Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698083586236.pdf (Sierra Leone)
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B SIERRA LEONE 9A-10 PETROLEUM LICENCE AGREEMENT & BLOCK 9B-10 SL EXPLORATION INVESTMENT & MANAGEMENT GMBH Petroleum Licence PARL, A M,:il I0[,:n ,r,.

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--k:.r $ \ I Ilr I PETROLEUM (EXLLaBAII_QN ald PRoD_i JCTION) LICENCE NO: = 201 4/9A.-'.t O/98-i O/00:l MADE: LAID before Parliament: Coming lnto Force: fhe Director General of the Pgtroleum Directorate in exercise of Executive Powers conferied on him hy H.E the President on the 20tr day of December 2011, hereby grunts the follorving Petroleum Exploration and Production Licence to SL Exploration Investment & Management GMBH .
a company .registered under the companies Act of 2009 (hereinafter referred to as the Licensee") CITATION and COMMENCEMENT This Licence may be cited as the Petroleum @xploration and Production) Licence No: 20l4l9{-l0l9B-10/001 for Block SL 9A-I0 and Block SL 98 -10 and shall come into force on this _ day of 2014 WITNESSETH: 1 ,' 3 4 All Petroleum existing in its natural state within Sierra Leone is the property of the Republic of Sierra Leone and held in trust by the State.
The Licence Area that is the subject matter of this PeEoleum Licence has b--en declared open for Petroleum Operations by the Director General, and the Government of Sierra Leone desires to encourage and promote Exploration, Development and Production within the said area.

Any obligations rvhich are to be observed and p€rformed by the Licensee, sirall at any time at which the Licensee is more than one p--rson, be joint and sevrral obligations.
licensee, having the iinancial ability, technical compe'€nce and professional skills necessary ior carrying out the Petroleum Operations herein described, hereby accept the offer of this Petroleum Licence granted by tire State ior the Exploration, Development and Production of the Petroleum r€sources of the said area.
NOW THEREFORE in consideration of the mutual covenants hereinafter provided for and the performance and observance by the Licensee of all the terms and conditions hereof, the Director General of the Petroleum Directorate, in exercise ofthe pou,ers conftr<ed upon him by executive ordcr and all otirer powers in that behalf enabling hinr, ireieby grants to the Licensee, licence and liberty during the continuance of this Licence and subject to the provisions hereof to search for, explore, develop and produce petroleum in the Licence Area ret-erred to in Annex I olthis Licence.
.... W I i I I I It is hereby agreed and declared as follows: ARTICLE 1 INTERPRETATION 1.1 In this Licence: t.2 1.3 1.4 (The Act" means the Peholeurn (Exploration and Production) Act 2011 ('Accounting Guide' means the accounting guide which is attached hereto as Annex 2 and made a part hereof; ttAffiliate" means any penon, whether a natural person, corporation, partrership, unincorporated association or other entity: a) in rvhich one of the Parties hereto directly or rndirectly holds more than fifty percent (50%) of the share capital or voting rights; b) which holds directly or indirectly more than fifty pe.rcent (507.)
of the share capital or voting nghts rn a Party hereto; c) - in which the share capital or voting rights are directly or indirectly and to an extent more than fifty percent (507") held by a company or companies holding directly or indirectly more than fifty percent (507o) of the share capital or voting rights in a Party hereto; or d) which holds directly five percent (5%) or more of the share capital or votrng rights in Licensee.
1.5 I.6 1.7 1.8 1.9 "Appraisal" nrcans a prognrm carried out following a Discovery of Petroleum for the purpose of delineating the accumulation of Petroleum to which that Discovery relates in terms of thickness and lateral extent and estimating the quantity of recoverable Petroleum therein; "Appraisal Well" rneans a rvell drilled for the purposes of an Appraisal Program; "Associated Gas" m€ans Natural gas produced from a well in association with Crude Oil; 'Barrel" means a quantity or unit of Crude Oil equal to forty two (42) United States gallons at a temperature of sixty (60) degrees Fahrenheit and at 14.65 psia prcssure; ('Block" means a Licence area as depicted on the reference map prepared by the Director General in accordance with the provisions ofthe Petroleum Act; 1.10 "Busincss Day" means weekday i.e.
Monday to Friday.

T / i- 1.11 "Carried lnterest" means an interest held by the State in respect of which the Licensee pays lbr the Exploration and Development costs without any .

:ititlement to reimbursement from :he Stcti.

rutless otherrvise agreed by the gr"l'ties.

1..12 "Calendar Year" means.

the period of twelve (12) months of the Gregorian calendar, commencing on January I and ending on the succeeding December 3l; 1.13 .
"Commercial Discovery" means a Discovery which is determined to be commercial in accordance with the provisions of this Licence; i.l4 sCommercial Production Period" means in respect of each Development and Production Area the period liom the Date of Commencement of Commcrcial Production urrtil 0rc termination of this Licence or earlier relinquishment of such Development and Production Area; 1.15 eContract Area" and "Licence Area" means the arca covcrcd by this Licence in wlriclr Licensee is authoriz.ed to explore for, develop and producc Petroleum, whrch is described in Annex I attached hereto and made a part of this Licence, but excludrng any portions of such area in respect of which Licensee's rights hereunder are from time to time relinquished or surrendered pursuant to this Licerrce; 1.16 "Contract Year" means a period of Farelve (12) calendar months, commencing on the Effective Date or any anniversary thereof; 1.17 *Crude Oil" means hydrocarbons which are liguid at 14.65 psia pressure and sixty (60) degrees Fahrenheit and includes condensates and distillates obtained from Natural Gas; 1,18 "Date of Commencement of Commercial Production" means, in respect of each Development and Production Area, the date on which prodrrction of Petroleum under a program ofregular production, lifting and sale co[[rcnces; 1.19 "Date of Commercial Discovery" means the date of anproval of the Development Plan.
1.20 "Default" means failure on the part of the Licensee to (a) To obsenc or p--rform any ofits <iuties or obligations under tbe licence (b) To comply with any court oi arbitral order arising out of or in connection with the licence or the enforcement therof.
1.21 "Development" or 'Devclopment Operations" means the p.,eparation of a Development Plan, the building and installation of facilities for Production, and includes drilling of Development Wells, construction and installation of equipment, pipelines, facilities, plants and systems, in and outside the Licence Area, which are required for achieving Production, tieatment, transpon, storage and lifting of Petroleum, and preliminary Production and testing activities carried out prior to the Date of Comnlencement of Commercial t\ ,/1lk I 1 I Production, and includes all related planning and administrative work, and may also include the construction and installation of secondary and tertiary r+:,jovery systems; i.22 r'Development Costs" means i'etroleum Costs incurred in Development Operations; 1.23 "Development and Production Area" rneans that portion of the Licence Area reasonably determined by Licensee on basis of the available seismic and well data to cover the area extent ofan accumulation of Petroleupr constituting d Commercial Discovery, enlarged in area by ten percent ( l0%), where possible, such enlargement to extend uniformly around the perimeter of such accumulation; 1.24 "Developmcnt Pcriod" mcans in respect ilf eat:h Drvclopment and Production Area, the period from the Date of Commercial Discovery until the Date of Commencement of Commercial Production; 1.25 "Development PIan" means the plan for development of a Commercial Discovcry prepared by Liccnsee; 126 cDevelopment Well' means a well drilled in accordance with a Development Plan for producing Petroleum, for pressurc maintenance or for increasing the Production rate; 127 *.llirector General' means The Director Gereral of the Petroleum Directorate appointed under Section 8 of the Act, and where the context so applies, the person appointed by the President of Sierra [-eone to oversee the administration of the Act and all aspects of petroleum resources management until the establishment of a Ministry and the appoinurent of a Minister with responsibility for petroleum matters; 1.28 (Discovery" means finding during Exploration Operations an accumulation of Petroleum which can be and is recovered at the surface in a flow measurable by conventional petroleum industry testing methods; 1.29 fDiscovery Area" trreans that portion of the Licence Area, reasonably determined by Licensee on the basis of the available seismic and rryell dar.a to cover the area extent of the geological structure in which a Discorcry is made.
A Discovery Area may be modified at any time by Licensee ifjustilied on the basis of new information, but may not be modified after the date of completion of the Appraisal Program; I.30 'Effective Date" means the date on which this Licence comes into effect and, unless otherwisc provided, shall be the date of ratificotion of this Liccncc by Parliament.
f 31 (Exploration" or "Exploration Operations" means the search for Peholeum by geological, geophysical and other methoCs and the drilling of Exploration Well(s) and includes any activity in connection therewith or in preparation thereof and any relevant proccssing and appraisal rvork.

including technical t\ 4" and economic feasibility shrdies, that may be carried out to determine rvhether a lJiscovery ot Petroleum constitutcs a Comnercral Drscovery; i.32 "Ltploration Period" means the period corr.
'^:encing on the Effective Date ' aod r:r.lrtinuing during the time provided within which Licensee is authorized to carry out Exploration Operations and shall include any periods of extensions providcd for in this Liccncc.
The period shall terminate with respect to any Discovery .Area on the Date of Commercial Discovery in respect of such l)iscovery Area; 1.33 "Exploration Well" means a *ell drilled in the course of Exploration Operations conducted hereunder during the Exploration Period, but does not include an Apprarsal Well; 1.34 "Force Majeure' meaDs any event beyond the reasonable control ofthe Party claiming to be affected by such event rvhich has not been brought about at its inst?nce, including, but not limited to, earthquake, stornr, flood, lightning or other adverse weather conditions, war, embargo, blockade, strike, riot or civil disorder which could hinder the performance of the party's obligations.
Force Majeure is not applicable to any default by Licensee to pay any sum of money due under this Licence.

135 "Foreign National Employee" means an expatriate employee of Licensee, its Affiliates, or its Sub-contractors who is not a citizen ofSierra Leone.
136 "Gross Production" means the total amount of Petroleum produced and saved from a Development and Production Area during Prociuction Operations which is not used by Licensee in Petroleum Operations; Gross Production" 1.37 "IT Act'means the Income Tax Act of 2000 and all amendments thereto.

138 t'Licensee" means the penon or persons to whom the licence is granted, their successors and any person or persons to whom the rights conferred by this Licence may lawfully have been assigned.
Where two or more persons are the Licensee any reference to the Licensee is a reference to any of these persons.

f39 *The Licence" means the right to explore for and produce hydrocarbons issued by the Director General Petroleum Directorate acting on betialf of the government of Sierra [.eone, and includes the Annexes attached hereto; f .40 "The Minlster" means the same as is defined in The Act.
l.4l "Month" means a month of the Calendar Year; 1.42 "Natural Gas" rneans all hydrocarbons which are gaseous at 14.65 psia pressure and sixty (60) degrees Fahrenheit temperature and includes wet gas, dry gas and residue gas remaining after the extraction of liquid hydrocarbons from wct gas; 1.43 "Non-Associated Gas" means Narural Gas produced from a well other than in association with Crude Oil; N /, 1.44 "Operator" means the same as is defined in The Act; 1.45 .
Psrent company is a company that o'*rrt enough voting stock in SL Rxpioration (the Licensee) to.

ci.
;ntrol rna.tagement and operations by igfluencing or electing its board ot directors; SL Exploration being deemed as a subsidiary of the parent company 7.46 means the State or Licensee, as the case may be; 1.47 "Petroleum" means Qrude Oil or Natural Gas or combination of both; 1.48 "Petroleum Costs" mcans all expenditures made and costs incurred in the conduct of Petroleum Operations hereunder, determined in accordance with the Accourtilg Guidc attached hereto as Annex 2; 1.49 'Petroleum Operations' means all activities, both in and outside Sierra Leone, relating to the Exploration for, Developmen!
Production, handling and transportation of Petoleum contemplated under tlris Licence and includes Exploration Operations, Development Operations and Production Operations and all activities in connection therewith; 1.50 cPetroleum Product' means any product derived from Petroleum by any refrning or other process; 1.51 "Production" or "Production Operations" means activities not being Development Operations undertaken in order to extract, save, treat, measure, handle, store and transport Petroleurn to storage and/or loading points and to carry out any type of primary and secondary operations, including recycling, recompression, maintenance of pressure and water flooding and all related activities such as planniDg and administrative work and shall also include maintenance, repaii and replacement of facilities, and well workovers, conducted after the Date of Commencement of Comrnercial Production of the respective Development and Production Area; 1.52 "Production Costs' Operations; means Petroleum Costs incurred in Production 1.53 ('Quarter" means a quarter, commencing January l, April 1, July I or October l; f.54 "Remedy" means to make good, or making good, such Default ilcluding performing the obligation ofLicensee under the Licence.
1.55 "Sierro Lconc" mcans the territory of the Republic of Sierua Leonc and includes the sea, seabed and subsoil, the Continental Shell the exclusive economic zone and all other areas within the jurisdiction; 1.56 "Specified Rate" means the rate which the Barclays Bank, London, certifies to be the London lnterbank offered rate (LIBOR) in the London Interbank Eurodollar market on thirty (30) day deposits, in effect on the last business day of the last respective preceding month, plus two and half per cer.t (2.5Yo); h r 1.57 cStandard Cubic Foot" or "SCF" means the quantity of gas rhat occupies one (l) cubic tbot at 14.65 psia pressure and sixty (60) dogrees Fahrenheit trqoi4ratule; 1.58 '''State" means the Government of the Republic of Sierra Leone; 1.59 "Subcontractor" has the meaning assigned to that term in the Petroleum Act; 1.60 .
"Work Program' means the annual plan for thc conduct of Pctrolcum Operations.

ARTICLE 2 SCOPE OF THE LICENCE AND LICENCE AREA 2.1 1., This Licence provides for the Exploration for and Development and Production ofPetroleum in the Licence Area by Licensee.

S.L.

Exploration Investsnent & Management GMBH is hereby appointed Operator with one hundred percent (100%) Participating Interest in the Licence.
2,3 Subject to the terms of this Licencq Operator shall be responsible for the exccution of such Petroleum Operations as are required by the provisioos of this Licence and is hereby appointed the exclusive entity to €onduct Petroleum Operations in the Licence Area.

2.4 )1 2.6 The Director General authorizes the Licensee pwsuant to the terms set forth herein to carry out the useful and necessary Petroleum Operations in the Licence Area.
The Licensee undertakes, for all the work necessary for carrying out the Petroleum Operations provided for hereunder, to comply rvith good intemational petroleum industry practice and to be subject to the laws and regulations in force in Sierra Leone unless otherwise provided under this Confiact.
The Licensee shall maintain all apparatus and appliances and all rvells which have not been abandoned and plugged as providcd by Articlc 20 of this Licence in good repair and condition and shall execute all operations in or in coonection rvith the exploration area in a proper and workmanlike manner in accordance with methods and practice of exploration customarily used in best oilfield practices and without prejudice to the generality of the foregoing provision the licensee shall take all steps practical in order (a) to prevent the escape or waste of petroleum discovered in the exploration area (b) to conserve the exploration area for production operations ix fi (c) to prevent damage to Petroleum bearing strata (d!., .
to prevent the entrance of water tkougb '*ells to Petroleum bearing strata and (e) to prevent the escape ol'PcLroleum into any rvaters in or around the vicinity of the Exploration Area The Licenscc shall comply with any instructions frr.rm time to time given by the Director-General in writing relating to any of the matters set out in the foregoing paragraph.
If the licensee objects to any such instruction on the ground that it is unreasonable he may, within fourteen days from the date upon which the same was given, meet rvith the Director General to raise its objections to the Directive and provide altematives that will meet the Director General's objectives.
If after the meeting, Director General informs Liccnsee in writing that notwithstanding its objectiuls, Liccnsee should comply with his original u,ritten directives, Licensee may rvithin fourteen days (14) days of receiving the written instnrction refer thc matter to arbitration in the marurer provided in Article 28.

If matter is ofa tecbnical nature, it may be referred for sole expert dctcrmination in the manner provided for in Article 28.7.
The Licensee shall give notice to the Director General of any event causing escape or waste of Petroleuln, damage to Petroleum - hearing strata or entrance of water through wells to Petroleum bearing strata forthwith after the (rccurience of that eient and shall, forthwith after the occwrence of any event causing escape of Petroleum into the sea, give notice of the event to the Chairperson of the Environment Protection Agency and Director General Petroleum Directorate The Licensee shall not carry out any operations authorized by this Licence in or about the Exploration Area in such marurer as to interfere unjustifiably with navigation or fishing in the waters of the Exploration Area or with the conservation of the living resources of the sea.
t- 2.7 2.8 2.9 2.10 The Licensee shall bear alone the financial risk associated with the perforrnance ofthe Petroleum Operations.
The Petroleum Cmts related thereto shall be recoverable by the Licensee in accordance with the provisions of the terms of this Licerrce 2.ll In the event that no Commercial Discovery is made in the Licence Area, or that Gross Production achieved from the Licence Area is insufficient fully to reimburse Licensee in accordance with the terms of this Licence, then Licensee shall bear its own loss; the Director General and tire State shall have no obligations whatsoever to Licensee in respect of such loss.
2.12 During the term hereof, in the event of Production, the total Production arising from the Petroleum Operations shall be shared behveen the parties according to the terms set forth in this Licence.

2.13 On the Effective Date, the Licence Area shall be the area referred to as Block SL 9A-10 and Block SL 98-10 as defined in Armex (l) One.

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)- I 2.14 As of the Effective Date, the Licence Area shall cover a total of approximately Four'fhousand Trvo Hundred and Seventy Seven Square Kilometres (4,277 Sq, iirr) as depicted by Annex (1) One and shel!

;1-om time to time during the Ter:n of this Licence be reduced according to the terms herein.

During the .

tsxploration, Licensee shall pay re;rtals to the State for that area included .
within the Licence Area at the begir.ning of each Contract Year according to the provisions of this Licence.

ARTICLE 3 STATE PARTICIPATION 3.1 3.2 3.3 3.4 The Licensee shall have 1009'o interest in the Licence Area during the Exploration Period.

Subject to Article 3.3 below, the State shall have a ten percent (10%) initial carried interest with respect to all Development Operations.

The State's initial interest shall be a working interest with respect to all Production Operations.
In addition to the Initial Interest provided for in Article 3.2 above, the Director General shall have the option in respect ofeach Development and Production Area to contribute a proportionate share not exceeding 5% ofall Development and Production Costs in respect of such Development and Production Area, (or make arrangements satisfactory to Licensee to that effect) thereby acquiring an Additional lnterest ofup to 5% in Petroleum Operations in such Development and Production Area.
The Director General shall notiff Licensee of its option within ninety (90) days of the Date of Commercial Discovery.

For Interest as provided for in Article 3.3 within six (6) months of its election, the Director General shall reimburse Licensee for all expendinre attributable to Director General's Additional Interest and incurred from the Date of Commercial Discovery to the date the Director General notifies Licensee of its election.
3.5 For the avoidance of doubt the State shall only be liable to contribute to costs: (a) Incurred in resp€ct of Development Operations in any Development and Production Area to the extent only of any Additional lnterest acquired in such Del'elopment and Production Area under Article 3.3.
(b) Incurred in respect of Production Operations in any development and production area both to the extent of l. ii It's l0% initial interest Any additional interest acquired in such developrnent and production area under Article 3.3.

3.6 All Development costs incurred by the Licensee on behalf of the State shall be fully recoverable subject to a maximum of 40% of the State's share of the oil kL \ and gas production attributable to the State's l0% Interest in any given financicl year.
All nnrecovercd costs shall bc carricri fonvard until such costs are llliy recovered.

3-7 if the oil and gas,production ceases before the amounts funded by Licensees are fully reimbursed, the State is under no obligation to pay to Licensee the uruecovered amounts.

ARTICLE 4 I ICFN(]F TERM 4.1 4.2 4.3 4.4 5.I 5.2 The Licence Tenn shall be a maximum period of Thirty (30) years from the etfective date, unless sooner cAncelled or terminated as provided for in the Act or this Licence.
The Exploration period shall comrence on the Effective Date of this Licence, and shall last a maximum of seven (7) years which shall be dividcd into an initial exploration period of three (3) years, a frst extension period and a second extension period ofup to two years each.
For each well drilled by Licensee during the Initial Exploration Period, the Initial .Exploration Period shall be extended by three (3) months and the cornmencemeDt of subsequent periods shall be postponed in their entirety accordingly.

Extension to be subject to such reasonable terms and conditions as the Director General may stipulate to assure performance of the work in accordance with Section 46 of The Act.
The term of this Licence may be extended only once and for a period not exceeding ten years on such terms and conditions as the Director General may deem fit.

