETC. PROVIDED BY DLS DURING THE PULLING RIG OPERATIONS.

DLS shall provide the principal and auxiliary equipment necessary to comply with the working
schedule.

Likewise, PAE’s “Wells Operation and Drilling Policies” shall be observed where applicable.

PAE reserves the right to expressly accept an amount of equipment not strictly suitable to fulfill
this condition according to its pulling program.

In addition, PAE requires at least the following:

	 	–	 	Application of the “Technical and Basic Safety Rules for Drilling, Workover and Pulling
Operations” (PG-AE-SE-03 Procedure) for the PAE-DLS Strategic Alliance.
	 
	 	–	 	Check list to verify the fulfillment of the PG-AE-SE-03 Procedure. (To be adapted in case
it is necessary)
	 
	 	–	 	Dismantling, Transport and Assemblage of Tower Equipment Safety (PG-AE-SE-01 Procedure).
(To be adapted in case it is necessary)
	 
	 	–	 	Trucks and hoisting elements Certification and Audit Procedure (IT-AE-TR-05). (To be
adapted in case it is necessary).

6.1 Equipment description 

 

 

Drawworks

Double Drum: 200 / 300 HP

     Capacities

Hoisting capacity: 75 TN

Maximum Working weight: 90,000 Lbs.

Wind resistance against chute at the tower: 100 Km/hour

Swabbing Drum: 3,500 Mts.

     Mast

Type: Structural

Height: 96’ – 98

Capacity: 140,000 – 180,000 Lbs.

Safety Device: Safety mechanism for Hoisting Gear course

     Hoisting Gear

Capacity: 75 TN

Pulleys: 3 x 20”.

     Rod Elevator

To be used for rods of: “– 3/4” – 7/8” – 1”

Work capacity 25 TN.

Maximum capacity 40 TN.

     Rod Wrench

Type B.J. – Mark V

For rods of: – 3/4 “ – 7/8” – 1”

     Tubing

Type: Foster

For tubing of: 2 3/8” – 2 7/8” – 3 1/2 ”

Surge Prevention

B.O.P.

Type: Double

Closures: In whole and in part 2 3/8” – 2 7/8” – 3 1/2 ”

Interior passage: 7 1/16”

Maximum work pressure: 3,000 psi.

Maximum proof pressure: 5,000 psi.

B.O.P. for rods

Hook for hanging pulleys to operate electric-submersible pumps (E.S.P.)

Power station 20 KW

Lighting

 

 

Type Explosion proof

Minimum luminosity 84 lux

     Capstan

Type: Hydraulic

Maximum capacity 1,500 Kg

Cable 1/2 “

Untwister Bearing

-
Capstan (do not use catline)

- All gear must be equipped to work with 3,000 psi.

	6.2	 	Tools available in each equipment

1 Rod stripper with line and 2” x 2,000 psi valve

1 High pressure 2” hose (2,000 psi) FOR DRAINING

1 Torquimeter to adjust rod clamp

1 Clamp puller to elevate oil well pump

2 24” Stillson wrench

2 36” Stillson wrench

1 48” Stillson wrench

1 12” Screw wrench

1 18” Screw wrench

1 48” Chain wrench

1 Friction wrench for coupling 1” rod

1 Friction wrench for coupling 7/8” rod

1 Friction wrench for coupling 3/4” rod

20 m measuring tape

1 3 1/2” x 2” Reduction

1 2 7/8” x 2” Reduction

1 2 3/8” x 2” Reduction

1 2” 3,000 psi balanced plug valve

1 large-sized bronze hammer

1 medium-sized bronze hammer

4 manual 1.5m long valve wheel wrench to close the B.O.P. (with their corresponding supports)

1 rod cleaning torch with an R5 type 30m long 1/4” hose

1 Wax chiller (corkscrew type) and/or hinge valve for 2 3/8” and 2 7/8” Tbg.

6 Rod frames

3 Small-sized frames for production rod

1 1” rod with cut pin to use for maneuvers

1 1” lump with cut pin to use for maneuvers

1 2 7/8” x 10’ N-80 nipple to use for maneuvers

1 2 7/8” perforated nipple to use in swabbing

1 Iron brush

2 Shovels

2 Pickaxes

1 Barrow

1 External and internal compass set

1 Caliper

1 Iron rule

1 Leveling instrument

1 Board for small-sized tools

1 Norris type well head adaptor

1 Cameron type well head adaptor

1 Danco type 2,000 psi well head adaptor

1 Danco type 3,000 psi well head adaptor

1 Electric-submersible well head adaptor

 

 

1 3,000 psi threaded adaptor, 7” Cgs. with dowel pins and 1” x 7” nuts for perforating

1 Flanged adaptor for 3,000 to 2,000 psi Cameron well head

1 Stafing-box adaptor

1 ex-YPF well head adaptor

2 3/4” – 7/8” – 1” rod elevators

1 2 3/8” tubing elevator

1 2 7/8” tubing elevator

1 3 1/2” tubing elevator

1 2 3/8” – 2 7/8” – 3 1/2” manual slips set for tubing

1 2 3/8” – 2 7/8” – 3 1/2” pneumatic slips set for tubing

1 Weight indicator (Type: Martin Decker)

1 5/8” to 1” Overshot for pin coupilng and rod body

1 1 1/4” and 1 1/2” rod overshot

1 rod and oil well pump head

1 2” overshot to fish 3/4” bodies

1 large-oversized overshot to fish 3/4” – 7/8” – 1” outworn sockets

1 Overshot to fish coupling and 2 3/8” 2 7/8” tubing body

3 1/2” fishing bell socket to run in 5 1/2” and 7” casing

1 Jeronimo

1 Safeguarding

2 Safety belts for the derrickman

2 Beacons to put on the wind guy line at the access to the site

1 6 Road safety cone set to signal guy lines

1 puller set to lower and pull well head wedges

1 Tbg. tester with equalizing valve Torpedo type

1 Cup tester integral

1 B.O.P. valve of 3,000 psi side rods with 2” x 3,000 psi valve

1 Safety tape roll or 50m red and white or fluorescent orange plastic chain

6 10Kg fire extinguishes ABC type

1 Swabbing rod with weak cutting point for 12,000 Lbs.

1 2 7/8” Lubricant for the swabbing rod with its corresponding wet tree for 3,000 psi

Heavy pulling equipment shall have rotary head, pit and injection pump

Mud system

	–	 	Triplex pump apt for operating under the following operation conditions:

	 	a)	 	Normal completion equipment operations: discharge 80 GPM – pressure 3,000 psi.
	 
	 	b)	 	17 m3 metal pit
	 
	 	c)	 	Rotary head

	6.3	 	Other Work Conditions and Requirements

6.3.1 B.O.P. installation, service pressure API 3,000 psi: — Two valves or one double valve
with two sets of rams, one of blind rams and one for the tubing in use. — B.O.P. adapter
flange

6.3.2 Test tree for 3,000 psi working pressure with maneuvering valve, manifold and lines for
3,000 psi working pressure.

All equipment shall be inspected by Pan American Energy supervision before being entered into
the area and authorization for such equipment to start operating shall be previously granted.
Only equipment authorized by Pan American Energy may operate; in case of equipment
replacement a new inspection shall be required.

A file containing all equipment technical data, including tools, overshots and their
corresponding entry dates, date of last repair, inspection date, maintenance and replacement
date shall be kept; this data shall be magnetically certified.

The rig shall keep another file for the purpose of controlling the amount of tons-miles for
which the hoisting gear cable is used keeping record of the measurements and cuts performed
thereon.

Regarding the swab cable, records shall be kept on the number of meters left in the drum, the
reasons for the cuts thereon, the number of meters cut and the number of meters left.

 

 

The trailer for the rig shall be of the office type and shall be mounted on a 2 shaft chasis,
shall have an office space for the supervisor and a dinning space for the personnel, with a
table and an electric stove, plus an electric heating system suited to the winter climate in
the operation area.

Drinking water supply.

Vehicles entering the site shall be parked outside the boundaries set the safety chain, which
shall go beyond the line between the anchors.

The contractor’s equipment shall have 4 or 5 supports on the sides to carry four 1” rods for
the replacements during fishing and hooking operations.

	6.4	 	Auxiliary equipment.

	 	–	 	Hydraulic or pneumatic tongs for tubing of 2 7/8”, 2 3/8” and 3 1/2” calibrated
according to DLS calibration procedure.
	 
	 	–	 	Automatic slips, elevators and manual slips for the above referred tubing.
	 
	 	–	 	Hydraulic or pneumatic tongs for pumping rods 3/4””, 7/8” and 1” calibrated
according to DLS calibration procedure.
	 
	 	–	 	Elevator, slips and manual wrenches for the referred rods.
	 
	 	–	 	Valve and reductions of 2” for 3,000 psi working pressure to close the borehole
in use, 2 3/8”, 2 7/8” and 3 1/2”.

The headwell adaptors to the B.O.P., pipe testers with pressure Equalizing systems (as requested by
Pan American), swab cups and rod stripper rubber seals are included among the elements to be
provided by the contractor. The sealing grease for tubing and lubricant for rods shall be provided
by Pan American.

The contractor shall have regular tools for the purpose of fishing the right hand thread tubing
(API version) type, the 4 9/16” diameter, Series 150 Overshot type (Exterior Overshots) with 5 1/2”
and 7” guides, in order to fish pin, body, upset and 2 3/8”, 2 7/8” and 3 1/2” coupling; in addition
the contractor shall have an interior tubing overshot of the 4 9/16” diameter Center Spear type for
2 3/8”, 2 7/8” and 3 1/2” interior tubing fishing, with 5 1/2” and 7” guides. The contractor shall also
provide printers, substitutes and reductions for all types of overshots.

The equipment shall include all the necessary elements in order to operate with
electric-submersible pumps.

	6.5	 	Swabbing Equipment.

	 	–	 	Hydraulic stripper for swabbing line and its packings.
	 
	 	–	 	Swabbing rods of 1 1/2”
	 
	 	–	 	Swab cup holder
	 
	 	–	 	Rubber-cupped seals and line and rods strippers

	6.6	 	Laboratory Tools and Equipment

	 	–	 	M. Decker type weight recorder.

	 
	 	–	 	Pressure gage in mud circuit.

	6.6	 	In Fishing Tools (which shall be available at the Operations Base at all times)

	 	–	 	Series 150 and 70 overshots for tubings and O’Bannon for rods in use (as many as
necessary).
	 
	 	–	 	Center spears for tubings in use
	 
	 	–	 	Adapters and reductions that may be necessary.
	 
	 	–	 	5 1/2” – 7” printers.
	 
	 	–	 	Taper taps.

	6.7	 	Well Tools

	 	–	 	Casing scrapers for 5 1/2” and 7”.

	 
	 	–	 	2 3/8”, 2 7/8”, 3 1/2” tubing calipers according to PAE requirements.

	6.8	 	Assorted Material and Equipment at the Site

	 	 	 	Anti-explosive fluorescent lighting.

	 
	 	 	 	Assorted tools.

	6.9	 	Consumption material
	 
	 	 	All supplies necessary for the maintenance of DLS equipment in good operating conditions.
	 
	6.10	 	Transport

 

 

	 	–	 	The following transport procedures and guidelines agreed under the scope of
the Alliance shall be applied:

	 	–	 	“Tower equipment Dismantling, Transport and Assemblage Safety
procedure” (PG-AE-SE-01). (To be adapted in case it is necessary)
	 
	 	–	 	“Road machinery support” (IT-AE-TR-03). (To be adapted in case it
is necessary)
	 
	 	–	 	All transport of DLS equipment to the area of the Agreement,
transport between sites and removal of equipment at the termination of the
Agreement.
	 
	 	–	 	In case roads are in bad conditions, PAE shall assist DLS in
carrying out the transport.
	 
	 	–	 	All transport of DLS materials and personnel necessary for the
operations.

	6.11	 	Personnel and Camp
	 
	 	 	Personnel shall comply with sections 4.1, 10.2 and 13 of this Appendix and furthermore:

	 	–	 	Working days shall be divided into 8 (eight) or 12 (twelve) hour shifts. 12 x
12 regimes are not allowed (12 hours rest x 12 hours work).
	 
	 	–	 	Camps to host personnel within the area of the Agreement are not allowed.

Personnel:

The team shall have a tourpusher or pulling supervisor, one driller, one derrickman and two
floormenat the wellhead.

In addition the team shall have a Field Supervisor, who shall be in charge of a minimum of 1 (one)
and a maximum of 5 (five) teams operating at the Pan American area; his duties shall be to
supervise the pulling units and keep the Pan American supervision department informed about all
news and maneuvers performed by the pulling teams. The Field Supervisor shall work at the field
from Monday to Friday from 8am to 5pm and be responsible for the pulling unit special works such
as: tubing fishing, non-routine maneuvers at the well, injection wells, perforations, bottom
cleaning with special tools, etc. and shall remain in the rig during the performance of such
operations.

The transport of personnel, equipment, tools, accessories, fuel and lubricants shall be carried out
the contractor’s own risk and expense.

6.12 Communications

Each rig shall have a radio-communication equipment, able to establish contact with all of the Pan
American area and maintain such communication permanently and efficiently 24 hours a day. This
system shall be connected to Pan American’s system in order for news and maneuvers performed to be
reported. In addition the Field Supervisor shall have a similar equipment on his vehicle. The
contractor shall place a similar equipment at its base in order to ensure the means of
communication.

6.13 Safety, Health and Environment

No alcoholic beverages or fire arms shall be allowed and no timber picking shall be allowed at the
area operated by Pan American.

Vehicles, equipment and machinery. Vehicles for transporting personnel and light cargo shall not be
over 5 years old models: automobiles, pick up and small trucks similar to an F-350. Heavy cargo
vehicles, buses and trucks shall not be over 10 years old models and shall be in perfect use and
safety conditions. All vehicles shall bear the contracting company logo and the vehicle’s internal
number at a visible place (at least on the four sides) and any other plate or identification item
issued by Pan American.

Specific personal protection equipment: Pirosalva, safeguarding, harness for derrickman with double
life line and one retractable line.

Pulling equipment transport: pulling equipment may not be transported along national or provincial
roads during night time. Pan American has sufficient secondary roads in order to transport
equipment throughout all the oilfield. The crossing of such roads shall be allowed provided beacons
are placed while crossing the equipment. In case a piece of equipment is being transported and the
night falls, the vehicle shall leave the road, place beacons to identify the equipment and wait
until day light in order to carry on.

6.14 Fire equipment and SH2 inhalation prevention.

 

 

SH2 and explosive mixtures continuous monitoring to work at areas where the presence of SH2 or gas
has been detected.

Self-contained breathing apparatus (30 minutes) to work at areas where SH2 has been detected
(equipment for 5 persons to be used by any of the 6 pulling teams).

Extinguishers: a total of 110 Kg dry powder, apt for Class B and C fires (2 fire trucks 25 kg
capacity and 6 extinguishers 10 kg capacity).

	6.15	 	Fire prevention and surge control training.
	 
	 	 	During the pulling operations in a well, different shifts of personnel shall be trained on
fire prevention, as provided for by the simulation plan. Written records of the dates and
training issues shall be kept.
	 
	6.16	 	Electric safety equipment.
	 
	 	 	Electric equipment shall be explosion proof, shall have a safety-break switch on the
switchboard and in the team’s trailer. Equipment engines shall have flame arresters and/or a
device that prevents engine acceleration when working in a gaseous atmosphere. The minimum
luminosity at the main places (such as wellhead) shall be 84 lux.

	 	–	 	Stakes.

	6.17	 	First Aid Equipment.

	 	–	 	Medicine cabinet with the items necessary to provide immediate aid.
	 
	 	–	 	Stretcher to carry injured persons (foldable).
	 
	 	–	 	In addition, all other equipment required by legal regulations in force.
	 
	 	–	 	Independent eye-washing station equipped with sterile liquids.
	 
	 	–	 	Safety glasses washing station.

