M/D Totco

12950 West Little York Road

Houston, Texas 77041
U.S.A.
Tel: 713-937-5700
Fax: 713-937-5730
www.varco.com

To: Precision Drilling - Kuwait Date: 28-Jan-05

P.O. Box 9282
61003 Ahmadi
Inquiry No.: Verbal

Quotation No.: 27719 Rev 1

Rig Name: Rig 155

Type: Land Rig

Attention: Daryl Cork Destination: Kuwait

Item Qty Description Unit Price Item Price

Budgetary Quotation Summary - Sensor Update

This quotation is Varco’s price for the specific equipment listed and described. Unless explicitly
agreed otherwise, Varco’s standard product specifications apply. This quotation is not binding on
Varco until such time as a purchase order is received and mutually agreeable technical and
commercial terms and conditions are accepted by Varco. Prices are shown in US Dollar.

Prices quoted do not include installation assistance. A seperate quotation for installation assistance
can be provided at your request.
1. 1 HMI Display, CENELEC Zone 2, Yoke Mount, FO $36,500.00 $36,500.00
Section Subtotal, Major Systems $36,500.00

2. 1 Wireless Connection Kit $3,152.25 $3,152.25

3. 12 Level Sensor, Ultrasonic, 16 ft Sensing Depth $1,950.00 $23,400.00
4. 1 Mud Return Flow Sensor $4,118.00 $4,118.00
5. 1 Pressure Transducer, 1 channel UL 2K $3,270.00 $3,270.00
6. 1 Transducer Box Hydraulic Hook Up Kit $219.30 $219.30
7. 1 Transducer Box Electric Hook Up Kit $153.20 $153.20
8. 2 PRES XDCR ASSY,10K 2" BW AISI $2,967.00 $5,934.00
9. 1 XDCR,15K,2202 H2S SRV/ABS $3,763.00 $3,763.00
10. 1 Encoder Kit, E-Depth, 1.0"-14 UNS $1,880.10 $1,880.10
11. 1 Cable Assembly, UL Depth Sensor $364.00 $364.00
12. 4 SPM/RPM Sensor, Proximity $598.00 $2,392.00
13. 1 Torque Sensor, Rotary, DC power $1,680.00 $1,680.00
14. 1 T-Pot Network, Coaxial Cable & Fittings $2,240.80 $2,240.80
15. 2 Gland Plate Assembly, 13-.5 inch $527.00 $1,054.00
16. 1 INSTALLATION KIT,TOTAL SYSTEM $1,601.00 $1,601.00
Section Subtotal, Accessories $55,221.65
Quotation Subtotal, Before Gross Discount $91,721.65
Quotation Gross Discount $-13,758.25
28-Jan-05 Page 1 of 8 By: Mike Smith
M/D Totco Quote No. 27719 Rev 1

Item Qty Description Unit Price Item Price

Quotation Summary (Continued)

Total Price, Ex-Works, Cedar Park, TX, USA $77,963.40
(*) Total and subtotals do not include those items marked as "Optional", "Alternate", or those shown with "(TBD)" as price.
Total known weight .0 lbs excludes "Optional", "Alternate", or items shown without weight.

28-Jan-05 Page 2 of 8 By: Mike Smith

M/D Totco Quote No. 27719 Rev 1
Item Qty Description Unit Price Item Price

Budgetary Quotation
Sensor Update
This quotation is Varco’s price for the specific equipment listed and described. Unless explicitly agreed otherwise,
Varco’s standard product specifications apply. This quotation is not binding on Varco until such time as a
purchase order is received and mutually agreeable technical and commercial terms and conditions are accepted by
Varco. Prices are shown in US Dollar.

Prices quoted do not include installation assistance. A seperate quotation for installation assistance can be
provided at your request.

Section 1 - Major Systems

1. 1 HMI Display, CENELEC Zone 2, Yoke Mount, FO $36,500.00 $36,500.00
Part No.: 40222616-006
with Sunvisor and Fiber Optic Connector Kit
1) 220451-002 Alarm Horn per System
30 ft 946941-124 Power Cable

Section Subtotal, Major Systems $36,500.00

Section 2 - Accessories
2. 1 Wireless Connection Kit $3,152.25 $3,152.25
Part No.: E-Series
Provides wireless connectivity between RigSense NT Tracer on
Rig Floor and Application Server in Tool Pusher's office.