ARTICLE 5 PERFORMANCE GUARANTEE Within Sixty (60) days of the Effective date, the Licensec shall deliver to the Director General a Performance Security in the amount stipulated in Article 6.4 (a) as the minimum expenditure in the initial Exploration Period to guarantee the performance of their work obligation under this Licence.
Within Sixty days from the day the Licensee elects to enter into any extension period in accordance with Article 4 of this Licerrce, the Licensee shall deliver to the Director General, subject to Article 6.2 (d), a Performance Security in the amount of the minimum expenditure specified in Article 6.2 (b) for the first extension period and Article 6.4 (c) for the second extension period to guarantee the performance of their work obligation for that period.
I 4, s.3 5.4 5.5 5.6 5.7 5.8 The Perfomrance Security delivered under this Licence, may be in the form of an unconriitional and irrevocable Bank Guarantec as stipulated in Annex 3 of this I-icesce from a reputed bank in gocd standing,' Cenominated in United States lilrilars Or a Parent Company Guarantee in lieu of Bank Guarantee as the ca.sc may be .
Licensee shall also provide a legal opinion from ie legal advisors in a form acceptable to the State, to the effect that the aforesaid Guarantees have been duly signed and delivered on behalfofthe guaranto$ with due authority and is legally valid and enforceabls and binding upon them; All Letters of Guarantee issued under this Licence shall remain effective for six (6) months after the end of the relevant Exploration period for which it has hecn issued, ex!1ept as it lray lrc c.rpirccl pnor to that time in acccrdalce with thc tcrms thereof.
WJrcre Licensee completes part of th€ minimum exploration work programme, the Director General shall permit the Licensee to reduce the guarantee by an amount eguivalent to the expeoses irrr:rrrrcrl in respect of the lvork complctcd for thc stipulatcd period.

Upon completion of the minimum exploration work programme within the stipulated period, the Director General shall discharge the Guarantee - ln the circumstances of a Defaul!
to undertake the.r,rinimum work obligation' by the end of the period for which the Performancb Security is deposited, the Director General shall immediately fumish the Guaranteeing Bank or the Parent Company with all relevant document evidencing non-performarrce of the work obligation and shall make a written demend on the Guarantee copying the Licensee, and the minimum expenditure for the period shall be paid to the Director General by the Guaranteeing Baok or the Parent Company without recourse to court action.
5.9 Demand shall not be made on the Guarantee by the Director General for Default due to Force Majeure, but the guarantee shall be extended for the period through which Force Majeure is claimed.

ARTICLE 6 MINIMUM EXPLORATION PROGRAM 6.1 6.2 Exploration Operations shall begin as soon as practicable, and in any case not later than ninety (90) days after the Effective Date.
Subject to the provisions of this Article, in discharge of its obligations to carry out Exploration Operations in the Licence Area, Licensee shall during the several phasss into which the Exploration Period is divided carry out the rvork specified hereinafter: tf I a) Initial Exploration Period: Commencing on the Effective Date and terminating at the end of the Third Contract Year: ..'!

)r Dcseription of Work: Acquisition of mrnrmum 3,100 lir.e Km oI new 2D seismic.
Process and interpret acquired 2D data and incorporate new Gravi$ and magnetic data covering the entire block.

Acquisitiou of any other G&G data that may increase the understanding of the petroleum play.

Process, interpret and demarcate prospects and arcas of interest.

Start proc€ss for the acquisiiion of3D data Minimum Expenditure: Licensee's minimum expendihre for the work in the Initial Exploration Period shall be Ten Million United Stales Dollars (US$ I 0,000,000).
b) Fint Extension Period: Commencing at the end of the tnitial Exploration Period and terminating at the end of the Fifth year of the Contract Period- Description of Work: Acquisition of a minimum 1,900 sq km of new 3D seismic.

Process and interpret acquired 3D data to determine drillable prospect.

Any other G&G data that will increase the understanding of both bloCxs.

One Contingent exploration well.


Minimum Expenditure: Licensee's minimum exp€nditure for the work in the First Extension Period shall be Fifteen Million United States Dollars (us$15,000,000).

c) Second Extension Period: Commencing at the end of the First Extension and terminating at the end of the Seventh year of the Contract Period.

Description of Work: lnterpretation of 3D seismic data, mapping and ranking of prospects and firm commitment to drill at least one erploration well.
Minimum Expenditure: Minimum expenditure for rvork in the Second Extension Period shall be Fifteen Million United States Dollars (us$1s,000,000).

d) Work and expenditurcs accomplished il auy period in cxccss of the above obligation may be applied as credit in satisfaction of obligations 4, called for in an.v other Period.

The fulfillment of any rvork obligation shal!.


relieve Licensee of the corresponding minimum expenditure oblig*rion, but the fulfillment of any minimrin-expenditure obligation shall rrot relieve Licensee of the corresponding wcrk obligation.

6.3 No Appraisal Wells drilled or seismic sun,eirs carried out by Licensee as part of an Appraisal Program and no expenditure incurred by Licensee in carrying out such Appraisal Program shall be treated as discharging the minimum work obligations hercundcr.
6.4 6.5 The ieismic program, when comhined with existing data, shall be such as will enable a study of the regional geology of the Licence Area.and the preparation of a report thereon rvith appropriate maps, cross sections and illustrations.
as well as a geophysical suwey of the Licence Area which, when cornbined with existing data, shall provide: a) b) a minimum seismic grid adequate to define prospective drill sites over prospective closures as interpreted from data available to Licensee, and a seismic evaluation of struchral and stratigraphic conditions over the lsmaining portions of the Licence Area Each of the Exploration Wells referred to above shall be drilled to a minimum depth of between Three (3) to Five (5) Kilometres, after deduction of the water depth, or to.
a lesser depth if the continuation of drilling performed in accordance rvith good international petroleum industry practice is prevented for any of the following reasons: a) b) c) d) the basement is encountered at a lesser depth than the minimum conkactual d€pth; coDtinuation of drilling presents an obvious danger due to the existence of abnormal formation pressure; rock formations are encountered the hardness of which prevents, in practice, the continuation of drilling by the use of appropriate equipment; petroleum formations are encountered the ciossing of which requires, for their protection, the laying of casings preventing the minimum conkactual depth from being reached.
In the event that any of the above reasons occurs, the Exploration Well shall be deemed to have been drilled to the minimum contractual depth.

6.6 6.7 Notwithstanding any provision in this Article to the contrary, the Director General and the Licensee may, at any time, agree to abandon the drilling ofa well at a lesser depth than the minimum contractual depth.
If during an Exploration Pcriod thc Licensee has pcrformed its work conunilmonts for an amount lesser thao the amount specified abovc, it shall be deemed to have fulfilled its investnent obligations relating to that period.
W Conversely, the Licensee shall perform the entirety of its work commitments set forth in.respect of an Exploration Period even il it results in exceeding the 6.8 6.9 ii in the course of drilling an Exploration well the Licensee concludes that drilling to the minimum depth specified in this Arti.jle 6.5 above is impossible, impracticable or imprudent in accordance with accepted intemational petroleum industry drilling and engineering practice, then Licensee may plug and abandon thc Exploration Wcll.
During the Exploration Period, Licensee shall have the right to perform additional Exploration Operations, including rvithout limitation performing gravitv and magnetic survcys, drilling stratigraphic rvells and pcrforming additional geolotsical aurl geophysical studies, provided the minimum rvork obligatioos are performed within the applicable period.
6.ltl Dunng the Exploration Period, Licensee shall deliver to the Director General reports on Exploration Operations conducted during each Calendar Quarter within thirty (30) days following the end of that Quarter.

Furthcr rcqucsts for infbrmation by the Director General shall be complied with within a reasonable time and copies of docunents and other material containing such information shall be provided to thc Dircctor Ceneral.
ARTICLE 7 RELINQUISHMENT 7.1 Except as otherwise provided in this License, Licensee shall relinquish portions of the Licence Area in the manner provided hereunder.
a) If on or before the expiration of the Initial Explorotion Period, Licensee elects to enter into the First Extension Period, then at the commetrcemeDt of the First Extension Period the area retained shall not exceed fifty percent (507o) of the Contract Area as at the Effective Date; b) c) If on or before the expiration of the First Extension Period, Licensee elects to enter into the Second Extension Period, at the comrnencement of the Second tsxtension Period the area retained shall not exceed (25%) of the Contract Area as at the Elfective Date; On the expiration of the Second Extension Period, Licensee shall relinquish the remainder of the retained Contract Area subject to kticle 7.2.
1) The Provisions of Article 7.1 shall not be read or construed as requiring Licensee to relinquish any portion of the Contract Area which constitutes or lbuns part ofeiLher a Discovery Area ot a Development and Production Area.

Ll r J ,,1 I I 7.3 7.4 8.1 PROVIDED IIOWEVER TEAT if at the cnd of the Initial Exploration Period or the First Extension Period as the case may be Licensee elects not to enter into the Ir:rst or Second Extension Period.

Licens:.. Shall relinquish the entrre Licsnci .l.rea.
Nothing in this provision shall be constn:ed as requiring the Licensee to relinquish the remainder of the Licence Area under Anicle 7.1 ( c ) above where the licensee has been granted a further extension on the second extension period until the end ofthe firther extension.
Each area to be relinquished pursuant to this Article shall be selected by Licensee and shall be measured as far as possible in tenns of continuous and compact units of a size and shape that rvill permit the carrying out of Pctrolcnm Opcrations in the relirrquishctl portions subject to the approval of the Director General.

ARTICLE 8.

OBLIGATIONS AND RIGHTS OF LICENSEE Licensee shall maintain an offrce in Sierra Leone at which notices shall be validly served.
Licensee shall appoint a Country Manager and assign to those offices such representatives as it shall consider necessary for the purposes of this Licence.

The Country Manager and staff shall be entrusted by Licensee with sufticient power to act on behalf of Licensee and carry out all local written directions given to them by the State under the terms of this Licence.
8.2 Subject to the provisions of this Licence, Licensee shall be responsible for the conduct of Petroleum Operations and shall: (a) conduct Petroleum Operations with utmost diligence, efficicncy and economy, in accordance with accepted Petroleum Industry practices, observing sound technical and engineering practices using appropriate advanced technology and effective equipment, machinery, materials and methods; (b) ensure compliance with The Act and any other law and regulations promulgated by the State; including ensuring the maximum conservation of Petroleum in the Licence Area in accordance with accepted Petroleum industry practic€s (c) prepare and maintain in Sierra Leone full and accurate records of all Petroleum Operations performed undcr this Licence; 8.3 In connection with its performance of Petroleum Operations, Licensee shall have the right within the terms of applicable larv; (a) to usc public lands in accordance rvith existing law for ilstallatiul alll operation of shore bases, and terminals, harbours and related tacilities, (, F ) F pipelines from fields to terminals and delivery facilities, camps and other housing; (b) to receir.
: liccnscs ald pcnnission to iutall a:lJ operate such communications and transportation facilities as shall be necessa-ry for the etliciency of its operations; - (c) (d) (e) (0 subject to local content requirements, to bring to Sierra Leone such number of Foreign Natiolal Employees as shall be necessary for its operations, including cmplcyees assigned on permanent or resident status, with or without families, as well as those assigned on temporary basis such as rotational employees; to provide or arrange for reasonable housing, schooling and other amenities, nermancnt and temporary, for its employees and to inrport personal and household effecs, furninrre and vehicles, for the use of its personnel in Sierra Leone; to be solely responsrble lbr provision of healllr, accident, pension and life insurancc bcncfit plans for its Foreign National Employees and their families; and such employees shall not be required to participate in any insurance compensation or other employee or social benefit programs established in Sierra Leone; provided hou,ever, that Licensee shall be responsible for social benelit programs and insurance benefit pians which apply under the law to employees who are Sierra kone ndtionals; to have, together with is personnel, at all times the right of ingress to and egress from its offices in Sierra Leone, the Licence Area, and the facilities associated with Petroleum Operations hereunder in Sierra Leone including the offshore waters, using its owned or chartered means of land, sea and air transportation; (g) to engage such Subcontractors, expatriate and national, including also consultants, and to bring such Subcontractors and their personnel to Sierra Leone as are necessary in order to carry out the Petroleum Operations in a skillful, economic, safe and expeditious manner; and said Subcontractors shall have the same rights as Licensee specitied in this Licence to the extent they are engaged by Licensee for the Petroleum Operations hereunder.
8.4 The Director General shall assist Licensee in carrying out Licensee's obligations expeditiously and efhciently as stipulated in this Lkence, and in particular the Director General shall use its best etYorts to assist Licensee and its Subcontractors to; (a) establish supply bases and obtain necessary communications facilities, equipment and supplics; (b) obtain necessary approvals to open and operate bank accounts in Siera Leone; ,L F !
t- (c) obtain enqv visas and work permits for such number of Foreign Nationa!
Employees of Licensee and its Suhcontrar:tors engaged in Pctroleu::': Operations and mcmbcrs of their famiiic,; ',vho will be resident in .lierra Leone and make arrangements ibr their trovcl, mcdical scn'iccs and other necessary amr-'rrilius; (d) obtain the necessaq/ pemrits to transport documents, samples or other forms of data to foreign countries for the purpose of analysis or processing if such is dccmcd necessary for the purposcs of Petroleurn Operations; 8.5 The Director General shall use his best efforts to render assistance to Licensee in emergencies and major accidents, and such other assistance as may be requested by Licensec, provided that any reasonablc cxpcnscs involvcd in such assistance shall be bome by Licensee.
ARTICLE 9 9.1 o, 9.3 9.4 9.5 9.6 ANNUAL WORK PROGRAMS AND BUDGETS Without prejudice to the rights and obligations of Licensee for day-to-day management of the operations, the Director General shall ensure that all Work Progrrams and Development Plans are complied with and also that accounting for costs and expenses and the maintenance of records and reports conceming the Petroleum Operations are carried out in accordance with this Licence and the accounting principles and procedurcs generally accepted in the intemational Petroleum industry.
Each Work Program submitted to thc Director Ceneral pursuant to this Article and every revision or amendment thereof shall be consistent with the requirements set out in this Licence relating to minimum work and expendihue for the period of the Exploration Period in which such Work Program or budget falls; The work obligations referred to in Article 6 shall be described in an annual plan, drawn up in due detail and with the rsspective budget, to be prepared by the Licensee and submitted to the Director General for review and approval.
The annual work program should be submiued to the Director General no less than sixty (60) days before the start of the year in question.
The Director Gcneral will review Work Programs and budgets and any amendments or revisions thercto, und Appraisal Programs submitted to him by Licensee pursuant to this Article, ln thc cvcnt of all oi purt of the unnuul plan bcing rcfuscd, thc Director Gcncral shall notiff the Licensee of thc foctwithiu forty-fivc days of rccciving the plan, indicating the reasons for the refusal.

th I .t I 9.7 9.8 If the plan is not refused within the period referred to in Article 9.6, the plan may be implemented.
If refuseo u[der Articie 9.6, the Director General may propose arnendments or modifications to the Annual Work Program i.nd corresponding Arurual Budget.

In such event the Director General and the Contractor shall meet as soon as possible to review the amendments or modifications proposed by the Dircctrir Gcncral and r':stablish by ntutuul aBruurrcut thc Annual Work Program and corresponding Annual tsudget.
The parts of the Annual Work Program for which the Director Geueral does not require amendment or modification will be deemed approved and must be completed by the Licensee within the stated time period, provided they may be undertaken on an individual basis.
With respect to the parts of the Annual Work Program for which the Director General proposes any amendment or modification, the date of approval of the Amual Work Program and corresponding Annual Budget shall be the date on which the Director General and thc Contractor rcach the aforcmentioned muhral agreerrrcnt.
In the event the Director General and the Contractor do not reach an agreemeot regarding the amendrnents and modifications proposed by the Director Gcncral within 120 days Aom the receipt of thc rcfusal, the instructions of thc Dircctor Ccncral shall apply, and Licensee shall amend its Work Program and/or Budget accordingly.

9.9 Thc Licensee may submit addenda to thc annual work plan to the Director General provided they arejustified on technical grounds.
9.10 After the date of the first Commercial Discovery, Licensee may submit a proposal for the drilling of an Exploration Well or Wells not associated with the Commercial Discovery and not otherwise required to be drilled hereunder.
9.11 Frcm the 1i.s1 uJcur'1irrg Date of Conrmercial Discovery, the Licensee: (a) Within sixty (60) days after the Date of Commercial Discovery shall prepare and submit to the Director General any revisions to its annual Work Program and budget that may be necessary for the remainder of that Contract Year and for the rest of the Exploration Period.
(b) At least ninety (90) days before the Commencement of each subsequent Calendar Year, Licensee shall submit to the Director General for review a Work Program and budget setting forth all Development and Production Operations which Licensee proposes to carry ont ia that Caleodar Year and the estimated cost th€reof and shall also give an indication ofLicensee's plans for 11rc susss6ding Calendar Ycar; (c) Within sixty (60) days of the Date of Commencement of Commercial Production and thereafter not later than one hundred and twenty (120) days bcforc thc conuueuceurelt of eauh Caleltlar Year, Liccnscc shall submit to the Director General an annual production schedule which shall be in accordance with good 'intemational oilfield practice, and shall he designed to provide the most efficient, beneficial and timely production of the Petroleum resources.
W r l- l-l i- .t 9.12 The Licensee shall provide The Direckrr General rvith lifting schedules for Development aad Production Areas as well as Licensee's reports cn the conduct of Petroleiirn Operations.

ARTICLE 1O COMMERCIALITY 10.1 The provisions of Section 50 and other relevant sections of the Act shall apply; 10.2 Unlcss Liccnscc and thc Dircctor Ccneral otherwise agree in any particular case, Licensee shall have a period of nvo (2) years from the date of Discovery to complete the Appraisal Progranr.
10.3 Licensee shall commence appraisal wrirk within one (l) year from the date of submission of the Appraisal Progr am to the Director Gcrrcral.
10.4 If Licensee informs the Director General that the Discovery is not commercial, then Licensee shall relinquish such Discovery Area; provided, however, that in appropriate cases, before declaring that a Discovery is not commercial, Licensee shall consult with the Director General and may make appropriate representations proposing milor changes in the fiscal and other provisions of this Licence which may, in the opinion of Licensee, affect the &termination of commerciality.
The Director General may, where feasible, and in the best interests of all parties agree to make such changes or modifications in the existing arrangements.

In the event the Parties do not agree on such changes or modifications, then Licensee shall re linquish the Discovery Area.

10.5 If Licensee informs the Director General that the Discovery is commercial, Licensee shall not later than one hundred and eighty (180) days thereafter, prepare and submit to the Director General a Development Plan.
f0.6 The Development plan shall be based on engineering studies and shall incluCe: (a) The revisions proposed by the Director General, to the Development Plan as submitte4 and the reasons thereof.

10.7 Where the Development Plan is not approvcd by the Director General, the Parties shall within a period of thirty (30) days from the date of the notice by the Director General as referred to above, Ereet to agree on tlrc revisions proposed by the Director General to the Development Plan.
f0,8 ln the event that Licensee indicates that a Discovery does not at the tinre merit appraisal, or after appraisal does not appear to be commercial but may merit appraisal or potentially become commercial at a later date during the Exploration Period, then Licensee need not relinquish the Discovery Area and may continue its Exploration Operations in the l.icence Area during 0re W t I i- Exploration Period provided that the Licensee shall explain what additional evaluations, including Exploration rvork or studies, and or may be planned in order to dete rmine .
rrvi:cther subsequent appraisal is rvarrantsC or that the Discovery is commercial.

After completion of the evaluations, l,icensee shall make the rndications called fbr under this Article a:rd either proceed with appraisal, confirm commerciality or relinquish the Discovery Area.

In any case, if at the end of the Exploration Period Licensee has not proceeded lvith an Appraisal Propga.m or declared that the Discovery is Coomercial, then the Discovery Area shall be reiinquished.
10.9 Nothing in this Article shall be read or constnted as requiring Licensee to relinquish any area which constitutes or.forms part of another Discovery Area in respect of which: (a) Licensee has given the Director General a separate notice indicating that such Discovery merits appraisal or confirmation; or (b) Licensee has given the Director General a separate notice indicating that such Discovcry is commercial; or (c) Any arca which constitutes or folus parl of a Development and Production Arca.
ARTICLE 11 PRODUCTION OF CRUDE OIL 11.1 Gross Production of Crude Oil from each Development and Production Area shall be distributed in the following sequence and proportions: (a) The rate of Royalty for Oil Production shall be as indicated in Annex 4 and shall be delivered to the State as ROYALTY.
(b) After distribution of such ,mounts of Crude Oil as are required pursuant to (a) above, the remaining Crude Oil produced Aom each Development and Production area shall be the Licensee's and, the State on the basis of their respective participating Interests pursuant to Article 2.

It.z LiceDsee shall have the right freely to export and dispose of all of its Petroleum pursuant to this Article subject to Article 16.
113 The Parties shall through consultation enter into supplementary agreement-s conceming Cnrde Oil lifting and tanker schedules, loading conditions and Crude Oil metering at the end of each Calendar Year.

The Crude Oil to be distributed or otherwise made available to the Parties in each Calendar Year in accordarrce with the preceding provisions of this Articte shall insofar as possible be in reasonably equal monthly quantities.

W l-r .
W l-r .

]- I l- I I ARTiCLE 12 MEASUREMENT AND PRICING OF CRUDE OIL l2.l Crude Oil shall be delivered by Licensee to, storage tanks constructed, maintained and operated in accordance with applicable laws and good oilfield practice.