	6.18	 	Training in and correct use of the STOP Safety system.
	 
	6.19	 	Compliance with API-Spec.8A Rule (Maintenance and inspection of the hoisting equipment).
	 
	6.20	 	Updated certificates of Wells’ Control Courses, Supervisor level, for Team Leaders, Shift
Heads and Mud Engineers. Wells’ Control Courses, Basic level, for Drillers and Derrickmen.

SECTION 7

MATERIALS, SUPPLIES, EQUIPMENT, SERVICES, PERSONNEL, ETC. PROVIDED BY PAE

DURING THE COMPLETION AND WORKOVER OPERATIONS.

	7.1	 	Services

	 	–	 	Well depressurization prior to commencing pulling operations
(IT-SE-TP-01) at well where gas problems have occurred.
	 
	 	–	 	Well dewaxing prior to commencing pulling operations (IT-AE-TP-02)
	 
	 	–	 	Controlling AIB engine and compressor prior to commencing pulling
operations (IT-AE-TP-06)
	 
	 	–	 	Placing the AIB on descending position prior to assembling the pulling
equipment (IT-AE-TP-05)

	7.2	 	Well materials
	 
	 	 	PAE shall provide the following materials at the well:

	 	–	 	Tubing and couplings
	 
	 	–	 	Pumping rods and couplings
	 
	 	–	 	Pony rods
	 
	 	–	 	Polished rods
	 
	 	–	 	Anchors
	 
	 	–	 	Sucker rod pumps
	 
	 	–	 	Pkrs
	 
	 	–	 	Packings
	 
	 	–	 	Bushings
	 
	 	–	 	Any other material that normal activities at the well may require.

 

 

	7.2	 	Surface works
	 
	 	 	PAE shall provide the following surface works at the well.

	 	–	 	Site with anchorage for the equipment. (“Site Construction Procedure” PG-AE-FA-01)
	 
	 	–	 	Access roads

SECTION 8

CONDITION OF THE EQUIPMENT – REPAIRS.

	8.1	 	Condition of the Equipment.
	 
	 	 	Pulling equipment availability, reliability and servicing indexes shall be kept;
interruptions to the service due technical failures or programmed maintenance works shall
also be recorded. (PG-AE-MA-01 “Equipment failure analysis”).
	 
	 	 	Suspension of the Works.
	 
	 	 	It should also involve deficiencies involving risks to the personnel shall also cause
suspension at no cost.
	 
	8.2	 	Repairs.
	 
	 	 	During operation DLS shall perform its equipment maintenance in order for them to carry out
their functions without wasting time. DLS shall perform all repairs immediately and at its
own expense and risk.
	 
	8.3	 	Suspension of the Works.
	 
	 	 	In case deficiencies in the equipment that cause unnecessary delays in the works are
identified, the company may suspend the works and such suspension shall create no
obligations.

8.4 Non-destructive Inspection

Non-destructive tests shall be performed on the equipment (the penetrating ink or magnaflux type)
assigned to permanent and variable solicitations (masts, hoisting equipment, substructure,
lifting jacks, crown block, structure knots, dead center, etc.).

An updated report on such tests shall be available with respect to all equipment entering the Pan
American area. Required inspection schedule is as follows:

Every 6 months: M. Decker tension indicator calibration

Every 2 years: Mast and crown block

Every year: Braking system, wind guy line, hoisting equipment, hooks, tongs, elevators, lifting

jacks and slips.

Pan American supervision department shall be presented with the supporting documents evidencing
the performance of such inspection. All documents shall be delivered when replacing a piece of
equipment or in January every year, together with the documents corresponding to the equipment
operating at Pan American area.

SECTION 9

SITE – TRANSIT PERMIT.

PAE shall produce the access, exit and permanence permits to, from and in the area of location of
the well for the performance of all the works included in these bidding terms. In case of
impossibility to obtain such permits or in case such permits are subject to restrictions or
limitations, PAE shall give DLS immediate written notice. Time lost by DLS as a result shall be
compensated at the Waiting Hour tariff.

SECTION 10

MISCELLANEOUS LIABILITIES.

 

 

	10.2	 	Responsibility for Damages or Losses to the Equipment.

	 	10.2.1	 	DLS surface equipment.
	 
	 	 	 	DLS shall be responsible at all time for damages or losses to its surface
equipment, tools, machinery and utensils, whatever the time or way in which the
damage is caused and PAE shall in no way be responsible for reimbursing DLS.
	 
	 	   10.1.2  DLS equipment in the Well.
	 
	 	 	 	PAE shall be responsible for damages to or destruction of DLS equipment in the
well, except in case they are not attributable to negligence or equipment failure
by DLS.

	10.2	 	Materials Provided by PAE.
	 
	 	 	DLS agrees to carefully inspect all the materials and equipment provided by PAE and to
notify PAE in writing about any apparent defects found, in the way and within the timeframe
necessary for PAE to be able to replace such defective materials or equipment. Failure by
DLS to give notice the materials and equipment shall be deemed free of apparent defects.
	 
	 	 	DLS shall be responsible for the materials, equipment and all other items provided by PAE,
and shall keep them in good condition in order to return them or respond for them as the
case may be. While in DLS’s possession, such elements shall be deemed under DLS’s custody.

SECTION 11

RELATIONSHIPS WITH DLS.

	11.1	 	The creation of an alliance between PAE and DLS may lead to the development of new
relationships based on mutual trust, the sharing of operation information and, above all, it
may raise both companies awareness on the need to insure their personnel and goods, to
preserve the environment and to constantly improve themselves for the benefit of the
companies and personnel involved.
	 
	11.2	 	Both companies shall share all the operation information related to the activities of
the Alliance. This information may be transmitted or accessed through common databases to
which access shall be granted via authorizations or passwords.
	 
	11.3	 	Each company organizing a technical training activity involving the interests of the
Alliance shall invite representatives of the other company to attend.
	 
	11.4	 	For the purposes of training of personnel and prior agreement and scheduling, any company
may assign its own personnel specific tasks to be performed at the other company.
	 
	11.5	 	Both companies undertake to systematically analyze the performance of the Alliance in
order to benefit from its achievements and prevent possible errors.

SECTION 12

RECORDING SYSTEM OF THE ALLIANCE.

The Alliance records system shall be composed of the DLS Quality Management System, the PAE
Environmental Management System, the PAE Safety Management System and the procedures and
guidelines prepared under the scope of the Alliance.

This system takes into consideration the preparation of special documentation for this Agreement
in particular. The operation procedures that require to be reviewed and that fall within the
scope of the PAE/DLS Alliance shall be jointly considered by both Companies. The preparation of
the same shall be

 

 

subject to the “Preparation of the Procedures Created under the Scope of the PAE-DLS Alliance”
procedure (PG-AE-GC-01).

In case of conflict between the latter and PAE’s and DLS’s own procedures, the Alliance
procedures shall prevail.

The procedures and guidelines describe the records created and provide objective guarantee and
evidence that the required quality and safety standards were met and that the quality system has
been properly put in practice.

SECTION 14: CONFIDENTIAL INFORMATION.

Any data or information deriving from or related to the pulling operations and other oil activity
in the area, of whatever kind or nature, shall be treated by the parties as strictly confidential.
The contents of such information shall under no circumstances be revealed to third parties, either
in whole or in part. The same obligation applies to the parties employees, subcontractors and their
employees and any other individual or entity related to the parties.

 

 

PAN AMERICAN ENERGY

GENERAL BIDDING TERMS

APPLICABLE TO CONSTRUCTION AND SERVICE CONTRACTS

 

 

TABLE OF CONTENTS

	 
	CHAPTER I – PRELIMINARY ISSUES

	Definitions

	1. Application

	2. Requirements

	3. Prohibition

	 

	CHAPTER II – GENERAL CONTRACTING PROVISIONS

	 

	4. Insurance

	5. Labor and other obligations

	6. General Rules on Safety, Industrial Hygiene and Environmental Protection

	7. Personnel

	8. Materials

	9. Execution of the works or rendering of the service

	10. Notices, reports and special announcements

	11, Liability of Contractor

	12. Access to the working area

	13. Tickets

	14. Completion of the works

	15. Cleaning

	16. Payment of the price

	17. Withdrawal by the Company

	18. Termination due to default of Contractor

	19. Other events of termination

	20. Patents and trademarks

	21. Assignment of Accounts Receivable

	22. Confidentiality – Conflict of Interests:

	23. Taxes

	24. Domicile. Applicable Law and Jurisdiction

	25. Acts of God or Force Majeure:

	26. Performance Bond and Labor Obligations

	27. Penalties.

	 

	EXHIBIT 1: CONTRACTOR MANAGEMENT SYSTEM

	 

	Health, Safety and Environmental Requirements

	Contractor Liability

	Occupational Health Requirements

	Occupational Hygiene and Safety Requirements

	Environmental Requirements

	Drilling Application List

	Work Over and Pulling Application List

 

 

GENERAL BIDDING TERMS

APPLICABLE TO CONSTRUCTION AND SERVICE CONTRACTS

CHAPTER I – PRELIMINARY ISSUES

Definitions. When used with a capital initial, the following terms shall have the meanings assigned
thereto:

Affiliate: means an individual or legal person which, directly or indirectly, controls Offeror,
Contractor or the Company; is controlled by Offeror, Contractor or the Company or is under common
control with Offeror, Contractor or the Company. For the purposes of this definition, the term
control consists of the direct or indirect ownership, by controlling party, of fifty percent (50%)
or more of the corporate capital or shares and votes of or in controlled party, or the ability to
form the corporate will of the latter. In the cases of indirect ownership of capital or shares and
votes, the minimum required percentage previously indicated must be complied with among Offeror,
Contractor or the Company and each of the individuals, entities, corporations or associations
involved in the chain of control.

Operations Area: means the geographic area within which the works shall be built or the hired
services shall be rendered. The contract or instrument entered into between the Company and third
parties through which the Company operates the Operations Area, whether an operating contract, a
union transitoria de empresas (similar to a joint venture) or another participation instrument, is
comprised within this concept.

Acts of God or Force Majeure: shall have the meaning assigned thereto in Section 25 of these
General Bidding Terms.

General Bidding Terms: shall mean these General Bidding Terms applicable to construction and
service contracts, to be entered into by the Company or any of its Affiliates, and their
appendices.

Specific Bidding Terms: shall mean the specific requirements of each tender, bid or contracting,
whether they be of a technical, operational or administrative and accounting nature.

Base Documentation: shall mean these General Bidding Terms, the Specific Bidding Terms applicable
to the tender, bid or contracting and any other additional documentation the Company makes
available or makes reference to in such documents, including the internal policies and standards of
the Company.

Performance Bond: shall have the meaning assigned thereto in Section 26 hereof.

Business Obligations: shall have the meaning assigned thereto in Section 5, first paragraph,
subsection (b) of these General Bidding Terms.

Labor Obligations: shall have the meaning assigned thereto in Section 5, first paragraph,
subsection (a) hereof.

Subcontractor: shall have the meaning assigned thereto in item 3.1 of these General Bidding Terms.

1. Application: These General Bidding Terms shall apply, as the case may be, additionally to what
has been established in each contracting, to all works and services commissioned by Pan American
Energy LLC (Sucursal Argentina) or by any of its Affiliates (hereinafter the “Company”), except
otherwise expressly agreed upon between the Company and the entity appointed by the Company to
execute the works or render the service subject-matter of the call for bids, price bid or tender or
awardee (hereinafter the “Contractor”).

1.1 Any individual or legal person that intends to submit an offer, a quotation or participate in
the call for bids, price bid or tender (hereinafter the “Offeror”), must submit, together with its
offer, a copy of these General Bidding Terms, duly signed in all the pages; however, the
requirement to execute this document does not oblige the Company to commission any work whatsoever.

The mandatory submission of the General Bidding Terms previously indicated shall not be required,
in the sole opinion of the Company, when Offeror has already submitted an executed copy of same for
prior

 

 

calls for bids or tenders. If a new contracting is entered into, it shall be stated that the
General Bidding Terms previously submitted (or the updating thereof, if applicable) shall be
applicable for all purposes and shall be deemed ratified by Contractor.

1.2 In these General Bidding Terms and except otherwise provided for, all obligations of Offeror
shall be considered as obligations of Contractor and the obligations of Contractor, when
applicable, shall also be considered obligations of Offeror.

1.3 The obligations of Offeror and Contractor hereinafter stated shall be considered as minimum
requirements for the execution of the works or the rendering of the service. These requirements are
included by way of illustration and shall not prevent the application of other internal rules of
the Company, specific for each type of works or service and contained or mentioned in the Base
Documentation.

1.4 Offeror shall be responsible for thoroughly checking and knowing the Base Documentation prior
to the contracting to be made and shall confirm the reception thereof. Consequently, Contractor
shall not be able to claim (and it waives its right to do so) lack of knowledge of the terms and
conditions applicable to the works to be built or the service to be rendered.

1.5 The Base Documentation may not be altered, crossed out or modified in any other way whatsoever
with respect to the original copy provided by the Company.

1.6 The Company shall not acknowledge any payment to Offeror for the development and preparation of
the offer. The Company shall not be liable for any cost or expense incurred by Offeror regarding
any eventual negotiation following the opening of offers or any development or study Offeror might
perform, whether by itself or through third parties, with respect to any future contracting,
whether it be consummated or not.

1.7 Offeror must keep any offer it submits in the call for bids or tender in force and unchanged
for the term indicated in the Specific Bidding Terms, which term shall in no event be lower than
thirty (30) days as from the date of submission of offers.

1.8 Offeror shall not be able to amend the terms of the offer once such offer has been submitted to
the Company, unless the latter expressly agrees thereto.

2. Requirements: Any Offeror must comply with the following requirements:

a) It must submit business references and professional experience on request and to the full
satisfaction of the Company;

b) It must evidence to have been pre-qualified in accordance with the requirements and procedures
established by the internal standards of the Company;

d) It must establish a domicile in the city mentioned in the Specific Bidding Terms, for
administrative and operational purposes of the contract, and in the city of Buenos Aires, where all
court or out-of-court notices served shall be deemed valid.

2.1 It is expressly understood that the Company reserves the right not to accept the offers that
deviate from the terms required; to award, totally or partially, the works or service subject
matter of the offer or offers it deems more convenient (even if such offer is not for a lower
price); of rejecting any or all offers and even to declare the tender or call for bids vacant, in
which case Offerors shall not be entitled to any claim whatsoever. The offers submitted shall
include a paragraph that transcribes this section 2.1.

2.2 The mandatory nature of the submissions and evidences indicated in this Section 2 shall not be
requested, in the sole opinion of the Company, if Offeror has already evidenced the requirements
indicated due to prior calls for bids or tenders.

3. Prohibition: It is an essential condition of any and all contracting that no Contractor shall
neither be able to transfer or assign to third parties, nor execute together with third parties,
the works or services commissioned, except with the written and prior authorization of the Company.

 

 

3.1 Those third parties authorized by the Company, and in the sole opinion of the latter, to
partially perform the works or render the service commissioned to Contractor shall be called
“Subcontractors”. In no event shall it be deemed that the authorization of the Company to
subcontract a part of the works or the service implies the exemption of liability of Contractor
regarding such part of the works, given that Contractor shall be, at all times, the only one
responsible before the Company for the commissioned works or service and for the outcome thereof.

NOTE: With respect to the analysis of the background of Offerors, it shall be considered favorable,
among other background to be taken into account and deemed relevant in the opinion of the Company,
if Offeror has been assessed by Instituto Argentino del Petróleo y el Gas Natural (“IAPG”) or,
failing this, the submission by Offeror of sufficient evidence of its formal request of assessment
of contractors to the IAPG.

During the term of the contract, the Company shall evaluate Contractors as regards their safety
performance, whether annually or at the end of the contract to be executed. Such evaluations shall
be specially taken into account by the Company for the participation of Offerors in future tenders
or for the renewal of the contracts to be entered into.

