Page 242 - The Persian Gulf Historical Summaries (1907-1953) Vol III

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Article 4
If hereafter any neutral Zone is created adjacent to the territory of the State,
wherein the Shaikh shall have a co-equal and joint interest, the Shaikh hereby
agrees to grant to the Company an oil concession over such neutral zone on terms
to be agreed between the Shaikh, the Company and the joint ruler of such Neutral
Zone.
Article 5
In consideration of the rights granted by the Shaikh by this Agreement the
Company shall pay to the Shaikh—
(a) on signature of the agreement Rupees sixty thousand.
(b) Rupees Two hundred thousand within a period of sixty (60) days from the
date upon which the Company declares in writing to the Shaikh that
substances have been discovered in commercial quantities. If the
Company should fail to declare so sooner, then the date of discovery of
substances in commercial quantities shall be that date upon which the
Company has completed and tested a well or wells capable of producing
in accordance with first class oil practice not less than two thousand
(2,000) English Tons of clean substances per day for a period of thirty
(30) consecutive days.
(c) Rupees Sixty thousand at the end of each year from the date of signature
hereof until the Company declares in writing to the Shaikh that Sub­
stances have been discovered in commercial quantities in accordance
with the Sub-Clause (b) of this Article 5 or until the Company com­
mences Production from quantities less than commercial quantities. In
the event of such Production by the Company from quantities less than
commercial quantities cither Rupees Fifty thousand per year or
Rupees 3 (three) per English Ton of 2,240 lbs. in respect of the Sub­
stances so won and saved shall be payable, whichever is the greater.
(d) At the end of every year from the date upon which the Company makes
in writing to the Shaikh the declaration that the Substances have been
discovered in commercial quantities Rupees Ninety thousand or
Rupees 3 (three) per English Ton of 2,240 lbs. in respect of the Sub­
stances other than natural gas, won and saved during the preceding
Calendar year, whichever is the greater.
(e) Annas 2 (two) per 1,000 cubic feet of natural gas produced and sold.
In calculating royalty for the purpose of this article account shall not be taken
of any of the substances used by the Company in its operations or used by the
Company’s employees within the State, necessary for their use, nor of any water
or foreign matter which may be produced with the Substances.

Article 6
The Company shall not carry on any operations within areas occupied by or
devoted to the purposes of mosques, sacred buildings or graveyards.
Article 7
The Company shall conduct its operations in a workmanlike manner and by
appropriate scientific methods and shall take all reasonable measures to prevent
the ingress of water to any petroleum-bearing strata and shall duly close any unpro­
ductive holes drilled by it and subsequently abandoned. The Company shall keep
the Shaikh informed generally as to the progress and result of its drilling operations
but such information shall be treated as confidential.

Article 8
Within three months after the expiry of each calendar year, the Company shall
deliver to the Shaikh a statement of the amount of the Substances won and saved
and in the case of natural gas produced and sold during the said calendar year,
and of the royalty which is or might have been payable under Article 5, together
with a report of its operations during the said year. The Shaikh or his representa­
tive shall have the right to check such returns and statements, and all such returns
and statements and the reports of the Company’s operations shall be treated as
confidential by the Shaikh.