Crude Oil shall be metered or otherwise measured for quantity and tested fr-'r quality fui such storage tanls for all purposes of this Licence.

Any Party nray reqrrest that me..rsrrrcrn(:nts and tcsts be done by an intemationally rccognized inspection company.
Licensee shall arrange and pay for the conduct of any me&suremcnt, or tcst so rcquested provided, however, that in the case of(l) a test requested tbr quality purposes and (2) a test requested on metering (or measurement) devices, or where the test demonstrates that such devices are accurate within acccptable tolerarrces, thc Party requcsting the test shall reimburse Licensee for the costs associatcd with thc test or tests.
12.2 Liccnscc shall kccp full and accurate accounts coucenring all Pctrolcuur measured as aforesaid and providc thc Director General with copies thereof on a monthly basis, not later than ten ( l0) days after ths end ofeach month.
123 The Market Price for Crude Oil delivered by Licensee hereunder shall be 'established u,ith respect to each lifting as follows: (a) on Crude Oil sold by Licensee in arm's length commercial transactions, the Market Price shall be the price actually realized by Licensee on such sales; o) On other sale by Licensee, on exports by Licensee without sale, the Market Prices shall be determined by reference to world market prices of comparable Crude Oils sold in arm's length transactions for export in the major world petroleum markets, and adjusted for oil quality, location and conditions ofpricing, delivery and payment, (c) sales in arm's length commercial kansactions shall mean sales to purchasers independent of the seller, which do not involve Crude Oil exchange or barter transactions, govemment to govemment transaction, sales directly or indirectly to Affrliates, or sales involving consideration other than payment in U.S. Dollar or currencies convertible thereto, or affected in whole or in part by considerations other than the usual economic incentives for commercial arm's length Crude Oil sales.
(d) the price of Crude Oil shall be expressed in U.S.

Dollars per barrel, (e) F.O.B.

thc poilt o[dclivcry by Liccnsee; if the quality of Crude Oils produced from the Licence Area rs different, the Market Price shall be determined separately for each type sold and./or exported by Licensee.

(, ?-I iL r I l2-4 Licensee shall notiff the Director General of the Market Price determined by it for its respective lifting during each Quarter not later than thirty (30) days aftcr thc cnd of that Quarter.
l2.S If the Director General considers that the price notified [,y Licensee was not correctly determined it shall so noti& Licensee not later than thirty (30) days after notitication by Licensee of such price, and the Director General and Licensee shall meet not later than nventy (20) days thereafter to agree on the correct Market Price.
12.6 If the Partics fail to agree on the Market Price applicable to a given quarter within sevenry five (75) days after the end ofthat $rarter, the Director General or the Licensee may immediately submit to an expert, appointed in accordance with the following paragraph, the determination of the Market Price (including the determination of reference crude oils if the Parties have not determined them).
The expert shall determinc the price within thirty (30) days aftcr his appointrnent and his conclusions shall be final and binding on the Parties.

The exp,ert shall deride in accordance u,ith the provisions of this Article.

t2.7 The expert shall be selected by agreement between the Parties or, if no agreement is reached, by the intemational centre of technical expertise of the International Chambcr of Commerce in accordatce with its mles on technical expertise, at the request of the most diligent Party.
The expert costs shall be charged to the Licensee and included in the Petroleum Costs.

ARTICLE 13 LICENCE FEES 13.1 The Licensees shall, be subject to the following Annual Licence Fees based on the acreage of the Licence area held during the period under consideration, 13.2 Annual Licence Fees are payable to the Petroleum Directorate per squaie kilometer of the area under Licence in the amounts as set forth below: Phase of Operation Licence Fees Per annum Initial Exploration Period US $40 per sq.

km.
km.

lst Extension Period US $60 per sq.

km.

2nd Extension Period US $85 per sq.

hn.

Development and Production Area US $l l0 per sq.

km.

133 An additional surcharge of $10 per sq.

km will be applied to any additional extension granted.

4, r r L l- : 13.4 The Licence Fee shall be paid in advance for the entire year, and is due on tlre Effective date and annually thereafier on the anniversary of the effecti.,e date until the termination of tbis l-;cence.
ARTICLE 14 FOREIGN EXCHANGE TRANSACTIONS l4.l Licensee shall for the purpose of this Licance be entitled to receive, remit, keep and utilize freely abroad all the foreign currency obtained from thc sales of the Petroleum assigned to it by this Licence or purchased hereunder, or from transfers, as well as its own capital, receipts from loans and in general all assets thereby acquired abroad.
Upon making adequate arrangements with regard to its commitrnent to conduct Petroleum Operations, Licensee shall be free to dispose of this foreip currency or assets as it deems fit.

14.2 Licemee shall havc the right to opcn and maintain in Sicrra kone baoli accounts in foreign currency and Sierra Leone currency.
No restriction shall be made on the import by Licensee of funds assigned to the performance of the Petroleum Operations, in accordancc with applicable law and Licensee shall be entitled to purchase Sierra Leone currerrcy through authorized means, without discrimination, at the prevailing rate of exchange; provided, however, that such prevailing rate applicable to Licensee hereunder for all transactions for converting Sierra Leone curency into U.S.
Dollars, and vice versa, shall be at a buying s1 selling, as the case may be, rate of exchange not less favorable to Licensee than that quoted by the State or its fqreign exchange control authority to any person or entity on the dates ofsuch conversion.
14.3 Licensee shall be entitled to convcrt in an authorized manner into foreign currencies of its choice funds imported by Licensee for the Petroleum Operations and held in Sierra Leone which exceed its local requirernents at the prevailing rate of exchaoge and remit and retain such foreign currencies outside Sierra Leone.
14.4 Licensee shall have the right to make direct payments outside of Sierra Leone from is home offices or elsewhere to its Foreign National Employees, and to its Subcontractors and suppliers for u,ages, salaries, purchases of goods and performance of services, whether imported into Sierra Leone or supplied or performed therein for Peholeum Operations carried out hereunder, in accordance with the provisions of this Licence, in respect of services performed within the framework of this Licence, and such paym€nts shall be considered as part of the costs incurred in Petroleum Operations.
In the event of any changes in the lo,r:ation of Licensee's home or othcr oflices, Licensee shall so notifr the Director General.

All such payments hon ever shall be subject to the Income Act 2000 and other relevant l'inancial Acts and Regulations currently in force.

14.5 All payments rvhich this l-icence ohligates Licensee to make to the State shall be made in U.S.

Dollars, except as requested othenvise.


All payments shall be /t, 1 I made by wire transfer in immediately available funds to a bank to be designated by the Director General, and reasonably accessible to Licensee by way of its being able to releive payments made by Licensee and gr.,e a confirmation of receipt therecrL or in such other manner as may be mu.uriliy agreed.
14.6 All payments which this Licence may obligate the Director General or the State to make to Licensee shall be made by wire transfer in immediately available fiurds in U.S.

Dollars to a commercial bank to be desigrratcd by Licensee.

ARTICLE 15 SPECIAL PROVISIONS FOR NNTURAL GAS PART I - GENERAL 15.1 Licensee shall have the right to cxtract Condensate and Natural Gas liquids for disposition under the provisions relatiDg to Crude Oil.
Residual Natural Gas remaining after &e exEaction of Condensate and Nahral Gas Liquids is zubject to the provisions of this Anicle.

15.2 When gas flaring is authoi^zed in accordance with The Act, the Director General may determine that a relevant fee be charged in accordance wittr the quantity and quality of the gas flared and with its location.
f53 Licensee shall have the right to use Nahrral Gas produced from any Development and Production Area for Petroleum Operations within the Licence Area such as for, but not limited to, reinjection for pressure maintenance and/or power generation.
PART II - ASSOCIATED GAS 15.4 Based on the principle of full utilization of Associated Gas and without substantial impediment to Crude Oil production, the Development Plan of each Development and Production Area shall include a plan of utilization for Associated Gas.

PART III _ NON-ASSOCIATED GAS 15.5 Licensee shall notifu the Director General in writing as soon as any discovery of Non- Associated Gas is made in the Licence Area.
15.6 As soon as possible after the technical evaluation of the test results of such discovery is complete and in any event Dot later than one hundred eighty days (lE0) days from the date of Discovery, Licensee shall by a further notice in writing to The Dircctor Gcneral (the'Notico") indicate whether in l,icenscc's opinion thc Discovcry merits Appraisal.
//, 15.7 Where Licensee's Notice indicates that the Discovery does not at tbat time merit Appraisal but may merit ADpraisal or additional evaluation at a later .Jatc during the Exploratic:i Perioci" Lhen Licensee need not submit a propi.

'riri Appraisal Program at that tinre but instead shall indicate what other shrdi':s ,)r cvaluation may be lvarranted beforc an Appraisal Program is undertaken.
f5.8 Where Licensee's Notice indicates that the Discovery merits the drilling of one or more Appraisal Wells at that time, Licensee shall pre.pare and submit thc appropriate Appraisal Program which Progranr shall he scheduled to be compieted within two (2) yean of the submission of the Notice to the Director Ccneral.

15.9 Not later than ninety (90) days from the date on which the Appraisal Program rclating to a Discovery is concludcd, Licensee shall submit a repon containing the results of the Program.
lf the report concludes that the Discovery merits comme.rcial osscssmcnt, I.iccnsee shall notifr dre Diruutur Gcncral rvithin one hundrcd cighty (180) davs ttom the dnte on rvhich the Appraisal Program relating to the Discovery wzs completed of a Program of such asscssment and shall conduct such Program during the rest of the Exploration Period.
Notwithstanding the above, Licensee may also notiff the Director General that commercial assessment of the Discovery is not warranted at that time but the Discovery may merit such assessment at a later date during the Exploration Period.

15.10 The purpose of the commerciai assessment shall be to shrdy the uses to witigh production from the Discovery Area can be devoted and whether involviug exports or domestic utilization.
As part of the assessment, the Parties shall also pursue discussions on the required contractual arrangements for disposition of the Nahrral Gas to potential purchasers and/or consumers of the Nahrral Gas.

r5.1t Licensee may consult with the Director General and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Licence which may, in the opinion of Licensee, affect the above determinations.
The Director General may, where feasible and in the best inter€sts of the Parties, agree to make such changes or modifications in the existing arrangements.
15.12 Nothing in this Part III of Article 15 shall be read or construed as requiring Licensee to relinquish any area (a) which constitutes or forms part of another Discovery Area in respect of which Licensee has given to the Director General a separate notice indicating that such Discovery merits confirmation or commercial assessments; or (b) which constitutes or forms part of a Development and Production Area.
tL N-' L L PART IV-NATURAL GAS PROJECTS 15.13 If at any time during the com:r-.erlial a^ssessment Licencsee infomrs the Director General in writing that il:.e Discovery can be produced comnlercia!i1'.

it shall as soon as reasonably possible thereafter submit its prop;sals lbr an agreement relating to the development of the Discovery on the principles set forth in this Part IV of Article 15.
The Director General undedakes on receipt ofsuch notice to negotiate in good faith rvith Licensee with a view to reaching agreement on terms for such production.

Any such agreement will be based on terrns and fiscal requirements which shall be no less favorable to Licensee than those provided elsewhere in this Licence.
15.14 If at any time during the commercial assessment Licensee has identified a market in Sierra Leone for the reserves of Associated and/or Non-Associated Gas or any part thereof that can be saved without prejudice to an export project, the Partres shall proceed in good faith to negotiate the appropriate contractual arrangements for the disposition of the Gas.
In the event of a domestic market for such (ias, Licensee shall receive for delivcry onshore of its shaie of thc Gas a price to be agreed between the Director General and Liusrscc taking into account among other things the cost ot developing the Gas and the uses which will be made of the Gas.
15.15 In the event ofa Discovery of Natural Gas in the Licence Area rvhich is to be developed and commercially produced, the provisions of this Licence in respect to interests, rights and obligations of the Parties regarding Crude O:l shall apply to Nahral Gas, with the necessary changes in poins of detail, except with respect to specific provisions in this Licence conceming Natural Gas and different or additional provisions concerning Nahral Gas which may be agreed by the Parties in the funre.
15.16 The system for the allocation of Natural Gas among the Pa(ies shall follow the sarne general format as provided for Crude Oil, with the exception that the royalty to be delivered to the State on Natural Gas shall be at the rate indicated in Annex 4as an incentive to enhance the viability ofa Gas project on the basis herein provided for.
15.17 The Parties recognize that projects for the development and production of Natural Gas are generally long-term in nature for both the project developers and the customers who purchase the Natural Gas.

Substantial investrnents and dedication of facilities require long-term commitments on both sides.
This Licence, being for a specific term of years, may not cover the length of time for which customers in given cases will require commitrnents on the part of the Parties to this Licence to deliver their respective shares of the output.

Accordingly the Parties agree to consider undertaking such commitrnents where reasonably required for the efficient and viable development of a Natural Gas project.
It is recogaized that, unless othenvise agreed by the Parties hereto, Licensee will have no right or interest in the project or the Natural Gas produced and delivered after the term of this Licence has expired.
r5.18 The Parties rvill consider collaboration in obtainrng ony common cxtcrnal financing available for Natural Gas processing or Nahrral Gas utilization llr N^' i facilities, including project financing; horvever, each party shall remain free to finance extemally its share ofsuch facilities to the extent it prefers to do so.

t5.r9 a) Where Liqeqsee has.
during the continuance of the Exploratiol Period made a Discovery of Non-Associated Gas but has not before the end of the Exploration Period declared that Discovery to be commercial, the Director General may, if Licensee so requests, enter into a new Petoleum Agreement with Licensee in respcct of the Discovery Area to which that Discovcry rclatcs; b) A Petroleum Licence granted pursuant to this Article: i) ii) shall unlcss the Discovcry in rcspcct of which thc Liccncc has bccn rnade is declared by Licensee to be commercial continue in forcc for an initial period not exceedirtg fivc (5) ycan; shall in the event that the Discovery is declarcd by Liccnscc to he commcrcial a) b) continue in force for an aggregate period not exceeding thirty (30) years; include, or- be deemed to include, all the provisions which mutatis mutandis, rvould have applied to a commercial Discovery of Non-Associated Gas if Licensee had declared such Discovery to be commercial under this Licence; iii) shall contain in respect of the initial period or of any renewal period details of the evaluations or studies which Licensee proposes to undertake in order to determioe or keep under review the commerciality of the discovery.
c) Where Licensee has not, before the end of the initial period, declared the Discovery to be commercial and the Director General has in his discretion determined that further evaluation or studies may be required before the Discovery can be declared commercial, the right of Licensee to retain the Discovery Area shall continue for a further period not exceeding in the aggregate tive (5) years.
The right of Licensee to retain the Discovcry Area aforesaid shall be secured by the renewal of the Licence referred to in this Article l5 or where necessary by a new Licence entered into by the Parties for that purpose.

15.20 The term of this Licence may be extended only once and for a period not exceeding ten years on such terms and conditions as the Director General may deem fit.
,nr l- I ARTICLE .I6 DOMESTIC SUPPLY REQUII]EMENTS (CHUDE OIL) 16.1 Crudc Oil for consumption in Sierra Leortu (il tLis Articlc callcd the "Domestic Suppty Pequkement ) shall be supplied, to the extent possible, by the State from its respective entitlement under this Licence and under any other contract for the production of Crude Oil in Sierra Leone.
16.2 In the event that Crude Oil available to the State is insufficient to fulfill the Domestic Supply Requirerhents, Licensee shall be obliged together with any third parties which produce Crude Oil in Sierra Leone, to supply a volume of Crude Oil to be used for such Domestic Supply Requirements, calculated on the basis of the ratio of Licensee's entitlement to Crude Oil to the similar entitlements ofall such drird p'ertics and provided that Liccuscc's olrligution to supply Crude Oil for purposes of meeting the Domestic Supply Requirement Crude Oil shall not exceed the total of Licensee's said entitlement under this I .icence.
The State shall purchase any Crudc Oil supplies by Licensee pur}*uaDt to this Article at the weighted average Market Price determined under this Licence for the Month of delivery, and the State shall pay such prices within thirty (30) days after receipt of invoice, failing which Licensee's obligatioos in respect of the Domestic Supply Requirement under this Article 16 shall be suspended until pal,ment is made good, at which time deliveries shall be resumed subject to any.
altemative commitments that may have been reasonably entered into by Liccrrsee to dispose of the Domestic Supply Requirement Crude Oil during the period of Default in payrnent.
ARTICLE 17 LICENSEE TO KEEP RECORDS l7.l Licensee shall keep the Director General regularly and fully informed of operations being carried out by Licensee and provide the Director General with all information, data, (film, paper, digital forms and magnetic tapes), samples, interpretations and reports, (including progress and completion reports) including but not limited to the following: (a) processed seismic data and interpretations thereof; (b) (c) the subsoil and strata through which the well was drilled (d) the casing inserted in any well and any alteration to such casing (e) any petroleum , water ,mines encountered in the course of such the site ofand number assigned to every well activities L\l-t W (f) well data, including but not limited to electric logs and other wireline surveys, and mud logging reports and logs, samples of cuttings and cores and anal1.
'ses made theieFom; (g) any reports prcpared from drilling data or geologicat or geophysical data, including maps or illustrations derived therefrom; (h) well testing and well completion reports; o reports dealing rvith locations surveys, seabed conditions and seafloor hazards and any other reports dealing with well, platform or pipeline locations; O) reservoir invcsiigations and cstinmtes regarding reserves, field litnits and economic evaluations relating to future operations; (k) daily, weekly, rrrou0rly and other regular reports on Petroleum Opcrations: (l) (m) (n) comprehensive final reports upon the completion of each specific project or operation; contingency prograrns and reports on safety and accidents; procurement plans, subcontractors and contracts for the provision of services to Licensee.
(o) zuch other matters as the Director General may from time to time direct 17.2 The licensee shall keep in Sierra Leone accurate geological plans and maps relating to the Exploration Area and such other records in relation thcrcto as may be necessary to preserve all informalion that the licensee has about the geology of the Exploration Area.
17.3 The licensee shall deliver copies of the said records , plans and maps referred to in the two foregoing paragraphs to the Director General when requested to do so, either: (a) Within any time limit specified in the request; or (b) If there is no time limit specified , rvithin four weeks of the request .
17.4 All information, data, logs, reports, samples, collected, processed or analysed pursuant to this [,icence shall remain the property of the State but the Licensee shall ha-ve the right to retain for its own use in connection with the conduct of Petroleum Operations under this Licence copies of data, well logs, maps, magnetic tapes, other geological and geophysical infonnation, portions of core samples and copies of reports, studies and analysis referred to in Article 17.1. lL 'I p- I I ARTICLE 18 INFORMATION AND CONFIDENTIALIry.
18,1 Not later than ninet-v (90) days following the end of each Calendar Year, Licensee shall submit to the Director General a repod.covering Pekoleum Operations performed in the Licence Area during such Calendar Year.
Such report shall include, but not be I'irnited to: (a) statement of the number of Exploration Wells, Appraisal Wells and Development Wells &illed, the depth of each such well, and a map on which drilhng locations are indicated; O) statcmcnt of any Petrolcum encourtered durilg Pctrolcunr Operations, as well as a statement of any fresh water layers encountered and of any other minerals discovered; (c) statement of the quantity and quality of Petroleum produced and of all other minerals produced thercwith from the same reservoir or deposit; (d) summary of the nature and exlent of all exploration activities in the Licence Area; (e) a general summary ofall Petroleum Operations in the Licence Area.
18.2 All data, infonnation, reports and statistics including interpretation and analysis which the Licensee is or may from time to fime be required to fimish under the provisions of this Licence shall be supplied at the expense of the Licensee and shall not (except with the consent in writing of the Licensee which shall not be unreasonably witbheld) be disclosed to any person not in the service or employment of the State of S ierra Leone 18.3 The provisions oftlris Article 18.2 shall not prevent disclosure: (a) By the Director General or the State: i. ii.
iit To any agency ofthc Statc or to any adviser or consultant to the Director Cencral or the State; For the purpose of obtaining a Petroleum Licence in respect of any acreage adjacent to the Licence Area; or For the purpose of complying with tlrc State's intemational obligations for the submission of statistics and related data.

b) By Licenscc: i. to its Affiliates, advisers or consultants; \- r, s- I I rL m. lv.
to a bona fide potential assignee of all or part of Licensee's interest hereunder; to banks or other lendir,g institutions for the purpose of seeking extemal financiag ofcosts ofthe Petroleum Operations; to Non-Affrliates who shall provide services for the Petroleum Operations, including subcontractors, vendors and otler serr"ice contractors, where this is essential foi their provision of such services; to governmental agencies for obtaining necessary rulings, permits, licenses and approvals, or as may be required by applicable law or financial stock exchange, accounting or reporting practices.
18.4 Any Party disclosing information or providing data to any third party under to undertake the confidentiality of such this Article shall require such p€rsons data.
ARTICLE 19 MONITORING OF PETROLEUM OPERATIONS l9.l The Director General of the Petroleum Directorate shall be responsible for monitoring and inspecting all activities unde(aken by the Licensee under the scope of this Petroleum Licence 19.2 The Director General or his duly authorized representatives shall have the right of access to all sites and offices of Licensee and the right to inspect all buildings and installations used by Licensee relating to Petroleum Operations.
Such inspections and access shall take place in consultation with Licensee and at such times and in such manner as not unduly to interfere rvith the normal operations of Licensee.