CHAPTER II – GENERAL CONTRACTING PROVISIONS

4. Insurance: Contractor shall retain, on its own account and cost, the specific insurance to be
established in each contracting and those listed hereinafter; and shall maintain them in force
during the whole term of the contract under which the commissioned works and/or services are being
performed or rendered and any extension thereof, and up to the date on which all material,
equipment, camps or worksite are removed from the place where the works has been constructed or the
service has been rendered, including any warranty term, whichever the latest. Notwithstanding what
has been provided for in Section 18.8 and the other rights of the Company pursuant to law and to
the Base Documentation, the Company shall be able to suspend the payment of invoices of Contractor
up to the time the integral compliance of this section 4 is duly evidenced and to its entire
satisfaction, including the payment of the corresponding premiums. In such event, the suspension of
payments shall not originate any obligation whatsoever for the Company to pay interest, updating,
penalties or any other sum due to any other item additional to the amount corresponding to the
payment suspended by the Company. It shall be deemed that the amounts established by the Company
for the coverage of the various risks shall not be lower, as the case may be, to the mandatory
amounts pursuant to law and to the other rules in force.

4.1 Occupational Hazards Insurance

(a) Contractor must comply with provisions of Act 24557 on Occupational Hazards, and therefore, is
obliged to insure itself, with the extent and effects established therein, with an Aseguradora de
Riesgos del Trabajo (ART) (Occupational Hazards Insurance Company) that it may freely choose (the
“ART”).

This insurance shall cover all the employees of Contractor and shall comprise all the benefits that
the legislation in force grants to such employees. In any and all events, Contractor must provide a
list of its personnel assigned to the contract to be instrumented and shall keep the Company
informed on any change to such list.

Contractor shall submit to the Company a certificate of association to the ART that must include
the following text:

“Non-recourse Clause:  {name of Insurance Company} ART {or as the case may be, the
self-insured employer} expressly waives to bring any reimbursement action (acción de repetición or
de regreso) against Pan American Energy LLC (Sucursal Argentina), its officers, employees and/or
workers, and/or against the ART of Pan American Energy LLC (Sucursal Argentina), whether grounded
on Section 39.5 of act 24557, or on any other legal rule, due to the renderings in cash or in kind
it may be obliged to grant or pay to the personnel employed by or formerly employed by {name of
Contractor}, comprised within the coverage of this policy, for occupational accidents or
occupational diseases, suffered or contracted due to or in occasion of the job or on the way to or
from the employee domicile and the workplace.

 

 

{name of Insurance Company} ART commits to duly inform Pan American Energy LLC (Sucursal Argentina)
about the non-compliance of the policy incurred by insured, and particularly, lack of payment of
same when due, within ten (10) days of having verified such non compliance.”

(b) In the cases in which Contractor is an individual that renders services as an independent or
autonomous contractor, or when Contractor subcontracts, according to what has been provided for in
these General Bidding Terms, specific services with individuals with such features, such
individuals shall contract, in their own account and risk, an insurance for personal accidents for
a minimum amount equivalent to the amount in force pursuant to rules applicable to occupational
hazards.

4.2 Mandatory Life Insurance

The policy must comply with requirements of Decree 1567/74 and the amendments thereof.

4.3 Comprehensive Liability Insurance

It shall cover injuries and/or death of third parties and/or damage to things of third parties,
caused by Contractor and/or its personnel or by things owned by or under the custody of Contractor.
The coverage of this policy shall be of, at least, United States Dollars One Million (US$
1,000,000) per occurrence.

4.4 Insurance for automobiles, road construction equipment, machinery and special equipment

a) Automobiles and patented road construction equipment

Insurance to be contracted shall be type C coverage (liability insurance) that includes total and
partial theft, total and partial fire, total destruction and liability (maximum permitted by
occurrence) covering physical damage and/or death of third parties and/or damages to things of
third parties caused with or by the use of vehicles by Contractor and/or its personnel in the
Operations Area, or outside such area, to the extent such occurrence is related to the works
performed for the Company.

b) Non patented road construction equipment, machinery and special equipment

The insurance to be taken out shall be an All-Risk Technical Insurance on the equipment of
contractor including Liability, pursuant to the same terms indicated for the previous item.

4.5 All the insurance policies mentioned in items 4.3 and 4.4 must include the following clauses:

1. “Insurers hereby waive their subrogation rights with respect to any individual or legal person,
their officers, employees or workers, or assignees, related with or for whom the insured might be
working, or that may work for or with such insured”.

In the event this clause may not be included, the insured that shall appear in the policy shall be
“{name of Contractor} and/or Pan American Energy LLC (Sucursal Argentina) {or the corresponding
Affiliate} and/or the other participating companies together with Pan American Energy LLC (Sucursal
Argentina) or its Affiliates in {name of Operations Area}”.

2. “Insurer commits not to terminate, cancel, annul or suspend the contracted insurance for any
reason whatsoever without prior notice duly served on Pan American Energy LLC (Sucursal Argentina)
or its Affiliates with a minimum advance of 30 days”.

In the case of the Occupational Hazards insurance indicated in item 4.1, this insurance shall
adjust to the formalities, content and term established by the Superintendence of Occupational
Hazards.

4.6 Before initiating the works, Contractor shall provide the Company with a copy, signed by
insurer, of the contracted policies (or provisional coverage certificates validly issued by
insurer, to the satisfaction of the Company) and of the association agreements to the chosen
Occupational Hazards Insurance Company (ART), pursuant to what has been stated in this section; and
reliable record, issued by the insurer, of the payment of the premium or of the corresponding rate,
as applicable.

The provisional coverage certificate previously mentioned shall be valid for a term of 60 (sixty)
days. Within this term, Contractor shall deliver to the Company, a copy of the final policy. If
Contractor does

 

 

not comply with this obligation, the Company shall be entitled to resort to the remedies granted to
it by these General Bidding Terms.

4.7 Contractor shall demand all its Subcontractors the submission of all the coverage previously
listed, for the amounts to be determined and with the clauses indicated above. Contractor shall be
exclusively liable for any deficiency in the coverage or in the limits of the policies of
Subcontractors.

Moreover, in case any legal action or claim brought against Contractor or directly against the
Company (as principal, third party or impleader) exceeds any of the maximum amounts established for
each insurance, Contractor shall be liable for such amounts, and it hereby waives the right to
bring a reimbursement action for such amounts against the Company.

4.8 The contracting of insurance or coverage for Occupational Hazards shall in no way release
Contractor and/or its Subcontractors of its liabilities with respect to the Company. It is a
substantial obligation of Contractor to have all policies paid and/or have no delays in the payment
of the corresponding installments, rates or premiums.

4.9 For each of the cases indicated in items 4.3 and 4.4, Insurer must be selected from the
companies established in Appendix III to these General Bidding Terms, and in all cases, to the
entire satisfaction of the Company. The Company reserves the right to request, on its sole
judgment, the change of insurer at any time.

4.10 Non performance in due time and way of the obligations to contract and/or renew the
corresponding insurance and, without prejudice to the other remedies established in these General
Bidding Terms, shall authorize the Company – in its sole judgment – to consider the contract
terminated or proceed to the direct contracting of insurance with the company it deems convenient
and pursuant to the terms required in these General Bidding Terms, payable by Contractor or
Subcontractor, and, it shall be irrevocably authorized to discount the necessary amount for such
purpose from the amounts due to Contractor for any reason whatsoever.

4.11 Loss

Contractor and/or Subcontractor shall inform any loss by immediately sending to the Company a copy
of the respective claim, within 24 hours of the occurrence thereof, and is also obliged to report
such loss to the Insurer within 72 hours of the occurrence of the event or in the lesser term
imposed by the policy, particularly for the cases of accidents “in itinere” suffered by employees
of Contractor.

If Contractor has not complied with this requirement, the Company reserves the right to reliably
notify Insurer of the occurrence. Lack of notice by the Company shall not release, in any way
whatsoever, Contractor of its liability.

Contractor and/or its Subcontractors are hereby liable for damages that may have occurred to
vehicles, machinery or tools owned by them, and shall exclusively bear the expenses related
thereto.

They shall also be liable for all damages caused to land owners or to any third party in which
fields or real estate the work is executed or the service rendered.

5. Labor and other obligations: Contractor, in its capacity of independent businessman and with its
own personnel structure, shall be liable for (a) compliance of all labor, union and social security
obligations as well as of those resulting from Act 24557 on Occupational Hazards and industrial
safety and hygiene (hereinafter, the “Labor Obligations”), regarding its personnel. With respect to
personnel not covered by a specific collective bargaining agreement, Contractor shall comply with
provisions of the collective bargaining agreement in force between the Private Oil Industry and the
Argentine Union Federation of Private Oil and Gas; and (b) the punctual and true fulfillment of all
business obligations of which it is a part as a consequence of the work or service for which it has
been hired by the Company (hereinafter, the “Business Obligations”). Among these Business
Obligations we find, without limitation, the ones Contractor has with suppliers, subcontractors and
other individuals or legal persons that Contractor may resort to for the fulfillment of the
subject-matter of the relevant contract.

Audit Rights of the Company: On request of the Company and without prejudice to the other powers
granted to the Company by the legislation in force, Contractor must show all the vouchers it is
required to

 

 

display, at any time during the term of validity of the contract, regarding compliance with Labor
Obligations and Business Obligations. Moreover, Contractor hereby irrevocably authorizes the
Company to perform, at any time, an audit of all its books and papers for the same purpose.
Notwithstanding the generality of the foregoing, the Company may demand, before proceeding to any
approval of works certification or payment of invoice of Contractor, the display of the vouchers
evidencing compliance with Labor Obligations as well as a detailed report regarding the situation
of Contractor with respect to Business Obligations.

5.1 (a) Withholding Right of Company. Notwithstanding provisions of the previous section, in case
the existence of debts of Contractor due to non-performance of Labor Obligations is evidenced,
whether this be due to the existence of claims against the Company or because the Company has
become aware of same through other means, the Company is hereby irrevocably authorized to
preventively withhold from the amounts accrued by Contractor, for any reason whatsoever, with
respect to the Company (including the amounts corresponding to other contracts in force between
Contractor and the Company), the amounts necessary to meet such Labor Obligations.

(b) The Company shall be entitled to the same withholding right in case it is obliged to pay any of
such Labor Obligations of Contractor. In case there are no pending invoices of or payments to
Contractor by the Company, the Company shall demand Contractor to immediately pay such amounts,
plus corresponding interest and other increases, without prejudice to being irrevocably authorized
to enforce any bond Contractor may have posted or else demand the collection thereof through a
legal action.

(c) Additionally to the right acknowledged to the Company in subparagraphs (a) and (b) above, the
Company shall be able to exercise the withholding right mentioned, in case the existence of debts
of Contractor for non-performance of Business Obligations is evidenced or in case there are claims
against the Company by the personnel of the Subcontractors, unions, suppliers of Contractor or
Subcontractors, or claims directly made by Subcontractors, when Contractor does not cure the
situation after having been demanded to do so by the Company, by evidencing to the Company and to
its satisfaction, the compliance with all Business Obligations claimed through the display of the
corresponding vouchers, or does not offer detailed and grounded explanations, in the opinion of the
Company, within twenty four hours (24 hours) of having received such demand.

(d) For all legal purposes arising from Act 24760 and the amendments thereof, with respect to the
credit invoice, it shall be understood that, in case such instrument must be issued by Contractor
pursuant to the legislation in force, non compliance of the Labor Obligations and Business
Obligations falls within the event established in Section 4, paragraph d) of such Act, for which
reason the Company shall have the right of not accepting the credit invoice based on such event and
Contractor expressly acknowledges such right.

5.2 Waiver of Withholding Right by Contractor. Contractor hereby expressly waives to exercise a
withholding right against the Company on any works he might be performing for the Company or any
part thereof, regardless of the state of execution thereof. Identical waiver shall be deemed made
on the materials, equipment, plans and other documents and instruments provided by the Company or
even provided by Contractor but already paid by the Company in accordance with certifications
submitted by Contractor for such purpose.

5.3 Substitution of attachments. Contractor irrevocably binds to substitute the Company in any
attachment levied upon it for any reason related to the works it performs or the service it
renders, or to the tasks to be performed with respect to the contract to be formalized.

Moreover, Contractor acknowledges that, in case the Company is notified of any attachment submitted
against any accounts receivable Contractor has with Company, the Company shall be entitled to pay
the same with any amount due to Contractor, including those sums resulting from any contract or
rendering in force on the date the attachment is notified.

5.4 Contractor shall demand Subcontractors compliance with Labor Obligations as previously stated
and shall be principal debtor and joint and several co-debtor of Subcontractors with respect to the
Company regarding any obligation the latter must comply with in relation to its Subcontractors.

 

 

5.5 Notwithstanding the other obligations regarding safety and industrial hygiene of its personnel
established hereinafter, in the cases so required by the Specific Bidding Terms applicable to each
works or service, Contractor shall install, at its own cost and in the place where it performs its
tasks, diners, restrooms and changing rooms for the exclusive use of its personnel.

These installations must comply with all the requirements of the applicable national, provincial
and municipal rules (particularly, though not exclusively, what is provided for by Act 19587, as
regulated and supplemented). These installations shall be maintained in good use and clean
condition and shall be dismantled at the end of the performance of the works commissioned by the
Company.

5.6 The Company, in its own judgment, shall be entitled to request the exclusion of members of the
personnel of Contractor or of its Subcontractors, even without stating a cause, and Contractor and
Subcontractors shall be obliged to substitute the objected individuals with no right to any
compensation whatsoever to be paid by the Company.

5.7 Prior to the initiation of the work, Contractor shall report in writing the name of the
Occupational Hazards Insurance Company that covers its personnel and the name of the health
professionals and health care establishments that will be in charge of the health care of its
personnel in the event that any of them suffers an occupational accident.

5.8 If non-performance of any of the obligations mentioned in this chapter is proved, the Company
shall be entitled to terminate the respective agreement and Contractor shall have no right to any
compensation whatsoever due to such termination.

The same right is acknowledged to the Company in case of defective or late compliance with the
previously mentioned obligations, if this circumstance is not cured by Contractor with due
promptness and efficacy after it has been notified by the Company of such circumstances.

5.9 Moreover, and given its economic independence with respect to the Company, Contractor
represents to have the necessary and sufficient economic and financial structure to perform the
works or render the service commissioned, up to the completion thereof, for which reason it waives
its right to claim lack of payment of the Company, in the cases mentioned in item 5.1 above, as
ground for default of its Labor Obligations or Business Obligations.

6. General Rules on Safety, Industrial Hygiene and Environmental Protection: Contractor shall
perform its activities with special care on the protection of the safety of its personnel, of
industrial hygiene and of the environment. It shall comply with the internal rules of the Company
which shall be considered, for all purposes, as an integral part of the Base Documentation, with
the provisions of Appendices I and II to these General Bidding Terms and with legal and regulatory
standards in force on safety, industrial hygiene and environmental protection, particularly Act
19587 on Industrial Hygiene and Safety, as regulated by 351/79 and/or any other rule that may
substitute it in the future, with Resolution SE 105/92 together with its supplementary and related
rules and with applicable provincial and municipal regulations. Contractor shall provide its
personnel with the corresponding protection elements and shall demand the use thereof. Under the
liability of Contractor, its Subcontractors shall be subject to equal obligations.

The Company has in place an environmental and safety management system, which has obtained the ISO
14001 certification, for which reason, the Company considers a priority in the performance of its
activities: respect for the ecology, the environment, and the safety and health of its own
personnel and of the personnel of its Contractors and the real properties of land owners that may
be affected thereby.

Compliance with such rules shall be considered an essential condition of the contracting per se,
and the Company shall reserve the right to demand Contractor or its Subcontractors to cure all
those actions that damage the environment or the real properties of the land owners that may have
occurred due to their negligence, having the Contractor or its Subcontractors no right to any claim
whatsoever, being the Company also able to resort to, without prejudice to the other remedies
awarded by these General Bidding Terms, its withholding rights on the necessary amounts to minimize
and correct the impacts produced or, as the case may be, terminate the agreement.