3. 12 Level Sensor, Ultrasonic, 16 ft Sensing Depth $1,950.00 $23,400.00

Tank sensors for 10 Active tanks (6 active & 4 reserve) and 2 trip
tank

The system package consists of:

A) 1 Level Sensor, 16 ft Ultrasonic (p/n 222573-001)
B) 1 Flange, Level Sensor, 16 ft Ultrasonic (p/n 222573-002)

Level Sensor, 16 ft Ultrasonic

Part No.: 222573-001
16 Foot Range
Hazardous Area Certification: IS, Class l, Div 1, Groups C & D
Kit per Sensor:
1) Installation Hardware
1) Manual 20-24
Flange, Level Sensor, 16 ft Ultrasonic
Part No.: 222573-002
Flange, 150# ANSI, 2 inch NPT
28-Jan-05 Page 3 of 8 By: Mike Smith
M/D Totco Quote No. 27719 Rev 1
Item Qty Description Unit Price Item Price

4. 1 Mud Return Flow Sensor $4,118.00 $4,118.00

The system package consists of:

A) 1 Mud Flow Sensor (p/n 270700-116)
B) 1 Cover Plate, Flow Sensor (p/n 270734-301)

Mud Flow Sensor

Part No.: 270700-116
Paddle Type, 0-100 Percent Relative
Kit per Sensor:
1) Paddle Set, 8-18 inch
125 ft) Cable Assembly
Cover Plate, Flow Sensor
Part No.: 270734-301
Cover Plate, 10.5L X 7W X 3/8T inch Steel
5. 1 Pressure Transducer, 1 channel UL 2K $3,270.00 $3,270.00
Part No.: 220759-140
Pressure to Current Transducer Assembly
Output: 4-20 ma
Input: 2K Hook Load
6. 1 Transducer Box Hydraulic Hook Up Kit $219.30 $219.30
Part No.: 40223387-001
7. 1 Transducer Box Electric Hook Up Kit $153.20 $153.20
Part No.: 40223388-001
8. 2 PRES XDCR ASSY,10K 2" BW AISI $2,967.00 $5,934.00
Part No.: 221212-1H10CD
Pressure Sensor, Standpipe Pressure, H2S Service, 1502 union
w/butt weld sub
Output 4-20mA

9. 1 XDCR,15K,2202 H2S SRV/ABS $3,763.00 $3,763.00

Part No.: 220017-215A
!5K Pressure Transducer, H2S Service, Annulus Pressure
10. 1 Encoder Kit, E-Depth, 1.0"-14 UNS $1,880.10 $1,880.10

The system package consists of:

A) 1 Depth Sensor, UL, RH 1-14 UNS (p/n 40219062)
B) 1 Connector, UL Depth Sensor (p/n 949810-067)
C) 1 Bushing, UL Depth Sensor (p/n 947641-008)

Depth Sensor, UL, RH 1-14 UNS

Part No.: 40219062
Electric Encoder
Connector, UL Depth Sensor
Part No.: 949810-067
Straight Plug, 16S, 7 SKT
Bushing, UL Depth Sensor
Part No.: 947641-008
0.437 inch ID
28-Jan-05 Page 4 of 8 By: Mike Smith
M/D Totco Quote No. 27719 Rev 1
Item Qty Description Unit Price Item Price

MS3420-8
11. 1 Cable Assembly, UL Depth Sensor $364.00 $364.00
Part No.: 221565-001
Encoder,
7S/4C/5P,
125 ft
12. 4 SPM/RPM Sensor, Proximity $598.00 $2,392.00
Part No.: 232389
Proximity Type
13. 1 Torque Sensor, Rotary, DC power $1,680.00 $1,680.00
Part No.: 40218041-002
Duty: Electric Torque
Location: SCR House or safe area.
Mounted on the power cable of a DC powered Rotary Table.
Max. Cable Diameter: 2 inches (5.08 cm)
Max. Load: 1000 amps
14. 1 T-Pot Network, Coaxial Cable & Fittings $2,240.80 $2,240.80

The system package consists of:

A) 600 Cable, Coaxial AJ (p/n 946900-003)
B) 2 Resistor, Coaxial (p/n 949972-001)
C) 4 Adapter, Coaxial (p/n 949895-001)
D) 6 Connector, Coaxial (p/n 949914-008)