Such representatives may make a reasonable number of surveys, drawings, and tests for the purpose of enforcing this Licence.
They shall, for this purpose, be entitled to malie reasonable use of the machinery and instruments ofthe Licensee on the condition that no danger or impediment to the operations hereunder shall arise directly or indkectly from such use.

Such representatives shall be given reasonable assistance by the agents and employees of the Liccnscc so that none of their activities endanger or hinder the safety or efticiency of the operations.
The Licensee shall offer such representatives all privileges and facilities accorded to its own employees in thc ficld and shall provide them, free of charge, the use of reasonable office space and of adequate housing while they are in the field for the purpose of facilitating the objectives of this Article.

19.3 Licensee shall save and kcep a representative portion of each sample of cores and cuttings taken fiom drilling wells, to be disposed of, or fonvarded to the Director General.
All samples acqu ed by the Licensee for their orvn purposes (, :l_ shall be considered available for inspection at any reasonable time by the Director General or his reprcsentatives.

19.

{ The Licensee shall provide the Dircct,-}r General with copies of any and all data (including, but not linited to, geological and geophysical reports, logs and well surveys), information and interpretation of such data.
and other relevant inlbrmation in Licensees possesslo - f9.5 Licensee shall provide an effective and sate systcm for disposal of water and rvaste oil, oil baisc mud and cuttings in accordance with accepted Petroleurn Industry practicc, and shdll provide tbr the saf'e completion or abandonment of all boreholes and wells.
19.6 If Licensee's failure to cornply with the requirements of Article 19.5 results in the release of Petroleum or other materials on the seabed, in the sea, on land or in fresh water, or ifLiccnscc's operations result in any othcr fomr of pollution or otherwise cause harm to fresh water, marine, plant or animal life, Licensee shall, in accordance with accepted Petroleum Industry practice, promptly take all necessary measures to conhol the pollution, to clean up Petroleurn or released material, or to repair, to the maximum extent feasible, damage resulting from any such circumstances.
The cost of clean-up and repair activities shall be borne by Licensee.

19.7 The Licensee shall fumish to the Director General all logs, operational reports and incident reports on their activities by the l0th d:ry of the end of each month and at intervals of three months thereafter during the period in which this licence is in force a retum in a form from time to time approved by the Director General of the progress ofhis operations in the Licence Area.
I9.8 If it is determined that a particular petroleum operation may cndangcr thc lives of persons or the preservation of the environment, the Director General, after consulting Licensee, may: (a) order such petroleum operation to be suspended; (b) order the withdrawal of all persons from the locations deemed dangerous, in coordination with the relevant State authorities; (c) order the suspension of the use of any machine or equipment which may jeopardize the said values.
19.9 Licensee shall notiff the Direclor General immediately in the event of any emergency or accident and shall take such action as may be prescribed by its emergency procedures and by accepted Petroleum lndustry practices.

COMMENCEMENT AND ABANDONMENT AND PLUGGING OF VV5LLS ARTICLE 20 \-- r, J .P- 20,1 The Licensee shall not commence or recommence the drilling of any well without the consent in writing of the Directo.

General.
General.

20.i The Licensee shall not abandon any u'eli r.rithout the consent in \witing of the Director General.

20.3 The licensee shall ensure compliance with any conditions subject to which any consent under either of the foregoing paragraph is given.

2A.4 If any such condition under Article 20.1 of this clause relatcs to thc position.
depth or direction of the well, or to any casing of the well or if any condition nnder either Artrcle 20.1 or 20.2 rclatcs to any plugging or scaling of thc wcll, the Director General rnay from time to time direct that the rvell and all records rclutfug thcrcto shall bc cxarmned m such manneq upon $lch rlcrlasir:rns lrr Al such intervals and by such p€rson as may be specified by the Director Gcncral's direction and the Licensee shall pay to any such penion or to the Director (ieneral such t'ees and cxpcnscs for such exarnlnatron as the Director General may speci$ 20.5 The plugging of any well slmll be donc il accr:rdance u'ith a specification approved by the Director General applicable to that wcll or to wclls generally or to class of wells to rvhich thc wcll bclongs and shall be carried out in an efficient and workmanlike manner.
20.6 Subject to Article 20.7 of this Licence , any Well drilled by the Licensee pursuant to this Licence shall be plugged and sealed in accordance with Article 20.2, 20.3,2O.4 and 20.5, not less than one month before the expiry or determination of the Licensee's rights in respect of the area or part thereof in which that well is drilled.
20.7 A direction by the Director General may be given by notice in writing to the Licensee not less than one month before the Licensee's righs in respect of the area or part thereof in which the well is situate expire or determioe so as to relieve the Licensee of the Obligation imposed by Article 20.6 of this Article to plug and seal the well.
20.8 Any well that, pursuant to a direction by the Director General Under Article 20.7 of this Article, has not been plugged and sealed , shall be left in good order and fit for firther working together with all casings and well head fixtures the removal whereof would came damage to such rvells 20.9 All casings and fixtues left in position pursuant to Article 20.7 of this Article shall be the property of the State.
ARTICLE 2,I ACCOUNTING AND AUDITING 2l,l Licenseo shall maintoin, at its offices in Sicrra Lconc, books of occouut ond supporting records in the manner required by applicable law and accepted W }.

1- t- accounting principles generally used in the petroleum iirdustry and shall file rcports, tax rcturns and any other dosurucr:ts autl uuy other firtancial retums wiiich are required by upplicublc law.
21.2 In atldition to the books and repors rcquirrd by Article 2l.l above, Licensee shall rnaintain, at its offrce in Sierra Leone, a set of accounts and records relating to Petroleum Operations under this Licence.

Such accounts shall be kept in accordance with the requirements of the applicable law and accepted accounting principles generally used in the industry.
These shall include reports of (a) the quantity ofpetroleum in the form ofgas won and saved O) (c) the quantity of petoleum in any other form won and saved.
the name and address of any person to whom any Pekoleum has been supplied by the Licensee, the quantity so supplied , the price thereofor other consideration thereof and the place to which the Petroleum rvas conveyed pursuant to the agreement for such supply and (d) Such other particulars as the Director General may from time to time direct 213 The accounts required by Articles 2l.l and2l.2 shall be kept in United States Dollars.
2lA Licensee will provide the Director General with quarterly summaries of the Petroleum Costs incurred under this Licence.

21.5 The Director General shall review all financial statements submitted by the Licensee as required by this Licence, and shall signi$ its provisional approval or disapproval ofsuch statements in writing within ninety (90) days ofreceipt, failing which the financial statements as submitted by Licensee shall be deemed approved by the Director General.
21.6 Notwithstanding any provisional approval pursuant to Article 21.5 the Director General shall have the right at its sole expense and upon giving reasonable notice in writing to Licensee to audit the books and accounts of Licensee relating to Petroleum Operations within two (2) years from the submission by Licensee of any report of hnancial statement.

The Director C-reneral shall not, in carrying out such audit, interfere unreasonably with the conduct of Petroleum Operations.
Any such audit shall be completed within nine (9) months after commencement.

Licensee shall provide all necessary facilities for auditors appointed hereturder including working space and access to all relevartt persorurel, records, files and other materials.

21.7 During the term of this License, Liccnsce shall bc subject to such fiscal and accounting terms and guides as are contained in Annex 2 and Annex 4, *'hich shall form a part of this agreement.
h J- l- 21.8 Subject to any adjustments resulting from such audits, Licensee's accounts and tinancial statements shall be considered to be correct on expiry ofa period sf two (2) years from the date oftheir submission unless before the expiry of suc:r i'wo year period the Director General ha.s uotified Licensee of any exceptions to such accounts and statements.
ARI'ICLE 22 PURCIIASING AND PROCUR-EMENT 22.1 In the acquisition of plant, equipment, services and supplies for Petroleum Operations, Licensee shall give preference to matenals, sewices and products produced in Sierra Leone, of the same or superior quality, if such materials, st:rvir:es antl prtxlucts tan be supplierl il duc tiurc u[ pricus.

rvhich arc no morc than l0% higher dral the imported items including transportation, insurance costs and customs charges due.
22-2 For the purposes of thc provisions of Article 22.1, Sierra Leonean companies shall be mandatorily consulted on the same terms as those used for consulting companies on the intemational market.
22.3 The Licensee shall always Contract local service providers, to the extent to ' u,hich the serrrices they provide are similar to those available on the intemational market, and their prices, when subject to the same tax charges, are no more than ten percent (10%) higher than the prices charged by foreigt contractors for similar ssrv1gs5.
22.4 In furtherance of the obligations under this Article, during the term of this Licence, Licensee shall prepare in respect of each Year a local procurement statement, containing ftg fsllowing information: (a) The amount of expenditure incurred by the Licensee directly, or indirectly through its Subcontractors, on goods supplied, produced or manufactured in Sierra Leone (b) the amount of expenditure incurred by the Licensee directly, or indirectly through its Subcontractors, on services provided by Sierra Leonean entities; (c) the respective percentages that the expenditures recorded under items (a) and (b) above represent of the Licensee's total expenditures; 22.5 a detailed description of the procedures adopted during the Year to identiS, and purchase goods and services from Sierra Leonean suppliers; and 22.6 a detailed exposition of how the local purchases for the Year as recorded under items (a) and (b) above compared with the projected purchases included in the budget statement for that Year, with explanations for any significant variations; _t- J.
-r- l- 22.7 f'he local pruculerlell statcrncnt shall be submitted to the Director General within sixtv (60) days after the end of each Year and shall be published in the iji,c;.a Leone gazette and in at least cne locai leiwspaper.
j. ABTICLE 23 EMPLOYMENT AND TRAINING 23.7 For each Block held under Licence, Licensee shall pay to the Training Research and Development Fund, the sum of trvo hundred thousand US dollars (US$200,000) every year from the effective date during the exploration and development period, and five hundrcd thousand US dollars (US$500,000) for each conmct year during the production period, rvhich the Stete shall nse at its sole discretion to traln Slerra Leonean personnel and transtbr the management and technical skills required for the efficient ctlrldlrct (.
'f Pctrolcum Opcrations, and lbr other general and cducational training purposcs.
This sum shall be paid on the effective date of the Licence, and on every anniversary of the effective date, for the duration of this Licence 23.2 Where qualified Sierra Leone personnel are available for employment, Licensee shall be required to employ Sierra Leone citizens in all categories and functions, except if there are no Sierra Leone citizens in the national rrra:ket with the required qualifications and :>:perience, under terms to be regulated.

233 National and foreip.


workers employed by Licensee who occupy identical professional categorie's and carry out identicil functions shall enjoy the same rights of remuneration and the same working and social conditions, rvithout any type of discrimination.
23.4 Licensee shall, if so requested by the Director General, provide opportunities for a mutually agreed number of employees nominated by the Director General to be seconded for on-the-job training or attachment to all phases of its Petroleum Operations under a mutually agreed secondment contract.

23.5 Licensee shall regularly provide to the Director General inforrnation and data relating to worldwide Petroleum science and technology, Petroleum economics and engineering available to Licensec.
It is agreed that there will be no disclosure or tiansfer of any documents, data, knorv-how, technology or other information owned or supplied by Licensec, its Affiliates, or Non- Affiliates, to third parties without Licensee's prior *ritten consent, and then only upon agreement by the recipients to retain such infomration in skict confidence during the life of this Licence.
23.6 In furtherance of its obligations under this Article, Licensee shall during the term of this Licerrce, prepare in respect of each Year a local employrnent statement, containing the following information: W I J- (a) ttre number of Sierra Leoneans employed b,v the Licensee directly, or .
indirectly through its Subcontractors, their level withiD the organization and their salary scale: O) (c) (d) G) thc mcan salary of foreign employees hired bv the Licelsee directly, ol rndirectly through its Subcontractors, at the same levels as the Sierra Leonean workers; the percentage that the nuruber of Sicrru Lconcans cmploycd by Licensee or Subcontractor represent of the total number of Licensee and S ub-contractors employees respectively; the percentage that the total salaries of Sierra Leoneans employed under items (a) above represents of the Licensee and Subcontractor's total salaries.
a detailed exposition ofhow the number of new Sierra Leoneans hired and traincd for thc Yqu compared rvith the projected recruit[lelt tbr that Year and how the total number of Sierra Leoneans employed compared with the previous two years, rvith explanations for any signifi cant variations.

23.7 The local employment statement shall be submitted to the Director General within sixty (60) days after the end of each Year and shall be published in the ' Sie;ra Leone gazette and in at least one local newspaper.
ARTICLE 24 IMPORT AND EXPORT 24.1 The Licensee shall have the right to import into Sierra Leone, in its own name or on behalf of its contractors and subcontractors, all the technical equipment, materials, machinery, tools, goods and supplics nccessary in the Licensee's opinion for the proper conduct and achievements of the Petroleum Operations; that includes but is not limited to, drilling, exploration, development, production, transportation, sales and marketing, equipment, pipelines, tanks, geological and geophysical tools, boats, ships, launches, drilling barges, ships and platfiorms, production platforms, civil engineering and telecommunication equipment, power plants and all related equipment, aircraft, automotive equipment and other vehicles, instruments, tools.
spare parts, alloys and additives, caqping equipment, protective clothing and equipment, medical, surgical and sanitary equipment, supplies and instrurnents necessary for the installation and operation of hospitals and dispensaries, documentation equipment, constnrction materials of all types, lumber, office fumiture and equipm€nt, automobiles, explosives, chemicals, fuels, ship supplies, pharmaccutical products, medicines.
24.2 The Licensee shall have the right to import into Sierra [.eone, in its own name or on behalf of its Contractors, Subcontractors and Agents the fumiture, W clothing, household appliances and all personal effects for all the Foreign .

Naticnal Employees and their families assigned tc rvork in Sierra Leone for the Lrcensee or its Contractors.

Subcontractors oi Agents.

.

?

"4.3 .


The.Licensee, its Contractors, SuLroDhactors and Agents shall have the right ' to re-export from Sierra Leone free ofall duties and taxes and at any time, all the items imported under Article 24.1 ard 24.2 which arc no longer necessary for the Petroleum Operations.
24-4 All the technical material, materials, machinery and tools, goods.anci supplies specified in Article 24.1 rvhich the Licensee, its Contractors, Subcontractors and Agents, their Foreign National Employees and their families will have the right to import in one or more shipments to Sicrrn Lconc shall bc ftrlly cxcmpt ofall duties and taxes payable as a result of such importation.
NRTICLE 25 PROTECTION OF RIGHTS 25,1 The State shall take all uecessary irurl possible stcps to facilitate the implementation by the Licensee of the objectives of this Licence, and to protect the property and operations of the Licensee, its employees and agents in the territory of Sierra Leone.
25.2 At the duly justified request of the Licensee, the State shall prohibit the construction of dwelling or business buildings in the vicinity of installations, which the Licensee may declare dangerous as a result of its operations.

It shall take all necessary precautions to prohibit anchoring in the vicinity of submerged pipelines at river passages, and to prohibit any hindrance to the use of any other installation necessary for the Petroleum Operations whether on land or offshore.
253 The Licensee shall take out and cause to be taken out by its conEactors and subcontractors, in respect of the Petroleum Operations, all insurances of the fype and for such amounts customarily used in the intemational Petroleum industry, including without limitation third party liability insurance and insurances to cover damage to property, facilities, equipment and material.
25.4 Upon the entry into Sierra Leone of all Foreign National Employees of Licensees, its Affiliates, Non-Affiliates and Subcontractors and their Agents, the Director General shall facilitate the issue of the documents necessary for the entry to all such Foreign National Employees, such as entry visas, working permits, exit visas and other related documents.
25.5 At the request of the Licensee, the Director General shall facilitate any immigration formalities at the points of entry into and exit from Sierra Leone in respect of all such Foreign National Employees and their families.

25.6 All the Foreign Notional Employccs rcquircd for thc conduct of the Petroleunr Operatrons shall he under the [.icensee's autholiry* or that of it^s Affiliates.

Non-Atfiliates, Subcontractors and Agents, in their capacity as employers.

tfr t-.
tfr t-.

l- t- L. Their rvork, number of rvorking hours, salaries and any other matters relating to their employment conditions shall be determined by the Licensee or its Afhiiatcs, Non-Affiliates, Subcontractors and Agerrts.

.

ARTICLE 26 FORCE MAJUERE 26.1 The provisions of Section 149 of The Act on Force Majuere shall apply mutatis mutandis.

26.2 Obligations other than those affected by Force Majeure shall continue to be performed in accordance with the provisions of this Licence.
ARTICLE 27 SOCIAL PROGRAMS 27.1 During the Term of this Licence, Licensee is obligated to perform the following social projects at its own recoverable expense, as indicated in its bid docur.rent.
27.2 Drrrlul,g the exploration period, Licensee commits to spending One Million United States Dollars (US1,000,000) during each of the three exploration periods, for a total of Three Million United States Dollars (US$3,000,000) on social progmms relating to areas of health, education, sanitation, agriculrure, and/or small and medium enterprise development.
27.3 Licensee shall work rvith the Petroleum Directorate and identified communities to design and implement strategic community engagement programs to advance health, education and sustainable socioeconomic development.

27.4 While Licensee shall collaborate with the Petroleum Directorate in the implementation of these social programs, Licensee shall at its sole discretion determine the appropriation of these funds.
27.5 Licensee at the request of the Director General can combine and coordinate efforts with other Petroleum Industry Stakeholders in the implementation of joint social projects.

27.6 Funds under this program shall be used in a judicious maoner and Licensee shall account for all expenditurcs under this program.
27.7 Accounting for the nse of these firnds shall be included in the annual budget, and shall be included in quarterly and annual reports due to the Director General and shall be subject to the same Audit terms.
tfu J- ARTICLE 28 COi*SULTATION, ARBITRATION.AND INI}UPENDENT EXPERT 28.1 Aly dispute or difference arising between the State on one hand and Licensee on the other in relation to or in connection wiLh or arising out ofany terms and conditions of this Licence shall be resolved by consultation and negotiation.
In the event that no agtreement is reached within thirtv (30) days after the date whel either Party notifies the othcr that a dispute or ditlbrence exists within the meaning of this Article or such longer pe.riod specifically agreed to by the Parties or provided elsewhere in the Licence, any Party shall have the rigtrt subject to Article 28.8 to have such dispute or difference settled through intemational arbitration under the rules and procedures and under the auspices of the Intemational Chamber of Commerce 28.2 The tribunal shall consist of three (3) arbitrators.
Each Party to the dispute shall appoint onc (l) arbitrator and those so appointed shall designate an umprre arbrtrator.
ll u I'arty's arbitrator and/or the umpire arbitrator is not appointed within the periods provided in the rules, such Party's arbitrator ond/or the umpire arbitrator shall at thc rcqucst of any Party to thc disputc bc appoirted by the lntemational Chamber of Commerce 28.3 No arbitrator shall be a citizen of the home countr,v of any Party hereto, and shall not have any economic interest or relationship with any such Party.
28.4 The arbitration proceedings shall be conducted in London, England, or at such other location as selected by the arbitrators rmanimously.

The proceedings shall be conducted in the English language.

28.5 If the opinion of the arbitrators are divided on issues put before the tribuoal, the decision of the majority of the arbitrators shall be determinative.

The award of the tribunal shall be final and binding upon the Parties.
The arvard may be submitted to a court of appropriate jurisdiction to implement as a judicial decree.

28,6 The right to aftitrate disputes arising out of this Licence shall survive the termination of this Licencs.

28,7 In lieu of resorting to arbitration, the Parties to a dispute arising under this Licence, including the Accounting Guide, which such Parties by mutual agreement may consider appropriate may be refered for determination by a Solc Expert to be appointed by agreement of the Parties.
In such case, the Parties shall agree on dte terms of reierence for such proceeding, the schedule of presentation of eviderce and testimony of witnesses, and other procedural matters.

'I'he decision of the Sole tsxpert shall be final and [ilding upon the Parties.

The Sole Expert shall have ninety (90) days atter his appointmcnt to decide the case, subject to any extensions mutually agreed to by the Parties to the dispute.
Upon failure ol' the Sole Expert to decide the rnatter timely, any Party may call for arbitration under Article 28.1 above.

W 28.8 Each Party to a dispute shall pay its own counsel and other costs of litigation; horvever, costs of the arbitration tribunal shall be allocated in accordance with the decisiolr of the tribunal.