Moreover, Contractor and its Subcontractors must comply with the following obligations:

 

 

a) Show maximum respect for the real properties and assets of land owners in the fields of which
the activities of the Company are being performed, or through which they pass to reach such fields,
including but not limited to, livestock, pastures and/or vegetal species existing in such lands.

b) Once per month, cause instructive lectures to be given to its personnel on safety, hygiene and
environmental protection, being obliged to record and report to the representative of the Company
on the subject thereof and on the list of the attending personnel. Besides, to the extent required
by legal and regulatory standards, or if the Company so provides, Contractor shall give any other
corresponding specific training on this issue.

c) It is strictly forbidden to cut or collect wood in the fields through which they pass and to
light a fire in the Operations Area of the Company, as well as to use and possess firearms and
animals.

d) It is strictly forbidden to smoke over a range of 100 meters around the wellbore, stations or
plants.

e) It is strictly forbidden to consume and/or have alcoholic beverages and/or illegal substances
(drugs) within the Operations Area.

f) Transportation of the personnel to perform the tasks must be made in a safe way and in
compliance with regulations in force.

g) Contractor shall not be authorized to install permanent houses in the Operations Area.

h) All vehicles, equipment and machinery of Contractor must be identified with its logo and must
comply with the requirements of national, provincial and municipal transit regulations (including
but not limited to those arising from Act 24449 on Transit, as regulated) and must be operated in
full compliance with such rules by qualified and duly authorized personnel.

i) It shall attach, prior to the award of the works, a detail of the vehicles to be used in the
performance of the tasks, assigning a number to each of them. A maximum seniority of 5 (five) years
shall be allowed for transportation vehicles for individuals and light load: automobiles, pick-ups
and small trucks Ford F-350 or similar ones. Heavy fleet, buses, trucks, machines: a maximum
seniority of 10 (ten) years shall be allowed. The vehicles shall be in good use and safety
conditions. The seniority of the vehicles previously mentioned may be established for each
particular contracting by the Company, pursuant to the requirements of the Specific Bidding Terms.

j) The speed of the vehicles must be adjusted to the type thereof, condition of the roads and
visibility, so as to be always able to avoid any possible accident. The maximum speed, in normal
conditions within the Operations Area, shall be the one established by the rules in force and shall
in no event exceed 80 Km/hour for main roads, 50 Km/hour for byroads and 100 Km/hour for highways.

Circulation must be on the right side, so that the whole way and, particularly, curves, have double
track. Path or cross-country transit shall be avoided.

If it is necessary to stop in the road, the driver shall try to take the vehicle off the road.
Should this not be possible, the vehicle shall be taken completely to the right of the road and
shall avoid to obstruct free circulation. At night or in days with fog or low visibility, warning
lights shall be placed 50 meters in front and 50 meters behind the parked vehicle.

k) Every vehicle shall have the following minimum equipment, additionally to the other requirements
established by the legislation in force:

1. Fire extinguisher with a capacity adequate to the vehicle and to the type of load transported
(the minimum requirement is a 1 Kg ABC potassium powder fire extinguisher). Pick-ups and bigger
size vehicles must have available fire extinguishers with a minimum capacity of 5 Kg of Monnex dry
chemical powder.

2. Combined type seat belts for driver and accompanying individuals.

 

 

3. Set of warning lights.

4. Fixed towing bar.

5. Complete first aid kit.

6. Headrests for driver and accompanying individuals.

l) Apart from maintaining the vehicles in good operating condition, special attention shall be
given to the following elements: sidelights, dipped headlights and full beam headlights, turn
signals, brakes, tires, gear system, horn, speedometer. All vehicles must permanently have their
documents: vehicle registration papers, insurance, road tax voucher, driver’s license. logo of
Contractor’s Company with internal number of vehicle placed on a visible spot and any other card or
identification delivered by the Company.

m) Contractor shall keep the area of its workshops, offices and all the equipment installed, in
order and clean, pursuant to regulations in force. Gas tanks and chemical products containers must
identify their content pursuant to IRAM standards.

n) Any and all trenches, pits or any type of difference in level produced during the works, must be
perfectly illuminated with warning lights and protected in order to avoid possible accidents,
particularly during night shifts or nights with low visibility.

o) Prior to undertaking any type of task in tanks, pipelines, containers or equipment that contain
or have contained fuel or inflammable agents, the corresponding written authorization must be
requested to the supervisor in charge.

p) Any oil, fuel or inflammable agent spill must be (i) immediately notified to the Company; and
(ii) immediately cleaned taking into account provisions of Resolution SE No. 105/92, as
supplemented, as well as the recommendations of the Company.

q) Any Oxy-Acetylene welding equipment must be transported in a safe way and its pressure gauges
and reducing valves must be perfectly protected. Any empty tube or tube full with oxygen and/or
acetylene, shall have its protective head installed. Besides, hoses must have check valves to avoid
the backward movement of the flame.

r) It is forbidden to use acetylene (carbide) generator equipments.

s) Use maximum care to avoid, in the course of the execution of the works or the rendering of the
service contracted, contamination of land, water or air as a result of the discharge or leak of any
harmful substance or contaminating agent, being the disposal of any type of waste restricted to the
places particularly indicated for such purpose and with the prior authorization of the Company’s
representative.

Notwithstanding the previous list, Contractor and Subcontractors shall adopt any other action and
precaution that might be necessary and/or convenient in the circumstances, in order to avoid or
prevent physical damage or death of individuals or damage to the things or to the environment.

6.1 Supervision of vehicles, equipment, machinery and tools. Prior to the initiation of the tasks,
Contractor shall submit to the Safety Section and/or to the Supervisor of the Section of the
Company in charge of the supervision of the works or service, all available equipment for its
approval to enter the Operations Area. A report shall be drawn indicating the acceptance of the
equipment by the Company or the observations made by it, which observation shall be corrected prior
to any authorization to enter the Operations Area signed by the Supervisor. Failing this report
signed by the Company’s Supervisor, no invoice of Contractor shall be processed.

6.2 Prior Meeting on Safety, Industrial Hygiene and Environmental Care. Upon entering the
Operations Area, a meeting shall be held with all the personnel of Contractor (foremen and workers)
together with the Safety Section and/or the Section Supervisor involved, at which meeting, the
policy on safety, industrial hygiene and environmental care of the Company shall be made clear, as
well as the liabilities involved. A small pocket manual shall be delivered with the minimum
required recommendations and with the corresponding receipt acknowledgment.

 

 

6.3 Identification of Contractor personnel. Any Contractor that, due to the type of commissioned
task must stay for more than three months in the Operations Area, shall submit, with an
anticipation of three days to the initiation of the tasks, a list of all its personnel assigned to
the Operations Area. Should the preparation of a specific identification be necessary, which fact
shall be required in due time by the Company, Contractor shall also attach a document-size photo, 4
x 4, of the members of the previously mentioned list.

The Safety Section shall issue the corresponding identifications that shall have the purpose not
only of authorizing Contractor personnel to enter the Operations Area of the Company due to the
compliance of the commissioned tasks, but also of performing the follow-up of the training of such
personnel. This identification must be always carried by Contractor personnel and must be shown to
the Company’s personnel or to the personnel of its Security Service, wherever required.

7. Personnel: Contractor shall use adequate personnel, in number and quality, in order to regularly
and efficiently comply with the contracted works or services.

The Company shall be entitled to request the exclusion of one or more members of the personnel of
Contractor or of any Subcontractor, even without stating the cause, and Contractor shall be obliged
to substitute, on its own account, the objected individuals or legal persons. This power shall not
imply that Contractor’s personnel is or may be considered as employees of the Company or that
Subcontractors may claim any direct contractual relationship with the Company. If applicable,
Contractor shall submit to the Company, the list of its Subcontractors.

The Company reserves the right to accept or reject the proposed Subcontractors, being able to
exercise, with respect to Subcontractor personnel, the same exclusion right mentioned in the
previous paragraph. This power shall neither imply that Subcontractor personnel is or may consider
itself as employee of the Company nor shall it release Contractor of its joint and several
liability with and for the compliance of the proposed Subcontractor.

Contractor and its Subcontractors must preferably employ citizens residing in the Operations Area,
in accordance with the applicable national, provincial and municipal legislation. In those
municipalities in which there is specific legislation regarding the hiring of local personnel.
Contractor must comply with same and shall keep the Company harmless against any claim in this
respect.

In no event shall the employees of Contractor or Subcontractor consider themselves as employees of
the Company or as having any labor relationship with the Company.

8. Materials: Any and all materials, equipment, tools and working elements used by Contractor
and/or its Subcontractors in order to perform or render the commissioned works or service, shall be
suitable for the intended purpose. The Company reserves the right to inspect and order the
substitution of those that, in its own judgment, do not comply with the previously stated
condition, with no charge whatsoever for the Company.

The Company shall not be liable, except for what may be provided for in special cases, for losses
of or damage to the assets belonging to Contractor, its employees, Subcontractors and the employees
of the latter, or any individual or legal person related to all or some of them, except if it is
duly evidenced that such loss or damage has directly resulted from gross negligence of the Company.

Contractor shall be liable of carefully inspecting all materials and equipment supplied by the
Company, in accordance with what is provided for herein, and of notifying in writing any defect it
may find therein, in due time and way, so that they may be replaced by the Company. If Contractor
omits to serve the previously mentioned notice, it shall be assumed, with no claim whatsoever, that
such material or equipment is free from evident vices and it was approved by the team of
Contractor.

Contractor shall be liable for materials, equipment, tools and elements that may be eventually
provided by the Company, which must be maintained in good operating condition for the timely return
thereof or Contractor shall inform about their use, as applicable. While such elements are in its
possession, they are considered to be in its custody, regardless of the owner.

 

 

9. Execution of the works or rendering of the service:

9.1 Contractor, as an independent entity, must direct and control the performance of the tasks and
any other necessary work or task for the consummation thereof, being the Company only interested in
the results obtained in the time and way agreed upon. This shall not damage the right of the
Company to inspect and supervise the tasks. The inspection, supervision or presence of the
representative – or personnel in general – of the Company shall not release Contractor from its
liabilities and obligations.

9.2 Contractor shall merely perform the works or render the services commissioned, and it is
strictly forbidden to carry out supplementary or additional works without the prior written
authorization of the Company. In the event it performs such works in violation of what has been
previously established, the Company shall be able to elect either to consider such works included
in the price agreed upon or to order their destruction on the account and expense of Contractor.

In order to authorize such works, the Company shall be able to request a prior budget.

9.3 Contractor and its personnel (and under the liability of Contractor, its Subcontractors and the
personnel thereof) shall comply with the instructions of the Company given through authorized
personnel. As a release from its liability, Contractor may expressly state its disagreement with
the instructions received.

9.4 The contracted works and services must be finished and delivered within the established term.
In the event a term or schedule of works has been established for a work or service, this term
shall be considered as an essential contracting condition, being only the Company authorized, in
its own judgment, to grant the extensions to such term it may deem convenient, should Contractor so
require in writing and stating the reasons thereof.

9.5 Contractor hereby represents and warrants that, prior to entering the Operations Area, it has
obtained adequate advice through its own investigation regarding all local, regional and national
conditions that may affect the performance of the works, the rendering of the service or any
obligation of Contractor pursuant to the contract, including, without limitation:

a) features and natural conditions of the Operations Area and, specifically, of the area in which
the works shall be performed or the service rendered, and its access means;

b) atmospheric, meteorological, topographic and hydrological conditions as well as other conditions
related thereto;

c) necessary equipment, resources and means to carry out the works or render the service and to
cure any defect thereof, including conditions and availability of transportation, carrying,
handling and storage;

d) availability of labor, spare parts, equipment, consumables, fuel, water (including drinking
water), logistics, power supply and other supplies that may be necessary to comply with its
obligations;

e) applicable laws and regulations, whether they be national, provincial or municipal, including
customs (related to eventual restrictions to imports and exports) and tax laws and regulations;

Therefore, Contractor hereby accepts all liabilities resulting from having adequately assessed the
necessary costs and contingencies to adequately comply with its obligations related to the
performance of the works or rendering of the service and, consequently, agrees to bear all costs
resulting from its incorrect assessment and hereby waives to file any type of claim against the
Company in this respect.

10. Notices, reports and special announcements:

10.1 Notwithstanding the other notices, announcements and reports the Contractor must serve on the
Company pursuant to what is established in this document, it is specially stipulated that
Contractor must reliably notify the Company on the accident/s of the employees of Contractor and
Subcontractors resulting in serious injuries or damage to the real properties of the Company or of
third parties, as well as on any event or act implying probable infringements of legal and
regulatory rules on environmental protection in force. Moreover, Contractor shall deliver to the
Company, as soon as possible, a copy of any

 

 

submission – which is mandatory pursuant to legal and regulatory rules in force – made with any
type of authority and jurisdiction, regarding infringements to environmental protection
regulations; any accident, event or act that have caused injuries to individuals or damage to
things, or accidents and occupational disease-accident.

Also, and as soon as possible, Contractor shall inform the Company on the performance by any type
of governmental authorities of any jurisdiction, of inspections regarding safety, industrial
hygiene and environmental protection, as well as the outcome thereof.

Given the significance the Company awards to prevention of accidents, the Company is performing the
analysis of the near-misses (those incidents which, although not having caused damage to
individuals, installations or assets of their own or belonging to third parties, imply a potential
risk of accident), for which reason Contractor shall inform the Company regarding all those unsafe
conditions observed, with the same celerity as in the case of accidents.

10.2 Any communication between Contractor and the Company must be written and may be sent to the
other party by hand, with receipt acknowledgment by means of the official reception seal of the
other party and identification of the person receiving the document; by postal documented letter
(carta documento); or by facsimile, provided the issuing equipment produces sufficient evidence of
the effective reception thereof by addressee.

11, Liability of Contractor: Contractor or its Subcontractors shall be liable for damages caused to
the Company, its personnel, land owners on which lands tasks are being performed, as well as to
third parties, whether related or not to the Company, for acts or omissions of Contractor and/or of
its personnel, or by things owned or under the custody of Contractor or its Subcontractors.
Moreover, Contractor shall indemnify the Company and its personnel for damages the latter are
obliged to pay as a consequence of legal actions or claims of the personnel of Contractor and/or
its Subcontractors and its personnel, or third parties related or not to the Company, except when
Contractor or its Subcontractors prove that such damages result from gross negligence of the
Company or its personnel.

12. Access to the working area: The Company shall obtain all permits that might be required to
access and occupy certain places. The corresponding compensations shall be borne by the Company.

13. Tickets: According to the works or service contracted and pursuant to what is established in
the Specific Bidding Conditions, Contractors shall (a) issue tickets or certificates of works
progress, as applicable, in two copies, at the intervals to be established in each case, being such
documents submitted to the consideration of the personnel of the Company, in charge of the
reception thereof; or (b) have access to the accounting operating system of the Company (called
“Latin American Business Solution” or “LABS”) in order to proceed to the issue of “work tickets”
supporting the works performed in an electronic way, which tickets shall be submitted for the
approval or rejection thereof by the Company, in the same way.

Should the works or service not be performed or rendered in accordance with what has been agreed
upon, the Company shall be irrevocably authorized to cause the correction, amendment and/or
repetition thereof, as applicable, on the account of Contractor and free of charge for the Company.
Without prejudice thereto, the Company is authorized to perform or cause to be performed by third
parties, such tasks and/or repairs, on the account and expense of Contractor. The original copy of
the approved tickets shall be kept by the Company.

In case it is decided to prepare such work tickets through electronic means, as previously stated,
Contractor must obtain, on its own account and expense, the necessary computer elements for such
operation, to the satisfaction of the Company.