Cable, Coaxial AJ
Part No.: 946900-003
Coaxial Cable
RG-59B/U-A,
Armor Jacket Exane
Resistor, Coaxial
Part No.: 949972-001
75ohm,
BNC Conn Terminal
Adapter, Coaxial
Part No.: 949895-001
BNC Tee,
Jack-Plug-Jack
Connector, Coaxial
Part No.: 949914-008
BNC,
Straight Plug,
RG59U
Summary of Selected Options:
Cable: Armored Package Package
Length in Ft: 600

15. 2 Gland Plate Assembly, 13-.5 inch $527.00 $1,054.00

Part No.: 222149-002
Gland Plate Assembly for the DAQ
13) 0.5 inch Hubs
2) 0.75 inch Hubs
28-Jan-05 Page 5 of 8 By: Mike Smith
M/D Totco Quote No. 27719 Rev 1
Item Qty Description Unit Price Item Price

3) 1.00 inch Hubs

16. 1 INSTALLATION KIT,TOTAL SYSTEM $1,601.00 $1,601.00
Part No.: 40222676-002

Section Subtotal, Accessories $55,221.65

Quotation Subtotal, Before Gross Discount $91,721.65
Quotation Gross Discount $-13,758.25

Total Price, Ex-Works, Cedar Park, TX, USA $77,963.40

(*) Total and subtotals do not include those items marked as "Optional", "Alternate", or those shown with "(TBD)" as price.
Total known weight .0 lbs excludes "Optional", "Alternate", or items shown without weight.

Delivery Lead Time

Consult factory.
Terms
Payment Schedule:
Full payment due 30 days from date of product shipment.

Qualification of Delivery Commitment:

Exact shipment date and interface requirement date will be assigned at time of order acceptance. Documentation
deliverables that required to be reviewed by certifying agencies, or by any other 3rd party, may be subject to deliveries
beyond date of equipment shipment due to the agencies' internal review process. All deliveries are subject to prior sale.

Cancellation Charges:
In accordance with section E. CANCELLATION of "Terms And Conditions Of Sale"

This quotation is subject to the standard Terms and Conditions of Sale as shown on the following page. All standard
terms are in accordance with Incoterms, 2000 edition. Quote validity period is 60 days.