The costs an<i fees.cf the Soie Expert shall be bonre equally by the Parties to the disputc.
ARTICLE 29 ASSIGNMENT 29.7 The I.icensee shall not, except with the consent in rwiting of the Director General and in accordance wlth the conditions (if any) of the consent, do anything whatsoever, whereby under the law (including the mles of equity), any right granted by this Licencc or dcrivcd from a right so gratrted becomes exercisable by or for the benefit of or in accordance with the directions of another person.
29.2 All or part of the rights and obligations arising from this Licence may be assigned by any of the entities constituting the Licensee to third parties rvhose technical and financial reputation is well established; the assignees with the other entities constituting the Licensee shall thereafter be jointly and severally liable for the obligations arising from this Licence.
29.3 The terms of any joint and several assignment and ownership shall be subject to the prior approval of the Director General 29.4 To eoable consideration to be given to any request for the Director General's consent referred to in Articles 29.3, the following conditions must be fulfilled: (a) All the obligations of the assignor deriving from this Licence must have been duly fulfilled as of the date such request is made.
(b) The instrument of assignment must include all the terms of the Assignment, and provisions stating precisely that the assignee is bound by all covenants contained in this Licence and any modifications or additions in writing that up to such time may have been made.

A draft of such instnrmeot of assignment shall be submitted to the Director General for review and approval before being formally executed.
(c) (d) The assipo(s) must submit to the Director General reasonable documents that evidence the assignee's financial and technical competence.

Oncc thc assignor and a proposed third party assigncc, othcr than an Affiliated Company, have agreed the final conditions ofan assignment, the assignor shall disclose in details such final conditions in a written notification to the Director General.
The State, shall have the right to acquire the interest intended to be assigned, if, rvithin Thirty (30) days from assignor's rwitten notification, the Director General informs the l. w assignor by a written notification that it accepts the same conditions agreed to with the proposed third parr_v assigncc.
If thc Dircctor ,Ccueral does not give such mrtification withrn the Thfuty (30) day i;eriod, the assignor shall have the right to assign to the proposed third party assignee, subject to the Director General's approval under Article 29.3 of this Licence.

(e) As long as the assignor shall hold any interest under this Licence, the assignor logether with the assignee shall be jointly and severally liable for all duties and obligations of Licensee under this Licence.
29-S On the date of approval of each assignment rcqucstcd by any of thc cntitics constituting the Licensee to any Assignee in accordance rvith the terms of this Licence in the follorving cases: (a) During auy Exploration period, in case any ofthe entities constituting the Licensee assigrs in whole or in part of its rights, privileges, duties antl obligations to any Assignee other than an Affiliate Company of the same entity constituting the Licensee, the Assignee shall pay to the State the sum of Two Million Five Hmdred Thousand United States Dollars (US$2,500,000) as Assignment Fees.
(b) During any Development or Production Period, in case any of the entities constituting the Licensee assigns in whole or in part of its rights, privileges, duties and obligations to any Assignee other than an Affiliate Company of the same entity constituting the Liceosee, Assignor shall pay to the Director General the sum Two Hundred and Fifty Thousand United States Dollars US$250,000 and Assignee shall pay to the State the sum of Four Million United States Dollars (US$4,000,000) as Assignment Fees.
(c) [n case of an assignment by any of the entities constituting the Licensee to an Affiliate company of the same entity constituting the Licensee during the Exploration phase; Assignee shall pay to the Director General the sum of Two Hundred and Fifty Thousand US Dollars (US$250,000) as Assignment Fee, and in the case of an Assignment by any of the entities constituting the Licensee to an Affiliate company of the same entity constih"lting the Licensee during the Development or Production Phase, Assignee shall pay to the Director General the sum of Five Hundred Thousand US Dollars (US$500,000) as Assignment Fee.
29.6 All fees paid in accordance *'ith Article 29.5 shall be deductible only from Capital Gains Taxes due to the Statc.
29.7 Wherein (a) any of the entltles constituting the Licensee ("Assignor') assigns all or a part of its Participating Interest to a third party ("Assignee") in accordance with this Article 29; ,/lk the Assignee provides an irrevocable, unconditional bank guarantee froin a reputed bank of good standing, acceptable to the State, in r'svour of the State, for an amount equal to tire assignee's Participating L:terest share of the estimated er^perdinre .of the Minimum Work Programme of the Exploration Phase current at the Effective Date of the assignment; the Assignee provides Performance Guarantee and legal opinion in terms of Article 5; and the assignnrcnt of Participating lnterest is executed by all Parties; (c) (d) then the Director Ceneral shall release the Guarantee given by the assignor under Article 5 to thc extent of the arnount of the Guarantee provrded by the assignee AH IICLT 30 BONUSES 30.1 Signature Bonus (a) Lice.nsee shall pay to the State in Cash as a signature bonus The Sum of Six Million Five Hundred Thousand United States Dollars (US$6,500,000) no later than Sixty (60) days after the Effective Date of this Licence .
30.2 Development Bonus (a) Licensee shall pay to the State in Cash as a Development bonus the Sum of One Million United States Dollars (US$1,000,000) the date of the approval of each Commercial Development.

303 Extension Bonus (a) Licensee shall pay to the State in Cash the Sum of Five Million US Dollars as an extension bonus no later than Thirty days after the approval date of entry into any further extensions other than that provided for the first and second extension under the work program.
This Bonus may be waived at the Discretion of the Director General for extensions granted under Section 46 (4) and (5) ofThe Act.

30.4 Production Bonus (a) Production Bonuses shall be based on Cumulative Production Milestones.
These Bonuses shall be paid to the State only once, in Cash at the amounts set below, and shall be paid within Thirty days from the date on which all cumulative oil production from the Licence Area exceeds Three Hundred Million Barrels of Oil or Oil Equivalent 4\ )c< (MMBOE) and at each production as stated below.

subsequent 100 MMBOE incremental L It.

llL tv.

Bouus payrnclt of Tcn Million Unit.,l Stot."

Dollars (US$ 10,000,000) shall be paid for reaching 300 MMBOE.
Bonus of Twenty Mitlion Ulited States Dollars (US$ 20,000,00) shall be paid for reaching 400 MMBOE.

Bonus of l'hirty Million United States Dollars (USS30,000,000) shall be paid on reaching 500 MMBOE Bonus of Forty Million United States Dollars (US$ 40,000,000) shall be paid on reaching 600 MMBOE tsonus of l"ifty Million United States Dollars (tJS$ 50,000,000) shall bo paid on rcaching 700 MMBOE and for every additional 100 MI4BOE thereafter.
(b) Gas shall be taken into account for purpose of determining the total production from thc Liccncc Arca undcr this Article by converting daily Gas delivered into equivalent barrels of Cnrde Oil production in accordance with the following forrnula for each unit of one thousand (1,000) standard Cubic Feet of Gas: Equivalent Barrels of Oil Per MSCF = H x 0.167 Where: MSCF = one thousand Standard Cubic Feet of Gas.

H : the number of million British Thermal Units (MMBTLf) per MSCF.
30.5 Technologr Bonus (a) Licensee shall pay to the Director General the sum of Five HunCred Thousand U.S.

Dollars (US$ 500,000) as a technology bonus, which the Directorate may use at its discretion to acquire leading edge tecbnology aad equipment, infrastrucnre improvement and rcsearch and developmen!

for the effrcient conduct of Petroleum Operations.

Payment shall be made only once, on the first anniversary of the effective date.
30.6 The Director General shall act as agent for the State in the invoicing and collection of all Petroleum or Amounts accruing to the State under this Article and delivery or payment to Director General by Licensee shall discharge Licensee's liability.

30.7 All the above mentioned'oonuses shall in no event be recovered by Licensee.

& J- ARTICLE 31 ADI.dINISTKATION OF CONTRACT 3l.I .
Ihis Licence and the relationship between rlre State and the Director General on one hand and Licensee on the other shall be govemed by and construed with the laws of the Republic of Sierra Leone.

31.2 Any Party failing to pay any amounts payable by it under this Licence (including the provisions of Annex 2 and 4) on the respective dates on which such amodnts are payable by such Party hereunder shall be obligated to pay interest on such unpa;d amounts to the Party to which such amounts are payable.
The rate of such interest with respect to each day of delay during the period of such non-payment shall be the rate which the Barclays Banlg London, certifies to be the London Interbank offered rate (LIBOR) in the London Interbank Eurodollar market on thirty (30) day deposits, in effect on the last business day of the respective preceding Month, plus Trvo and half percent (2.5%").
Such interest shall accrue from the respective dates until such amounts are payable and rmtil the amounts are actually duly paid.

The Party to whom any such amount is payable may give notice of non-payment to the Psrb, il defoult and if such omount is not paid within fifteen (15) days after such noticc, thc Party to which thc :rmount is orvcd may, in additiol to thc interest referred to above, seek remedies available pursuant to the Arbitration provision hereunder.
31.3 The rights and obligations urider this Licence of the State on the one hand and Licensee on the other shall be separate and proportional and not joint.

This Licence shall not be construed as creating a partnership orjoint venture, nor an association or trust or as authorizing any Party to act as agent, servant or employee for any other Party for any purpose whatsoever.
31.4 The duties and obligations of each Party constituting Licensee hereunder shall be joint and several atrd it is recognized that each such Party shall own and be responsible for its undivided Interest in the rights and obligations of Licensee hereunder; provided, however, that the following payments shall be the separate obligation of and shall be made by each Party which constitutes the Licensee: (a) (b) (c) (d) Payments of income tax under the Terms of this Licence; Payments of royalty under the Terms of this Licence; Payments of Licence fees under the Terms of this Licence Payment of Assignment Fees under the Terms of this Licence.
/,/ I !

ARTICLE 32 IN4PLEME'\iTA flON OF LICENCE 32.7 Ti:e. Pzuties agree to cooperate in every possible m.umer to achieve the objectives of this License.

The Director Ceneral shall facilitate the grant of any permits, licenses, access rights, appropriate services and iacilities required by the Licensee for the perforrnance of the Petroleum Operations.
32.2 If the Director General considers that the Licensee has committed a trreach in the performance of any of its obligations, it shall so notiff the Licensee in rwiting and the Licensee shall have Forty Five (45) days to remedy the breach or refer the matter to Arbitration in accordance with the provisions of this Licence.
32.3 If any of the events specified in the follorving paragraph shall occur then and in any such case the Director General may revoke this Licence and thereupon the same and all rights hereby granted shall cease and determine but subject nevertheless and without prejudice to any obligation or liability incurred by the Licensee or imposed upon him by or undcr thc tcrms and conditions hereof.
32.4 Thc brcach by thc Liccnscc of thc provisions of this Licence may give rise to the termination thereof by the State upon the uncorrected occurrence of any of the everits or iirilures to act listed below.
(a) the submission by Licensee to the Director General of a written statement which the Licersee knows or should have known to be false in a particular material matter; (b) the assignment or purported assignment by Licensee, of this Licence contrary to the Assi.gnment provisions hereunder; (c) (d) (e) (f) the insolvency or bankruptcy of Licensee or the entry of the Lieensee rvhether compulsory or voluntary, and into liquidation or r€ceivership, there is justifiable anticipation that the obligations of Licensee hereunder will not be performed; the failure of Licensee to fulfill its minimum work obligations hereunder unless the Director General has waived the default; the substantial and material faiture by Licensee to comply with any of its obligations pursuant to Articles 7 & 8 hereof; the failure of the Licensee to provide the required Performance Security within Sixty (60) days of the effective date for the Initial Exploration Period or within Sixty (50) days of entrance into any extension period.
(g) the failure by Licensee to make any payment of any sum due to the Director General or the State pursuant to this Licence within forty five (45) days after receiving notice that such payment is due.
4 \\x J. I (h) Iflicensee intentionally extracts any mineral other than petroleum, not authorizcd by this Licence, or without the authorization of the Goveiunent, except such extractions that inay be unavoidable as a ' result cf the operations conducted heieunder ir: accordance with accepted petroleum industry practice, and which shall be notified to the Director General as soon as possible.

(l) 0) any breach or non-observance by the Licensee of the terms and conditions ofan approved Development Plan.
If the Licensee is a compiiny and therc is a chang6 in the control of the Licensee and the Director General serves notice in writing stating that the Director General proposes to revoke this Licence in punuance of this paragraph unless such a further change in control of the Licensee as is spccificd in the notioe takcs place within the period of tlree months beginning with thc date of service of the notice and that firther change does not take place within that period.
(k) There is a change in the control of the Licensee for the purposes of Articlc 32.3 (i) of this Article whcnever a person has control of the Licensee who did not have control of the Licensee when this Licence was granted.

For the purposes of determining whether for the purposes of this paragraph a person has control or had control of the Licenssee if he holds a greater part in the Licence or more than One-Third.
32.5 The Director General may terminate this Licence as to one of the parties comprising the Licensee, if the circumstances set forth in Article 32.3 arc applicable to only that party in the manner set forth in Article 32.3.
32.6 The Director General may terminate this Licence as to one of the parties comprising the Licensee if the Operator informs the Director General that that party has consistently defaulted in its obligations uoder the Joint Operating .A.greement between the parties, if one or more of the parties holding shares in the Licence suspend their palments, requests the opening of negotiations for a compulsory composition, are declared banknrpt, go into liquidation or ,re in a similar situation.
32.7 If the Director General or the State believes an event or failure to act as described in Article 32.3,32.4 and 32.5 above has occurred, a written notice shall be given to Licensee describing the event or failure.

Licensee shall have Forty Five (45) days from receipt of said notice to remedy the event or failure cited in the notice.
If after said Forty Five (45) days Licensee has failcd to Remedy the default, the Director General or the State may then Suspend or Terminate the Licensee unless the Licensee has referred the matter to Albitlation urder this Liceuce.

32.8 If so referred to Arbitration, the Director General and/or the State may not terminate this Licence in respect of such event except in accordance with the terms of any resulting Arbitration Award.
,L 32.9 Disputes regarding non-payment of Annual Licence Fees, Annual Training Fees and non-recriipt of Bank or Parent Company guarantee: for minimum work expendituie shall not be refen'ed to Arbitration and such rvritten Notir;e of Terminalon shall be effective without delav.

32.10 ihe terms and conditions of this Licence may be modified only in writing and by mutual agreement between the Parties.
32.11 32.12 The Director General shall represent the State under .this Licerrce and is empowered to grant by due process, in the name and on behalf of the State, any consent necessary or useful for the implementation of this Licence.

The Petroleum Directorate shall act as an agent for the State in the collection of all petroleum or moDcy apart liom Duties and Taxcs, accruing to tllc Statc under this Licence, and delivery or payment to the Director Cencral by Licensee shall discharge Licensee's liability.
32.13 Headings in this Licence are inserted for purposes of convenience and rctbronce ind ln no event shall deline, r'estrict or dcscribc thc scopc or olrjcct of thc Liccmc or of any of its clauscs.

32.14 Annexes l, 2, 3 and 4 attached hereto shall form an integral part of this Licence.
32.15 Any waiver of the State concerning the perfomrance of ari;i obligation of the Licensee shall be in writing and signed by the Director General, and no waiver shall be implied if the Director General does not exercise any of is rights to which it is entitled under this Licence..
ARTICLE 33 STABILITY OF CONTRACT 33.1 During the validity of the Licence, the State guarantees that no future govemment acts shall apply to the Licence without the prior agreement of the Parties, that may affect, directly or ipso facto, the obligations and charges imposed on the Licensee through the provisions of the Licence, or that may adversely affect the rights and economic benefits of the Licensee provided in the Licence.
33.2 This shall apply, in particular, to the following: (a) Exemption from fees, duties and taxes; (b) Obligations with regard to Royaltics and profits tax; (c) Rights to keep and transfer abroad the funds and foreign currencies; (d) Non-discrirrrirration for the chargcs for services reudet'ed by dle State for similar services provided within the public domain.
\ L 33.3 In the event that such changes were made by the Govemment of the Republic of Sierra Leone ',vithout the prior agreement of the Licensee, the Parties will agree oB the nectssary amcndments in order to provide the Licensee with the same financli,l tcmrs.

obligations and charges, as.

rvell as.th: same rights and economic benefits that existed before said changes occuned.
33.4 Where a Party considers that a significant change in the circumstances prevailing at the tirne the Licence was entered into, has occurred affecting the economic balance of the Licence, the Party affected hereby shall notiry the other Parties in rvriting of the clairned change with a statement of how the claimed change has affected thb relations behveen the Parties.
33.5 The other Parties shall indicate in writing their reaction to such representation within a period of one (1) month of receipt of such notification and if such significant changes are established by Parties to have occurred, the Parties shall meet to engage in negotiations and shall effect such changes in, or rectification of, these provisions as they may agree are necessary.
33.6 Where parties cannot agree on new tenns, the matter may be submifted for arbitration or sole expert dctcrmination according to Article 28.

\ & ARTICLE 34 NOTICE 34.1 Any Nof<;q, Appiication, Requests, Agreemenrs, ..Q9.nsenr.

Approval, IDstr-uctioo, Delegation, Waiver.
or other communioation required or permitted to be given hereunder shall be in writing and shall be <ieemed to have been properly given rvhen delivered in person to an authorized representative of the Party to whom such notice is directed or rvhen actually received by such Party tfuough registered mail, telefax or telegram at the following address or at such other address as the Party shall specifu in rvriting fifteen (15) days in advance: ADDRESS: TELEPHONE: EMAIL: Director General Petroleum Directorate 43 Siaka Stevens Street Frcetown, Sierra Leone For Licensee: ADDRESS: SL Exploration Investment & Management GMBH 3 Turay Drive Off Pipeline, Juba Hill Freetown, Sierra kone info@pd-sl.com TELEPHONE: EMAIL: +)-3278 636 155 +23278 096700 info@sl- exploration.com lN WITNESS WHEREOF the parties have caused this Licence to be executed by their duly authorized representatives as of the date first written above.
lh h.'O^ FOR THE STATE : represented by WITNESSED: By: t. 'u_J_' B DR. KAIFALAMARAH MINISTER OF FINANCE & ECONOMIC DEVELOPMENT RAYMOND U DIR.ECTOR GENERAL PETR.OLEUM DIRECTOLATE GBO FOR LICENSEE: representcd by WITNE By: DR. LAF GRABO MANAGING DIRECTOR SL EXPLORATION & MANAGEMENT G fREEIOW{ of FtcE M By .-SAHR tsA HEAD OF OPERATION fr ANNEX I Attached to and made part of this l-icet.ce between the Republic of Sierr Leor- .

:d thc Licensee.
:d thc Licensee.

LICENCE AREA/LICENCE AREA On the Effective Date, the Contract Area/Licence Area, designatetl as Block SL 9A-10, is formed by the area included inside the perimeter constituted by the points indicated SL-9A, SL-9B, SL-9C, SL-9G, SL-9H and SL-9I and the Licence / rea designated by Block SL 98- 10 is formcd by thc arca includcd insidc thc pcrimeter constituted by the poilts irrtii,:atcrl SL- 9C, SL-9D, SL-9E, SL-9F nnd SL-9G on the map attached hereto.
Thc geographical coordinates of those poirts are the firllowing with ret'erence to the Greenwich meridian.

Point Latltude Longitudc sL-9A-10 Arca 1) 63 sq km SL-9A SL-98 SL-9C SL-9G SL-9H sL-91 SL-9C SI,-9D SL-gE SL-9F SL-9G 130 32'33" W 130 17'00" w 130 l0'09" w Bo 23', 54" W 130 46'09', w 130 42',00" w Area = 2141 sq.
km 130 l0'0g', w 130 0l'00' w 120 47',00" W 130 03'50" w 130 23' 54" W 60 48' 38" N 60 36'00" N 603l'18"N 50 13'43" N 60 32'35',N 60 37'00" N 60 3l' l8" N 60 25'00,'N 60 14'00" N 50 57'34" N 60 13'43* N sL-9B-10 Those coordinates are only given for purposes of this Licence and shall not be considered as the boundaries of thc national jurisdiction of Sierra Leone.
The surface of the entire Licence Area abov-'defined is deemed to be equal to about Four Thousand Two Hundred and Seven Square Kilometres (a,277 Sq.

Km).

/, MAP OF THE LICENCE AREA SIERRA LEONE PETROLEUM OFFSHORE BLOCK SL-9A&98-10 AREA4277 sq.km N+w s E i sl--9A ATLAN IC OCEAN SL.9D 9B SL-9E Legend Block ioundary Reference scale=l :3,000,000 Lp D.n m=WGS 198,a CooatEle System=Geogr.phic eoo.dinat Sysrem(GCS) sr-q*ro I sr-eelo I la-.aaa3bl lsr,9^ lr, 12'lr'w 15.
{n rf x 15.36 dr{ ls[-r6 llrr/6'w lsr s( lr3oldo9'w 16.3l'r.. f, i6' 1r'.r r l5r-e6 l1r'?r'e-w l5r*r l!1.

{5 c'w 16.rl'!5.r lst:q 11t.2'6'w 15.3t@r l^,B ' 2rr!

4 rr I 16.3ri rf, r lsrx llrloc'w I$90 lraoor'm'w 16.5 @r la-* hr./o'w l.'rddr tsrjr llroJ'ro'w ls.s7rai !r4 I 'vU A{'''()UNTING GUIDE ANNEX 2 11:.