14. Completion of the works: Once the commissioned work has been completed and the approval by the
Company of all the work tickets corresponding to such work has been obtained, Contractor shall
submit an invoice for collection. Partial payments may be authorized when this modality has been
established.

15. Cleaning: Once the works have been completed, Contractor shall take care that the places where
such works were performed are fully clean and free from surplus material.

 

 

16. Payment of the price: Payments shall be made in accordance with provisions of the Specific
Bidding Terms, taking into account that no payment may be demanded by Contractor before thirty five
(35) days have elapsed from the date of reception of the invoice or of the approval thereof by the
Company, whichever the later.

16.1 Contractor expressly acknowledges that reception and lack of return within 10 (ten) days or
the payment of any invoice; or, in case of a credit invoice, within 15 (fifteen) days; shall not
damage the right of the Company of requiring, at a later time, the correction of any amount
established therein, provided that the Company, within two (2) years following the date of
reception of such invoice, delivers to Contractor a written notice of the objections to any item or
items thereof, the correction of which it is requiring, and specifying the grounds for such
objections. As soon as the correction or lack of correction of such items is determined, the
parties shall make the corresponding updated adjustments or payments.

16.2 Contractor shall keep a complete and true set of notes pertaining to all aspects related to
the works it performs or to the service it renders, and of the books and business papers required
by the legislation in force, where the corresponding accounting entries shall be posted. The
Company, with the aim of verifying that all the terms and conditions of the contract to be
instrumented have been complied with, shall have the right to perform an accounting audit, either
by itself or by third parties, on any and all notes of this type, within a period of two (2) years
as from the completion of the commissioned works or service. Should the outcome of any inspection
of this type so require, the parties shall make the corresponding adjustments or payments.

16.3 Contractor must submit to the Company, in order that the latter may proceed to process the
invoices Contractor submits for collection, all vouchers documenting the true compliance of the
Labor Obligations, the payment of the insurance premiums, as well as any other information required
by the Bidding Terms or by the Company.

16.4 As a general rule, (a) all items making up the Price to be agreed upon in the Contract, shall
be paid in Argentine Pesos or United States Dollars, at the option of the Company. In the event of
several exchange rates, the one to be adopted shall be the exchange rate corresponding to the
settlement of imports and it shall be exclusively applied to the payment of Imported Equipment. In
case of doubt, the exchange rate to be adopted shall be the one agreed upon by the parties, (b) in
the event that due to significant changes in the value of the payment currency, the economic
equation of any of the parties is altered, the parties shall meet to try to reach an agreement to
be exclusively applied to the prices of domestic supplies and/or services, so as to reestablish the
contractual economic equation. The term for an eventual negotiation between the parties shall be of
30 (thirty) days, after which term and in case no agreement is reached, the parties shall resort to
the dispute settlement resolution formula included in the Contract to be entered into.

16.5 The Contract must disclose the costs of supplies, resources or services in the corresponding
currency: Argentine Pesos or United States Dollars.

16.6 In case Contractor is obliged to issue a credit invoice under Act 24760 as regulated and
amended: (a) endorsement thereof shall be forbidden in all cases, even when such endorsement is
made in favor of a financial institution or to trade a security in a stock market, and regardless
of whether this prohibition has been transcribed or not in the body of the credit invoice at the
time of acceptance.

(b) the credit invoice shall not be considered issued with the clause “without protest for lack of
payment”, due to which Contractor hereby accepts that, in case of lack of payment, it shall be
necessary to protest such invoice pursuant to the legislation in force.

(c) if the credit invoice is delivered to a bank, in ownership, warranty or to be handled, pursuant
to the terms of Section 14 of Act 24760, as regulated and amended, which action may only be validly
adopted by a documented assignment of accounts receivable through public instrument, the bank must
comply with provisions of item 21 of these General Bidding Terms.

(d) Contractor hereby binds itself to include these clauses, particularly the one mentioned in item
16.6(a), in the body of the Credit Invoice. Lack of such terms shall be sufficient grounds for
rejection.

17. Withdrawal by the Company: CONTRACTOR HEREBY ACKNOWLEDGES AND EXPRESSLY STATES THAT THE COMPANY
IS ENTITLED TO WITHDRAW FROM THE COMMISSIONED

 

 

WORKS OR SERVICE AT ANY TIME, THROUGH PRIOR WRITTEN
RELIABLE NOTICE
SERVED UPON CONTRACTOR, WITH AN ANTICIPATION OF SIXTY (60) DAYS. IN THIS CASE, CONTRACTOR SHALL BE
ENTITLED TO THE PAYMENT OF THE WORKS PERFORMED UP TO THE EFFECTIVE DATE OF TERMINATION, BUT NOT TO
THE PAYMENT OF THE BENEFITS THAT WOULD HAVE CORRESPONDED TO IT IF THE WORKS OR SERVICE WOULD NOT
HAVE BEEN TERMINATED.

18. Termination due to default of Contractor: Apart from what has been established in item 17
above, the Company shall be able to terminate the contract and Contractor shall have no right to
any compensation whatsoever, in case of default by Contractor of its obligations, particularly in
the following cases:

18.1 If Contractor transfers, assigns to third parties or subcontracts, all of the works or service
or a part thereof, or if it enters into an association with third parties for the purpose of the
performance or rendering thereof, without the written authorization of the Company.

18.2 When Contractor, in the judgment of the Company, acts with gross negligence, to the detriment
of the interests of the Company, or does not fulfill any substantial obligation, in the opinion of
the Company, contained in the Base Documentation and/or does not comply with the instructions
received from the authorized personnel of the Company. With no intention of limitation, the
obligations mentioned in items 5.1 and 6 shall always be considered as substantial obligations for
the purposes of this subsection.

18.3 When Contractor exceeds in five (5) consecutive days the term established for the commencement
of the works or services.

18.4 When, in the opinion of the Company, Contractor does not proceed with the necessary celerity
established to complete the work.

18.5 When Contractor abandons the works or interrupts the rendering of the services for a term
exceeding five (5) consecutive days.

18.6 When Contractor repeatedly infringes, at least two (2) times, its non substantial obligations.

18.7 When Contractor does not use the indicated materials or use such materials in a quantity
inferior to the one established or does not use the materials supplied by the Company in the way
established in Section 8 hereof.

18.8 When Contractor does not retain the specified insurance to the satisfaction of the Company or
does not evidence, likewise, the payment of the corresponding premiums.

18.9 When penalties have been provided for in the Specific Bidding Terms and the amount of such
penalties applied to Contractor by the Company, exceeds 20% (twenty percent) of the total amount of
the contract.

18.10 When penalties have been applied and, regardless of the amount thereof, such penalties are
not paid when due if they are not discounted from the invoices submitted.

18.11 When Contractor does not complete the works in the stipulated term.

18.12 When Contractor does not comply with the Rules and Procedures on Occupational Hygiene, Safety
and the Environment of the Company.

18.13 When Contractor shows bad performance in safety issues through accident rates higher than the
ones established as a goal by the Company or to than the ones established for a specific project.

Grounds for termination shall be evidenced together with the communication reliably served by the
Company on Contractor, without need of court or out-of-court demand.

The use of the right of termination by the Company does not release Contractor from any of its
liabilities it shall have due to having incurred an event of termination. In these cases,
Contractor shall deliver to the

 

 

Company the works performed and the materials, equipment, etc,
owned by the Company or even those
supplied by Contractor but which have already been paid for by the Company, in accordance with
certificates submitted by Contractor for such purpose, immediately, and the corresponding minutes
shall be drawn and shall be signed by the Company and Contractor.

19. Other events of termination: The Company shall be entitled to terminate the contract in case of
death (if Contractor is an individual) or in case of insolvency, reorganization, bankruptcy or
liquidation of Contractor – except when such petition is dismissed within a term of sixty (60) days
– or due to the spin-off or merger of Contractor with third parties without the express consent of
the Company, except when, in the sole judgment of the Company, it decides to continue the contract
with the successors of Contractor.

20. Patents and trademarks: Contractor hereby warrants that no manufacturing, installation or
assembly of the works, or rendering of the service or use or operation of the works that may
perform the Company, shall mean or imply an infringement to any patent of invention, utility model,
trademark or other intellectual or industrial property right. Contractor shall fully hold Company
harmless and, if applicable, shall adequately indemnify it (including expenses and reasonable
attorneys costs), against any damage resulting from any claim, loss, expense or action arising from
the use by Contractor or its Subcontractors of patents of invention, trademarks or intellectual or
industrial property in general, or from any eventual infringement thereto.

21. Assignment of Accounts Receivable: Contractor shall make its best efforts not to assign,
transfer or constitute a commercial pledge on the accounts receivable resulting from the contract,
for no reason or cause whatsoever.

In case of an assignment of invoices (whether they be ordinary invoices or credit invoices, should
the issue of the latter be mandatory) or pledge thereon that implies that the Company must make
payments to a person different to Contractor, the Company (a) must receive an adequate compensation
for the higher costs this payment may cause; and (b) shall demand as an essential condition for any
assignment of accounts receivable, compliance with provisions of Appendix IV of these General
Bidding Terms.

The occurrence of some of these events or the repetition thereof shall entitle the Company to
terminate the contract.

22. Confidentiality – Conflict of Interests:

22.1 Contractor, its personnel and, if applicable, Subcontractors and the personnel thereof, shall
handle with strict and absolute confidentiality, all information directly or indirectly related to
the Company and/or its operations, to which they have access due to or through the rendering of its
services or the performance of the works, and shall not be able to disclose nothing contained in
such confidential information to any person, without the express and written consent of the
Company. Contractor hereby also agrees that the handling and filing of such confidential
information shall be made by applying thereto, at least, the same control, protective measures and
precautions it would apply to handle and file its own data and information.

If for the rendering of the service or for the construction of the works the Company has delivered
confidential information to Contractor, the latter must, once the contract has finished, whether by
expiration of the term or due to any other cause, return all the original documents in its
possession (whether this be in paper or in electronic means) and destroy all the copies in its
possession. On request of the Company, Contractor shall issue a certificate signed by a duly
authorized representative, which shall state that the obligations of restitution and destruction of
the copies mentioned in this paragraph have been complied with.

22.2 In tune with the most elementary business practices, Contractor shall not pay any commission
or fee whatsoever to employees or officials of the Company, and shall not grant to them, their
relatives or friends, discounts on their possible purchases or personal operations, nor shall it
grant any other type of benefit or courtesy exceeding the limits of what is strictly understood as
elementary courtesy. Compliance with provisions of this clause is considered an essential
obligation of Contractor, the verification of which shall, if applicable, be extended to the
respective Subcontractors. To this end, each agreement entered into with Subcontractors must
contain a reproduction of this clause and the commitment to observe it as

 

 

regards the Company. The
Company shall be able, with prior notice of three (3) days, to examine the
accounting records and/or books of Contractor, in order to verify compliance with what has been
established in this clause. The same power to be granted in favor of the Company shall be agreed
upon by Contractor with its Subcontractors.

23. Taxes: Contractor shall strictly perform its tax obligations and shall be subject to the
applicable general taxation legislation. Consequently, it shall fully bear any tax, rate, charge,
expense or right, whether national, provincial or municipal, that may be applicable pursuant to or
in relation with the possible contract or instrumentation or recording thereof, including any
applicable tax or withholding with respect or due to payments or acts performed in compliance
thereof, plus secondary claims and penalties.

Payments provided for under the Contract to be instrumented do not include the Value Added Tax
(VAT) to be paid pursuant to what has been established by the competent Argentine authorities in
this issue. The Company shall pay Contractor the amount of such tax against receipt of the invoice
including it, issued in accordance with the applicable provisions in force. Amounts paid for the
VAT may be paid in local currency using the exchange rate in force on the business day immediately
preceding the invoice date.

Contractor shall indemnify and hold the Company harmless against any cost, damage and injury that
may be claimed against it due to the items previously indicated.

This indemnity obligation must be complied with by Contractor within twenty four (24) hours of a
request made by the Company by sufficient means.

All amounts to be paid due to the stamp tax applied on the contract to be instrumented, should the
same be subject thereto, shall be equally paid by Contractor and the Company.

24. Domicile. Applicable Law and Jurisdiction: The Company constitutes special domicile for the
purposes of any notice related to the administrative and operational part of the contracting, at
the one established in the Specific Bidding Terms and for court or out-of-court purposes at Leandro
N. Alem 1180, Buenos Aires. Contractor shall constitute special domiciles for the same purposes,
pursuant to what has been established in clause 2(d). Except otherwise provided in each particular
contracting, the applicable law shall be the law of the Republic of Argentina. The parties hereby
submit to the jurisdiction of the local courts of the city of Buenos Aires to solve the disputes
that cannot be solved in good faith directly between them.

25. Acts of God or Force Majeure:

25.1 Act of God or Force Majeure shall be: (i) any extraordinary unforeseeable event or (ii) any
extraordinary event which though foreseen, may not have been avoided, provided such extraordinary
unforeseeable or unavoidable events last more than three (3) days. In case of extraordinary events,
sections 513 and other applicable sections of the Argentine Civil Code shall apply.

25.2 In no event shall Contractor invoke unconscionability, want of skill or commercial
impracticability, in everything related to the contract to be entered into. In no case shall it
attempt to change or terminate the performance of the works or the rendering of the services by
invoking a change in the economic feasibility or in the profitability of the operation.

25.3 Burden of the Proof. Contractor must notify the Company about the occurrence of an event that
may qualify as an Act of God or Force Majeure in the manner and within the term established in
25.4(i). The expiration of such term or the non compliance with the information duties established
shall cause the lapsing of the right to claim such liability exemption(s).

The Company must issue a decision on the matter within forty eight (48) hours as from the
compliance in the anticipated term of the requirements established in 25.4 (i). If the Company
fails to do so, the cause invoked shall be deemed accepted.

If the event is admitted, the Company shall determine the corresponding extension to be included in
the works schedule.

 

 

The granting of a greater term shall be at the exclusive option of the Company.

25.4 If Contractor becomes totally or partially incapable of complying with the obligations of the
contract awarded to it due to an extraordinary event that may qualify as an Act of God or Force
Majeure, its obligations shall be suspended for the time such extraordinary event lasts, to the
extent such event affects it, provided that (i) it notifies in writing the Company of its inability
to perform its obligations due to the extraordinary event of Act of God or Force Majeure, within
forty eight (48) hours of the occurrence thereof, supplying all details on what happened, including
an estimate of the duration thereof and of the probable impact on the performance of its
contractual obligations, and that it continues to inform in a timely and periodical manner on the
situation, as long as such extraordinary event lasts; (ii) it makes its best efforts and adopts all
actions that would be taken by a reasonable and careful Contractor, in accordance with good
customary practice generally accepted for the type of works or service commissioned, in order to
mitigate the consequences of the event and continue complying with its contractual obligations: and
that it continues making its best efforts to cure, with due diligence and good faith, its
performance incapacity; and (iii) it immediately notifies the Company of the cessation of such
extraordinary event of Act of God or Force Majeure, that has been accepted and that has provided it
with an excuse for non performance of its obligations.

25.5 Each party shall separately bear the economic consequences of the event of an Act of God or
Force Majeure, and no additional payment or compensation shall be made by the Company to Contractor
as a result of the suspension of the works or of the rendering of the service attributed to such
Act of God or Force Majeure accepted by the Company.

If the event occurred renders impossible the completion of the works or of the service, the
contract shall be terminated by operation of law. If the consequences of the event force the
stopping of the works or services for the term established in the specific bidding terms of the
contracting, the Company shall be able to terminate the contract. In any one of these two cases,
only works performed shall be paid.

26. Performance Bond and Labor Obligations

26.1 If at any time during the term of the Contract, the payment, financial or credit capacity of
Contractor is affected by any circumstance that might, on the sole judgment of the Company, cause
non compliance by Contractor of any of its obligations under the Contract or Base Documentation
(including, without limitation, the total and full payment of all the Labor Obligations due to its
personnel); Contractor shall, on request of the Company, establish and maintain in force and effect
for the whole term of the Contract and up to the end of any warranty period that may have been
provided for, a performance bond (the “Bond”) for the amount that the Company may reasonably
estimate as adequate to address the pending obligations in charge of Contractor.

