Exhibit 10.01
 
PRODUCTION SHARING CONTRACT

BETWEEN

THE REPUBLIC OF
EQUATORIAL GUINEA
AND
GUINEA ECUATORIAL DE PETROLEOS
AND
OPHIR EQUATORIAL GUINEA (EG-24) LIMITED
FOR
BLOCK EG-24

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CONTENTS
 
Page

ARTICLE 1 SCOPE AND DEFINITIONS
3

ARTICLE 2 PERIOD OF EXPLORATION AND RELINQUISHMENTS OF AREAS
11

ARTICLE 3 EXPLORATION WORK OBLIGATIONS
13

ARTICLE 4 ANNUAL WORK PROGRAMS AND BUDGETS
16

ARTICLE 5 EVALUATION OF A DISCOVERY AND PRODUCTION PERIOD
18

ARTICLE 6 CONDUCT OF PETROLEUM OPERATIONS
21

ARTICLE 7 ROYALTIES, RECOVERY OF PETROLEUM OPERATION COSTS, AND DISTRIBUTION OF
PRODUCTION
28

ARTICLE 8 PARTICIPATION INTERESTS
30

ARTICLE 9 TAXES
31

ARTICLE 10 VALUATION OF CRUDE OIL
31

ARTICLE 11 BONUSES AND SURFACE LEASES
33

ARTICLE 12 OBLIGATIONS TO SUPPLY THE NATIONAL MARKET
34

ARTICLE 13 NATURAL GAS
35

ARTICLE 14 CUSTOMS REGULATIONS
38

ARTICLE 15 CURRENCIES
39

ARTICLE 16 BOOKS, ACCOUNTS, AUDITS, AND PAYMENTS
41

ARTICLE 17 TRANSFERS, ASSIGNMENTS, AND CHANGES OF CONTROL
42

ARTICLE 18 INDEMNIFICATION, LIABILITY, AND INSURANCE
44

ARTICLE 19 TITLE TO GOODS, EQUIPMENT, AND DATA
45

ARTICLE 20 CONFIDENTIALITY
46

ARTICLE 21 TERMINATION
47

ARTICLE 22 UNITIZATION
49

ARTICLE 23 NATIONAL CONTENT AND SOCIAL PROGRAMS
49

ARTICLE 24 DISMANTLING
53

ARTICLE 25 APPLICABLE LAW AND STABILITY
54

ARTICLE 26 RESOLUTION OF CONFLICTS AND ARBITRATION
55

ARTICLE 27 FORCE MAJEURE
56

ARTICLE 28 ASSISTANCE AND NOTIFICATIONS
57

ARTICLE 29 MISCELLANEOUS
59

ARTICLE 30 INTERPRETATION
60

ARTICLE 31 EFFECTIVE DATE
60

 
 
ANNEX A CONTRACT AREA
62

ANNEX B MAP OF THE CONTRACT AREA
63

ANNEX C ACCOUNTING PROCEDURE
64

ANNEX D GUARANTEE AGREEMENTS
78

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THIS PRODUCTION SHARING CONTRACT is dated the____ of ____________, 2017.

BETWEEN:
(1)
THE REPUBLIC OF EQUATORIAL GUINEA (hereinafter referred to as the "State"),
represented for the purposes of this Contract by the Ministry of Mines and
Hydrocarbons (hereinafter referred to as the "Ministry"), represented for
purposes of its execution by His Excellency Gabriel Mbaga OBIANG LIMA, in his
capacity as Minister of Mines and Hydrocarbons.

(2)
GUINEA ECUATORIAL DE PETRÓLEOS (hereinafter referred to as the "National
Company"), acting in exercise of its authority and in its own name for the
purposes of this Contract and represented for purposes of its execution by
Antonio OBURU ONDO, in his capacity as Director General; and

(3)
OPHIR EQUATORIAL GUINEA (EG-24) LIMITED (hereinafter referred to as the "Ophir
Energy"), a company organized and existing under the laws of the British Virgin
Islands under commercial registry number 1958060, with its registered office at
Jayla Place, Wickhams Cay 1, Road Town, Tortola, VG1110, British Virgin Islands.

The State, Ophir Energy, and the National Company, including their transferees
as approved under the law and this Contract, may be referred to individually as
"Party" and collectively as "Parties."
PREAMBLE
(A)
WHEREAS, all Hydrocarbons existing within the territory of the Republic of
Equatorial Guinea, as stated in the Hydrocarbons Law, are national resources
owned exclusively by the State;

(B)
WHEREAS, the State wishes to promote the development of Hydrocarbon deposits
within the Contract Area and the Contractor desires to associate itself with the
State with a view to accelerating the Development and Production of Hydrocarbons
within the Contract Area;

(C)
WHEREAS, the Contractor has the technical and financial ability, as well as the
professional skills necessary to carry out Petroleum Operations in accordance
with this Contract and good practices of the international petroleum industry;
and

(D)
WHEREAS the Parties wish to enter into this Contract in accordance with the
Hydrocarbons Law, which allows for agreements to be entered into between the
State and foreign investors in the form of a production sharing contract,
through direct negotiation or by international public bidding,

NOW THEREFORE, in consideration of the commitments and mutual agreements
expressed in this document, the Parties agree as follows:

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ARTICLE 1
SCOPE AND DEFINITIONS
1.1
Definitions

Except where the context dictates another meaning, or as defined in the
Hydrocarbons Law or Petroleum Regulations, the following words and expressions
will have the following meanings:
1.1.1
Joint Operating Agreement or JOA means the joint operating agreement that rules
the internal relations of the Parties making up the Contractor in carrying out
Petroleum Operations in the Contract Area.

1.1.2
Calendar Year or Year means a period of twelve (12) months beginning 1 January
and ending 31 December of the same year according to the Gregorian Calendar.

1.1.3
Contractual Year means a period of twelve (12) consecutive months according to
the Gregorian Calendar from the Effective Date of this Contract or from the
anniversary of the Effective Date.

1.1.4
Contract Area or Area means the geographic area within the territory of
Equatorial Guinea, which is the object of this Contract. This Contract Area will
be described in Annex A and illustrated in Annex B, as it may be changed by
relinquishments of the Contractor in accordance with this Contract.

1.1.5
Development and Production Area means an area within the Contract Area
encompassing the geographical extent of a Commercial Discovery that is subject
to a Development and Production plan and corresponding budget in accordance with
Article 5.5.

1.1.6
Evaluation Area means an area within the Contract Area encompassing the
geographical extent of a Discovery subject to an Evaluation work program and
corresponding budget in accordance with Article 5.2.

1.1.7
Barrel means a quantity or unit of measure of Crude Oil equal to 158.9874 liters
(forty-two (42) United States gallons) at a temperature of fifteen point five
six degrees (15.56°) Centigrade (sixty degrees (60°) Fahrenheit) and at one (1)
atmosphere of pressure.

1.1.8
BEAC means the Bank of Central African States.

1.1.9
Change in the Law means, with respect to Article 25, any change in the laws,
decrees, regulations, or standards of Equatorial Guinea and any Relevant
Authority Law in force on the Effective Date, including those pertaining to any
fiscal matters, taxes, customs, or currency control, any change in the
interpretation or application of, or in the customs and practices related to
these laws (the stipulations of this agreement are considered to conform with
such interpretation and application from the date this Contract is signed),
decrees, regulations, or standards of Equatorial Guinea and excludes those laws,
decrees, regulations, or standards that are (i) related to health, safety, work,
and the environment, (ii) consistent with international oil and gas industry
standards and practices, and (iii) applied in a non-discriminatory manner.

1.1.10
Field means a Discovery or set of Discoveries established as a Field in
accordance with Article 5 and can be developed commercially, taking into account
all pertinent operational, economic and financial information collected in
carrying out the Evaluation work program or otherwise, in accordance with
generally accepted practices of the international petroleum industry. A Field
may consist of a Hydrocarbon deposit or multiple Hydrocarbon deposits grouped in
or related to the same

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individual geological structural or stratigraphic conditions, or unrelated
deposits that are developed using a Development and Production Plan. All
deposits superimposed, adjacent to, or underlying a Field in the Contract Area
will form part of that Field.
1.1.11
CIF has the meaning established in the publication of the International Chamber
of Commerce, INCOTERMS 2000.