Mike Smith, Sales Engineer

28-Jan-05 Page 6 of 8 By: Mike Smith

M/D Totco Quote No. 27719 Rev 1
Item Qty Description Unit Price Item Price

Worldwide Terms And Conditions Of Sale

1. ACCEPTANCE
Orders or other requests, whether oral or written, for machinery or equipment (“Equipment”), or the supply or 8. LIMITED WARRANTY
sale of spare or replacement parts (“Parts”) or for services (“Services”) to be provided by Varco, L.P., on behalf New Equipment/Parts. In the case of the purchase of new Equipment/Parts and solely for the benefit of the
of itself and its divisions and subsidiaries (“Varco”) to its customers (each a “Buyer”) are subject to Varco written original user, Varco warrants, for a period of 15 months from shipment or 12 months from installation, whichever
acceptance by an authorized representative of Varco and any orders so accepted will be governed by (i) the is earlier, that Equipment of its own manufacture shall conform to the material and technical specifications set
terms and conditions stated in these Terms and Conditions for provision of Equipment, Parts or Services forth in the relevant scope of work document or purchase order as agreed to in writing by Varco and Buyer. If
(“Terms and Conditions”), (ii) the written proposal submitted by Varco to Buyer (“Proposal”), if any, (iii) the written the Equipment fails to conform with such specifications upon inspection by Varco, Varco at its option and as
order acknowledgment issued by Varco to Buyer (“Acknowledgment”), if any (iv) any change orders identified as Buyer’s sole remedy, will either repair or replace such defective Equipment with the type originally furnished.
such and agreed to in writing by Varco (the Order, Terms and Conditions, Proposal, Acknowledgment, and any Remanufactured to “As New” Equipment. Varco warrants to Buyer, that for a period of twelve (12) months from
such change order, and any such additional terms as agreed to in writing by an authorized representative of the date of shipment to Buyer or installation of part(s), whichever is earliest, that reconditioned to “as new”
Varco collectively referred to herein as “Agreement.” Buyer’s submission of a purchase order (or other similar machinery or equipment will be free from defects in material and workmanship.
document) shall be deemed to be an express acceptance of these Terms and Conditions notwithstanding Overhauled Equipment. Varco warrants that for a period of four (4) months from the date of shipment or three
language in Buyer’s purchase order (or other similar document) inconsistent herewith, and any inconsistent (3) months from installation, whichever is earliest, that overhauled equipment will be free from defects in
language in Buyer’s purchase order (or other similar document) is hereby rejected. Buyer’s purchase order (or workmanship. This warranty expressly assumes that parts normally considered consumables (including, but not
other similar document is incorporated in this Agreement, only to the extent of specifying the nature and limited to rubber goods, seals (rubber, polymer and/or metallic) and/or bearings, are replaced during overhaul.
description of the Equipment, Parts or Services and then only to the extent consistent with the Proposal or If Buyer requests that such parts not be replaced, Varco hereby disclaims any warranty for said Equipment or
Acknowledgment. In the event of any conflict between a Proposal and an Acknowledgement, the Parts.
Acknowledgment shall prevail. Used Equipment. Varco warrants to Buyer, that for a period of four (4) months from date of shipment or three (3)
2. PRICES months from date of installation, whichever is earliest, that the used equipment shall conform to the material and
Prices of Equipment, Parts or Services shall be as stated in the Proposal or Acknowledgment, or if there is no technical specifications set forth in the relevant scope of work or purchase order as agreed to in writing by Varco
Proposal or Acknowledgment, as otherwise agreed to in writing by Varco. All price quotations are Ex-works and Buyer. This warranty is only valid for equipment that was inspected at a Varco or Varco-approved facility.
Varco's factory or distribution point or as agreed per quote and are subject to change without notice. All sales, Items sold on an “as-installed” basis are sold “as is” at the time of purchase and no warranty is expressed or
use, import, excise and like taxes, whether foreign or domestic, shall be charged to and borne by Buyer. Varco implied.
bears no responsibility for any consular fees for legalizing invoices, certificates of origin, stamping bills of lading, Service. Varco warrants that the Services to be provided pursuant to this Agreement shall conform to the
or other charges required by the laws of any country of destination, or any fines imposed due to incorrect material aspects of the specifications set forth in the relevant scope of work document as agreed to in writing by
declarations. Charges will be added for factory preparation and packaging for shipment. Minimum freight and Varco and Buyer. Varco shall re-perform that part of the non-conforming Services, provided Varco is notified by