The Bond may be constituted in cash, in which case an amount of up to ..... % shall be discounted
from each invoice or, in the case of a credit invoice, through the partial acceptance thereof for
the equivalent amount; through a bank guaranty; through listed securities; surety bond or through
other ways, to the entire satisfaction of the Company.

The Company shall not acknowledge interest on the guaranty deposit, but the interest accrued on the
securities that may be produced shall belong to depositor and shall be at the disposal thereof when
the issuing entity makes them available.

26.2 Should the above not be complied with by Contractor, the Company shall be entitled to
terminate the Contract by operation of law and Contractor shall have no right to any compensation
for such termination, being the Company able to assign any pending amount to Contractor to the
compliance, on the account and behalf of Contractor, of any pending obligation of Contractor, for
which purpose it is hereby irrevocably authorized.

26.3 Should any lack of compliance of Contractor be still pending for a term of forty five (45)
days or more, the Company, apart from the other remedies awarded thereto by the Contract, the Base
Documentation and/or the law, shall be able to fully or partially execute the valid bonds, up to
the settlement of the total amounts due or obligations pending performance by Contractor, plus
their respective interest.

 

 

27. Penalties. In case of delays of Contractor in the construction of the works or in the rendering
of the service, pursuant to the works schedule that has been established in the Contract or Base
Documentation, or in the case of repeated non compliance by Contractor of the commissioned tasks,
the Company shall be entitled to apply the penalties to be established in the Specific Bidding
Terms, by operation of law.

The amount resulting from the application of the penalties shall be discounted from the respective
invoices, in case there are invoices of Contractor pending payment, or else shall be directly
required to Contractor, which shall have to pay such amount within fifteen (15) days of the
effective notice by the Company in this respect (with the respective invoice attached thereto) or
deducted from the Bond.

The amount of the penalties to be applied shall not be, per each individual event, lower than {zero
with five percent (0.5%) per day} of the total amount of the Contract, nor higher than,
collectively {twenty percent (20%)} of the total amount of the Contract.

Always subject to the right of the Company to terminate the Contract, the payment of the penalties
shall not release Contractor from its obligations of diligently completing the contracted works or
service or from any other obligation arising from the Contract or the law.

 

 

EXHIBIT 1

CONTRACTOR MANAGEMENT SYSTEM

 

 

Health, Safety and Environmental Requirements

Contractor Liability

During the execution of the works, Contractor shall be totally responsible for complying with:

	 	>	 	 The national, provincial and municipal effective regulations on the issue.
	 
	 	>	 	 The Company’s internal standards on safety, health and the environment (SSA).

Contractor shall be totally responsible for the supervision of its personnel in order to assure
compliance with all applicable safety requirements.

Contractor shall appoint one of its employees in the works site to act as safety, health and
environmental advisor, having previously asked the Company for the approval thereof.

This advisor shall be responsible for coordinating safety, health and environmental activities of
Contractor with the SSA representative of the Company, for all the issues in this area.

Items valid for the present contract are detailed in the attached “Application Lists”.

 

 

Occupational Health Requirements

1. Legal references

In this contract, the performance of contractor in Health, Industrial Safety, and
Environmental (HSE) matters shall be subject to the effective legal provisions in the Republic
of Argentina, especially the Occupational Risks Act 24557/95, together with its decrees,
awards and complementary resolutions, Act 20744/ its decrees, resolutions and amendments, Act
19587/72, its Regulatory Decree 351/79, and its Decree 1338/96 and resolution 444/91 on
Health and Occupational Safety (MTSS). Act 24051/91 and its Regulatory Decree 831/93, which
regulates the protection of the environment, Act of the Province of Buenos Aires 11347/92,
Regulatory Decree 450/94 and Amending Decree 403/97, that regulate pathogenic waste,
Industrial Settlement Act of the Province of Buenos Aires 11459/93 and its Regulatory Decree
1601/95. Resolution 157/93 of the National Transportation Secretariat, Act 24241 and Decree
1278/00.

2. Occupational Health Requirements

2.1- As from the bidding stage, contractor shall submit a description of the occupational and
environmental risks of the geographic area referred in the bidding terms as well as of the
activities to be performed. Once the contract is awarded, these occupational and environmental
risks will be reviewed and updated regularly. An identification, evaluation and risk control
system shall be included, to measure variations in the course of
time.

2.2. Contractor shall present a plan to avoid, reduce and control endemic/epidemic diseases,
specific of the area.

2.3. Contractor must consider and budget in the bidding stage the following requirements:

2.3 1. Occupational Health Plan Coordinator
Contractor shall have one (1) Doctor with qualifying degree in Occupational Medicine,
preferably with field experience in the oil or petrochemical industry, knowledgeable in
emergentology and treatment of victims of serious accidents. His/her responsibility will be to
plan and put into practice the activities related to Occupational Health outlined in the
Medical Guide and Procedures Manual of Pan American Energy.

     His/her duties will be to coordinate the activities of the health personnel in the field
(doctors, nurses, paramedics, etc.), to comply with the medical emergencies plan and to assist
the personnel according to what is provided for by law and by Pan American Energy’s own
internal practices.

2.3.2. Field Health Care Personnel

Given that the works will be carried out in places distant from urban centers, Contractor
must staff permanent health care personnel in the sites mentioned in the Bidding Terms.
Graduated doctors in exercise of their profession shall be needed for works fronts staffed
with more than 200 workers, and these doctors shall be available for emergencies and
consultations. In special high risk cases or areas distant from medical resources, there shall
be a permanent doctor in the drilling site or works front. The background of these doctors
shall include experience in emergentology, critical patients care and evacuation and
occupational medicine knowledge. Graduated nurses are required permanently in those works
fronts when the number of workers exceeds 50 and the risk is low. In works fronts with less
than 50 workers and high risk the presence of a nurse is mandatory while any task is being
performed in the area. The background of these nurses shall include experience in emergency
rooms or intensive care units and in factory infirmaries. Once the contract is awarded, a
continuous education program for emergencies, catastrophes and health preventive issues
(nourishment, diseases, etc.) shall be included.

2.3.3. Occupational medical examinations

These examinations must be performed to all individuals working under this contract, in
compliance with Act 24557/95, Resolution SRT 43/97 and PAE’s Health, Industrial Safety and
Environmental Policy. Once the contract is awarded, awardee shall perform the examinations
provided by law to all its employees and shall warrant that its contractors and
subcontractors also do so. The examinations will be pre-occupational risk-oriented
examinations, periodical risk-oriented examinations, pre-position transfer risk-oriented
examinations and pre-termination risk-oriented examinations.

2.3.4. Health Promotion Programs :

The activities outlined in 2.1 shall be detailed in a time schedule. Significance shall be
assigned to the inclusion of programs to prevent: hypoacusia induced by industrial noise,
alcoholism and addiction to other licit and illicit drugs, solar radiation injuries, ionizing
radiation, cold, heat, dust, bad postures and injuries and poisoning caused by chemical
agents. It shall also consider the diagnosis and prevention of diseases transmitted by air,
water and food, inmunopreventible diseases, diseases transmitted by virus, bacteria, insect
stings, scorpions, spiders, animal bites, snakes and sexual transmission diseases.

 

 

2.3.5. Recording and statistics:

Contractor shall document, by means of records and medical statistics, the tasks performed and
shall send to PAE, monthly reports on this activity in equal or similar format to the existing
one in PAE’s Medical Guide and Procedures Manual. All formalities required by Occupational
Hazards Insurance Companies regarding information on accidents and occupational diseases shall
be fulfilled.

2.3-6. Health care at the works sites:

Contractor, through its health care personnel, shall provide first aid and evacuation in case
of injuries or occupational and non occupational diseases, to all the personnel at the rig,
and at the works line and front. Contractor shall become familiar with PAE’s medical
emergencies plan and will be part of it. In case medical care is necessary, contractor shall
coordinate such care to be provided at health care centers of low, medium and high complexity
and shall submit a proposal with the chosen centers. Once the contract is awarded, contractor
shall submit a plan of medical emergencies in line with PAE’s plan, which shall have at least:

2.3.6.1. A system for health care and transfer of patients, including communication and
transport means, assigned personnel and referral centers.

2.3.6.2. A first aids brigade, trained in first aid and CPR for each works site with its
respective continuous training program.

2.3.6.3. Updating of Medical Emergencies Plan, being also liable of informing PAE, within 24
hours, about all emergency situations requiring evacuation of injured patients.
Contractor will fulfill all the requirements demanded by its Occupational Hazards Insurance
Company.

2.3.7. Infrastructure and staff:

Prior to the award, the offeror shall submit a plan to render the following services, which
must be operational simultaneously with the initiation of the works, and having been
previously audited by PAE’s medical and safety personnel.

2.3.7.1 Infirmary or aid centers: They shall be equipped to take care of critical patients or
patients with ordinary injuries (oxygen, stretchers, set of instruments, etc.) (Advanced
Trauma Life Support)

2.3.7.2. Infirmary Elements: Infirmaries will be equipped with elements for cardio pulmonary
urgencies and accidents, suitable to be used by doctors, nurses and paramedics (inflatable
splints for limbs, neck and head immobilizers, intubators, aspirators, ambu laryngeal masks,
sheets for burnt patients, aluminized blankets for patients transport, vacuum mattress, etc.).

2.3.7.3. Transportation: Contractor shall have permanently, at least, one vehicle with cab,
available at each works site for land transportation of patients. The vehicle shall have fire
extinguisher, flashlight, flares and radiophone. Contractor shall also have ambulance services
available, near the operational bases.

2.3.7.4. Medicines: There must be necessary medicines to handle emergencies and common
diseases, which shall be selected by contractor doctors, who will control the stock and
expiration dates of such medicines.

2.3.8. Environmental cleaning and hygiene:

2.3.8.1. Drinking water: Contractor shall plan the supply of drinking water for the workers
following the guidelines described in PAE’s Medical Guide and Procedures Manual.

2.3.8.2. Diners: If the contract includes food services, the guidelines described in PAE’s
Medical Guide and Procedures Manual shall be followed.

2.3.8.3. Food manipulators: If the contract includes food services, the guidelines described
in PAE’s Medical Guide and Procedures Manual will be followed.

2.3.8.4. Camps Condition: See Camps procedures

 

 

Occupational Hygiene and Safety Requirements

	1	 	SSA Policy
	 
	2.	 	Planning
	 
	3.	 	Implementation and operation
	 
	4.	 	Checks and corrective actions

1. SSA Policy

Offeror shall know, understand, communicate and comply with PAE’s SSA Policy. Offeror must assure
and document compliance thereof at all levels of its organization. During the performance of
contract, the policy shall be fixed in places easily accessible by all personnel.
Should the offeror have a SSA policy, then it shall submit a signed copy thereof for the
corresponding analysis. If it does not have a policy in place, it will indicate so in its offer.

2. Planning

2.1. Resources and Personnel

2.1.1.Offeror shall warrant, at least, one full time Industrial Safety Coordinator of Contract for
the works sites, and several SSA supervisors depending on the magnitude and risk of the activity.
During the offer study or the performance of the contract, PAE may request adjustments to the
payroll, with the purpose of guaranteeing an appropriate coverage of that task.

2.1.2. The coordinator must have proven experience in industrial safety, the supervisors or
inspectors must have, at least, the level of a technician in industrial safety.
Offeror shall detail in its offer the resources allocated to the development of the industrial
safety program, such as: budget, communications means, transportation means, training, audio-visual
aids, measurement equipment, personal protection equipment and database to keep safety statistics.

2.2. Induction, Training, Awareness and Disclosure Program

2.2.1. Offeror shall determine the training in SSA which, according to the project, must be
implemented, including in a matrix the personnel to whom it is addressed and an estimation of the
time at which it will be applied.

2.2.2. Contractor shall also host daily industrial safety briefings, weekly health, safety and
environmental meetings at which the following will be discussed: specific standards of the works to
be executed, unsafe situations identified, and incidents occurred and
lessons learned.

Contractors are responsible for the supply of documentation about training in safety and industrial
hygiene areas for all personnel involved in the project. The instruction will be specific and
applicable to the project. If a mutual agreement is reached, training could be provided by our
company personnel in specific subjects.

2.2.3. All new personnel in the project must wear, in the sites so requiring, a green helmet so
that all the rest of the personnel is warned that it is a person undergoing training or new in
the works. Once all the training courses are completed and when the supervision deems it
advisable, the previously mentioned helmet color will be replaced by the corresponding one.

All training shall be registered together with the developed subject and filed for its eventual
control.

2.2.4. Offeror must also submit its performance goals in industrial safety for the contract,
and identify the actions to be carried out to achieve them. Proactivity indicators (PAE
indicator guidelines may be used) shall be included.

For this purpose, offeror shall have disclosure means such as billboards, pamphlets and
posters aimed at strengthening the positive attitude, knowledge and fulfillment of the
standards and procedures.

Offeror must assimilate any campaign issued or promoted by PAE under this scheme.

2.3. Risk Administration

2.3.1. Offeror must present the set of main activities to be performed, and identify and
evaluate the main risks establishing the required control measures. The product of this
analysis shall be submitted as an appendix.

2.3.2. Offeror must know and comply with PAE’s Work Permits System .

2.4. Vehicular Safety Program

2.4.1. Vehicular driving and transport management procedures shall be complied with.

2.4.2. The operation, revision and maintenance of automotive heavy equipment (cranes, retro
diggers, bulldozers, etc. ) must be part of the same program and, additionally, must include
the safe operation procedures of each equipment in the language of the operator. Moreover, all
equipment required for raising loads (cranes, pipe layers, freight elevators, trucks, hydro
cranes, winch trucks,

 

 

etc.) must be previously certified by an institution acknowledged by PAE. During the contract
term, equipment must be certified every year. The personnel operating such equipment shall
also be authorized.

2.5. Personal Protection Equipment, Elements and Devices

2.5.1. Offeror must submit a plan of provision, use control and replacement of the personal
protection elements for all the workers present at the works site and in accordance with the
identified risks.

2.5.2. PAE requires as minimum equipment for each worker, the following:
at construction sites and industrial areas: Safety shoes, boots with safety toe, helmet,
gloves, safety goggles, hearing protectors and those other protection elements required to
perform a safe work according to the identified risks the worker is exposed to.

3. Plan Implementation and Operation

3.1. Offeror shall anticipate the inclusion of training resources for the personnel according
to the previously established planning, to wit: didactic material, the site at which the
activity will be performed and the human resources to be employed.

3.2. The awardee offeror shall indicate how he will assure that all the personnel:

	 	>	 	 Understands the SSA policy.
	 
	 	>	 	 Is trained in the identification of dangers and risks handling
	 
	 	>	 	 Knows its role and responsibility in the SSA plan.

3.3. Emergency Response Plan

Offeror shall submit a plan indicating the organization, response brigades, available
resources for its execution, communications lines and emergency categories, emergency practice
and training program.

Its personnel shall be linked to the emergency plans of the site and ready to work in the
response brigades if PAE so requires.

Offeror shall make the medical evacuation plan available in case of an emergency, clearly
indicating in a flow chart the names of the involved personnel and involved medical
institutions, according to the complexity of the emergency.

3.4. Reports

     Once the contract is awarded, awardee will monthly submit to the PAE representative
reports containing the following data:

	 	 	 	 	 	 	 
	 	 	Safety Matrix	 	Month/Year	 	 
	3.4.1.

	 	Number of deaths	 	 	 	 
	3.4.2.

	 	Number of cases with lost days	 	 	 	 
	3.4.3.

	 	Number of lost days	 	 	 	 
	3.4.4.

	 	Number of injuries and diseases with restricted work	 	 	 	 
	3.4.5.

	 	Number of injuries and diseases with medical treatment	 	 	 	 
	3.4.6.