1.1.12
Affiliated Company or Affiliate of any specific Person means any other Person
directly or indirectly Controlling or Controlled by or under the direct or
indirect common Control of such Person.

1.1.13 The National Company, for the purposes of this Contract, means Guinea
Ecuatorial de Petróleos (GEPetrol), as the national petroleum company of
Equatorial Guinea, or whatever successor state company.
1.1.14
Contractor means Ophir Energy and the National Company and will include the
entities to which a Participation Interest under the Contract is legitimately
transferred.

1.1.15
Contract means this production sharing contract, including its Preamble and
Annexes.

1.1.16
Material Contract means a contract having a value over five hundred thousand
Dollars ($500,000) with respect to Exploration Operations, or a million Dollars
($1M) with respect to Exploration Operations or Production Operations with (i)
an Affiliate of the Technical Operator, when the contract has not previously and
specifically been approved in an Annual Budget as a contract that should be
carried out by an Affiliate, or (ii) a non-Affiliate of the Technical Operator.
If law or regulation establishes a greater limit than that stipulated in this
definition for the supervision of contracts by the State, this definition will
be amended to reflect that limit.

1.1.7
Control, when used with respect to a specified Person, means the power to
direct, administer, and dictate the policies of such Person through ownership of
a percentage of such Person's equity sufficient to hold a majority of voting
rights in an ordinary shareholders meeting. The terms Controller and Controlled
have meanings that correlate to the foregoing.

1.1.18
Development and Production Costs means all costs, expenses, and obligations
incurred by the Contractor in connection with Development and Production
Operations in a Development and Production Area, excluding all Exploration Costs
incurred in the Development and Production Area before any Field is established,
and that are determined to be in accordance with this Contract and the
Hydrocarbons Law.

1.1.19
Exploration Costs means all costs, expenses, and other obligations that are
non-recoverable costs incurred by the Contractor in connection with Exploration
Operations in the Contract Area, including those identified in the Accounting
Procedure, and that are determined to be in accordance with this Contract and
the Hydrocarbons Law.

1.1.20
Petroleum Operations Costs means Exploration Costs and/or Development and
Production Costs (depending on the context) incurred by the Contractor in
carrying out Petroleum Operations, as determined in accordance with this
Contract and the Accounting Procedure.

1.1.21
Argus Crude means the report published by the Argus company on the international
crude oil market, including evaluation of the Crude Oil deposit located in the
Contract Area.

1.1.22
Discovery means a finding of Hydrocarbons by the Contractor whose existence
within the Contract Area was unknown prior to the Effective Date, or
Hydrocarbons within the Contract Area that had

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not been declared a Commercial Discovery prior to the Effective Date and that
are measurable by generally accepted international petroleum industry practices.
1.1.23
Commercial Discovery means a Discovery that the Contractor considers
economically viable and in the interest of which submits for the approval of the
Ministry a Development and Production Plan of the Discovery.

1.1.24
Days means the days on which the offices of the Ministry are open to the public.

1.1.25
Working Day means a day on which the banks of Malabo, Equatorial Guinea, and New
York, USA, generally conduct commercial activities.

1.1.26
Dollars or $ means the legal tender of the United States of America.

1.1.27
Member State of CEMAC means the country is a member of the Economic and Monetary
Community of Central Africa.

1.1.28
Member State of OHADA means the country is a member of the Organization for the
Harmonization of Business Law in Africa.

1.1.29
Effective Date means the date the Contractor receives ratification of this
Contract, totally signed by the State, in accordance with the provisions of
Article 31.

1.1.30
Brent Closing means the quote published daily in the Platts Bulletin of the
Crude Oil Market that reflects the price of a shipment of Brent North Sea mixed
crude oil for a set period.

1.1.31
FOB has the meaning stipulated in the publication of the International Chamber
of Commerce, INCOTERMS 2000.

1.1.32
Reserve Fund has the meaning attributed to it by Article 24.3.1.

1.1.33
Natural Gas means those Hydrocarbons that at atmospheric conditions of
temperature and pressure, are in a gaseous state, including dry gas, wet gas,
and residual gas remaining after extraction, treatment, processing, or
separation of liquid Hydrocarbons from wet gas, as well as gas or gases produced
in association with liquid or gaseous Hydrocarbons.

1.1.34
Associated Natural Gas means all Natural Gas produced from a deposit the
predominant content of which is Crude Oil and that has been separated from Crude
Oil in accordance with generally accepted practices of the international
petroleum industry, including free gas cap, but excluding any liquid
Hydrocarbons extracted from such gas either by normal field separation,
dehydration, or in a gas plant

1.1.35
Net Natural Gas has the meaning attributed to it by Article 13.3.5.

1.1.36
Non-Associated Natural Gas means all gaseous Hydrocarbons extracted from Natural
Gas deposits, and includes wet gas, dry gas, and residual gas remaining after
the extraction of liquid Hydrocarbons from wet gas.

1.1.37
Equatorial Guinea means the Republic of Equatorial Guinea.

1.1.38
Hydrocarbons means all natural organic substances composed of carbon and
hydrogen, including Crude Oil and Natural Gas that may be found and produced, or
otherwise extracted and saved from the Contract Area.

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1.1.39
Income Tax means that tax levied on the each of the Parties making up the
Contractor and all other pertinent Persons in accordance with the Tax Law.

1.1.40
Gross Revenues means total income from sales of Total Disposable Production plus
the equivalent monetary value of any other disposal of Total Disposable
Production from the Contract Area during any Calendar Year.

1.1.41
Participation Interest means for each Party constituting the Contractor, the
undivided percentage share of such Party in the rights and obligations under
this Contract, as specified in Article 1.3.

1.1.42
Participation Interest of the National Company means the Participation Interest
of the National Company as established in Article 1.3.

1.1.43
Hydrocarbons Law means Law No. 8/2006 dated 3 November 2006 of Equatorial
Guinea.

1.1.44
Relevant Authority Law means any laws, codes, decrees, instruments or
subordinate legislation, by-laws, regulations, declarations, rules, orders,
statute, ordinances, normative acts and administrative acts of:

(a)    the Organisation for the Harmonization of African Business Law (OHADA);
(b)    the Interafrican Conference of Insurance Markets;
(c)    COBAC;
(d)    BEAC;
(e)    CEMAC; and
(f)
any other regional laws, codes, decrees, instruments or subordinate legislation,
by-laws, regulations, declarations, rules, orders, statute, ordinances,
normative acts and administrative acts (whether current or future and excluding
Equatoguinean Law) applicable to the Parties in relation to the Project,

and shall also include the OHADA Accounting System;
1.1.45
Environmental Law means Law No. 7/2003 of 27 November of Equatorial Guinea and
any law that amends or replaces it, including the International Treaties signed
and ratified by the Republic of Equatorial Guinea.

1.1.46
Tax Law means Law No. 4/2004 of 28 October 2004 of Equatorial Guinea, and any
law that amends it or replaces it.

1.1.47
LIBOR means the interest rate at which Dollar deposits of six (6) months'
duration are offered in the London InterBank Market, as published in the
Financial Times of London. The applicable LIBOR interest rate applicable for
each month or part of the month within an interest period will be the interest
rate published in the Financial Times of London on the last Working Day of the
immediately preceding calendar month. If no such rate is quoted in the Financial
Times of London during a period of five (5) consecutive Working Days, another
rate (for example, the rate of exchange quoted in the Wall Street Journal)
chosen by mutual agreement between the Ministry and the Contractor will apply.

1.1.48
Month of Commercialization of the Shipment means the month that initiates two
(2) calendar months before the month scheduled for the embarkation of a Crude
Oil shipment.

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1.1.49
Ministry means the Ministry of Mines and Hydrocarbons of Equatorial Guinea, the
entity responsible for supervising Petroleum Operations in coordination with
other Government bodies within their respective areas of competence, and any
successor.

1.1.50
Negligence means any act or omission of an act by a person or entity (acting
alone, together with another, or simultaneously) with the intention of causing
harmful consequences, or with reckless imprudence or indifference to the harmful
consequences that such person or entity knew or should have known would result
for the safety, property, or interests of another person or entity from such an
act or failure. Provided they satisfy the above parameters, such acts or
omissions can include substantial deviations from the standards of behavior of a
reasonable man, or of a prudent operator, guided by the standard practices of
the industry and by those considerations that normally rule the conduct of human
affairs, acting in the circumstances of the presumed bad behavior.