invoice charges apply, as in effect at the time of order. If by reason of any act of government, the cost to Varco Buyer prior to Varco’s departure from the worksite.
of performing its obligations hereunder is increased, such increase shall be added to the quoted price. Varco’s warranty obligations hereunder shall not apply if the non-conformity was caused by a) Buyer’s failure to
3. PAYMENT TERMS properly store or maintain the Equipment or Parts; b) unauthorized modifications, repair or service of the
Unless alternate payment terms are specified or approved by Varco's credit department, all charges, including Equipment or Parts by Buyer; c) utilization of replacement parts not manufactured by Varco; or d) use or
applicable packing and transportation costs, billed by Varco are payable within Net 30 days of the date of handling of the Equipment or Parts by Buyer in a manner inconsistent with Varco’s recommendations. Further
invoice. Varco reserves the right to modify or withdraw credit terms at any time without notice. Unless otherwise Varco’s warranty obligations under this Article 8 shall terminate if a) Buyer fails to perform its obligations under
specified all payments are due in the currency specified in Varco's Proposal, Acknowledgment and/or invoice. this or any other Agreement between the parties, or b) if Buyer fails to pay any charges due Varco. Any third
Interest shall be due from Buyer to Varco on over due accounts at the maximum rate allowed by law. When party warranties provided on Equipment or Parts not manufactured by Varco are assigned to Buyer, without
partial shipments are made, the goods will be invoiced as shipped and each month's invoices will be treated as a recourse, at the time of delivery, provided such warranties are assignable.
separate account and be payable accordingly. Payment for goods is due whether or not technical THIS ARTICLE 8 SETS FORTH BUYER’S SOLE REMEDY AND VARCO’s ONLY OBLIGATION WITH
documentation and/or any third party certifications are complete at the time of shipment. Varco shall be entitled REGARD TO NON-CONFORMING EQUIPMENT, PARTS OR SERVICES. EXCEPT AS OTHERWISE
to recover all reasonable attorney's fees and other costs incurred in the collection of overdue accounts. Varco EXPRESSLY PROVIDED PURSUANT TO THE PROVISIONS OF THIS ARTICLE 8, VARCO MAKES NO
reserves the right where genuine doubts arise as to Buyer’s financial position or if Buyer is in default of any OTHER WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, AND VARCO
payment, to suspend delivery or performance of any order or any part thereof without liability or without prejudice DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR
to and without limitation of any other remedy until Buyer cures the default and payment or satisfactory security PURPOSE.
for payment has been provided. Varco shall have the option to extend the delivery date by a time at least equal 9. CHANGES
to the period of suspension. Varco expressly reserves the right to change, discontinue or modify the design and manufacture of its products
4. DELIVERY without obligation to furnish, retrofit or install goods previously or subsequently sold.
Where goods are to be supplied from stock, such supply is subject to availability of stocks at the date of delivery. 10. RETURN OF MAKE TO STOCK GOODS
Partial shipments may be made as agreed by Buyer and Seller. Stated delivery dates are approximate only and Upon Varco’s written approval, unused incorrectly shipped or “Made to Stock” goods ordered incorrectly, in new
cannot be guaranteed. Varco shall have no liability for damages arising out of the failure to keep a projected condition and of current manufacture and catalog specifications may be returned by Buyer for credit (subject to a
delivery date, irrespective of the length of the delay. In the event Buyer is unable to accept delivery of goods restocking fee), provided written request is received within one year after the purchase date. Non-standard
when tendered, Varco may, at its option, arrange storage of the goods and Buyer shall be liable to Varco for the goods are not returnable for credit. Requests for return of goods must show original purchase order number,
reasonable cost of such storage. This provision is without prejudice to any other rights, which Varco may have invoice number, description of material, and date of purchase. Return of goods does not relieve Buyer of the
with respect to Buyer's failure to take delivery of goods, which includes the right to invoice Buyer for the goods. obligation to make payment against Varco’s invoice, and any credit or refund allowed will be issued following
Buyer agrees that title to the goods will transfer to Buyer upon invoicing notwithstanding Buyer's inability to Varco’s receipt of the goods. The credit allowed on returned goods, if any, is a merchandise credit and is
accept delivery and that Buyer assumes all risk of loss or damage to the goods from the date title passes to applicable only against future purchases of Varco goods. The credit given will be solely in Varco's discretion and
Buyer. may be based on the original or a subsequently adjusted price; a charge will be made to clean-up, refinish and
5. FORCE MAJUERE restock. No rubber or electronic products or components may be returned for credit after six months from date of