	 	Number of worked hours	 	 	 	 
	3.4.7.

	 	Number of accidents in road, light vehicles (< 3,5 T)	 	 	 	 
	3.4.8.

	 	Number of accidents in road, heavy vehicles (> 3,5 T)	 	 	 	 
	3.4.9.

	 	Distance run by light vehicles, km (< 3,5 T)	 	 	 	 
	3.4.10.

	 	Distance run by heavy vehicles, km (> 3,5 T)	 	 	 	 
	3.4.11.

	 	Number of observations of SSA	 	 	 	 
	3.4.12.

	 	Amount of ASA	 	 	 	 
	3.4.13.

	 	Number of near-misses	 	 	 	 
	3.4.14.

	 	Number of SSA Alerts	 	 	 	 
	3.4.15.

	 	Number of First Aid Cases	 	 	 	 
	3.4.16.

	 	Training hours	 	 	 	 
	3.4.17.

	 	Number of SSA audits	 	 	 	 
	3.4.18.

	 	Number of SSA meetings	 	 	 	 

In case of need a complete definitions guide can be found in the SSA correct handling document
(Getting HSE Right).

 

 

4. Verification and Corrective Actions

4.1. Inspections Plan

4.1.1 Offeror must submit an inspections plan to evaluate the administrative management in
industrial safety, including the methodology description, the participants, the performance
intervals and the recommendations follow up.

It must also provide information about its own equipment and tools maintenance inspections,
according to the preventive maintenance programs.

4.2. Contractor shall be in charge of industrial hygiene monitoring in the works environment of
its employees, with the purpose of verifying that they are suitably protected in those areas
where a potential exposure to chemical products, biological and/or physical agents exists. Our
company will inform contractors at the works place, about any dangerous condition existing
therein, with the purpose of assisting them in the identification of these conditions in the
cases where monitoring is required. If contractors do not have the capacity to perform such
task, they will have to contract the services of a qualified consultant or to obtain the
services of specialized companies.

4.3. Investigation and Incident Reporting System
Offeror must submit its investigation and incident reporting system, and it must also attach
an investigated accident case with the respective causes and established recommendations.
Once the contract is awarded, offeror shall be able to use PAE’s incident investigation guide

4.4. Plan Audit

4.4.1. Offeror shall propose a revision of the plan designed for the project with the purpose
of an early identification of deviations.

4.4.2. The resulting non conformities will be listed and terms and individuals in charge to
perform the corrective actions will be established.

 

 

Environmental Requirements

General Aspects

PAE has a ISO 14001 certified Environmental Management System (EMS), where the activities of
offerors are included.

Should the offeror be awarded the works, it shall comply with PAE’s EMS. A copy of said document is
available on request.

1. Environmental Management Plan for the Project

The Environmental Management Plan for the Project is the Document the offeror must include in its
bid. The offeror must include all the activities it needs to carry out in the development of the
project, and shall only include the list of the relevant building and operative procedures
involving the management of Significant Environmental Aspects following the procedural
identification criterion of PAE’s environmental aspects.

2. Environmental Policy

Offeror must know, understand, communicate and comply with PAE’s Environmental Policy. Offeror must
ensure and produce evidence of compliance with said Policy at all levels of its organization.
During the performance of the contract, the policy must be fixed in places easily accessible by all
the personnel.

2.1. Offeror must present its environmental policy or the environmental policy proposed for the
development of the activity.

3. Planning

According to the complexity of the project, the full or partial compliance with the items described
below shall be determined in the particular conditions.

3.1 Identification of environmental Aspects: it must know the Environmental Aspects of PAE’s EMS
and identify and control the Significant Environmental Aspects – SEA– originated by its operations.

3.2 Legal Requirements: it must know, understand and comply with the Legal Requirements established
by PAE in the EMS as well as in the specific Licenses and Permits for the project and others to be
applied.

3.3 Objectives and goals: all PAE’s EMS objectives and goals which are related to its activities
have to be known and all Objectives and Goals arising from the spotted Significant Environmental
Aspects must be established.

3.4 Environmental Management programs: it must know, apply and/or design and execute all
Environmental Administration Programs (or of environmental management) related to the Objectives
and Goals identified, ensuring compliance thereof.

Offeror must summarily and schematically present the environmental administration or management
programs according to the objectives and goals identified by offeror according to the Environmental
Management Plan elaborated by PAE, applicable to its work or service.

4. Implementation and Operation

4.1 Structure and Liability

Offeror shall implement, keep and operate its Environmental Management, under the following
conditions:

4.4.3 Establishment of an organizational structure.

4.4.4 Submission of the proposed Environmental Management System organizational chart.

4.4.5 Align its Environmental Management System with that of PAE’s

Ensure compliance with PAE’s environmental policy

4.4.6 According to the complexity, it shall contemplate the appointment of a person who will be
responsible of the environmental area and who shall be custodian of the environmental management
elements.

4.5 Training, awareness and competence

4.5.1 It shall define and execute a training program to ensure: knowledge on environmental
management (and its relation with PAE’s EMS), competence of the personnel managing Significant
Environmental Aspects (significantly impacting or that may impact on the environment) and that said
personnel is aware of and applies the operational procedures related to its activity.
Offeror shall submit its proposed training program through a matrix.

4.6 Communications System

It shall establish and keep a communications system on the environmental management System and
agreed upon with PAE.

 

 

Offeror shall summarily submit the proposal or scheme of communication of the relevant aspects of
the environmental management.

4.7. Control of Documentation

A Control, Management and Distribution system of the environmental management documents shall be
defined and applied, consistent with PAE’s EMS.

Offeror shall comply with the list of operational control procedures according to the EMS.

4.8. Prevention and response to an emergency

PAE’s Contingency Plan shall be known and understood.

Offeror is required to include the proposal to meet this Plan in the training matrix requested, as
well as to include the management of environmental emergencies in the environmental administration
programs.

5. Verification and Corrective Actions

5.1. Monitoring and Measurement: Offeror shall comply with the procedure to perform monitoring and
measurement of the characteristics that are inherent to its operations and activities to ensure a
correct environmental management consistent with EMS.

All equipment and instruments that form part of the system for monitoring and measuring variables
associated to significant environmental aspects must be calibrated and the appropriate maintenance
implemented. These two activities must be registered.

Non-conformities and Corrective and Preventive Actions: Offeror must set up a plan to correct
identified non-conformities. Corrective and preventive actions must be verifiable and timely
informed to PAE. A copy of the verification and issuance/closure report of non-conformities must be
available for its control by PAE.

Offeror must include in its proposal the performance verification system, the way corrective
actions shall be handled and how the closure shall be verified.

Issuance
and Control of Environmental Registries

The list of registries shall be delivered to PAE to make it official within the system.
Additionally, the list of significant environmental procedures of the activity to be carried out
shall be included.

The registries to be generated shall be consistent with the respective procedure and shall be sent
to PAE within the terms specified for said procedure.

5.2 EMS Auditing

Offeror authorizes PAE to audit and inspect, at any time, all equipment, work sites, personnel and
documents that are necessary to evaluate the compliance and application of EMS.

Offeror shall present its proposal of the internal audit program to be performed during the
execution of the works.

5.3 Revision by the Management

The documents generated after auditing shall be revised by PAE’s management. Offeror shall submit
the management revision program proposed.

5.4 EMS’s Formats

Offeror may design, develop and document its procedure and registries by using as a basis those
established in PAE’s EMS.

5.5 Improvement of EMS

Offeror may suggest and recommend practices and/or procedures aiming at continuing improving the
EMS.

5.6 Induction Meeting

Before the starting-up of activities, the management and the supervisory personnel of Offeror shall
participate in an induction meeting of SSA.

The purpose of the meeting shall be to clarify doubts and to reaffirm knowledge and commitment in
the execution of the Environmental Management Plan by Offeror with the following general agenda:

	Ø	 	PAE’s environmental policy
	 
	Ø	 	EMS
	 
	Ø	 	Legal considerations
	 
	Ø	 	Indications regarding the Environmental Management Plan of the Project
	 
	Ø	 	General Environmental Requirements
	 
	Ø	 	Specific Rules on Environmental Compliance

 

 

As it applies to the object of service/activity to hire, the following rules and guidelines
of actions shall be taken into account by Offeror and its employees:

Damage to third parties caused by non-compliance with these rules is the responsibility of OFFEROR,
who shall have to cure said damage at its cost.

As a measure of protection of wildlife, bearing and using arms in the area of work is prohibited,
except for the safety personnel who is expressly authorized to do so.

Mobile equipment, including heavy machinery, shall be operated so that minimum deterioration to
soil, vegetation and streams of the works site is caused. The washing of mobile equipment shall not
be made in gap beds or in other sites different from the areas
authorized in the works site. Provisioning of fuel and maintenance of mobile equipment and other machinery, including washing
works, shall be carried out in a way so as not to pollute soils or waters and waste shall be
retained and treated. The location of the yards to carry out these operations shall be isolated
from the streams.

Offeror shall keep in good operative conditions all its machinery with the aim of avoiding
lubricant or fuel leaks that may affect soils, streams, air and organisms.

Motor-pumps, and in general water-extraction equipment to be installed at a stream bank shall be
supplied with trays to allow avoidance of fuel and lubricants leaks. By no means shall oils or
fuels be discharged to a water body or soil.

Used oils and lubricants and cleaning and maintenance residues shall be retained in hermetic
containers and shall be treated and have an appropriate final disposal.

All camps shall be supplied with facilities for recollection, treatment and disposition of waste
water, which systems shall have to be previously authorized by PAE. Solid waste shall be handled
pursuant to PAE’s standards.

Offeror shall ensure that the impact on vegetation or the deforestation is the minimum necessary to
carry out the works, for which purposes they shall have the relevant permits.

Deforestation and cutting waste must not reach streams. Said waste must be piled up so that no
imbalance in the conditions of the area is caused. Except in cases that are justified by PAE and
authorities of the administration of woods, protected forests, etc. said waste shall not be burned.

In the land movement operations, Offeror shall implement all control measures regarding the
materials waste in order not to cause land slips in the surrounding area and pollution of streams.
A previous plan has to be in place to dispose inert waste and to store the vegetal layer to later
restore the landscape (restoration of vegetation, corrective land movements, etc.) The works
oriented to the management of rain water must be carried out before the land movement has started.

When ditches or trenches of a work directly meet in a surface water source, they shall be provided
with appropriate infrastructure to allow sediment decantation.

Drainage must be built following level curves towards natural protected channels. Should this not
be possible, energy dissipation structures must be built.

When it is necessary to deviate a natural stream or when a transitory path has been built for a
stream and these works shall not to be necessary in the future, the abandoned stream or the path
shall be restored by Offeror to its original conditions.

Offeror shall install tubes and/or hoses provisionally, depending on the output to be handled, in
drainages and runoffs interrupted by the construction of paths.

Broken-stone or bed particles shall not be removed from the river, brook beds, beaches, lakes or
small lakes, except in areas specifically approved as sources of material by the competent
governmental entity and in this case the deterioration of the area at the end of the use shall be
avoided, and it shall carry out works that are necessary for the
recovery of the affected area.

Offeror shall take all steps necessary to ensure that cement, mud or fresh concrete, and in general
solid residues, are not received, at the end, by the stream beds.

Excavation or path opening material shall be piled up for its use in restoring the landscape when
works are not permanent.

Offeror shall put special attention to maintain fences, enclosures and accesses, which shall remain
closed at all moments and demand from its sub-contractors the observance of this obligation.
The adequate disposition of waste water shall be permanently verified.

In camp areas all natural and artificial rain water drainage and gutters have to be clean.
Offeror shall be obliged to cooperate so that the behavior of its workers is an example for the
community.

At the end of the activities, the work areas shall be left in similar conditions to those initially
found.

All hydrocarbons handling activity shall have preventive and control measures for leaks.
Hunting, consumption, transport or holding of wildlife animals or breeding animals is prohibited.

 

 

Regarding the protection of historical and cultural resources, Offeror is obliged to take into
account the following recommendations if a site with archeological remains is found:

	–	 	Do not allow the destruction of remains and elements.
	 
	–	 	Avoid publication so that robbery or site alteration is prevented.
	 
	–	 	Transitorily suspend works in the site and immediately contact PAE’s representative.

5.7 Reports

If awarded the works, Offeror shall inform PAE’s representative, within two hours of produced, of
any news related to the actual or potential environmental damage.

Other data shall be monthly sent to the inspection of PAE or to whom PAE may specifically indicate.

 

 

	 	 	 	 	 
	 	 	Quantity	 
	5.9.1 Spillage 1 barrel (bbl) = 159 liters = 42 US gallons
	 	 	 	 
	5.9.2 Spillage between 0 and 1 barrel
	 	 	 	 
	5.9.3 Number of hydrocarbon spillage
	 	 	 	 
	5.9.4 Volume of spilled hydrocarbons (liters)
	 	 	 	 
	5.9.5 Volume of spilled hydrocarbons but not recovered (liters)
	 	 	 	 
	5.9.6 Spillage in land or surface water
	 	 	 	 
	5.9.7 Spillage reaching environment (number)
	 	 	 	 
	5.9.8 Loss of containment (number)
	 	 	 	 
	5.9.9 Chemical emissions (as per definition) number
	 	 	 	 

Other data shall be submitted quarterly, in accordance with what has been established, in the
following format. Values of EMISSIONS into the air may be required. If this is verified, PAE shall
provide instruction to complete the corresponding forms.

	 	 	 
	EMISSIONS INTO THE AIR	 	UNITS
	CO2 (carbon dioxide) Emissions
	 	tons
	CH4 (methane) Emissions
	 	tons
	Emissions of hydrocarbons with no methane
	 	tons
	Total of hydrocarbons into the air
	 	Total in tons
	Water consumption
	 	 
	Drinking water consumption
	 	m3
	Fresh water consumption
	 	m3
	Total consumed water
	 	Total in m3
	Power consumption
	 	 
	Fuel gas
	 	tons
	Diesel (used to generate power, not for transportation)
	 	tons
	Waste generation
	 	 
	Total treated waste
	 	tons and m3
	Total recycled waste
	 	tons and m3

 

 

DRILLING APPLICATION LIST

Occupational Health

	 	 	 
	 	 	REQUIRED
	1. Legal References
	 	YES
	2. Occupational Health Requirements
	 	 
	2.1 Description of occupational and environmental risks
	 	YES
	2.2 Submission of a Health Plan
	 	YES
	2.3 Submission of budget:
	 	 
	2.3.1 Authorized Medical Coordinator of Occupational Health Plan
	 	YES
	2.3.2 Field Health Care Personnel – Covered by PAE
	 	YES
	2.3.3 Occupational medical examinations
	 	YES
	2.3.4 Health Promotion Programs
	 	YES
	2.3.5 Submission of Recordings and Statistics
	 	YES
	2.3.6 First-Aid and evacuation
	 	 
	2.3.6.1 Communication and transport means, assigned personnel and
referral centers. PAE Ambulance
	 	YES
	2.3.6.2 First-aids brigade, trained in first aids and CPR per each site
	 	YES
	2.3.6.3 Medical Emergencies Plan
	 	YES
	2.3.7 Infrastructure and Staff
	 	 
	2.3.7.1 Infirmary or aid centers
	 	NO
	2.3.7.2 Infirmary elements
	 	NO
	2.3.7.3 Transportation
	 	NO
	2.3.7.4 Medicines, as per I-55 PAE
	 	First-Aids Kits
	2.3.8 Environmental cleaning and hygiene
	 	 
	2.3.8.1 Drinking water supply
	 	YES
	2.3.8.2 Diners – Does not apply in GSJ
	 	YES
	2.3.8.3 Kitchen personnel
	 	NO
	2.3.8.4 Camps
	 	NO

 

 