1.1.51
Dispute Notification has the meaning attributed to it in Article 26.1.1.

1.1.52
Notification of Exploration Well has the meaning attributed to it in Article
3.1.2.

1.1.53
Development and Production Operations means all operations, other than
Exploration Operations that are engaged in to facilitate the Development and
Production of Hydrocarbons from the Contract Area to the Delivery Point, but
excluding refining and distribution of Hydrocarbon products.

1.1.54
Exploration Operations include geological and geophysical studies, aerial
mapping, investigations relating to subsurface geology, stratigraphic test
drilling, Exploration Wells, Evaluation Wells and related activities such as
drill site preparation, surveying and all connected work carried out in relation
to the Exploration for Hydrocarbon deposits in the Contract Area and their
Evaluation until the Ministry approves a Development and Production Plan.

1.1.55
Petroleum Operations means all operations related to Exploration, Development,
Production, transportation, storage, conservation, dismantling, sale and/or
other disposal of Hydrocarbons from the Contract Area to the Delivery Point and
any other work or activities necessary or complementary to such operations;
these operations and activities will be carried out in accordance with this
Contract and the Hydrocarbons Law and will not include transport outside
Equatorial Guinea.

1.1.56
Administrative Operator means the National Company so designated in the Joint
Operation Agreement.

1.1.57
The Technical Operator will be Ophir Energy, as approved by the Ministry and so
designated in the Joint Operation Agreement.

1.1.58
Party or Parties means the party or parties to this Contract, as the context
dictates.

1.1.59
Paying Party or Parties will have the significance attributed to it (them) in
Article 8.2.1.

1.1.60
Participation of the National Company Carried Forward means the Participation
Interest of twenty percent (20%) of the National Company that will be carried
forward by the Contractor during the Exploration Period(s) in accordance with
provisions of Articles 1.3 and 8.2 of this Contract.

1.1.61
Development and Production Period means the period defined in Article 5.10.

1.1.62
Initial Exploration Period means a period of four (4) Contract Years from the
Effective Date, subdivided into two sub-periods of two (2) Contract Years within
the First Exploration Sub-Period and two (2) Contract Years within the Second
Sub-Period.

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1.1.63
Extension Period means the First Extension Period and the Second Extension
Period, separately or together, as the context dictates. Each of these Extension
Periods will be for a period of one (1) Contract Year.

1.1.64
Exploration Periods means the Initial Exploration Period, an Extension Period,
and any further extensions of them.

1.1.65
Person means any individual, firm, company, corporation, society, trust,
foundation, government, state or state agency, or any association or grouping
(whether or not having a separate legal personality) or two or more of these.

1.1.66
Crude Oil means Hydrocarbons produced at the wellhead in a liquid state at
atmospheric pressure including asphalt and ozokerites, and the liquid
Hydrocarbons known as condensates and/or Natural Gas liquids obtained from
Natural Gas by condensation or extraction through field separation units.

1.1.67
Net Crude Oil has the meaning attributed to it by Article 7.3.

1.1.68
Cost-Recovery Oil has the meaning attributed to it in Article 7.2.1.

1.1.69
Development and Production Plan has the meaning attributed to it in Article
5.5.1.

1.1.70
Platts or Platts Crude Oil Market Bulletin refers to the daily publication of
crude oil quotes that are customarily adopted by the petroleum industry to
determine crude oil prices.

1.1.71
Well means any opening in the ground or seabed made or being made by drilling or
boring, or in any other manner, for the purpose of exploring and/or discovering,
evaluating, or producing Crude Oil or Natural Gas, or for the injection of any
fluid or gas into an underground formation other than a seismic hole.

1.1.72
Development Well means a Well, other than an Exploration Well or an Evaluation
Well, drilled with the purpose of producing or improving the Production of
Hydrocarbons, including Exploration Wells and Evaluation Wells completed as
production or injection Wells.

1.1.73
Evaluation Well means a Well drilled after a Discovery, with the objective of
delimiting and mapping the deposit, as well as to estimate the quantity of
recoverable Hydrocarbons.

1.1.74
Exploration Well means any Well whose sole objective is to verify the existence
of Hydrocarbons or to study all the necessary elements that could lead to a
Discovery.

1.1.75
Market Price means the FOB price for Crude Oil calculated in accordance with
Article 10.

1.1.76
Annual Budget means the Contractor's approved expenditures with respect to an
Annual Work Program.

1.1.77
First Extension Period means the period of one (1) Contract Year beginning
immediately after the conclusion of the First Exploration Sub-Period

1.1.78
First Exploration Sub-Period means the first three (3) Contract Years of the
Initial Exploration Period.

1.1.79
Accounting Procedure means the accounting procedure contained in Annex C.

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1.1.80
Total Disposable Production means all Hydrocarbons produced and saved from a
Development and Production Area minus the quantities used for fuel and transport
in Petroleum Operations under Article 6.10.

1.1.81
Annual Work Program means an itemized statement of the Petroleum Operations to
be carried out in the Contract Area during a Calendar Year.

1.1.82
End Point of the Carry-Forward has the meaning attributed to it by Article
1.3.1.

1.1.83
Delivery Point means the point located within the jurisdiction of Equatorial
Guinea at which Hydrocarbons reach (i) the inlet flange at the FOB export
vessel, (ii) the loading facility metering station of a pipeline, or (iii) any
other point within the jurisdiction of Equatorial Guinea as may be agreed to by
the Parties.

1.1.84
Royalties means a right of the State to Hydrocarbons extracted and saved from
the Contract Area, and not utilized in Petroleum Operations for fuel or
transport, in accordance with Article 6.10, based on percentages calculated as a
function of the daily rate of the Total Disposable Production in accordance with
Article 7.1.

1.1.85
Petroleum Operations means all regulations promulgated by the Ministry observing
and in accordance with the Hydrocarbons Law under Ministerial Order 4/2013 of 20
June 2013, and any regulations that may amend or replace them.

1.1.86
Minimum Retention means the Technical Operator and its Affiliates will maintain
a minimum balance on deposit in one or more of the banks that are operating in
Equatorial Guinea selected by the operator, measured annually for each Calendar
Year, in the following amounts:

(a)
Before the year following approval of the first Development and Production Plan,
a deposit balance equal to ten percent (10%) of the current Annual Budget
applicable to the Calendar Year;

(b)
After the year following approval of the first Development and Production Plan,
and during each year that the development activities continue that were foreseen
in that Development and Production Plan, a deposit balance equal to zero point
five percent (0.5%)of the Annual Budget (excluding capital expenditure)
applicable to the Calendar Year;

(c)
After the year following the year in which the development operations cease that
were foreseen in the first Development and Production Plan, a deposit balance
equal to five percent (5%) of the Annual Budget (excluding capital expenditure)
applicable to the Calendar Year;

(d)
If at any time a subsequent Development and Production Plan is approved that
requires a development operation, the required balance of the deposit will
return to zero point five per cent (0.5%) of the Annual Budget (excluding
capital expenditure) applicable to that Calendar Year, up to the year following
the year during which the development operations foreseen in that Development
and Production Plan cease;

1.1.87
Second Extension Period means the period of one (1) Contract Year beginning
immediately after the end of the Second Exploration Sub-Period.

1.1.88
Second Exploration Sub-Period means the final two (2) Contract Year(s) of the
Initial Exploration Period.

1.1.89 Maximum Efficient Production Rate means the maximum efficient production
rate of Hydrocarbons from a Field that does not damage deposit formations and
does not cause excessive decline or loss of deposit pressure in accordance with
good practices of the international oil industry, and as agreed in accordance
with Article 6.4.

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1.1.90
Tax and Taxes means the coercive pecuniary contributions stipulated by Law, that
the State, local entities and other public entities levy in exercise of their
sovereign power.

1.1.91
Quarter means a period of three (3) consecutive months beginning 1 January, 1
April, 1 July, or 1 October and ending 31 March, 30 June, 30 September, or 31
December, respectively.

1.2
Scope

1.2.1
This Contract is a production sharing contract awarded pursuant to Chapter IV of
the Hydrocarbons Law. In accordance with the provisions of this Contract and the
Hydrocarbons Law, the Ministry will be responsible for supervising Petroleum
Operations in the Contract Area.

