3. Permit Conditions and Administration
The conditions applying to a permit granted under the OPGGSA, and the continuing administration of those conditions, will be as follows:
(a) The permittee will be required to undertake within the permit boundary each component of the minimum guaranteed work program in the designated year or earlier and failure to do so may result in cancellation of the permit.
The minimum guaranteed work program cannot be reduced once the permit has been awarded. Exploration activity in excess of the minimum guaranteed work program is permitted.
Surrender of the permit in good standing may only be agreed prior to the beginning of the fourth permit year if the total three year minimum guaranteed work program is completed.
(b) No earlier than six months and no later than three months before the end of the third year of the permit term, the permittee may submit a revised secondary work program covering the remaining years of the permit term for consideration by the Joint Authority and agreement on a mutually acceptable work program.
If agreement cannot be reached on a mutually acceptable work program, the permit may be surrendered in good standing or continue in force subject to the original secondary work program.
(c) On commencement of the fourth permit year the secondary work program (as revised, if agreed by the Joint Authority) becomes guaranteed on a year by year basis and each component must be undertaken within the permit boundary in the designated year or earlier. Failure to do so may result in cancellation of the permit.
The permittee may renegotiate the secondary work program on an annual basis by providing substantial and compelling evidence that the work program should be varied on technical grounds prior to entry into any of the remaining years of the secondary term.
Surrender of the permit in good standing during the secondary work program may only be agreed in a permit year if the work guaranteed for that year has been completed.
If a permit holder fails to complete a final year work program, the permit holder will not have complied with the conditions of the permit.
(d) Permittees may at any time make application for a variation or suspension of permit conditions (e.g. work program commitments) on the grounds of force majeure. If granted, a suspension has the effect of putting back the end date of the current permit year- it does not affect the ability of the permittee to undertake work activities during the suspension period. Force majeure refers to an event or effect that cannot be reasonably anticipated or controlled via experience or care. Commercial circumstances that are common risks in the industry would not normally be considered as a basis for an application on force majeure grounds. Factors such as changes in oil prices, difficulty in attracting farm-ins, avoidable delays in contracting a rig or vessel, disappointing drilling results, poor quality seismic data or the failure to prove up a prospect would not normally be considered as force majeure. Such factors may influence the perceived commercial viability of an activity, but should not prevent the explorer from adhering to its bid commitment.
When applying for a suspension of permit conditions, permittees may also apply for an extension of the permit term. An extension has the effect of putting back the end date of each permit year remaining in the current permit term.
(e) Where a permittee has been unable to prove up a prospect to meet a drilling commitment, the permittee may apply for a variation and suspension of permit conditions to commit to sufficient new seismic surveying (additional to the current work program) to prove up a prospect to meet that drilling commitment. Only where a permittee has demonstrated a significant attempt to meet its work program commitments would a suspension be considered and then only for a maximum of 12 months.
(f) The American Petroleum Institute's well classification is used as a general guide to determine whether a well has sufficient exploration component to meet a work program commitment.
The first appraisal well in a permit on the extension of a discovery made in an adjacent permit will be accepted as an exploration well. Similarly, a well drilled on the unproven extension of an accumulation from an adjacent permit will be accepted as an exploration well.
(g) Permittees may seek at any time to have an alternative work activity credited as meeting a work program commitment. Whether an alternative work activity meets a work program commitment will be considered on a case-by-case basis, with the criteria for approval being to ensure that the alternative work activity is a similar, or superior, technique and meets or exceeds the objective of the original work commitment.
Non-exclusive seismic data purchased by a permittee may be counted against a pre-existing work program commitment to the extent that the survey met in part, or in full, the original work program commitment and was recorded after the date on which the permit was granted/renewed.
Permittees will be required to comply with the provisions of the OPGGSA, the Regulations and Directions issued under the OPGGSA, and with any special conditions associated with the permit area.
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