If either party is unable by reason of Force Majeure to carry out any of its obligations under this Agreement, other shipment.
than obligations to pay money, then on such party giving notice and particulars in writing to the other party within 11. LIABILITIES, RELEASES AND INDEMNIFICATION
a reasonable time after the occurrence of the cause relied upon, such obligations shall be suspended. “Force For purpose of this Article11, the following definitions shall apply:
Majeure” shall include acts of God, laws and regulations, government action, war, civil disturbances, strikes and (1) “Varco Group” shall mean (i) Varco, L.P., its parent, subsidiary or related companies, (ii) its and their working
labor problems, delays of vendors, carriers, lightening, fire, flood, washout, storm, breakage or accident to interest owners, co-lessees, co-owners, partners, joint venturers, if any, and their respective parents, subsidiary
equipment or machinery, shortage of raw materials, and any other causes that are not reasonably within the or related companies and (iii) the officers, directors, employees, consultants, agents and invitees of all of the
control of the party so affected. Varco shall be paid its applicable standby rate, if any, during any such Force foregoing.
Majeure event. (2) “Buyer Group” shall mean (i) Buyers, its parent, subsidiary or related companies, (ii) its and their working
6. CANCELLATION interest owners, co-lessees, co-owners, partners, joint venturers, if any, and their respective parents, subsidiary
Orders placed by Buyer and accepted by Varco may be canceled only with the consent of Varco and will subject or related companies and (iii) the officers, directors, employees, consultants, agents and invitees of all of the
Buyer to cancellation charges. All of Varco’s documents, drawings and like information shall be returned to foregoing.
Varco upon Buyer’s request for cancellation. No orders may be canceled subsequent to shipment. As estimated (3) “Claims shall mean all claims, demands, causes of action, liabilities, damages, judgments, fines, penalties,
actual damages, Buyer agrees to pay Varco the greater of Varco's actual costs incurred prior to cancellation plus awards, losses, costs, expenses (including, without limitation, attorneys’ fees and costs of litigation) of any kind
a reasonable profit, or the following minimum cancellation charges: or character arising out of, or related to, the performance of or subject matter of this Agreement (including,
a) 20% of order value if canceled 30 or more days prior to the original shipment date; without limitation, property loss or damage, personal or bodily injury, sickness, disease or death, loss of services
b) 50% of the order value if canceled thereafter; or and/or wages, or loss of consortium or society).
c) 100% of the value of any non-standard items, which are items not built for stock or built to customer a. Varco shall release, indemnify, defend and hold Buyer Group harmless from and against any and all Claims
specifications. in respect of personal or bodily injury to, sickness, disease or death of any member of Varco Group or Varco
Buyer shall verify the amount of the cancellation charges prior to canceling an order. Group’s subcontractors or their employees, agents or invitees, and all Claims in respect of damage to or loss or
7. TITLE AND RISK OF LOSS destruction of property owned, leased, rented or hired by any member of Varco Group or Varco Group’s
Ownership and risk of loss pass to Buyer upon the earlier of (i) Varco's delivery of the goods to the carrier, or (ii) subcontractors or their employees, agents or invitees.
invoicing by Varco for the goods where Buyer is unable to accept delivery on the scheduled date. Varco retains b. Buyer shall release, indemnify, defend and hold Varco Group harmless from and against any and all Claims in
a security interest in the goods until the purchase price has been paid, and Buyer agrees to perform upon respect of personal or bodily injury to, sickness, disease or death of any member of Buyer Group or Buyer
request all acts required to secure Varco's interest. Varco accepts no responsibility for any damage, shortage or Group’s other contractors or their employees, agents or invitees, and all Claims in respect of damage to or loss
loss in transit. Varco will attempt to pack or prepare all shipments so that they will not break, rust or deteriorate or destruction of property owned, leased, rented or hired by any member of Buyer Group or Buyer Group’s other
in shipment, but does not guarantee against such damage. Claims for any damage, shortage or loss in transit contractors or their employees, agents or invitees.
must be made by Buyer on the carrier. c. In the event this Agreement is subject to the indemnity limitations in Chapter 127 of the Texas Civil Practices
and Remedies Code (or any successor statute), and so long as such limitations are in force, each party
covenants and agrees to support the mutual indemnity obligations contained in Paragraphs a and b above, by
carrying equal amounts of insurance (or qualified self insurance) in an amount not less than U.S. $1,000,000.00.