1.2.2
The State grants the Contractor the sole and exclusive right to carry out all
Petroleum Operations in the Contract Area during the term of this Contract. In
consideration of the above, the Contractor commits itself to:

(a)
be responsible to the State, in the capacity of independent contractor, for
execution of the Petroleum Operations in accordance with this Contract, the
Hydrocarbons Law, and the Petroleum Regulations;

(b)
provide all funds, machinery, equipment, technology, and personnel that are
prudent and necessary to execute the Petroleum Operations; and

(c)
diligently, with due attention to good practices of the international petroleum
industry execute at its exclusive responsibility and risk, all investments and
contractual obligations necessary for carrying out the Petroleum Operations in
accordance with this Contract.

1.2.3
All Costs of the Petroleum Operations will be recoverable and/or deductible for
tax purposes in the manner established in this Contract and the Hydrocarbon Law.

1.2.4
During the term of this Contract, all Production obtained as a consequence of
the Petroleum Operations will be shared between the parties in accordance with
Article 7.

1.3
Participation Interests

1.3.1
On the Effective Date, the Participation Interests of the Parties making up the
Contractor are as follows:

Ophir Energy
80
%
 
The National Company
20
%
("Carry Participation of the National Company")
Total
100
%
 

The Participation Interest of the National Company is for compliance with
Chapter XVIII of the Hydrocarbon Law. The abovementioned Carry Participation of
the National Company of twenty percent (20%) will be carried by the Contractor
(with the exception of the National Company) until the State approves the
Development and Production Plan (Carry Termination Point). The Carry
Participation of the National Company will remain subject to all the
responsibilities and obligations of the Contractor. The costs attributable to
the Carry Participation of the National Company will be paid, subject to Article
8.2, by the entities that make up the Contractor, with the exception of the
National Company, and recoverable as specified in Articles 8.2.2 and 8.2.3.

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1.3.2
The National Company will have the option of acquiring an additional
Participation Interest of ten percent (10%) if there is a Commercial Discovery
in the Contract Area. This option will expire if it is not chosen to acquire
this extra ten percent within ninety (90) days of the date when the State
approves the first Development and Production Plan for that Commercial
Discovery. If this option is selected, the National Company will acquire from
the Contractor (not including the National Company) the additional Participation
Interest, and all the past costs associated with that Participation Interest
will be recoverable by the Contractor (not including the National Company) of
the Cost-Recovery Oil attributable to that additional Participation Interest.
That additional interest acquired by the National Company will be an interest
with all the payment obligations, in that the National Company will pay its
portion of the future costs attributable to such interest from the date of its
selection and the revised Participation Interest of each Party will be as
follows from that date.

Ophir Energy
70
%
 
The National Company
30
%
(20% + 10% additional) Participation Interest of Full
Payment Total
100
%
 

Article 2
PERIOD OF EXPLORATION AND RELINQUISHMENTS OF AREAS
2.1
Initial Exploration Period

From the Effective Date, the Contractor will be authorized to carry out
Exploration Operations in the Contract Area during the initial Exploration
Period of four (4) years, as established in Article 1.1.60. Within 60 days from
the Effective Date, the Contractor will initiate study and evaluation work.
2.2
Extension periods

2.2.1
The Contractor may ask for up to two (2) extensions: the first is an extension
of one (1) year to the First Sub-Period, and the second is an extension of one
(1) year to the Second Sub-Period, .

2.2.2
For each Extension Period, the Contractor will present a request to the Ministry
at least two (2) months before the expiration of the First Sub-Period, or as the
case may be, the Second Sub-Period. The Ministry will not unreasonably deny or
delay the granting of this extension, provided the Contractor has complied with
all of its obligations in the Initial Exploration Period and the First Extension
Period, as the case may be, and is in no way noncompliant with this Contract.

2.2.3
A map will be attached to each request for an extension, delineating the
Contract Area the Contractor proposes to retain, as well as a report that
specifies the work realized in the areas proposed for relinquishment since the
Effective Date, and the results obtained from them.

2.2.4
If on the expiration of the Initial Exploration Period or any Extension Period,
an Evaluation work program is under way, the Contractor will be entitled to the
grant of an additional extension of the current Exploration Period necessary to
complete the work in progress. Additionally, if Evaluation work has not been
completed by the Contractor at the time a relinquishment comes due, as
stipulated in Article 2.4, the obligation to relinquish will be suspended until
the Contractor has completed the work, the commerciality is decided, and if
applicable, establishment of a Field has been approved or denied. Any additional
extension granted in accordance with this Article will not exceed one (1)
Contract Year or a longer period that may be approved by the Ministry, plus the
necessary period of time established under Article 5 for the evaluation of a
Development and Production Plan and the Ministry's response.

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2.2.5
In the previous case, the Contractor will ask the Ministry for an additional
extension at least two (2) months before expiration of the Initial Exploration
Period or the Extension Period in force at the time, as applicable.

2.3
Termination

If the Contractor decides:
(a)
not to enter the Second Sub-Period;

(b)
not to extend the Initial Exploration Period and no Field has been established
during that period; or

(c)
to extend the Initial Exploration Period and no Field has been established
during the Extension Period or any extension of it; or

(d)
to relinquish all its rights with respect to the entire Contract Area in
accordance with what is established in Article 2.5,

this Contract will be automatically terminated.
2.4
Obligatory relinquishments

2.4.1
The Contractor must relinquish to the State forty percent (40%) of the initial
surface area of the Contract Area on finalization of the Initial Exploration
Period, twenty-five percent (25%) of the remaining area on finalization of the
Second Extension Period, or if the Contractor does not ask for additional
extensions, on finalization of the Initial Exploration Period or First Extension
Period. To decide the area or areas the Contractor will relinquish, the
following areas will be excluded for the purposes of the calculation:

(a)
areas designated as Evaluation Areas;

(b)
Development and Production Areas;

(c)
areas for which approval of a Development and Production Plan is pending, until
a final decision is made;

(d)
the area of any Field, including those Fields that may be subject to unitization
in accordance with Article 22; and

(e)
any area reserved for a possible Unassociated Natural Gas Evaluation with
respect to which the Contractor is negotiating with the Ministry in accordance
with the terms of Article 13.1.

2.4.2
On expiration of the final applicable extension period stipulated in accordance
with Article 2.2, and subject to the provisions of Article 2.2.4, the Contractor
will relinquish the rest of the Contract Area, with the exception of:

(a)
Development and Production Areas;

(b)
areas for which approval of a Development and Production Plan is pending, until
a final decision is made;

(c)
the area of any Field, including those Fields that may be subject to unitization
in accordance with Article 22; and

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(d)
any area reserved for a possible Unassociated Natural Gas Evaluation with
respect to which the Contractor is negotiating with the Ministry in accordance
with the terms of Article 13.1.

2.5
Voluntary relinquishments

2.5.1
Subject to the Contractor's obligations established in Article 24 and the
Hydrocarbons Law, the Contractor may at any time notify the Ministry with three
(3) months' advance notice that it relinquishes all of its rights over all or
any part of the Contract Area.

2.5.2
In no event will voluntary relinquishment of rights over all or any part of the
Contract Area reduce the Contractor's obligations of Exploration established in
Article 3.

2.6
Involuntary relinquishments

2.6.1
If the Contractor, during the First Exploration Sub-Period, fails to succeed in
(i) acquiring, processing, and interpreting three thousand (3000) square
kilometers of new 3D seismic data in accordance with Article 3.1.1(a), or (ii)
acquiring existing 2D data and reprocessing it in accordance with Article
3.1.1(b), the Contractor will then relinquish all of its rights over the entire
Contract Area at the end of the First Exploration Sub-Period.

2.6.2
If the Contractor, during the First Exploration Sub-Period:

does not succeed in drilling an Exploratory Well in accordance with Article
3.1.2, the Contractor will then relinquish all of its rights over the entire
Contract Area at the end of the Second Exploration Sub-Period.
2.6.3
This involuntary relinquishment will in no way exempt the Contractor from any of
the obligations it may have under Article 24 of the Hydrocarbons Law.

2.7
Relinquishments in General

2.7.1
No relinquishment made by virtue of Articles 2.4 or 2.5 will relieve the
Contractor of its obligation to pay accrued surface rentals, or to make due and
payable payments incurred during Petroleum Operations executed up to the date of
the relinquishment.