Occupational Hygiene and Safety

	 	 	 
	1. SSA Policy
	 	YES
	2. Planning
	 	 
	2.1 Resources and Personnel
	 	 
	2.1.1 Full time industrial safety supervisor for 7 drilling teams
	 	YES
	2.1.2 Resources allocated to the development of industrial safety program
	 	YES
	2.2 Induction, Training, Awareness and Disclosure Program
	 	 
	2.2.1 SSA Training
	 	YES
	2.2.2 Performance of daily, weekly, monthly briefings, etc
	 	YES
	2.2.3 Industrial Safety Goals for contract
	 	YES
	2.3 Risk Administration
	 	 
	2.3.1 Identification of main risks
	 	YES
	2.3.2 Work Permits System
	 	YES
	2.4 Vehicular Safety Program
	 	 
	2.4.1 Applicability of driving and transportation management procedure
	 	YES
	2.4.2 Special equipment. Authorization of equipment and personnel
	 	YES
	2.5 Personal Protection Equipment, Elements and Devices
	 	 
	2.5.1 Supply, use control and replacement plan of personal protection elements
	 	YES
	2.5.2 Minimum Requirements of Personal Protection Elements
	 	YES
	3. Plan Implementation and Operation
	 	 
	3.1 Personnel training according to prior planning
	 	YES
	3.2 Assurance Plan
	 	YES
	3.3 Emergency Response
	 	YES
	3.4 Reports
	 	 
	3.4.1 Number of deaths
	 	YES
	3.4.2 Number of cases with lost days
	 	YES
	3.4.3 Number of lost days
	 	YES
	3.4.4 Number of injuries and diseases with restricted work
	 	YES
	3.4.5 Number of injuries and diseases with medical treatment
	 	YES
	3.4.6 Number of worked hours
	 	YES
	3.4.7 Number of accidents in road, light vehicles (< 3.5 T)
	 	YES
	3.4.8 Number of accidents in road, heavy vehicles (> 3.5 T)
	 	YES
	3.4.9 Distance run by light vehicles, km (< 3.5 T)
	 	YES
	3.4.10 Distance run by heavy vehicles, km (> 3.5 T)
	 	YES
	3.4.11 Number of observations of SSA
	 	YES
	3.4.12 Amount of ASA
	 	YES
	3.4.13 Number of quasi-accidents
	 	YES
	3.4.14 Number of SSA Alerts
	 	YES
	3.4.15 Number of First Aid Cases
	 	YES
	3.4.16 Training Hours
	 	YES
	3.4.17 Number of SSA Audits
	 	YES
	3.4.18 Number of SSA meetings
	 	YES
	4. Verification and Corrective Actions
	 	 
	4.1 Inspections
	 	YES
	4.2 Inspections Plan
	 	YES
	4.3 Industrial Hygiene Monitoring
	 	YES
	4.4 Incident Investigation and Reporting
	 	YES
	4.5 Incident Investigation and Reporting System
	 	YES
	4.6 Plan Audit
	 	 
	4.6.1 Plan Revision
	 	YES
	4.6.2 Handling of Non-Conformities
	 	YES

 

 

Environmental Requirements

	 	 	 
	1. Environmental Management Plan for the Project
	 	YES
	2. Environmental Policy of the Company
	 	 
	2.1 Environmental Policy of Contractor
	 	YES
	3. Planning
	 	 
	3.1 Environmental Aspects
	 	YES
	3.2 Legal Requirements
	 	YES
	3.3 Objectives and Goals
	 	YES
	3.4 Environmental Management Programs
	 	YES
	4. Implementation and Operation
	 	 
	4.1 Structure and Liability
	 	 
	4.1.1. Organizational Structure
	 	YES
	4.1.2 Submission of proposed Environmental Management System
organizational chart
	 	YES
	4.1.3 Alignment of its Environmental Management System with that of PAE’s
	 	YES
	4.1.4 Individual in charge of environmental area – Covered by Safety
Supervisor indicated in 2.1.1
	 	YES
	4.2 Training, awareness and competence
	 	 
	4.2.1 Training Program
	 	YES
	4.3 Communications System
	 	YES
	4.4 Control of Documentation
	 	YES
	4.5 Prevention and response to an emergency
	 	YES
	5. Verification and Corrective Actions
	 	 
	5.1 Monitoring and Measurement – Data Collection Sheet
	 	YES
	5.2 Non-conformities and Corrective and Preventive Actions
	 	YES
	5.3 Environmental Registries Issuance and Control
	 	YES
	5.4 EMS Audit
	 	YES
	5.5 Revision by Management
	 	YES
	5.6 EMS Formats
	 	YES
	5.7 Improvement of EMS
	 	YES
	5.8 Induction Meeting
	 	YES
	5.9 Reports
	 	YES

 

 

WORK OVER AND PULLING APPLICATION LIST

Occupational Health

	 	 	 
	 	 	REQUIRED
	1. Legal References
	 	YES
	2. Occupational Health Requirements
	 	 
	2.1 Description of occupational and environmental risks
	 	YES
	2.2 Submission of a Health Plan
	 	YES
	2.3 Submission of budget:
	 	 
	2.3.1 Authorized Medical Coordinator of Occupational Health Plan
	 	YES
	2.3.2 Field Health Care Personnel – Covered by PAE
	 	YES
	2.3.3 Occupational medical examinations
	 	YES
	2.3.4 Health Promotion Programs
	 	YES
	2.3.5 Submission of Recordings and Statistics
	 	YES
	2.3.6 First-Aid and evacuation
	 	 
	2.3.6.1 Communication and transport means, assigned personnel and
referral centers. PAE Ambulance
	 	YES
	2.3.6.2 First-aids brigade, trained in first aids and CPR per each site
	 	YES
	2.3.6.3 Medical Emergencies Plan
	 	YES
	2.3.7 Infrastructure and Staff
	 	 
	2.3.7.1 Infirmary or aid centers (PAE System)
	 	NO
	2.3.7.2 Infirmary elements (PAE System)
	 	NO
	2.3.7.3 Transportation (PAE System)
	 	NO
	2.3.7.4 Medicines, as per I-55 PAE
	 	First-Aids Kits
	2.3.8 Environmental cleaning and hygiene
	 	 
	2.3.8.1 Drinking water supply
	 	YES
	2.3.8.2 Diners – Does not apply in GSJ
	 	YES
	2.3.8.3 Kitchen personnel
	 	NO
	2.3.8.4 Camps
	 	NO

 

 

Occupational Hygiene and Safety

	 	 	 
	1. SSA Policy
	 	YES
	2. Planning
	 	 
	2.1 Resources and Personnel
	 	 
	2.1.1 Full time industrial safety supervisor for Workover and Pulling
	 	YES
	2.1.2 Resources allocated to the development of industrial safety program (2
Supervisors for 11 Work Over Teams and 6 Pulling Teams
	 	YES
	2.2 Induction, Training, Awareness and Disclosure Program
	 	 
	2.2.1 SSA Training
	 	YES
	2.2.2 Performance of daily, weekly, monthly briefings, etc
	 	YES
	2.2.3 Industrial Safety Goals for contract
	 	YES
	2.3 Risk Administration
	 	 
	2.3.1 Identification of main risks
	 	YES
	2.3.2 Work Permits System
	 	YES
	2.4 Vehicular Safety Program
	 	 
	2.4.1 Applicability of driving and transportation management procedure
	 	YES
	2.4.2 Special equipment. Authorization of equipment and personnel
	 	YES
	2.5 Personal Protection Equipment, Elements and Devices
	 	 
	2.5.1 Supply, use control and replacement plan of personal protection elements
	 	YES
	2.5.2 Minimum Requirements of Personal Protection Elements
	 	YES
	3. Plan Implementation and Operation
	 	 
	3.1 Personnel training according to prior planning
	 	YES
	3.2 Assurance Plan
	 	YES
	3.3 Emergency Response
	 	YES
	3.4 Reports
	 	 
	3.4.1 Number of deaths
	 	YES
	3.4.2 Number of cases with lost days
	 	YES
	3.4.3 Number of lost days
	 	YES
	3.4.4 Number of injuries and diseases with restricted work
	 	YES
	3.4.5 Number of injuries and diseases with medical treatment
	 	YES
	3.4.6 Number of worked hours
	 	YES
	3.4.7 Number of accidents in road, light vehicles (< 3.5 T)
	 	YES
	3.4.8 Number of accidents in road, heavy vehicles (> 3.5 T)
	 	YES
	3.4.9 Distance run by light vehicles, km (< 3.5 T)
	 	YES
	3.4.10 Distance run by heavy vehicles, km (> 3.5 T)
	 	YES
	3.4.11 Number of observations of SSA
	 	YES
	3.4.12 Amount of ASA
	 	YES
	3.4.13 Number of quasi-accidents
	 	YES
	3.4.14 Number of SSA Alerts
	 	YES
	3.4.15 Number of First Aid Cases
	 	YES
	3.4.16 Training Hours
	 	YES
	3.4.17 Number of SSA Audits
	 	YES
	3.4.18 Number of SSA meetings
	 	YES
	4. Verification and Corrective Actions
	 	 
	4.1 Inspections
	 	YES
	4.2 Inspections Plan
	 	YES
	4.3 Industrial Hygiene Monitoring
	 	YES
	4.4 Incident Investigation and Reporting
	 	YES
	4.5 Incident Investigation and Reporting System
	 	YES
	4.6 Plan Audit
	 	 
	4.6.1 Plan Revision
	 	YES
	4.6.2 Handling of Non-Conformities
	 	YES

 

 

Environmental Requirements

	 	 	 
	1. Environmental Management Plan for the Project
	 	YES
	2. Environmental Policy of the Company
	 	 
	2.1 Environmental Policy of Contractor
	 	YES
	3. Planning
	 	 
	3.1 Environmental Aspects
	 	YES
	3.2 Legal Requirements
	 	YES
	3.3 Objectives and Goals
	 	YES
	3.4 Environmental Management Programs
	 	YES
	4. Implementation and Operation
	 	 
	4.1 Structure and Liability
	 	 
	4.1.1. Organizational Structure
	 	YES
	4.1.2 Submission of proposed Environmental Management System
organizational chart
	 	YES
	4.1.3 Alignment of its Environmental Management System with that of PAE’s
	 	YES
	4.1.4 Individual in charge of environmental area – Covered by Safety
Supervisor indicated in 2.1.1
	 	YES
	4.2 Training, awareness and competence
	 	 
	4.2.1 Training Program
	 	YES
	4.3 Communications System
	 	YES
	4.4 Control of Documentation
	 	YES
	4.5 Prevention and response to an emergency
	 	YES
	5. Verification and Corrective Actions
	 	 
	5.1 Monitoring and Measurement – Data Collection Sheet
	 	YES
	5.2 Non-conformities and Corrective and Preventive Actions
	 	YES
	5.3 Environmental Registries Issuance and Control
	 	YES
	5.4 EMS Audit
	 	YES
	5.5 Revision by Management
	 	YES
	5.6 EMS Formats
	 	YES
	5.7 Improvement of EMS
	 	YES
	5.8 Induction Meeting
	 	YES
	5.9 Reports
	 	YESexv10w14

 

Exhibit 10.14

DLS Argentina Limited

SUCURSAL ARGENTINA

City of Buenos Aires, April 1, 2005

Messrs.

Pan American Energy LLC Sucursal Argentina (Argentine Branch)

Av. Leandro N. Alem 1180

(1001) Buenos Aires

By hand

Re: Strategic Agreement for the rendering of Drilling, Completion and Workover Services of
oil and gas wells. Amendment # 1.

Dear Sirs,

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

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

WHEREAS, taking into account the changes in prices and costs verified in the local market, it is
the PARTIES intention to adjust the tariffs and work modalities set forth by the Strategic
Agreement;

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

1. PARTIES

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

2. PURPOSE

The purpose of this Amendment is to adjust the tariffs that DLS shall be entitled to charge for the
SERVICES, as established in Appendix I to the present offer. Such new prices and conditions shall
apply to the SERVICES rendered as from January 1, 2005.

In addition, and taking into account that the cost variations begun during the second semester of
2004, PAE acknowledges that DLS is entitled to an amount of US$570,000.00 (five hundred and seventy
thousand US Dollars) plus the corresponding VAT, covering all sums due, which DLS declares
sufficient so as to cover any eventual additional cost incurred up to January 1, 2005. DLS shall
invoice this amount and PAE shall pay it within 30 (thirty) days following reception of the
invoice.

3. RENDERING OF THE SERVICES

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

4. RATIFICATION

 

 

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

The present offer shall be considered accepted by you when Pan American Energy LLC (Sucursal
Argentina) pays the Invoice 0001-00001445 that DLS Limited Argentina (Sucursal Argentina) shall
present on April 18, 2005, for the amount established in the second paragraph of Clause 2 of the
present Amendment.

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

Sincerely,

/s/ Martín Zöldi

Martín Zöldi

Vice President

 

 

Appendix I

	1.	 	Drilling Service

The certification modality and applicable rates defined by Section 3.1.1 of the “APPENDIX I –
PRICES” of the Strategic Agreement shall be modified as follows:

	 	a.	 	The Standard Hourly Rate “K” shall have following new value:
	 
	 	 	 	K = 934.75 UM(30%USD)/hour
	 
	 	b.	 	In case that during a well completion more than 32.4 hours are employed in well
logging operations, in addition to the global amount “LS” payable per completed well, an
extra amount shall be payable, which shall be determined as follows:
	 
	 	 	 	H1 x SHR x H2 x OHR
	 
	 	 	 	Where:
	 
	 	 	 	H1 = hours of logging exceeding the first 32.4 and up to a maximum of 48 hours in whole
	 
	 	 	 	H2 = hours of logging exceeding the first 48 hours
	 
	 	 	 	SHR = as defined by Section 3.1.4 of the “APPENDIX I – PRICES” of the Strategic Agreement
	 
	 	 	 	OHR = as defined by Section 3.1.2 of the “APPENDIX I – PRICES” of the Strategic Agreement

	2.	 	Completion and Workover Services
	 
	 	 	The applicable rates defined by Sections 3.2.1, 3.2.2 and 3.2.3 of the “APPENDIX I – PRICES” of
the Strategic Agreement shall have following new values:
	 
	 	 	OHR = Operation Hourly Rate = 288.55 UM(19%USD)/hour
	 
	 	 	SHR = Stand By Hourly Rate = 261.16 UM(19%USD)/hour
	 
	 	 	CFHR = Climate Factor Hourly Rate = 186.84 UM(19%USD)/hour
	 
	 	 	DTA(=ƒ) = DTA between wells located on a same flange = 4,862.00 UM(19%USD)/day + [Distance in
excess of 20 Km.] x 84.00 MU(19%USD)/Km.
	 
	 	 	DTA(1ƒ) = DTA between wells located on different flanges = 11,142.62 UM(19%USD)
	 
	3.	 	Pulling Service
	 
	 	 	The certification modality and applicable rates defined by Sections 3.3.1, 3.3.2 and 3.3.3 of
the “APPENDIX I – PRICES” of the Strategic Agreement shall be modified as follows:
	 
	 	 	Light Pulling
	 
	 	 	OHR = Operation Hourly Rate = 232.96 UM(16%USD)/hour
	 
	 	 	SHR = Stand By Hourly Rate = 209.66 UM(16%USD)/hour
	 
	 	 	CFHR = Climate Factor Hourly Rate = 116.48 UM(16%USD)/hour
	 
	 	 	DTA = 931.84 UM(16%USD) + [Distance in excess of 20 Km.] x 15.53 MU(16%USD)/Km.

 

 

	 	 	Heavy Pulling
	 
	 	 	OHR = Operation Hourly Rate = 263.24 MU(16%USD)/hour
	 
	 	 	SHR = Stand By Hourly Rate = 236.92 MU(16%USD)/hour
	 
	 	 	CFHR = Climate Factor Hourly Rate = 131.62 MU(16%USD)/hour
	 
	 	 	DTA = 1,316.22 UM(16%USD) + [Distance in excess of 20 Km.] x 17.54 MU(16%USD)/Km.

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