'purpose of this Accounting Guide is to eitablish equrtable methods as betwi-en tire Parties for determining chargcs and crcdits applicable to operations utder the f.icence.
Principles established by this Accounting Guide shall reflect the Licensee's actual costs.

W SECTION T GEI{ERAL PROVISIONS r.1.1 1.1.2 Words arid terms'appearing rn this Annex shall have the sarr,: meaning a:; in the Licence,aird to that end shall be defined in accordance with Article I of the Licence In the event of a conflict between the provisions of the Accounting Guide and 'he provisions of tle Licence, the provisio;rs of the Licence shall prevail.
1.2 STATEMENTS RXQUIRT,D T'O BE SUBMITTED BY LICENSEE 1.2.t 1.22 1.23 1.2.4 Within forty-five (45) days fi'om the Effective Date, Licensee shall propose to the Director General an outline of the chart of accounts, operating records and teports to l-ru pruptucd and maintairrctl, which shall dcscribc thc basis of thc accounting principles and proccdurcs to hc rrscd during the term of the Licence, and shall be cousisteut with lormal practice of the intematronal petroleum industry.
Within ninety (90) days of the receipt of such proposal the Director General shall either accept it or request such revisions as the Director General deems necessary.

Failure to notiS Lrcensee of any requested revisions within a ninety (90) Cay period shall be deemed acceptance of such proposal.
Within one hundred and eighty (180) days from the Effective Date, the Parties shall either agree on such outline or submit any outstanding issue for determination by a Sole Expert pursuant to the Arbitration provisions of this Licence.

Following agreement over the outline Licensee shall prepare and submit to the Director General fonnal copies of the chart of accounts relating to the accounting, recording and reporting functions listed in such outline.
Licensee shall also permit the Director General to inspect its manuals and to review all procedures which are to be followed under the Licence.
1.2.s Without prejudice to the generality of the foregoing, Licensee shall make separate statements relating to Petroleum Operations for each Development and Production Area as follows: (a) Production Statement (see Section 5) (b) Value of Production Statement (see Section 6) (c) Cost Statement (see Section 7) (d) Statement of Expenditures and Receipts (see Section 8) (e) Final End-o[-Year Statement (see Section I9) $, \\ 0) (e) Budget Statement (see Section 10) Long Range Plan :;r.l Forecast (see Section l3) I.3 LANGUAGE MEASUREITIENT, AND TJNITS OF ACCOUNTS 1.3.1 The U.S. Doilar bcing thc currency unit for investments and compensatir.ru hereunder shall therefore be the unit of currency "or all bookkeeping and reporting under the Licence.
When transactions for an asset or liability are in currency other than the U.S. Dollar, the respective accounts shall be kept in such other currency as well as the U.S. Dollar.

1.j.2 Measurement required under this Amex shall be in the metric system and Barrels.

1.33 The English language shall be employed.

7.3.4 Where necessary for purposes of clarification, Licensee may also prepare financial reports in other languages, units of measurement and currencies.
1.3.s 1.3.6 It is Oe iltcnt r.rf the Parties that no Party shall expenence any gain or loss at the expense of or to the benetit of the other as a result of exchange of cturency.

Where any such ga.in or loss arises it shall be charged or credited to the accounts under thc Licence.
The rate of exchange for the conversion of currency shall be the rate quoted by the Bank of Sierra Leone, or, where buying and selling rates are quoted, the arithmetic average of those rates, at the close of business on the date ofsuch currency convenion.

13.1 Cuu'ent Asscls and Liabilities shall be franslated at the rate prevailing on the date of setdement of the account.

13.8 To translate revenue received and expenditures made in currencies other than U.S.
Dollars, the average of the monthly rate between the currencies shall be used.

13.9 Expenditures made in U.S.

Dollars or other currencies in respect of capital items shall be translated at the rate prevailiog at the date of acquisition.

,// I the proceeds derived from the sale or issue of any intellectual property the developrnent costs ofrvhich rvere incurred pursuar,i to this Licence; h) li:e p oceeds from the sale of zrny petro!e!i.:!
information derived from ' Pcuolcum Operations undcr this Lic:rrce.

3.4 DUPLICATION OF CHARGES AND CREDITS Notwithstanding any provision to the contrary in this Annex.

it is the intcntion that there shall be lo dupliuation of charges or credits in thc accounts under the Licence.

I- t- [* i-.'

t' l- I t- I I I 1- ,l I J 1- I I t 1 I hl, L I I I I i .l I SECTIOI* 2 CLAS:J].ETCATION AND ALI,OTMENT OF C'.
:1TS AI{D EXPENDITURE 2.i Expenditure relating to P€trr'ieuo Opcrarions shall be classified, as follo':rs: a) b) c) d) Exploration Expeliditure; DevelopmentExpenditure; Production Expenditure; Service Costs; and e) General and Administrative expenses and shall be defirrctl and allottctl as herein below provided.
2.2 EXPLORATIONEXPENDITTJRE Exploration Expenditure: shall consist of all direct, indirect and allotted costs incurred in the search for Petroleum in the Licence Area, including but not limited to expendihue on: a) aerial, geographical, geochemical, paleontological geological, topographical and seismic surveys, and studies and their interpretation; b) borehole drilling and water drilling; O labor, materials and services used in drilling wells with the objective of finding new Petrolelm reservoirs or for the purpose of appraising of Petroleum reservoirs already discovered provided such wells are not completed as producing wells; d) facilities used solely for Exploration Operations, including access roads, where applicable, and purchased geological and geophysical information; e) service costs allotted to the Exploration Operations on an equitable basis; D General and Administrative Expenses allotfed to Exploration Operations bascd on the percentage share of projected budget expenditure which will be adjusted to actual dxpenditure at the end of each year.
,h4 \ W l I I I J 2.3 DEVELOPMENTEXPENDITURE Development Expendih.re shall cons.
::t ;r expenditure incurred in Developrnent' Operations, including but not iirnited to r.,,.p€nditure on: a) drilling wells which are cornpleted as producing wells and dr:illing wells for purposes of producing a Petroleum reservoir alread;r discovered, whether these wells are dry or prducing; b) completing wells by way of installation of casing or equipment or otherwise after a well has been drilled for the purpose of bringing such well into use as a producing well; c) intangible drilling costs such as labor, consumable material aod services having no salvage value which are irrcurred in drilling and deeJrening of wells for producing purposes; d) field facilities such as pipelines, flow lines, production and treatmcnt units, wellhead equipmen!
zubsurface equipment, enhanced recovery systems, offshore platforms, Petroleum storage facilities and access roads for production sctivitics; e) f) c) engineering and design studies for field facilities: service costs allotted to Development Operations on an equitable basis; General and Administrative Expenses allotted to Development Operations based on the percentage projected bu@et expenditure which will be adjusted to actual expenditure as the end ofthe year.
2.4 PRODUCTIONEXPENDITURX Production Expenditure shall consist of but not limited to expenditure incurred in Petroleum Operations after the Date of Commencement of Commercial Production, such expenditure being other than Exploration Expendirure, Development Expenditure, General and Administrative Expenses and Service Costs.
The balance of General and Administrative Expenses and Service Costs not allotted to Exploration Operations or to Development Operations under Section 2.2 and 2.3 shall be allottcd to Production bxpendinue.
2.5 SERVICE COSTS 2.5.1 Service Costs shall consist of but not be limited to direct and indirect expenditure irrcurred in support of Petroleum Operations, including the construction or installation of rvarehouses, piers, marine vessels, vehicles, motorized rolling equipment, aircraft, fire security stations, workshops, v/ater and sewage plants, power plants, housing community and recreational facilities and ftu'nirure, tools and cquipmcnt uscd in such construction or installation.
u D,r\ 2.s.2 2.53 Service Costs in any Calendar Year shall include the total costs incurred in such year to purchase and construct or install such facilities as well as the annual costs of main+.aining :r.,a operating such facilities.

Service Costs uril be reguiarly allotted on an equitable basrs to Exploration Expenditure, Development Expenditure a-'rd Production Expenditure.
2.6 GENERAL AND ADMINISTRATIVE EXPENSES General and Administrative Expenses shall consist of: 2-6.1 main office, field and general administrative costs, in the Republic of Sierra Leone, including but not limited to supervisory, accounting and employee relations services; 2.6.2 2-6.3 An overhead charge for the actual cost of services rendered outside the Republic of Sierra kone by Licensee and its Afliliates for managing Petroleum Operations and for staff advice and assistance, including but not limited to financial, legal, accounting and cmployee relations services.
General and Administsative lixpenses will be regularly allotted as specified in subsections 2.2 (f), 2.3 (d and 2.4 to Exploration Expenditure, Development Expenditure and Production Expenditure.

l I I l, I l I I I , .

ri t 3.1 COSI>; I.JOT ALLOWABLE UNDER 1;g]T'.NCE SECTION 3 'HB Th: {r-,llorving costs and expe[ses shal!
not be rei:overable or allowable (whether directly as such or indirectly as part ot any other charges or expense) rurder.the Licence: I I I ) I I I (a) commission paid to intermediaries by Licensee; (b) cosls and charges incurred before the Effective Date including costs in respcct ofpreparation, signature or ratification of this Licence; (c) expenditures in respcct of any financial transaction to negotiate, float or otherwise obtain or secure funds for Petroleum Operations including, but not limited to, interest, commission, brokerage and lbes related to such transachons, as well as exchange losses on loans or other financing, whether between Affiliates or otherwise; (d) expenditures incurred in obtaining, fumishing and maintaining the .guarantees required under the Conkact and any other amounts spent on indemnities with regard to non-fulfillment of contractual obligations; (e) (f) (o (h) (D 0) (k) 0) attomey's fees and olher costs and charges in connection with arbitration proceedings and sole expert detennination pusuant to the Contract; amounts paid with respect to non-firlfiltnent of contractual obligations; costs incurred as a result of failure to insure where insurance rs required pursuant to the ConEact, or of failure to follow procedures laid down by an insurance policy or where the Licensee has elected to self insure, or has under-inswed; financing cost of inventory and loss on disposal of inventory Costs which are not adequately supported and documented.
any bonus payments made by the Licensee; any payments made to the State for failure to fulfill the minimum Exploration work obligations pursuant to Article 6 of the Contract; any fines and sanctions incurred for infringing the larvs and regulations of Sierra Leone; (m) any donation to the Ststc carricd out by Licensce unless otberwise agreed; (n) the State's audit and inspection expenses incurred as a result of the absence of original documents in the Licensee's offices in Sierra Leone; ft u*1' I I I (o) costs related to the assignment from the Licensee to any of its Affiliates or other Persons- (p: petroleum marketing costs or costs ol;,.nsporting pctrolcum bcyond the Delivery Point; (q) (r) (s) cost of fibitration under the L.icence or dispute settlement by any independent expert under the terms of the Licence; fines and penalti:s imposed by a competeDt Court ofLaw; costs incurred as a result of gross negligence or willful misconduct chargeable to Licensee or the Operator under the terms of the Licence.
3.2 ALLOWABLEANDDEDUCTIBILITY The costs and expenses set forth herein shall be for the purpose of determining allowable or non-allowable costs and experses only and shall have no bearing on Licensee's eligibility or otherwise for deductions in computing Licensee's net income from Petroleum Operations for income tax purposes under the Licence.
3.3 CREDITS UNDERTI{E LICENCE The net proceeds of the following transactiotrs will be credited to the accounts under the Licence: a) the net proceeds of any insurance or claim in connection with Petroleum Operations or any assets charged to the accounts under the Licence when such operations or assets were insured and the premiums charges to the accounts under the Licence; b) rcvenue received from third parties for the use of property or assets charged to the accounts under this Licence; c) any adjustuent from the suppliers or manufacturers or their agents in connection with a defective equipment or material the cost of which was previously charged to the account under the Licence; d) the proceeds received for inventory materials previously charged to the account.
:nder the Licence and subsequently exported from the Republic of Sierra kone or transferred or sold to third parties wifiout being used in the Petroleum Operations; e) rentals, refinds or other credits received which apply to any charge which has been made to the account under the Licence, but excluding any award granted under arbitration or Sole Expert proceedings; f) the proceed from the sale or exchange of plant or facilities from the Development and Production Area; u, I I I I I I I I l-I l-I I l I i MATERJAL SECTION 4 4.1 VALUf, u!
rliA'li.RIAL CHARGED TO THtr ACCOUNTS UNDER THE LICENCE Material purchased, leased or rented by Licensee for use in Petroleum Operations shall be valued at the actual net cost incurred by Licensed.
The net cost shall include invoice price less t'ade and cash disco,rnts, if any, purchase and procwement fees plus freight and forwarding charges between point ofsupply and point of shipment, freight to port of destioation, insurance, taxes, customs duties, consular fees, other items chargeable against imported material, and any other related costs actually paid- 4.2 VALUE OF MATERIAL PURCHASED FROM AN AFFILIATE Liccnsec shall notiff drc Dircctor Gcucral of any goods supplied by an Afliliate of Licensee.
Material purchased from Affiliate oflicensee shall be charged at the prices specified in Sections 4.2.1, 4.2.2 and,4.2.3.

4.2.1 New Material (Condition "A') New material shall be classified as Condition 'A".

Such material shall be valued at the prevailing market price, plus expenses incurred in procunng such new materials, and in moving such materials to the locations where the material shall be used.
4.2.2 Used Material (Condition '8") Used material shall be classified as Condition "8" provided that it is in sound and serviceable condition and is suitable for reuse without reconditioning.

Such material shall be valued at not more than seventy five percent (75%) of the current price of new material valued according to Section 4.2.1 above.
4.2.3 Used Material (Condition "C') Used material which is serviceable for original firnction as good second hand material after reconditioning and cannot be classified as Condition "8" shall be classified as Condition "C".

Such material shall be valued at not more than fifty percent (50%) of thc current price of new material valued according to Section 4.2.

I above.
I above.

The cost of reconditioning shall be charged to the reconditioned material provided that the value of such Condition "C" material plus the cost of reconditioning dnes not exceed the value of Condition "B" material.

/, \?D{ t I I I I I 4.3 CLASSIFICATIONOI.

'MATERIALS Material cosa sL:ll be charged to the respecti;e E;;li;ration Expenditwe, Developmerrt E-ip::[diturc, Opcrating Exponditurc acc'ourts ,rt ihe time the material is acquircd hnd on tbe basis of the irrtended use r)f {hc material.
Should such matcrial s.:bsequently be used other than as iritenCed, the relevant charge will be kansferred to the appropriate account.

4.4 DISPOSAL OF MATERIALS Sales of property shall be recorded at the net amount collected by the Licensee from the purchaser.

4.5 WARRANTY OF MATERIAI,S h drc casc of dcfective material or equipment, aoy adjustment received hy Licensee from the suppliers or manufhchrers of such materials or their agents will be credited to thc accounts under thc Liccncc.
4.6 CONTROLLABLEMATERIALS 4.6.1 4.6.2 4.6.3 The Licensee shall control the acquisition, location, storage and disposition of materials which are subject to accounting record control, physical inventory and adjustment for overages and shortages (hereinafter referred.to as Controllab le Material).

Licensee shall conduct one physical inventory of the Controllable Material each Calendar Year which shall be completed prior to the end of the year.
The gain or loss resulting from the physical inventory shall be reflected in the stock records of Controllable Materials.

The Licensee shall compile a reconciliation of the inventory with a rcasonablc explanation for such gains or losses.

Failwe on the part of the Director Gencral to object to Licensee's reconciliation within thirty (30) days of compilation of said reconciliation shall be regarded as approval by the Director General.
hrtr W r r a- I l I PRODUCTTON S'I]..1'TEilIENT SECTION 5 5.1 Subsequcnt to uie i )atc of Comrnencement of (lomr)excial Production from the Licenge Area, Licensee shall submit a monthly Production Stateorert to the Director General shoying the following information for each Development and Production Area as appropriate: a) thc quantity of Crude Oil 'u'oduced and saved ; b) .
the quantity of Nanrral Gas produced and saved; c) d) e) f) (a) the quantities of Petroleum used for thc puposc of conducting drilling aod Production Ogrrafions, pumping to field storage and re'iniection; the quantties ol'Natural Gas flarcd; tlrc size of Petroleum stocks held at the beginning ofthe Month; the size of Petroleum stocks held at the end of the Month.
Such other particulars as the Director General may from time to time dfuect 5.2 The Production Staternent ofeach Calendar Month shall be submitted not later than ten ( l0) days after the end of such Month.

v&r" 4 6.1 VALUE OF PRGDI]f.JTION STATEMENT SECTION 6 6.1.1 'established Lien!€e sr-rali prepare a statement providirg calcriLlahtins of the value of Crud9 Qil prodrced and saved during each Quarler based on the Market under the Licence.
Such Statement shall be submitted to Price the Director General not later than thirty (30) , days following the determination, notification and acceptance of the World Market Price to the Director General according to the Licence.
Report should also include the name aird ad&ess of any person to whom any Petroleum has been supplied by the Licensee, the quantity so supplied, the pice thereof or other consideration thereof and the place to which the Petroleum was conveyed pursuant to the agreement for such supply.

I J r r r t- l- t- I t- l- l- I l- I i- I u rJ COST STATEMENT 6.2 Licensee.

si:ral!

prepare with respect to each Quarter.


a Cost Stateitent containing the following ihformation: a) Total Petroleum Costs in previous Quarters, if any; b) Petroleum Costs for the Quarter in qunstion: c) To'ral Pekoleum Costs as of the end of thc Quarter in question (subsection 7.1 (a) plus subsection 7.1 (b)).

Petroleum Costs for Exploration, Development and Production Operations as detailed above shall be separatcly idcntifierl for each Development and Production Area.
Petroleum Costs tbr Exploration Operations not directly attributable to a specifrc Development Area shall be shown separately.

6.3 The Cost Statem€nt of each Quarter shall be submitted to the Director General no later than forty-five (45) days after the end ofsuch Quarter.
VWW l STATEMEN,T OF EXPi'JDITURES AND RECEIPTS SECTION 7 7.1 Subsequent ?r rhe Date oi:Commencement of Commerciai ltoduction ilom the to each Quarter a Statement of Licence .fuea, Liceqs€e shall prepare with resp€ct Expenditures and Receipts.

The Statement will distinguish between Exploration Experditure and Development Exp€nditure and ProCuction Expenditure and will identifo major items of expendinre within these categories.
The statement will show tl^e following: a) actual expenditures and receipts for the Quarter in question; b) cumulative expenditure and receipts for the budget year in question; : t- c) latest forecast of cumulative expenditures at the year end; and d) variations between budget forecast and lotcst forccast and cxplanations therefore.
7.2 The Statement of Expenditures and Receipts ofeach Calendar Quarter shall be submitted to the Director General not later than forty-five (afl days after the end of such Quarter for provisional approval by the Director General.

'&F4, FINAL END-OF-YEAE i':]ATEMENT SECTION 8 8.1 The Licensee .will prepare zi Final End-of-Year Statement.
.The Sta'tbment witl contain informafon..as provided in the Production Statement,:Value of Production Statements, Cost Statement and Statements of Expenditures and Receipts, as appropriate.

The Final End-of-year Statement of each Calendar Year shall be submittcd to thc Dircctor Ceneral withio uirrcty (90) days of the end of such Calendar Year.

{ r r l-' ,- I l- l^ I )- I l- I l- i- hkh l 9.r 9.2 9.3 9.4 BUDGET STATE}TENT SECTION 9 The Licensee sltall prepare irn annual budget Statement.
ThiS will distinguish betwccn Exploratibn pxpcnditurc, Developurcnt Expcndittrre aud Production Expendih.ue and will shorv the following: a) b) c) cumulative Expenditures and Receipts to the end ofsaid budget year, and forecast Expendinres and Receipts for the budget year under the Licence; the most important individual items of Exploration, Development and Production Expendinres for said budgct ycar.
The Budget may include a budget line or lines for unforeseen expenditures which, however, shall not exceed ten percent (107o) of the total hndgetary expenditure.

The Budget Statement shall be submitted to the Director General with respect to each budget year no less than ninety (90) days bcforc thc start of such ycar cxccpt in the case of thc first year of Lhe Liccncc when the Budget Statement shall be submitted within sixty (60) days of the Effective Date.
Where Licensee foresees that during the budget period expenditures have to be made in excess of the ten percent (107o) prusuant to Section 10.2 hereot Licensee shall submit a revision of the budgct to the Director General.
,*F(/ SECTION IO LONG RANGE PL-AN Ar.I* -E'ORECAST I0.l Licensee shall.prepare anci submit to the Director General th:'tbllowing: During Exploration Period, an Exploration Plan for each year commencing as of the Effective Date which shall contain the following inforrnation: Estimated Exploration Costs showing outlays for each of the years or the number ofyears agreed and covered by the Plan.
i) : ii) iiD Details of drilling activities planned for each such year; iv) Details of infrastructure utilization and requirements.