2.7.2
The Contractor will, in accordance with good oil field practice, put forward the
geographical location of the part of the Contract Area that it proposes to
retain. This area will have one or more continuous geometric forms that extend
North to South and East to West and will be delimited at a minimum by one (1)
minute of latitude or longitude or natural boundaries; moreover, this area will
also be subject to the Ministry's approval.

ARTICLE 3
EXPLORATION WORK OBLIGATIONS
3.1
Minimum Work Program

During the Exploration Period, the Contractor commits itself to executing the
following program of minimum work:
3.1.1
During the First Exploration Sub-Period, the Contractor must:

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(a)
acquire, process, and interpret three thousand (3000) square kilometers of new
3D seismic information; and

(b)
buy all existing seismic data to combine with the new data acquired to generate
models of the deposit, and shall pay for such data as follows:

(i) $750,000 (seven hundred and fifty thousand US dollars) on signature of this
Contract
(ii) $1,000,000 (one million US dollars) on completion of any farm-in by the
Contractor to this Contract; and
(iii) $1,798,355 (one million seven hundred and ninety eight thousand three
hundred and fifty five US dollars) on date of approval to entry into the Second
Sub-period,
and, for the avoidance of doubt, all such existing seismic data will be provided
to the Contractor on the payment of the amount set out in Article 3.1.1(b)(i),
All costs of acquisition and reprocessing of information (including escalation
fees) will be recoverable. The minimum expenditure for this period will be five
million Dollars ($5MM).
3.1.2
If the Contractor completely fulfills all the obligations of the First
Sub-Period, then it may, at its sole discretion, opt to enter into a Second
Exploration Sub-Period. During the Second Sub-Period, the Contractor will drill
one (1) Exploratory Well to a minimum depth reaching the farthest of the
objectives below the mud line of the sea floor. The minimum expenditure for this
period will be twenty five million Dollars ($25MM).

3.1.3
If the Contractor decides to undertake the First Extension Period, it must
conduct the seismic and geological studies. The minimum expenditure for the
First Exploration Sub-Period and First Extension Period combined will be five
million Dollars ($5MM).

3.1.4
The minimum expenditure for the Second Exploration Sub-Period and Second
Extension Period combined will be twenty five million Dollars ($25MM).

3.1.5
If the Contractor has drilled more than the minimum number of Exploratory Wells
demanded of it in either of Articles 3.1.2 or 3.1.4, then the surplus that
exceeds the obligatory amount at the end of the period in question will be
transferred and considered part of the obligations of the next guaranteed
period(s).

3.1.6
Subject to Article 31 of the Petroleum Regulations, when the work demanded under
this Article 3 has been realized, observing good practices of the international
petroleum industry, the obligation of minimum expenditure associated with that
work will be considered fulfilled, irrespective of whether the actual cost of
such work has represented more, less, or the same as the amount of the minimum
expenditure obligation.

3.2
Minimum Depth of the Wells

3.2.1
Each of these Exploratory Wells must be drilled to the minimum depth specified
above or to a lesser depth if the Ministry so authorizes in accordance with this
Article, or if interrupting drilling is justified by one of the following
reasons:

(a)
the economic basement is reached at a lesser depth than the minimum depth
specified in the Contract;

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(b)
further drilling is clearly dangerous because of abnormal pressure in the
formation or for another reason;

(c)
rocky formations are encountered whose hardness makes it impracticable to
continue drilling with appropriate equipment; or

(d)
hydrocarbon-bearing formations are encountered that require the installation of
casings that exclude reaching the minimum contractual depth.

3.2.2
For purposes of Article 3.2.1, economic basement in and beneath which the
geological structure or the physical sequence of the rocks do not have the
necessary properties to accumulate hydrocarbons in commercial quantities and
that moreover, reflects the maximum depth at which accumulations of this type
can reasonably be expected to occur.

3.3
Cessation of drilling

With respect to Article 3.2.1(a), and to the extent practicable, if a prudent
operator would immediately cease drilling operations, the Contractor will notify
the Ministry immediately of its decision, and obtain the Ministry's approval
before removing any drilling platform from the area. The Ministry will respond
to this request for approval as soon as practicable, but in any case within
three (3) Business Days of receiving such a request. Approval may not be
unreasonably denied or delayed without reasonable justification, provided that
the Ministry has sufficient information to make an informed decision.
3.4
Substitute Wells

If any obligatory Exploratory Well is abandoned due to insurmountable technical
problems as set out in Article 3.2.1, items (b), (c) and (d) and, at the time of
abandonment, the Exploration Costs for that Well equal or exceed twenty five
million Dollars ($25MM), for all purposes of this Contract, the Contractor will
be considered to have fulfilled its minimum work obligations for the period in
question. If any obligatory Exploratory Well is abandoned due to insurmountable
technical problems and if, at the time of abandonment, the Exploration Costs for
that Well are less than twenty five million Dollars ($25MM), the Contractor will
choose between the following options:
(a)
drill a substitute Exploratory Well in the same or a different site to be agreed
on with the Ministry: or

(b)
pay the Ministry an amount equal to the difference between twenty five million
dollars ($25MM) and the amount of Exploration Costs effectively spent in
connection with this Exploratory Well, which will be treated as if it were the
finalization of the well, thus fulfilling the minimum work obligations with this
Well.

3.5
Provision of Guarantees

3.5.1
On or before the Effective Date, each of the Parties making up the Contractor
(other than the National Company) will provide to the State, guarantee
acceptable to the Ministry, either (i) an Affiliate Company guarantee in the
form stipulated in Annex D from an Affiliate Company or (ii) an irrevocable
standby letter of credit from a first-class international financial institution
in up to the amount of five million Dollars ($5MM), which corresponds to the
minimum expenditure obligations of the Contractor under this Contract for the
First Exploration Sub-Period, and which will remain valid until the Contractor
has complied with this obligation of minimum expenditures. In any case, the
amount of the guarantee will be reduced as a function of sums expended that are
related to the work obligations carried out to the degree that they are
complete. If the Parties that make up the

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Contractor (except the National Company) do not provide the Ministry with the
guarantees demanded by the date established under this Article 3.5.1, this
Contract will be considered null and void, if the Contractor does not succeed in
remediating the noncompliance within thirty (30) days of being notified of it.
3.5.2
Thirty (30) days before initiating drilling of the Exploratory Well demandable
in the Second Exploration Sub-Period, the Contractor will provide the State, a
guarantee acceptable to the Ministry either (i) an Affiliate Company guarantee
in the form stipulated in Annex D from an Affiliate Company; or (ii) an
irrevocable standby letter of credit from a first-class international financial
institution up to the amount of twenty five million Dollars ($25MM), which
corresponds to the minimum expenditure obligations of the Contractor under this
Contract for the Second Exploration Sub-Period, and which will remain valid
until the Contractor has complied with this obligation of minimum expenditures.

3.6.1
Participation Interest of the National Company

For purposes of Article 3.5, any expenditure of the Paying Parties under Article
8.2 will not be considered an expenditure for the purpose of satisfying the
minimum expenditure requirements established in this Article.

ARTICLE 4
ANNUAL WORK PROGRAMS AND BUDGETS
4.1
Presentation of Annual Work Program

No later than ninety (90) days before the beginning of each Calendar Year, or
for the first Calendar Year, no later than sixty (60) days after the Effective
Date, the Contractor will prepare and present for approval by the Ministry a
detailed Annual Work Program divided into Quarters, together with the
corresponding Annual Budget for the Contract Area explaining the Petroleum
Operations the Contractor proposes to carry out during the Calendar Year. The
Annual Budget will be presented in the Ministry's official format.
4.2
Form and Approval of the Annual Work Program

Each Annual Work Program and corresponding Annual Budget will be broken down
into the various Exploration Operations and, as applicable, according to the
evaluation operations for each Evaluation Area, and the Development and
Production Operations for each Development and Production Area. If no response
is received within ninety (90) days of the reception of the Annual Work Program
and corresponding Annual Budget, these will be considered approved. The Ministry
may propose amendments or modifications to the Annual Work Program and
corresponding Annual Budget, by giving notice to the Contractor and including
reasons for the amendments or modifications, within sixty (60) days of receiving
the Annual Work Program and Annual Budget. In such event, the Ministry and the
Contractor will meet as soon as possible to review the amendments or
modifications proposed by the Ministry and establish the Annual Work Program and
corresponding Annual Budget by mutual agreement. The parts of the Annual Work
Program for which the Ministry does not require amendment or modification will
be considered approved and the Contractor must implement them within the stated
time period, provided they can be undertaken on an individual basis, or with
respect to an approved activity that depends technically or financially on an
activity that is not approved. With respect to the parts of the Annual Work
Program for which the Ministry proposes any amendment