28-Jan-05 Page 7 of 8 By: Mike Smith

M/D Totco Quote No. 27719 Rev 1

Worldwide Terms And Conditions Of Sale

d. Notwithstanding anything contained in this Agreement to the contrary, in all instances where Varco is 15. REGULATORY COMPLIANCE
providing Services at a wellsite, Buyer, to the maximum extent permitted under applicable law, shall release, By acceptance of delivery of this order, Buyer warrants it has complied with all applicable governmental,
indemnify, defend and hold Varco Group and Varco Group subcontractors harmless from and against any and all statutory and regulatory requirements and will furnish Varco with such documents as may be required. Varco
Claims asserted by or in favor of any person or party, including Varco Group, Buyer Group or any other person warrants and certifies that in the performance of this contract, it will comply with all applicable statutes, rules,
or party, resulting from: (i) loss of or damage to any well or hole (including but not limited to the costs of re-drill), regulations and orders of the United States and of any state or political subdivision thereof, including laws and
(ii) blowout, fire, explosion, cratering or any uncontrolled well condition (including but not limited to the costs to regulations pertaining to labor, wages, hours and other conditions of employment, applicable price ceilings if any,
control a wild well and the removal of debris), (iii) damage to any reservoir, geological formation or underground and that the articles delivered hereunder shall be produced in compliance with the Fair Labor Standards Act and
strata or the loss of oil, water or gas therefrom, (iv) pollution or contamination of any kind (other than surface the Equal Employment Opportunity provisions of pertinent Executive Orders and the regulations adopted
spillage of fuels, lubricants, rig sewage or garbage, to the extent attributable to the negligence of Varco Group, thereunder. Further, Buyer acknowledges that all equipment, parts, materials, and products under these terms
including but not limited to the cost of control, removal and clean-up, or (v) damage to, or escape of any and conditions are being quoted accordingly to regulations issued by the United States Export Administration
substance from, any pipeline, vessel or storage facility. Department. United States Law prohibits the sale, re-sale, export or re-export of equipment, parts, materials or
e. Notwithstanding anything contained in this Agreement to the contrary, neither party shall be liable to the other products to trade sanctioned countries.
and each party releases the other for any indirect, special, punitive, exemplary or consequential damages or 16. SAFETY SCREENING
losses (whether foreseeable at the date of this Agreement, including without limitation, damages for lost In the event Varco is required by Buyer as a condition to entering into contract, to have in effect a drug or alcohol
production, lost revenue, lost product, lost profit, lost business or business opportunities. policy, and any provision of said policy implemented in compliance with the Buyer's requirements is held to have
f. Notwithstanding anything contained in this Agreement to the contrary, Varco’s total liability for all claims, violated any employee’s rights or any law, then Buyer shall indemnify Varco and hold it harmless from all
damages, causes of action, demands, judgments, fines, penalties, awards, losses, costs and expenses resulting loss, including all defense costs and attorneys' fees. Buyer shall also defend and indemnify Varco with
(including attorney’s fees and cost of litigation) shall be limited to and shall not exceed the value of the Products respect to any claim or loss, which arises as a result of sampling, testing or analytical procedures administered
or Services purchased by that Buyer or its agents in applying its drug/alcohol policies to Varco’s employees assigned to work at the
g. THE EXCLUSIONS OF LIABILITY, RELEASES AND INDEMNITIES SET FORTH IN PARAGRAPHS A. Buyer's facility.
THROUGH F. OF THIS ARTICLE 11 SHALL APPLY TO ANY CLAIM(S), LOSSES OR DAMAGES WITHOUT 17. CONFIDENTIAL INFORMATION
REGARD TO THE CAUSE(S) THEREOF, INCLUDING BUT NOT LIMITED TO PRE-EXISTING CONDITIONS, Each party recognizes and acknowledges that it shall maintain all data, information, disclosures, documents,
WHETHER SUCH CONDITIONS BE PATENT OR LATENT, THE UNSEAWORTHINESS OF ANY VESSEL OR drawings, specifications, patterns, calculations, technical information and other documents (collectively,
VESSELS, IMPERFECTION OF MATERIAL, DEFECT OR FAILURE OF PRODUCTS OR EQUIPMENT, "Confidential Information") obtained from the other party in strict confidence subject only to disclosure required
BREACH OF REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED), ULTRAHAZARDOUS by law or legal process. In the event that Varco owns copyrights to patents to, or has filed patent applications
ACTIVITY, STRICT LIABILITY, TORT, BREACH OF CONTRACT, BREACH OF DUTY (STATUTORY OR on, any technology related to the Equipment, Services or Parts furnished by Varco hereunder, and if Varco
OTHERWISE), BREACH OF ANY SAFETY REQUIREMENT OR REGULATION, OR THE NEGLIGENCE OR makes any improvements on such technology, then such improvements shall not fall within the confidentiality
OTHER LEGAL FAULT OR RESPONSIBILITY OF ANY PERSON (INCLUDING THE INDEMNIFIED OR obligations included herein, and Varco shall own all such improvements, including drawings, specifications,
RELEASED PARTY), WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR patterns, calculations, technical information and other documents. However, nothing hereinabove contained
PASSIVE. shall deprive the Receiving Party of the right to use or disclose any information: a) which is, at the time of
h. Redress under the indemnity provisions set forth in this Article 11 shall be the exclusive remedy(ies) available disclosure, known to the trade or public; or b) which becomes at a later date known to the trade or the public