Details or" seismic operations for each such year, 10.2 The Exploration Plan shall be revised on each ernniversary of the Effective Date.
Licensee shall preparc and submit to the Director General the first Exploration Plan for the Tnitial Exploration Period of two (2) years within sixty (60) days of the Effective Date and thereafter shall prepare aud submit to The Director General no later than forty-five (45) days before each anniversary of the Effective Date a revised Expluratiorr Plan.
a) ln the event of a Dcvelopment Plan being approve{ the Licelsee shall prepare a Development Forecast for each calendar year of the Development Period, which shall coitain ttre following information: i) forecast of the capital expenditure portions ofDevelopment and Production exper,ditures for each Calendar Year of the Development Period; forecast of operating costs for each Calendar Year; ii) iii) iv) description of main technologies employed; and forecast of Petroleum production for each Calendar year; b) The Development forecast shall be revised at the beginning of each Calendar Year commencing as of the second year of the first Development forecast.
Licensee shall prepare and submit to the Director General the first Development forecast within one hundred and twenty (120) days of the date when the first Development Plan is approved by the Director General no later than forty-five (45) days betbre each Calendar Year comrnencing as of the second year of the fi rst Development forecast.
a,.-F. -{t (, rO3 CHANGES OF PLAN AND FOR.ECAST It is recognized by Lrcensea r nd The Director General that thc d€taile -.i the Exploration Plan ana Developi,:cnt forecast may require changes in the hght of existing circumstebdes and nothing herein contained shatl lilnif the flexibility to make such changes.

Consistent with the foregoing the saiC Plan:and Forecast may be revised a:mually.
l- t- r l-, 1- 1- I t- l- t- l- t- i rKxil J FOR]VI OF GUARAN'I [,E ANNEX 3 l. 2 3 4 dated having its registrrctl oflicc at (namc of the Baok) rcgistered under the Law of _ ln consideration of the Go..remment of Sierra Leone representeC by :he Director General of the Petroleum Directorate (hereinafter referred to as "the State') having granted a Petroleum Licence for the block (hereinafter referred to as "Licence", which expression shall include all the terms, and amendmen s agreed to between the State and the licensee, thereto), with lvlls (hereinafter referred to as "Licensee", .which expression unless repugnant to the conl€xt or meaning thereof include all its successors, administrators, executors and assigns), and the Stote havc ugrccd that thc Licenscc shall furdsh to tlte Stat€, a fuarrk guaran(ee (hereinafter referred to as "Guarantee") towards its minimum financial obligations as provided in the Contract for Us$(xxx) for thc pcrformancc of its obligations undcr the Licence.
We and having its registered offrce at (hereinafter referred to as "the Bank", which expression shall unless repugnant to th€ context or meaning thereof includes all its successors, administrators, executors and assigns) do hereby guarantee and undertake to pay to the State, immediately on the fust demand in writing, any/all in words) money(s) to the extent of US$ without any demur, reservation, cont?st or protest and/or without any reference tc the Licensee.
Any such demand made by the State on the Bank by serving a written notice shall be conclusive and binding, without any proof, on the Bank as regards the amiunt due and payable, notwithstanding any dispute(s) pending before any court, trib'.rnal, a$itrator, sole expert, conciliator or any other authority and/or any other matter or thing whatsoever, as liability under these presents being absolute and unequivocal.
We agree that the Guarantee herein contained shall be irrevocable and shall continue to be enforceable until it is discharged by the State in writing.

This Guarantee shall not be determined, discharged or affected by the liquidation, winding up, dissolution or insolvency of tlre Licensee and shall remain valid, binding and operative against the Bank.
ln figures) and (US$ _ The Bank also agrees that tle State at its option shall be entitled to enforce this Guarantee against the Bank as a principal debtor, in the first instance, without proceeding against the Licensee and notwithstanding any security or other .guarantee that the State may have in relation to the Licensee's liabilities.
The Bank further agrees that the State shall have fuUest liberty without our consent and without affecting in any manner our obligations hereunder to vary any of the terms and conditions of the said Contract or to extend time of performance by the said Licensee from time to time or to postpone for any time or from time to time exercise of any of the powers vested in the State against the said Licensee and to forebear or enforce any of the terms and conditions relating to the said Contract and we shall not be relieved from our liability by reason of any such variation, or extension being granted to the said Licensee or for any forbearance, act or omission on the part of the State or any indulgence by the State to the said Licensee or any such matter or thing fr w 'l 6 7 at 9. whatsoever which under the law relating to sureties would, but for this provision, have effect of so relieving us.
The Bank firther agrec that the Gu.

:iaiitee herein contained shall remain in firll:irrse during the period that is taken lbr the performance of the Licence and all dues ol the state under or by virt'-re of this Licence have been fully paid and its claim satisfied or discharged or till the State discharges this Guarantee in writing, whichever.

is earlier.

This Guarantee shall not be discharged by any change in our constihrtion, or in the constihltion of the Licensec.
The Bank confrms that this Guarantee has been issued with observance of appropriate laws ofthe countr5r ofissue.

The Bank also agree that this Guarantee shall be govemed and construed in accordance with Sierra Leone Laws and subject to the exclusive jurisdiction of Sierra Leone courts in figures) US$ Notwithstanding anything contained hercirr atxrve, onr liabilities under this Guarantee is limited to I Is$ our Guarantee shall remain in force up to days after the expiry date/extended date.
Any claim under this Guarantee must be received before the expiry of sixty (60) days after the expiry date, or before the expiry of sixty (60) days from the extended date ifany.

Ifno such claim has been received by us withitr sixty (60) days after the sairi date/extended date the PRU's right under'.\is guarantee will cease.
However, if such a claim has been received by us within and up to sixty (60) days after the said datey'extended date, all the PRU's rights under this Guarantee shall be valid and shall not cease until we have satisfied that claim.

atrd inclu.ling sixty (60) (in words) and day In witness whereof, the Bank through its authorized officers has set its hand and stamp on .

The seal this 200 of day of 200 in accordance with its bye-laws and this Guarantee was duly signed by as required by the said bye-laws.
was hereto duly affixed this and of at Secretary Witness: President & Director ).
{ \'r w I ANNEX 4 FISCAI- TERMS |-:(.TION I INTERPRETATION l.t t.2 1.3 1.4 1.5 1.6 1.7 1.8 t.9 In this Annex 4, unless the context requires otherwise- "adiustal cost base' ofan asset has the meaning given in scction 2 of the IT Act, but is determined without indexation under section 58(7) of that Act; (arrmgement" has the mcaning givcn in sectiou 95 of thc IT Act; "associate" has the meaning given in section 2 of the IT Act; "Commissioner-General of the NRA" means the Commissioner-General appointed under the National Revenue Authoity Act,2002; "debt claim" and "debt obligadon" have the meanings given in section 2 of the IT Act; "derivative instrument" has the meaning prescribed by regulations and, in the absence ofregulations, takes its meaning from generally accepted accounting principles; aPetroleum Producer"-means a person engag€d under a petroleum licenc in petroleum production activities *exploration operations"-with respect to a petroleum right, means "exploration" within the mcaning given in section I of the Act; "crcluded erpenditure" means - in addition to rrnallowable costs under Ar:nex 2 (a) income tax and PRRT; (b) bribes and expenditure incurred in comrpt practices; (c) interest, penalties and fines payable to a govemment or a political subdivision ofa ovemment of any country for breach of any law or subsidiary legislation; and (d) expenditure incurred as a consequence ofbreach ofan Liceace Agreement; I .
l0 "Iinancial cost' and "financial gain" have thc rncanings given in section 35 of the IT Act; l.l I "fiscal stability clause'refers to a clause in a Licence Agreement that warralts that the fiscal regime applying to a contracting party will continue to apply or not be altcrcd to the detriment of the party; l.l2 'foreign currency instrument" has the meaning prescribed by regulatiom and, in thc abscncc of regulations, takes its ureaning from generally accepted accounting principles; n <fr J B r i- r r t- )- j 1- I t- I )- I l- I l. I 3 "gQnerally accepted accounting principles" means the Intemational Financial .
Reporting Standards; t,I1 :'NRA' mcans the National Rev"no" nu,iltrity established under the National Revenue Authonty Act, 2Nl2;' l.l5 'relevant financial cost" and "relevant linancial gain" mean- (a) a firrancial cost or a tinancial gain, respectively, with respect to a derivative or foreigl exchange instrument; or (b) a loss or gain, respectively, with respect to a debt claim or debt obligation denominated in a currency other than that in which ihe person accounts for the purposes of this Act; I .
16 "relevant Ministry" and "relevant Minister"- (a) mean-with respect to petroieum, the Ministry and Minister responsible for management of petroleum matters; aod O) where there is no cunent Ministry or Minister, includes- (ii)with respect to pcholcum, the directorate or agercy alld the person appointed to oversee the administration of the Act; l -l'?
"revenu€' has the nrcaufurg h section 2 of the National Rcvcnue Authority Act, 2002; l.l8 *revenue law'means a law referred to in the Schedule to the National Revenue Authority Act, 2002 1.19 "separate petroleum.operation" has the meaning given in section 5; I .20 *service fee" has the meaning given in section I I 7 of the IT Act; l.2l "under\ring ownership or control'has the meaning given in section 2 of the IT Act; and 'tear of assessment" has the meaning given in sections 45 , 46 and 47 of the ITAct.
ROYALTIES 2.1 Royalties are payable by the holder ofa petroleum right in respect of petroleum produced and saved pursuant to the right.

SECTION 2 2.2 2.3 2.4 2.5 Royalties are calculated by applying the relevant rates set out in paragraph I of the Second Schedule to the market value ofthe petroleum produced and saved as determined under paragraph 2 of the Second Schedule.
Royalties are payable at the time prescribed in paragraph 3 of the Second Schedule and in accordance with the procedure outlined in Annex 2 this Licence Agreement.

This section and the provisions referred to in it are subject to the State's right to receive royalties in kind pursuant to section 107 ofthe Act.
Asscssment of Royalties h\v I (a) A person liable to pay royalties under this Act must, at the time the royalties are payable, file with the Commissroner-General of the NRA a retum of royalties and make payrnent.
(b) A retum filed under subs eciion 2.5 (a) must be in the manner and tbrr:l prescribed specifring- i) ii) the volume of petroleum liable for royalties; the market value ofthe petroleum calculated in accordance with Part I of the Second Schedule; the ;mount of royalties tbr which the person is li.rble; any any other information that the Commissioner-General may prescnbe.
iii) i") 2.6 Subject to this section, the provisions ofPart XVII of the IT Act (assessments) apply, with any necessary adaptations, to a retum filed under subsection (2.1).

In particular, a return filed under subsection 2.5 is- (a) Eeated as a self-assessmen!

but (b) subject to sections 102 (eopardy assessment) and 103 (amended assessment) of the IT Act.
INCOME TAX PBINCIPLES OF TAXATION SECTION 3 3.1 3.2 3.3 A person cooducting petroleum operations is subject to income tax with respect to those bperations under the IT Act, but as modified by this Annex.

To the extent there is no modification, the standard rules in the IT Act apply.

The provisions of the IT Act apply to thc assessment and pa)rment of income tax with respect to petrolelm operations.
Income tax payable with respect to petroleum operations for a year ofassessment is calculated by applying the rate set out in Part II of the First Schedule to a person's chargeable income from petroleum operations for the year- If the person has other chargeable income, that income is charged at the appropriate rate under the IT Act.
3.4 For the purposes of calculating a person's chargeable income from petroleum operations- (a) O) each separate petroleum operation is treated as an indcpendent business and the penon must prepare accounts for that business separate from any other activity of the person; and the person must calculste chargcablc income, loss and income tax liability for the business independently for each year ofassessment.
(c) Section 95 ofthe IT Act (arm's lcngth standard) applies- \ t5 4, I .J i) to arrangements between a separate petroleum operation and other activities of the pe156n qqndrrcting the petroleum operation (including other peEoleum opeiation.

:-; .

':fining or other processing operations of the person); and i, persons.
as though the arr-angements wcre conducted between associated ln accordance with subsection 1.3, the transfer ofan asset to or from a separate pctrolcuu opeiatio,: is hcated as an acquisition or disposal of thc asset, as the case requires.

Where two or more persons hold a petroleum right, they must calculate their chargeable iucolre fiom pctroleum operations with respect to the right separately, but do so as though they were associated persons.
As a rcsult, scction 95 of the IT Act (ann's length standard) applies to arraDgements between thc persons.

3.5 3.6 INCOME TAX SECTION 4 SEPARATE PETROLEUM OPERATIONS 4.1 Subject to subsection 4.2 petroleum operatioos pertaining to each pefroleum right constitute a separate petroleum operation.
4.2 The following rules apply following an approval of commerciality within a petroleum licence area: (a) peholeum operations conducted with respect to a petroleum right to the date of approval and petroleum operations conducted with r€spect discovery area after that date are treated as condrrcted with respect to the same separate petroleum operation; and to the approved (b) from the date of approval, petroleum operations conducted with respect to the petroleum right that are not in respect ofthe approved production area are treated as a new scparate p€troleum operation.
4.3 Subsection (4.4) applies where- (a) there is an approval ofcommerciality with respect to an approved discovery area within a petroleum licence area (whether or not there are prior approved discovery areas within the licence area); and (b) subseqrrcntly, but before any further approval ofcommerciality within thc petroleum licence area, the holder ofthe petroleum licence relinquishes all of the licence area that is not subject to an approval of commerciality (whether the approval referred to in paragraph (a) or an earlier approval).
w & 4.4 4.5 Where this subsection applies, petroleum operations conducted with respect to the relinquished area referred to in subsection (1.3)(b) from the date ofapproval of i.'.

: rmerciality are Eeated as conducted witl' :espect to the approved area referred to :- ;ubsection (4.3)(a), and so are Eeated an conriucted with respect to the same separate petroleum operation.
Regulations may prescribe circumstances in which and extent to rvhich petroleum operations conducted w-ith respect to a pipeline permit are keated as conducted with respect to the same separate p€troleum operation as that conducted with respect to an approved discovery a.ea serviced by the pipeline.

In particular, thc regulations may apportion pipeline costs between petroleum operations conducted with respect to more than one approved discovery area.
4.6 [n this section- I (a) "pipeline permit" means a permit granted under section 76 of the Act; and (b) "reconnaissance permit" has the meaning given in section 2 of the Act.

INCOME TAX SECTION 5 INCOME FROM PETROLEUM OPERATIONS 5.1 Subject to subsection 5.2, in calculating a person's income from a separate petroleum operation for a year of assessmen!
include the following: (a) the market value ofpetroleum produced and saved from the licence area that is disposed of or reated as disposed of during the year; (b) compensation received, whether under a policy of insurance or otherwise, in respect of loss or destruction of petroleum from the licence area; (c) amounts received in respect of the sale of information pertaining to the operations or petroleum reserves; (d) gains from the assignment or other disposal ofan interest in the petroleum right with respect to which the operation is conducted; (e) amounts required to be included undcr section l0 in respect of a positive balance in a decommissioning fund; and (f) any other amounts derived by the person during the year from or incidental to the operation that are included in calculating income under the IT Act.
5.2 The market value of petroleum is determined in accordance with paragraph 2 of the Second Schcdulc.
hn' W I I t- I )- lilCCi..:]-,CX SECTION 6 DEDUCTIONS FROM PETROLEUM OPERATIONS 6.1 Subject to this section, in calculating a person's chargeable income from a separate p€troleum op€ration for a year of assessment, deduct the following: (a) area fees, rent lnd royalties paid by the person uoder this Abt or the Act with respect to the petroleum right; (b) expenditure (other than frnancial costs) incurred in respect ofthe petroleum operation on the following but only if it has been expensed in the person's financial accounts and that expensing is in accordance with generally accepted accounting principles: and i) ii) expenditure on reconnaissance, appraisal and exploration operations; expenditure in developing pekoleum operations and infrastruchrre, including as may be prescribed by regulations; (c) capital allowances granted with respecf to the petroleum operation and calculated in accordance with Part II ol the Second Schedule; (d) contributions to and other expenses incurred in respect ofa decommissioning firnd forthe petroleum operation as required under the Licence Agreement or decommissioning plan approved by the Minister responsible for management of petroleum matters; (e) (0 expenses incurred by the penon in the course of reclamation, rehabilitation and closure of the petroleum operation, but only to the extent funds in the relevant decornmissioning fund are not yet available or are inadequate; and subject to zubsection (6.2), any other amounts incurred by the person during the year directly in the coune of the operation that may be deducted under the provisions of the IT Act.
6.2 No deduction is allowed in calculating chargeable income from a separate petroleum operation- (a) nnder sections 37 ,40, 43 and 44 of the IT Act (b) for an amount unless- i) it is incurred in the acquisition or improvement ofa valuable asset used in the operation; or {, I I I ii) it is incurred in providing services or facilities for the operation and the amouot constirutes income of the .ecipient that has a source in Sierra Leone (see section 89 cf tire IT i.
-'r,; (c) to the extent the amount do€s not comply rvith section 95 of the IT Act (are.'s,.

length standard); (d) for a bonus payment referred to in section 5; or (e) for excluded exp;ndirure.

In calculating a person's chargeable inconne frorn a separate petroleum operation for a year ofassessment, relevant financial costs incurred during the year may be deducted only to the extent that relevant financial gains are included in calculating the income.
This limitation is in addition to that provided il scctiou 35 of tll: IT Act (deduction of interest).

Any excess tinancial cost for which a deduction is not available under subsection (6.3) is carried forward and treated as a financial cost inourred in the following year of assessfii€nt, However, section 88 of the IT Act (change ofconhol) applies to rcstrict the carry forward of that excess.
The following are treated as the cost ofa depreciable asset lbr which capital allowances are granted with respect to a separate petroleum operation in accordance wiLL r'art II of the Second Schedule: (a) the adjusted cost base of the petroleum nght; (b) expendiurre hcurred in respect ofthe petroleum operation and referred to in subsection (6. l)O) thar ,) iD in accordance with generally accepted accounting principles, is capitalised in the person's financial accounts; and does not otherwise fall to be included in the cost base ofan asset; and (c) bonus payments made in respect of the grant of the petroleum right and referred to in section 5.
Regulations may make further provision with respect to the deduction of amounts in calculating income ftom petroleum operations.

In particular, where goods or services are supplied to a petroleum right holder by an associated person, regulations may limit the deduction for any amount incurred by the right holder to the no profit amount referred to subsection (6.8).
The no profit amount is the actual costs incurred by the associated penon in the provision of the goods or services, but excludes any cost incurred in favour of another associated person.

6.3 6.4 6.5 6.6 6.7 6.8 u h("tr J r t-i a- t !- I )- I I , I I I .
INCOMI: {nX SECTION 7 LOSSES FROM PETROLEUM OPEH,ITIONS 7.t Section 32(2)(b) ofthe IT Act applies to allowablc losses ofa person from a separate petroleum operation with the following modifications: (a) tax payable may be reduced to 15% of the tax that would be due if losses were not carricd forward; (b) losses are used in the order in which they are incurred; and (c) losses from the separate petroleum operatioo may be deducted only in calculating future chargeable income from that operation and not chargeable income from any other petroleum operations or non-petroleum activities.
INCOME TAX DECOMMISSIONING FUNDS SECTION 9 9.1 9.2 9.3 Amounts accumulated in or withdrawn from a decommi55isning fund to meet decommissioning expenditure are exempt from tax.
Subsection (9.3) applies where there is a positivc balance in tbe relevant decommissioning fimd at any of ftg fsllewing times: (a) after a person completes rehabilitation ofa separate petroleum operation conducted by the person; or (b) at the time the person breaches an approved decommissioning plan Where this subsection applies, the positive balance is included in calculating the chargeable income of the person from thre separate petroleum operation for the year of assessment in which the event referred to in subsection (9.2) occurs.
Further, the person may be liable for PRRT with respect to thc positive balance (see section 19).

4 ) r I 1 INCOME TAX MlNiMl.Ji',, :AX SECTION 1O 10.1 Part V of the IT Act does not appiy to petroleum operations.

SECTION 11 PETFTOLTUM RESOURCE RENT TAX {PRRT) PETROLEUM RESOURCE RENT TAX IMPOSED l1.l Petroleum resource rent tax ("PRRT') is payable by a petroleum licence holder that has accumulated net receipts for a year of assessrnent from Petroleum Operations ofa Petroleum License.
ll.2 The amount of PRRT payable under subsection (l l.l) is calculated by applying the rate specified in Part III of the Second Schcdulc to the accumulated let reueipls for the year- 11.3 For the lurposes ofall PRRT provisions, but subj,jct to section 17, Petroleum Operations conducted with respect to a Petroleum License is teated as a Petroleum Operation separate from any other Petroleum License.
lf.4 A petroleum licence holder becomes liable to PRRT with respect to a separate Petroleum Operation from the point Petroleum Operations commence with respect to this Licence.