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or modification, the date of approval of the Annual Work Program and
corresponding Annual Budget will be the date on which the Ministry and the
Contractor reach mutual agreement on them. If the Ministry and the Contractor do
not reach an agreement about the amendments and modifications proposed by the
Ministry before the end of the Calendar Year in which the Annual Work Plan and
corresponding Annual Budget are submitted, the Contractor will continue
operating in accordance with the most recent Annual Work Plan and corresponding
Annual Budget approved by the Ministry until agreement is reached.
4.3
Execution of Petroleum Operations

The Contractor will perform each operation included in an approved Annual Work
Program correctly and diligently, in accordance with the terms of this Contract,
the Hydrocarbons Law, and the good practices of the international petroleum
industry.
4.4
Unbudgeted expenses

4.4.1
The Ministry and the Contractor recognize that the technical results acquired as
work progresses, or certain unforeseen changes in circumstances, may justify
modifying the approved Annual Work Program and corresponding Annual Budget. In
such circumstances, the Contractor will promptly notify the Ministry of the
proposed modifications. The Ministry will study these modifications and decide
whether to approve them within a period of sixty (60) days of receiving the
notification. If the Ministry neither approves nor rejects the proposed
modifications within this sixty- (60-) day period the proposed modifications
will be considered approved. Notwithstanding the foregoing, the Contractor will
not in any case incur any expenditure that exceeds the approved Annual Budget by
more than five percent (5%) without the prior approval of the Ministry.
Expenditures exceeding the five percent (5%) tolerance will not be recoverable
as a Petroleum Operations Cost or deductible for tax purposes. Where such
approval is requested in connection with ongoing operations, the date of any
approval will be considered to be prior to expenditure if the Ministry is aware
of the excess and the continuation of operations after the time of that cost is
verbally approved by the Ministry. In relation to emergencies or accidents,
Articles 78.3 and 79 of the Regulations will apply.

4.4.2
At the time the Contractor reasonably believes that the limits of the Annual
Budget will be exceeded, the Contractor will promptly notify the Ministry and
provide the Ministry with full details of such excess expenditures, including
the reasons for them.

4.4.3
The limitations stipulated in Article 4.4 will not affect the Contractor’s right
to make expenditures in the event of an emergency or accident requiring urgent
action in accordance with what is stipulated in Article 4.5.

4.4.4
Except as otherwise provided in Article 4.5, if the Contractor incurs any
expenditure whose program and budget has not been approved within an Annual Work
Program and corresponding Annual Budget or any amendment to them approved by the
Ministry, then this expenditure will not be recoverable by the Contractor as a
Petroleum Operations Cost.

4.5
Emergency or Accident

4.5.1
In the event of an emergency or accident requiring urgent action, the Contractor
will follow all steps and take the measures as may be prudent and necessary in
accordance with good practices of the international petroleum industry to
protect its interests and those of the State and the property, life, and health
of other Persons, the environment, and the safety of the Petroleum Operations.
The Contractor will promptly inform the Ministry of such emergency or accident.

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4.5.2
All of the related costs incurred by the Contractor in accordance with Article
4.5 will be recoverable as Petroleum Operations Costs in accordance with this
Contract Nevertheless, costs incurred by the Contractor in cleaning up pollution
or damage to the environment, if caused by the negligence or willful misconduct
of the Contractor, its subcontractors or any Person acting on its or their
behalf, will not be recoverable as a Petroleum Operations Costs.

ARTICLE 5
EVALUATION OF A DISCOVERY AND PRODUCTION PERIOD
5.1
Notification of Discovery

If the Contractor discovers Hydrocarbons in the Contract Area it will notify the
Ministry as soon as possible, but not later than thirty (30) days after the date
of the Discovery. This notice will include all relevant information in
accordance with the good practices of the international petroleum industry,
including the details of any production testing program that the Contractor has
carried out or proposes to carry out during drilling operations
5.2
Evaluation Work Program

5.2.1
If the Contractor considers that the Discovery merits Evaluation it will
diligently submit to the Ministry a detailed evaluation work program and
corresponding budget no later than six (6) months following the date on which
the Discovery was reported in accordance with Article 5.1 The evaluation work
program, corresponding budget and designated Evaluation Area are subject to the
review and approval of the Ministry in accordance with the procedures
established in Article 4.

5.2.2
The rough draft of the evaluation work program will specify the estimated size
of the Hydrocarbon reserves of the Discovery, the area to be designated as the
Evaluation Area and will include all seismic, drilling, testing and evaluation
operations necessary to carry out an appropriate evaluation of the Discovery.
The Contractor will diligently undertake the approved evaluation work program,
it being understood that the provisions of Article 4.4 will apply to the
program.

5.2.3
The duration of the evaluation work program will not exceed twenty-four (24)
months for Crude Oil and in the case of Natural Gas, the duration of the
evaluation work program will be determined in accordance with the provisions of
Article 13, unless otherwise approved by the Ministry. The Ministry's approval
of the request will not be denied or delayed without reasonable justification.

5.3
Presentation of the Evaluation Report

5.3.1
Within six (6) months following completion of the evaluation work program and in
any case, no later than thirty (30) days before expiration of the Initial
Exploration Period, or the First Extension Period or the Second Extension
Period, including all additional extensions in accordance with the provisions of
Article 2.2, as the case may be, the Contractor will present a detailed report
to the Ministry giving all the technical and economic information associated
with the evaluated Discovery and that confirms, in the Contractor's judgment,
whether such Discovery is a Commercial Discovery.

5.3.2
This report will include geological and petrophysical characteristics of the
Discovery, estimated geographical extent of the Discovery, results of the
production tests obtained from the formation, and a preliminary economic study
with respect to exploitation of the Discovery.

5.4
Determination of Commerciality

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For the purposes of Article 5.3, the Contractor will determine whether it
considers that a Discovery or set of Discoveries can be developed commercially.
The commercial viability of the Discovery or set of Discoveries will be
determined after consideration of all operating, economic, and financial
information gathered during performance of the evaluation work program and other
sources, including recoverable reserves of Crude Oil and Natural Gas,
sustainable Production levels and all other relevant economic factors, according
to the good practices of the international petroleum industry.
5.5
Presentation and Approval of the Development and Production Plan

5.5.1
If the Contractor considers the Discovery or set of Discoveries to be a Field,
it will submit for the approval of the Ministry a development and production
plan (the "Development and Production Plan") for that Discovery or set of
Discoveries within twelve (12) months following delivery of the report referred
to in Article 5.3

5.5.2
The Ministry may propose amendments or modifications to the aforementioned
Development and Production Plan, and also to the Development and Production Area
that is the object of this Development and Production Plan, giving notice to the
Contractor within ninety (90) days following receipt of the plan. Such
notification will explain the reasons for the amendments or modifications
proposed by the Ministry. In such case, the Ministry and the Contractor will
meet as soon as possible to review the proposed amendments or modifications of
the Ministry and establish the Development and Production Plan by mutual
agreement.

5.5.3
If the Contractor and the Ministry do not reach a written agreement within one
hundred eighty (180) days following the submission of amendments and
modifications by the Ministry, or the Ministry notifies the Contractor that it
does not approve the establishment of a Field, the Field will not be established
and any extension granted under Article 2.2.4 with respect to the Discovery or
set of Discoveries in question will be deliberated and decided by an
internationally recognized expert named by the International Chamber of Commerce
in accordance with its Rules for Expertise (ICC Expertise Rules). The decision
of the expert will be restricted to whether the rejection by the Ministry of the
establishment of a Field or the amendments and modifications to the Development
and Production Plan by the Ministry are reasonable and customary and prudent in
accordance with generally accepted practice of the international petroleum
industry. The decision of the expert will be final and binding on the Parties,
and if it cannot be enforced in accordance with the legislation of Equatorial
Guinea, the only recourse will be to arbitration under Article 26 to arrive at a
definitive and binding decision. The expert will determine the above within
twenty (20) days from the date of his designation. The costs and expenses of the
expert will be paid proportionately by the Parties.