to the parties hereto for the matters, claims, damages and losses covered by such provisions. through no fault of the Receiving Party and then only after said later date; or c) which is possessed by the
12. INSURANCE Receiving Party, as evidenced by the Receiving Party’s written records, before receipt thereof from the
Upon written request, each party shall furnish to the other party certificates of insurance evidencing the fact that Disclosing Party; or d) which is disclosed to the Receiving Party in good faith by a third party who has an
the adequate insurance to support each party’s obligations hereunder has been secured. To the extent of each independent right to such information; e) which is developed by the Receiving Party as evidenced by
party’s release and indemnity obligations expressly assumed by each party hereunder, each party agrees that all documentation, independently of the Confidential Information, or (f) which is required to be disclosed by the
such insurance policies shall a) be primary to the other party’s insurance; b) include the other party, its parent, Receiving Party pursuant to an order of a court of competent jurisdiction or other governmental agency having
subsidiary and affiliated or related companies, and its and their respective officers, directors, employees, the power to order such disclosure, provided that the Receiving Party uses its best efforts to provide timely
consultants and agents as additional insured; and c) be endorsed to waive subrogation against the other party, notice to the Disclosing party of such order to permit the Disclosing Party an opportunity to contest such order.
it’s parent subsidiary and affiliated or related companies, and its and their respective officers, directors, 18. INDEPENDENT CONTRACTOR
employees, consultants and agents. It is expressly understood that Varco is an independent contractor, and that neither Varco nor its principle,
13. GOVERNING LAW. partners, employees or subcontractors are servants, agents or employees of Buyer. In all cases where Varco’s
A. Except for Equipment, Parts or Services provided, or to be provided, by Varco in North or South America (the employees (defined to include Varco’s and its subcontractors, direct, borrowed, special, or statutory employees)
“America’s”), this Agreement shall be governed by and interpreted in accordance with English law, excluding are covered by the Louisiana Worker’s Compensation Act. La. R.S. 23:102 et seg., Varco and Buyer agreed that
conflicts and choice of law principles. all Products and Services provided by Varco and Varco’s employees pursuant to this Agreement are an integral
B. For Equipment, Parts or Services provided, or to be provided, by Varco in the America’s, this Agreement shall part of and are essential to the ability of Varco to generate Varco’s goods, products, and services for the purpose
be governed by and interpreted in accordance with the substantive laws of Texas, excluding conflicts and choice of La. R.S. 23:106(A) (1). Furthermore, Varco and Buyer agree that Buyer is the statutory employer of all of
of law principles. Varco’s employees for the purpose of La. R.S. 23:1061(A) (3)
Varco retains the right to arbitrate and any all disputes that may arise in connection with the sale of its 19. GENERAL
Equipment, Product or Services. Failure of Buyer or Varco to enforce any of the terms and conditions of this Agreement shall not prevent a
14.OWNERSHIP AND PATENT INDEMNITY. subsequent enforcement of such terms and conditions or be deemed a waiver of any subsequent breach.
All software used in connection with the Equipment, Parts or Services, either purchased or rented from Seller, is Should any provisions of this Agreement, or portion thereof, be unenforceable or in conflict with governing
copyrighted and owned by Seller and licensed to Buyer. Varco warrants that the use or sale of Equipment or country, state, province, or local laws, then the validity of the remaining provisions, and portions thereof, shall not
Parts hereunder will not infringe patents of others by reason of the use or sale of such Equipment or Parts per be affected by such unenforceability or conflict, and this Agreement shall be construed as if such provision
se, and hereby agrees to hold Buyer harmless against judgment for damages for infringement of any such supersedes all prior oral or written agreements or representations. Buyer acknowledges that it hast not relied on
patent, provided that Buyer shall promptly notify Varco in writing upon receipt of any claim for infringement, or any representations other than those contained in this Agreement. This Agreement shall not be varied,
upon the filing of any such suit for infringement, whichever first occurs, and shall afford Varco full opportunity, at supplemented, qualified, or interpreted by any prior course of dealing between the parties or by any usage of
Varco’s option and expense, to answer such claim or threat of suit, assume the control of the defense of such trade and may only be amended by an agreement executed by an authorized representative of each party.
suit, and settle or compromise same in any way Varco sees fit. Varco does not warrant that such Equipment or
Parts: (a) will not infringe any such patent when not of Varco's manufacture, or specially made, in whole or in
part, to the Buyer’s design specifications; or (b) if used or sold in combination with other materials or apparatus
or used in the practice of processes, will not, as a result of such combination or use, infringe any such patent,
and Varco shall not be liable and does not indemnify Buyer for damages or losses of any nature whatsoever
resulting from actual or alleged patent infringement arising pursuant to (a) and (b) above. THIS PARAGRAPH
STATES THE ENTIRE RESPONSIBILITY OF VARCO CONCERNING PATENT INFRINGEMENT.

28-Jan-05 Page 8 of 8 By: Mike Smith