11.5 PRRT is imposed in addition to any other tax or charge, including income tax.
11.6 Where two or more Licensee's hold a peaoleum right, each shall separately and individually calculate PRRT, file PRRT tax rehrms and pay to the Govemment their chargeable PRRT from Petroleum Operations with respect to their right, PETROLEUM RESOURCE RENT TAX (PRRT) SECTION 12 ACCUMULATED NET RECEIPTS AND ACCUMULATED NET EXPENDITURE l2.l Accumulated net receipts of a separate Petroleum Operation for a year oi assessment is the extent to which- (a) net receipts ofthe operation for the year; exceeds *rt (b) accumulated net expenditure for that operation for the previous year of assessment (ifany) as increased by the up!ift soecified in Part III of the ..:cond Schedule.
12.2 Accuinulated net expenditure for a separate Petrolcum Operation for a year of assessment is the extent to which- (a) net expenditure for the operation for the year (if any); plus (b) u"o"mulated oet expenditure for that operation for the previous year of asscssment (ifany) as incroased by thc uplift spccificd in.Iart III ofthe Second Schedule; exceeds (c) net receipts of the operation for the year (if any).
SECTION 13 PETROLEUM RESOURCE RENT TAX (PRRT) NET RECEIPTS AND NET EXPENDITURE 13.1 Net receipts ofa separate Petoleum operation for a year of assessment are the extent to which- I I I (a) gross receipts of the operation for the year; exceed O) deductible expenditure ofthe operation for the year.
13.2 Net expenditure of a separate Petroleum operation for a year of assessment is the extent to which- (a) deductible expendinre of the operation for the year;.exceeds (b) gross receipts of the operation for the year.
SEGTION 14 PETROLEUM RESOUBCE RENT TAX (PRRT) GROSS RECEIPTS 14.l Subject to this section, gross receipts ofa separate Petroleum Operafion for a year of assessment is the sum of the following .gross amounts (without deduction): (a) gross amounts directly included in calculating income from the P€troleum Opcration for the year, ilcludir.rg service fees, amounts receirred from the disposal ofpetroleum and other tading stock and, with respect to a positive balance in a decommissioning fimd,; hl (b) {c) gross positive amounts included in calculating income from the petroleum )ieration for the year as required by secti-:r1r, including consideration ,':.
:eived on the disposal ofdeprecrable.

bu:.in-:ss or other assets; and interest and other l-rnancial galns, including an amount treated as interest income under the IT Act; and 14.2 Gross receipts ofa separatc Petroleum Operation does not include- (a) subject to.section 18, consideration received for the tansfer ofa petroieum riCht.
l4.l An amount - (a) (b) determined in accordance wi0r section 95 of the IT Act (arm's length standard); and may be included in the gross receipts ofa year of assessment when it is actually received during that year.
SECTION 15 PETROLEUM RESOURCE RENT TAX (PRRT) DEDUCTIBLE EXPENDITURE 15.1 Subject to this section, the deductible expenditure ofa separate Petroleum Operation for a year of assessment is the sum of the following gross amounts: (a) gross amounts in respect ofthe Petroleum Operation that are directly deducted in calculating chargeable income for the year and where the amounts are referred to in section 7; O) (c) gross expenditure included during the year in the adjusted cost base ofa depreciable or business asset used in the Petroleum Operation; other gross expenditue that enters into thc calculation ofa net amount that is incluCed in calculating income from the Petroleum Operation for the year; (d) other gross expenditue that enters into the calculation ofa net amount (such as a loss) that is deductible in calculating chargeable income from the petroleum operation for the year where that amount is referred to in section 7; (e) the amount of incom€ the year as calculated under section 4; and ta.\ payable with respect to the Petroleum Operation for lr u*F', (f) (g) with respect to the year of commencement of Pctrclcum Opcrations, any anrount provided for in section 17; ix:erest or other financial costs, includinq aD allrount treated as interest under the IT Act; (h) The States Carried Interest paid by Licensee's.
15.2 The <ieductible expenditure .rfa separate Petroleum Operation does not if,clude- (a) amounts claimed as capitai allowances, but not to limit a deduction under subsection l5.l (b); O) subject to section 17, amountE included in the adjusted cost bosc ofu petroleum right; (c) bonus payments referred to in section 5; and (d) payments to acquire an interest in the profits, receips or expendihres ofthe Petroleum operation and payments made with respect to such interests.
15.3 Expcndinrc is not dcductible expcrditure to the extcnt it cxcceds the requirements of .

section 95 ofthe IT Act (arm's length standard).

SECTION 16 PETROLEUM RESOURCE RENT TAX (PRRT) YEAR OF COMMENCEMENT 16.

I This section applies with respect to the year of assessment in which a person corlmences Petroleum Operations under a petroleum licence (as to which, see definition of"Petroleum Operations" in section l).
It applies for the purposes of allowing a deduction with respect to exploration expenditure incurred since the Effective Date up to the year of assessment.

16.2 Subject to this section, the deduction allowed under section l5(1)(f) is equal to the amount by which- (a) relevant deductible expenditure; exceeds O) relevant gross receipts.
16.3 Relevant deductible expenditure means expenditure- I I I l- I L { I I (a) ft) incurred by the person exclusively on exploration in the relevant licence area sinse the Effective Date and ci I r.ype referred to in section 15 (other thaa x4ction I 5 ( I {f)), prestming that the petroleum operation in question is t-hat conducted under &e petroleum licence prior to the commencement.
16.4 Relevant gross receipts means receipts- (a) (b) derived by the person rom exploration in the.relevant licence area Stnce the Effective Date; and ofa type referred to in section 14, presuming that the petroleum operation in question is that conducted under the petroleum licence prior to the coomencement.
16.5 No amount is deductible under section l5( l)(f) unless the relevant deductible expenditure and relevant gross receipts have been auditcd and ccrtificd as correct by the Commissioner-General of the NRA.

Regulations may prescribe a time limit for the Commissioner-General for conducting the audit and certification.
SECTION 17 PETROLEUM RESOURCE RENT TAX (PRRT) TRANSFER OF PETROLEUM RIGHTS l7 .l This section applies where a pemon mnsfers an interest in a peroleum right during a year of assessment together with the person's interest in the separate Petroleum Operation conducted under that right.
17.2 For the purposes of calculating any PRRT payable by the transferee, the transferee is treated as- (a) having the samc accumulated net expenditure for the Petroleum Operation for the year of assessment preceding the transfer as the transferor had (ifany); O) (c) incurring the same deductible expenditure for the Petroleum Operation during the year ofassessment of the transfer and to the time of transfer as the transferor did (if any); and deriving the same gross receipts for the Petroleum Operation during the year of assessment of the transfer and to the time of tr-ansfer as the transferor did (if any)- t- I l \^{t' I t I I I I l 17 .3 Where a person transfers only a part of an interest in a petroleum right, the amounts referred to in -<ubsection (17.2) are apportioned accordirg ro the amount of the interest trai;sferi.j SECTICI{ 1B PETROLEUM RESOURCE RENT TAX (PRRT) DECOMMISSIONING TUND POSITIVE BALANCE t8.l In tire circumstances prbvided for in section 9, the positive balance in a decornmissioning firnd may bc included in calculating the chargeable income of a person from a separate petroleum operation.
18.2 An inclusion referred to in suhsection (18.1) is also included in gross receipts for the prrrlnrsrlr of r:alculating PRRT (see section l4( l)(d)).

SECTION 19 PETROLEUM RESOURCE RENT TAX (PRRT) INSTALLMENTS OF PRRT 19.l Petroleum Prodrrcer mus!

at the time the producer would be liable to file an estimate of chargeable irrcome under section I 13 of the IT Act, file an estimate of PRRT due with respect to the same year of assessment.
19.2 An estimate frled un&r subsection (19.1) must be in the manner and fomr prescribed estimating- G) O) (c) gross receipts, deductible expenditure, net receipts, net expenditure, accumulated net receipts and accumulated net expendinre for the year of assessment from the separate Petroleum Operation; accumulated net expenditure tbr that operation tbr the previous year of assessment (if any) as increased by any uplift available; where the producer estimates accumulated net receipts for the year of assessment, the amormt of PRRT payable with respect to those receipts; and (d) any other intbrmation that the Commissioner-General may prescribe; 19.3 An Petroleum Producer must file an estimate under subsection ( 19. l) irrespective of whether any amount of PRRT is estimated as payable.
\ t- i- 19.4 An Petroler,m Producer that estimates PRRT as payable for a year of a.ssessment undcr sul -:,-.

on (19.3) rnust pay that PRRT bv t1irartu.,l.v r^lstalment at the same time as income :a], would be payable under section M nr" th: lI Act.

19.5 Subjcct to this section, the procedurc in sect,ion lij of the l'l'Act applies to estimates aod payment of instalments under this section as though PRRT were income tax.
SECTION 20 PETROLEUM RESOURCE RENT TAX (PRRI) ASSESSMENT of PRRT 20.1 A Petroleum Producer must, at the time the producer would be liable to file a retum of income under section 97 of the IT Act, file a rehrm of PRRT due with respect to the salre year of asscss[rcn t. 2O.2 A retum filed under subsection (20.1) must be in the manner and forrn prescribed speciffing- (a) gross receipts, deductible expenditure, net receipts, net expenditure, accumulated net receipts and accumulated net expendihre for the year of assessment from the separate ... Pekoleum Operation; O) (c) accumulated net expendihre for that operation for tbe previous year of assessment (if any) as increased by any uplift available; where the producer has accumulated Det receipts for the year ofassessment, the amount of PRRT payable with respect to those receipts; and (d) any other information that the Commissioner-General may prescribe.
2O.3 A Petroleum Producer must file a retum under subsection (20.1) irrespective of whether any amount of PRRT is payable for the year of assessment.

20.4 A Petroleum Producer that estimates PRRT as payable for a year of assessment under subsection (20.3) must pay that PRRT (less any instaLnents paid under section 19) at the time the return is filed.
20.5 Subject to this section, the provisions of Part XVIII of the IT Act (assessments) apply with any necessary adaptations to a retum filed under subsection (20.1).

In particular, a retum filed under subsection (20. l) is- (a) treated as a self-assessment; but (b) subject to sections 102 (eopardy assessment) and 103 (amended assessment) of the lT Act.
'N \*\ lr i I I I SECTION 21 PEIROLEUM RESOURCE RENT TAX (PRRTi PRRT TRANSITION 2l.l For the purposes of imposing PRRT, "relevant deductible expenditure" and "relevant gross receipts" referred to in section 16 may include amounts incurred or derived in a year of assessment prioi to the year of commencement.
GENERAL PRINCIPLES OF ADMINISTRATION SECTION 22 22.1 Subject to the Act, this Annex is administered in accordance with the following mles and procedures of the IT Act: (a) tax avc;rtance (section 96 ofthe IT Act); O) recovery of tax (section 106 to I 12 of the IT Act); (c) (d) (e) (D G) reftrnds oftax (section I 15 ofthe IT Act); records and investigation powers (Part XVI of the IT Act): objections and appeals (Part XflI of the IT Act); interest and penalties (Part XVII of the IT Act); and administration (Part XD( of the IT Act).
22.2 The rules and procedures referred to in subsection 22.1 apply with any necessary adaptations and, in particular, as though amounts payable under this Act were income tax.

22.3 For the purposes of section 133 of the IT Act, the holder of a petroleum licerrce must maintain accounts and records for the Petroleum Operations in accordarce with generally accepted accounting principles.
22.4 The Minister responsible for finance may, by statutory instrument, make regulations- (a) for matters authorised to be made or prescribed under this Annex 4 by regulation; 4/ (b) amendina, repealing or replacing provisions of the First.

Seccnd or Third StheC'.

'!,:.r,, but not in a way that is inconsistent u,itl' err;i other provision of this Annex 4: (c) -.
.. tb; the better carrying into elIbct and interpreting the principles, purposes and provisions of this Annex; and (d) rcquiring petroieum right holders to provide such inforrnation as may bc prescribed, whether on an isoiated or periodic basis I I I I : I l ) I BONUS PAYMENTS SECTION 23 23.1 The terms and conditions for grant, transfer or assigrunerrt of a petroleum liccncc rrray provide for the payment ofone or more bonuses from the licensee, transferee or assignee, as the case requires.
23.2 A bonus under subsection (23.1) may be a lump sum or depen,lent on or calculated by reference to specrfic production targets.

23.3 Bonus payments are not.deductible for irrcome tax or PRRT purposes.

However, capital allowarrces are granted with respect to bonus payments, but for income tax purposes only.

(See sections 7 and 16).

23.4 In this section, "bonus payment" does not include a fee prescribed by the Act or regulations made under those Acts.
ASSISTANCE OF OFFICERS OF PUBLIC BODIES SECTION 24 24.t For the purposes of this Annex, the Commissioner-General of the NRA may r€quest the otlicers ofa public hody, inchrding hodies that provide security, to assist or protect the NRA and its ollicers in the proper performance of their firnctions.

Regarding those functions, see sectioD 12 of the National Revenue Authority Act, 2002.
24.2 Within the limits of its authority and resources, a public body that receives a r€quest under subsection (24.1) must do its best to provide assistance.

{vu, 24.3 Without limiting the scope of subsection (24.1), oflicers of the relevant Ministries must provide off,:e's of the NRA with all necessary informati.n and assistance, including for t1... rrl.iper assessment, audit and collectirrn of ;.1 ainouuts due under this Act.

24.4 -{n'NRA officer authorised for the function in question .
'lrust sup€rvise assistance provided by a public ollicer.

24.5 Section 165 of the IT Act (secrecy) applies to a public officer providing assistance under this section with respect to all information and documents that, solely by reason of the assistance provided, come into the public officer's possession.
I I l I I PROHIBITION ON DISPOSAL OF PETROLEUM SECTION 25 25.1 This section applies where the holder of a petroleurn right fails to pay any amormt due under this Act, including income tax referred to in Division II of Part [I.
25.2 Where this section applies the Commissioner-General of the NRA may serve a notice on all holders ofa petroleum right who fails to pay any amount due under this Act, establishing a lien upder section 107 of the IT Act, in favour cf.the Commissioner General until thc outstanding amount has been paid.

25.3 The Commissioner-General may enforce payment of the amount by issuing distress proceedings under section 109 of the IT Act against the petroleum referred to in subsection 25.2.
25.4 Wherc by reason of this section a holder of a petrohum right pays tax due by a joint holder of that right, the holder may recover any loss from the joint holder as a debt due.

25.5 A person who without reasonable excuse fails to comply with a notice issued under (subsection 25.2) is treated as wilfully evading tax for the purposes ofsection 154 of the IT Act.
SECTION 26 PROVISION OF FINANCIAL FORECASTS 26.1 Each rclcvant liccucc holdcr rnust- (a) on cach of thc occasious referred to in subscction (26.2) and, on each of those occasions.
for each year ofthe pmjected life of the licence (including any polcntial [or extension), prepare forecasts of- // s I I D i;) iii) ir) v) amounts, sources, methods, terms and conditions of financing of op-rations under the licence; c):':Jicrdtion, dcvelopment and operating cos'.s ;rs ,;eil as additional capital costs incurred after the corrm3ncem€nt of commercial protluction; production volumes and expected conditions of sale, particularly with respect to price; production or profit sharing arrangements, including expected distributions, the policy on which distributions are to be based and the order ofpriority between distributions and other payments (especially interest and repayment ofdebt); taxes and other revenues to become payable to the Govemment of Sierra Leone and the manner in which those amounts are calculated; and vi) any other inlbrrnation as the Minister responsible for fmance may prescribe.
(b) use an appropriate template provided by the Minister responsible for finance in making,the forecasts referred to in paragraph (a); an{ (c) have appointed by written notification to the Minister responsible for finance and at all times, an oflicer- i) iD of sulficient seniority to be able to access the information referred to in paragnph (a); and who is to liaise with the Ministy of Finance and Economic Development regarding matters prescribed by this section.
26.2 Forecasts under subsection (26.1[a)- (a) must be prepared twice each year, stating the forecasts as at 30 March and 30 September; O) (c) in the case of 30 March forecasLs, must he forwarded to the Minister responsible for finance by no later than 15 April of the same year; and in the case of 30 September lbrecasts, must be forwarded to the Minister responsible for finance by no later than 15 October of the same year.
26.3 Upon receiving forecasts under subsection (26.2), the Minister responsible for fmance may, by notice in writing, required the licence holder to provide frrther aod befter particulars as to the lbrecasts.

The licence holder must provide those particulars within 7 days of receiving the noticc.
tu \t 26.4 Ifa relevant licence holder becomes aware of facts that make the most recent forecasts referred ro in subsection (26.1)(a) inaccurate in a mate.i?l padicular, then the licence holdr ..:-'ist immediately notiS the Minister resp<,-' lai-e for finance and provide uprjated i>ri:,'mration.
26.5 A failure by a relevant licence holder to comply with the requirements of this section cirnstitutes- (a) impeding the administation of this Act for the purposes of section 155 of the IT Act (applied by section 22 oi this Annex); and O) a se:-ious breach of the terms and conditions upon.

*,hich the licence is granted and so constitutes grounds upon which thc licence may be revoked (see section I 15 of the Act).
26.6 lnformation received under this section- (a) may be used within the Ministry of Finance and Economic Development for revenue forecastiug ald public fiuancial maaagement purposes, but O) is otherwise subject to the requirements of section 165 of the IT Act (secrecy), with auy necessary adaptations.

26.7 In this section, "relevant licence hotder" means the holder of a pe-.troleum licence.

FIRST SCHEDULE.

- PETROLEUM 1 Part l: ROYALTIES ROYALTYRATES 1.


(l) Subject to subparagraph (2), the royalty rates referred to in section 2 are: (a) for crude oil - l0%; and O) for natural gas -'5olo.

@ Samples of petroleum produced and saved for purposes of assay, analysis or other examinaticn or testing are exempt from t}re payment of royalties.

However, royalties apply if a sample is sold or any economic benefit is derived from is disposal.
In this paragraph- "crude oil" and'hatural gas" have the meanings given in section 2 of the Act; (3) and "sample" includes petroleum used in the commission of facilities that are used directly in the same separate Petroleum Operation kom which the petroleum is produced a-nd saved.

W h{+ MARKET VALUE Oi' PE.

'.IDLEUM 2.


The mari:et ..'aiue of pekoleum- (a) is determined in accordance with the method prescribed in the p€troleum agreement, but (b) is not less than the sale value receivable in a transaction meeting the requircmcnts of scction 95 of the IT Act (arm's leugth standard) without discount, commission or deduction.
TIME FOR PAYMENT OF ROYALTIES 3 Royalties with respect to petroleum produced or saved during a calendar month are payable/reccivable on or before thc last day of the tbllowing caleudar mondt.

PART ll: INCOME TAX INCOME TAX RATE 4.

The income tax rate for petroleum operations is 30% l^ I l CAPITAL ALLOWANCES 5 (l) All capital allowance expendihre incurred in respect of peEoleum operations during a year of assessment is placed in a separate pool.
Capital allowances are granted with respect to each pool at the rates provided for in subparagraph (2).
(2) Capital allowances are granted for expendihre pooled under subparagraph 5(l) for a year of assessment at the following rates: Ycar of Asscssmcnt In which expenditure furcurred Second Year Third Year Fourth Year Amount of Capital Allowance 40o% of expenditure 20% of expenditure 200lo of expenditure 20%o of expenditure (3) Capital allowances granted with respect to a particular year of assessment must be taken in that year and cannot b€ deferred to a later year of assessrnent.
(4) Where an asset tbr which capital allowances has been granted under this paragraph is disposed of(or deemed to be disposed of) during a year of assessment- t N[" (a) if the conslderation received for the disposal cxcccds th: ','rrittcn down vatue of "'.s ;sset, the excess is included in calculatinj jh..€eable irt:omr: filri tbe petroleum operations lbr the -vear; (b) if the ivritten down value ofthe asset excseds the consideration received for the disposal, an additional capital allowance is granted for the year in aD amount equal to the excess; and (c) the relevant pools referred to irr subparagraph 5(l) are reduced by the written do.
:vn value of the asset.

(s) In this paragraph- 'tapital allowance expenditure" mcans cxpcndlhrc tbr whlch caprtal allowances arc availablc, cither undcr scction 6 of this Annex or section 39 of the IT Act; and "written down value" ofan asset means the adjusted cost of thc asset less all capital ollowanccs grantcd with rcspcct to cxpcnditurc includcd in that cost.

PART lll: PETROLEUM RESOURCE RENT TAX (PflRr) PETROLEUM RESOURCE RENT TAX RATE 6.

The rate of PRRT for a year of assessment is 40%.


UPLIFT FOR ACCUMULATED NET EXPENDITUR-E, 7 (l) expendihue for a previous year of assessment is- The uplift referred to in section 12 to be applied to accumulated net (a) in the case ofa period of Petroleum Operations during the current year of assessment - 20olo per aonum applied to the period; and O) in any other case - nil.

(2) In this paragraph, 'period ofPetroleum Operations"- G) means a period during which Petroleum Operatioos are conducled.
under a petoleum licence; (b) includes the period between the approval of commerciality and the commencement of production activities \#w