5.6
Modifications to the Development and Production Plan

5.6.1
When the results obtained during Development and Production Operations require
certain modifications to the Development and Production Plan, the plan may be
modified using the same procedure provided for its initial approval. Subject to
the provisions of Article 4.4, the Contractor may not incur any expenditure that
exceeds the approved Development and Production Plan without prior approval of
the Ministry; if prior approval is not obtained, such excess expenditures will
not be recoverable by the Contractor as Petroleum Operations Costs or deductible
for tax purposes.

5.6.2
During the period of Development and Production, the Contractor may propose to
the Ministry revisions to the Development and Production Plan at any time that
additional Development and Production Operations are under consideration. Such
revisions will be submitted for the Ministry’s approval using the same procedure
provided for the initial approval.

5.7
Number of Fields

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If the Contractor discovers more than one (1) Field in the Contract Area that
are not overlying, adjacent to, or underlying an existing Field, each will be
the object of a separate Development and Production Plan, unless the Ministry
agrees that the Fields would be better developed with a single Development and
Production Plan.
5.8
Extension of the Field beyond the Contract Area

5.8.1
If, during work performed after approval of a Development and Production Plan,
it appears that the geographical extent of a Field is larger than the
Development and Production Area designated in accordance with Article 5.5, this
will be so reported to the Ministry for enlargement of the Field by the
Contractor to the additional area, provided that it is included in the Contract
Area in effect at that time, and provided that the Contractor provides
supporting evidence of the existence of the additional area for which it is
applying.

5.8.2
If a Field extends beyond the boundaries of the Contract Area as delimited at
any particular time, the Ministry may require the Contractor to exploit such
Field in association with the contractor of the adjacent area in accordance with
Article 22 of the Hydrocarbons Law and good practices of the international
petroleum industry

5.8.3
When the area proposed to be unitized is not subject to any production sharing
contract, such area will be the subject of new negotiations between the Parties
to achieve an amendment to this Contract, it being understood that any award of
an additional area must be in accordance with the Hydrocarbons Law.

5.9
Commencement and Execution of Development and Production Operations

5.9.1
The Contractor will commence Development and Production Operations within six
(6) months of the approval date of the Development and Production Plan and will
conduct these operations diligently.

5.9.2
The Contractor commits itself to conducting all Development and Production
Operations in accordance with good practices of the international petroleum
industry, this Contract, and the Hydrocarbons Law.

5.10
Duration of the Operations

5.10
The duration of the Development and Production period during which the
Contractor is authorized to exploit a Field is twenty-five (25) Years from the
date of approval of the Development and Production Plan for the Field.

5.10.2
The Development and Production period defined above may be extended for an
additional period of five (5) Years with prior approval of the Ministry, which
approval will not be denied or delayed without reasonable justification, if the
Contractor presents a request to this effect to the Ministry at least one (1)
Year prior to its expiration and on the condition that the Contractor has
fulfilled all of its obligations under this Contract and that it can demonstrate
that commercial Production from the Field is still possible after expiration of
the initial Development and Production Period. The Contract can be extended for
additional periods in accordance with the Hydrocarbons Law and Petroleum
Regulations at the sole discretion of the Ministry.

5.11
The Contractor's Expenses and Financial Risks

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The Contractor commits itself to assuming the expenses and financial risks of
all Petroleum Operations required to bring a Field into Production in accordance
with the approved Development and Production Plan.
5.12
Mandatory Relinquishment

During the Initial Exploration Period, the Extension Periods, and any additional
extensions, the Ministry may, provided it gives at least six (6) months’ notice,
require the Contractor to promptly relinquish, without any compensation or
indemnification, all of its rights to the area encompassing a Discovery,
including any rights to Hydrocarbons that may be produced from such Discovery,
if the Contractor:
(a)
has not presented, in accordance with Article 5.2, an evaluation work program
and corresponding budget with respect to the Discovery within six (6) months of
the date on which the Discovery has been reported to the Ministry; or

(b)
subject to the provisions of Article 13.1 with respect to Unassociated Natural
Gas, does not establish the Discovery as a Field within one (1) Year after
completion of evaluation work with respect to the Discovery.

5.13
Future Operations

In the event of a relinquishment under Article 5.12, the Ministry may perform or
cause to be performed any Petroleum Operations with respect to any Discovery so
relinquished without any compensation or indemnification to the Contractor,
provided, however, that it will not interfere with the Petroleum Operations
undertaken by the Contractor in the part of the Contract Area retained by the
Contractor, if any. The Ministry will be permitted to use (free of charge) all
facilities and equipment of the Contractor that are not used for continuing
Petroleum Operations. If so requested by the Ministry, the Contractor will take
charge of all continuing operations on terms and for a fee to be agreed between
the Ministry and the Contractor.

ARTICLE 6
CONDUCT OF PETROLEUM OPERATIONS
6.1
Obligations of the Contractor

In accordance with the good practices of the international petroleum industry
and the Hydrocarbons Law, the Contractor will provide all funds necessary to
manage Petroleum Operations in the Contract Area, including buying or leasing
all facilities, equipment, materials, and other goods required to carry out such
Petroleum Operations. It will also supply all technical and operational
expertise, including the use of foreign and national personnel required to
implement Annual Work Programs. The Contractor will be responsible for the
preparation and implementation of all Annual Work Programs, which will be
carried out in accordance with this Contract, the Hydrocarbons Law and good
practices of the international petroleum industry.
6.2
Joint Operating Agreement

The contractor will provide the Ministry with a copy of the draft Joint
Operating Agreement (JOA) no later than one hundred eighty (180) days after the
Effective Date, linking the entities making up the Contractor group, and naming
the entities designated the Technical Operator and Administrative Operator.

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6.3
Management of Petroleum Operations

The Contractor will diligently manage Petroleum Operations in accordance with
this Contract, the Hydrocarbons Law and the good practices of the international
petroleum industry.
6.4
Maximum Efficient Production Rate

The Contractor and the Ministry will agree on the Production programs before
Production begins in any Field and establish at that time the Maximum Efficient
Production Rate for the Field, and will decide the dates on which the levels
will be reexamined and potentially revised.
6.5
Working conditions

The Contractor will provide acceptable working conditions and access to medical
attention and nursing care for all of its local and international personnel and
those of its subcontractors that are working offshore and on land during
Petroleum Operations. The Contractor will also provide living quarters for
national or international personnel based on offshore installations and an
additional housing allowance in the remuneration of land-based personnel.
6.6
Discovery of other minerals

The Contractor will promptly notify the Ministry of the discovery of other
minerals or substances in the Contract Area. If any Persons are granted a permit
or license within the Contract Area for the exploration and exploitation of any
minerals or substances other than Hydrocarbons, the Ministry will take all
reasonable measures to ensure that the operations of such Persons do not
obstruct the Contractor's Petroleum Operations. The Contractor will use all
reasonable efforts to avoid obstructing the operations of such permit holders or
licensees.
6.7
Awarding of Contracts

6.7.1
The Contractor will award all contracts in accordance with the National Content
Regulation promulgated by the Ministry in Ministerial Order No. 1/2014 of 26
September 2014, to the best qualified subcontractor or other Person, including
Affiliates of the Contractor, as determined by cost and ability to comply with
the provisions of the contract, provided the Contractor complies with Article
23.1.

In all Material Contracts, the Contractor will:
(a)
call for bidding on the contract;

(b)
give preference to national companies the Contractor considers qualified;

(c)
before awarding a Material Contract, send a notification to the Ministry
reporting that the Contractor intends to present an offer for the contract;

(d)
include the national companies on a list supplied by the Ministry and that the
Contractor considers competent, on the list of bidders for the Material
Contract;

(e)
add any Persons to the list so requested by the Ministry;

(f)
complete the bidding process within a reasonable time;

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(g)
consider and analyze the details of the bids received;

(h)
prepare a competitive bid analysis and present to the Ministry stating the
Contractor’s recommendation as to the Person to whom the contract should be
awarded, the reasons, and the technical, commercial, and contractual terms to be
agreed upon;

(i)
obtain the approval of the Ministry that will be considered as conceded if there
is no response to a request for approval thirty (30) Days after receipt of a
written request; and

(j)
provide the Ministry with a copy of the final executed contract.

