We will try to list and explain the various problems and conditions that the client mainly needs and those terms that the contractor is capable of and wants to implement during the operation. So, after securing the general advanced geological information, the contractor will now prepare the budget and cost estimate and the terms and conditions of the contract.

A contract is basically a binding agreement made by both parties, in this case the client (primarily a geological exploration company) and the diamond drilling contractor. Therefore, the terms and conditions are cited in the contract on every important item that the client wants and that the contractor is obliged to comply with. If both parties agree, the contract becomes binding and is notarized by a rebuttable law firm.

Common terms and conditions are as follows:

I – Statement of Work:

Here, the contractor agrees to perform all the work and supply the labor, equipment and materials to carry out the surface diamond drilling project in the best manner in the industry and in the established time of completion. The location of the drilling project will be cited here.

II – General Information:

This basic information is also noted in the field investigation conducted prior to the submission of the bid proposal for the project, as follows;

1. Project name

2. Rent

3. Hole diameter (usually three sizes)

4. Average and maximum depth

5. Hole angle from vertical

6. Start of operation and projected completion

II – Guaranteed footage:

The total footage to be drilled is cited in this paragraph as a guarantee to the contractor. In general, the guaranteed meters is the minimum meterage requirement of the contractor to guarantee the completion of said project. This is the minimum necessary in the budget and cost calculation to determine if the project is profitable for the contractor. The average hole depth is also included here. This determines the number of holes. It is also stipulated that the number of diamond drilling with the complement of drillers and accessory equipment varies according to the number of meters to be drilled and the completion time of the schedule.

III – Reduction of the Guaranteed Meterage:

The sanction to the client in case the guaranteed footage is not met. The customer will pay for the remaining undrilled footage per metre.

IV – Contract Extension:

In the event that drilling footage is added above the guaranteed meters, the cost per meter drilled mostly remains the same. However, this is open to negotiation if any other significant issues are found by either party.

V- Initial payment:

Any contractor requires an initial payment to cover the cost of general mobilization from the contractor’s point of origin to the diamond drilling area. It is common to have twenty percent of the cost of the drilling program plus the cost of mobilization as a down payment. The cost of demobilization is paid at the end of the contract.

VI – Drilling Rates:

This will be charged according to size at the corresponding cost per meter. Drill angle has an additional premium depending on the angle from vertical, as this will affect the difficulty of drilling. The customer also has the privilege to penalize the contractor by applying a core recovery penalty starting at 100 percent. This is done for every 10 percent decrease in sample recovery.

VII – Hourly Rates:

It is stipulated in the contract to charge the client hourly rates at various stages in the diamond drilling that is necessary to complete the well, such as;

1. Customer Caused Wait Time: Incorporates rig hourly rates, equipment depreciation, lost opportunity.

2. Reaming – This is when the operation involves enlarging the hole to install the hole liner for the necessary stabilization to continue the coring operation.

3. Wellbore stabilization by pumping drilling mud: necessary to clean and stabilize the wellbore.

4. Pumping of water from the source: it is generally paid by the client if the water must be pumped from a source more than 200 meters away.

5. Cement pumping: Cementing the hole if warranted.

6. Rebar or casing recovery: This may be due to a highly fractured soil formation.

7. Well Inspection – This may be a third party contacted by the client or may be performed by the rig team at a different rate.

VIII – Other Matters:

1. Access Road and Drill Site Preparation

2. Carriage of core samples

3. Supply of core boxes

4. Company representative to supervise any problems that affect the operation or cause delays.

5. Basic sample measurement methodology

6. Environmental issues

7.Security

8. Land owners and local government affairs, etc.

9. Billing calendar

10. Drilling Realization and Performance

The above terms and conditions are the most common and important items that will be discussed with the client and stipulated in the final contract.