 
All amendments and/or variations to a Material Contract will require the prior
approval of the Ministry, approval that will be considered as conceded if there
is no response to a request for approval thirty (30) Days after receipt of a
written request.
6.7.2
To the extent that the Contractor imports and/or uses any services, materials,
equipment, consumables, and other goods from outside Equatorial Guinea in
conscious contravention of this Article or Article 23.1, or otherwise enters
into a contract in contravention of these Articles, the costs will not be
Petroleum Operations Costs and will not be costs that the Contractor can
recover.

6.7.3
Together with the Annual Work Program, the Contractor will submit to the
Ministry a list of the types of contracts or agreements for services that the
Contractor foresees entering into during that Year, as well as details of those
entered into in the previous Year. This list will include the value of those
contracts, as well as the names, addresses, and telephone numbers where all the
subcontractors of the Contractor and other Persons who have entered into these
contracts. In addition, the Contractor will present to the Ministry quarterly a
detailed list, including the names, addresses, and telephone contacts of the
Contractor’s subcontractors and other Persons who have provided goods or
services to the Contractor for the conduct of Petroleum Operations during the
relevant Quarter.

6.8
Inspection of Petroleum Operations

6.8.1
All Petroleum Operations may be inspected and audited by the Ministry at such
intervals as the Ministry considers necessary; nevertheless, only in exceptional
cases will this be done outside regular working hours. The duly commissioned
representatives of the Ministry will have the right, among others, to monitor
Petroleum Operations and inspect all equipment, facilities, and materials
relating to Petroleum Operations, provided that any such inspection will not
unduly delay or impede Petroleum Operations, nor demand the use of housing
necessary for operating personnel. The representatives of the Ministry
inspecting and monitoring Petroleum Operations will comply with the safety
standards of the Contractor, and whenever possible, will do so without incurring
extra expenses for the Contractor.

6.8.2
For purposes of allowing exercise of the rights mentioned in the paragraph
above, the Contractor will provide reasonable assistance to the representatives
of the Ministry, including transportation and accommodation, when these are
under the control of the Contractor. The Ministry will pay all expenses of
transportation and housing of third parties, with the exception of what is
established in Article 6.8.3,

6.8.3
In accordance with the Petroleum Regulations, all reasonable costs directly
related to the technical inspection, verification, and audit of Petroleum
Operations, or related to the exercise of the Ministry's rights under this
Contract or the performance of the Contractor's obligations will be at the
expense of the Contractor under tariffs that will be published and are
applicable in general to all companies

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in the Hydrocarbon extraction sector in Equatorial Guinea. Payments under this
Article 6.8.3 will be made to the State and are recoverable as Petroleum
Operations Costs in accordance with this Contract, including:
(a)
outbound and return travel expenses for trips outside Equatorial Guinea;

(b)
local public transportation, when transportation in accordance with Article
6.8.2 is not available;

(c)
housing, when this is necessary to carry out official tasks and is not supplied
under Article 6.8.2; and

(d)
per diems, which will be adjusted in accordance with the amounts assigned to the
classification of each agent of the Ministry and published in the general budget
law of the State approved for the corresponding Calendar Year, applicable to all
companies in the Hydrocarbons extraction sector of Equatorial Guinea.

6.9
Supply of information to the Ministry:

6.9.1
The Contractor will keep the Ministry fully informed of the performance and
status of Petroleum Operations, supplying information at reasonable intervals
and as required under this Contract, and about all accidents or emergencies that
may have occurred during these operations. Furthermore, the Contractor will
provide the Ministry with all documentation and information that is required to
be provided under this Contract and the Hydrocarbons Law and that may be
requested by the Ministry from time to time.

6.9.2
The Contractor will keep the Ministry informed on a daily basis of the volumes
of Hydrocarbons produced in the Contract Area.

6.10
Production of energy for own use

If the national power grid is available to the Contractor for its onshore
Petroleum Operations, the Contractor will connect to that network and will not
produce any energy for its own use except to the extent that national production
or transmission of energy is insufficient or not sufficiently reliable for the
Contractor's needs to carry out Petroleum Operations. In such case, the energy
produced will not be sold to any Person. The Contractor may utilize the
quantities of Crude Oil and/or Natural Gas as fuel in its offshore Petroleum
Operations or for the transport of Hydrocarbons to an onshore location.
6.11
Equipment standards

The Contractor will ensure that all equipment, plants, installations, and
materials it uses comply with the Hydrocarbons Law and generally accepted
engineering standards, and that they have been duly constructed and are
maintained in good condition.
6.12
Contractor's care and the environment

6.12.1
The Contractor will take all necessary and prudent steps in accordance with good
practices of the international petroleum industry, the Hydrocarbons Law, and
this Contract to:

(a)
prevent pollution and protect the environment and living resources;

(b)
ensure that any Hydrocarbons discovered or produced in the Contract Area are
handled in a safe manner for the environment;

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(c)
avoid causing damage to overlying, adjacent, and/or underlying formations that
contain Hydrocarbon deposits;

(d)
prevent the ingress of water via Wells into strata that contain Hydrocarbons
that are not specified in an approved Development and Production Plan;

(e)
avoid causing damage to overlying, adjacent, and/or underlying aquifers;

(f)
ensure that Petroleum Operations are carried out in accordance with this
Contract, the Hydrocarbons Law, and all other laws of Equatorial Guinea;

(g)
take the precautions necessary to protect maritime transportation and the
fishing industry, and to avoid contamination of the ocean and rivers;

(h)
drill and exploit each Field in a manner consistent with the approved
Development and Production Plan for protection of the interests of Equatorial
Guinea; and

(i)
ensure that damages caused by Petroleum Operations to Persons and property are
promptly, fairly, and fully compensated.

6.12.2
If the Contractor's actions result in any pollution or damage to the
environment, any Person, living resources, property or other type of damage, the
Contractor will immediately take all prudent and necessary measures to remedy
such damages and its effects and/or those measures the Ministry may order. If
the pollution or damage is caused as a result of the negligence or willful
misconduct of the Contractor, its subcontractors, or any Persons acting on its
or their behalf, all costs related to that pollution or damage will not be
recoverable as Petroleum Operations Costs. If the Contractor does not act
promptly to control or clean up any pollution or repair any damage caused, the
Ministry may, after giving the Contractor reasonable notice in the
circumstances, carry out the actions that are prudent or necessary in accordance
with this Article and Article 4.5 and all reasonable costs and expenses of those
measures will be at the expense of the Contractor and will not be recoverable as
Petroleum Operations Costs.

6.12.3
If the Ministry determines that any works or installations built by the
Contractor or any activity undertaken by the Contractor threatens the safety of
any Persons or property or causes pollution or harm to the environment, the
Ministry will promptly advise the Contractor of its determination, and may
require the Contractor to take all appropriate mitigating measures, consistent
with generally accepted practices of the international petroleum industry, to
repair any damage caused by the Contractor's conduct or activities. Furthermore,
if the Ministry considers it necessary, it may demand that the Contractor
suspend the affected Petroleum Operations totally or partially until the
Contractor has taken the appropriate mitigating measures or repaired any damage.

6.12.4
The Contractor will undertake comprehensive environmental impact assessment
studies before, during, and after major drilling operations. The Contractor will
assume the costs of these studies and the costs will be recoverable This
requirement is mandatory and the first study will be presented to the Ministry
before drilling starts on the first Well in the Contract Area. However, an
environmental impact assessment must also be completed before any seismic work
in especially sensitive areas environmentally specified by the State.

6.13
Reinjection and Natural Gas Flaring

The Natural Gas that the Contractor does not develop in accordance with this
Contract and the Hydrocarbons Law or use in its own operations within the
Contract Area will be reinjected into the structure of the subsoil. All costs of
the reinjection will be recoverable as Petroleum Operations

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Costs. Notwithstanding the foregoing, the Ministry may authorize the combustion
of Natural Gas for short periods of time in accordance with the Hydrocarbons
Law. The Contractor will compensate the State for unauthorized volumes of gas
flared. All such Natural Gas not used in Petroleum Operations by the Contractor
or not developed in accordance with this Contract and the Hydrocarbons Law will
remain the sole property of the State.
6.14
Design and identification of Wells

6.14.1
The Contractor will conform to the practices generally accepted in the
international petroleum industry in the design and drilling of Wells, including
their casing and cementation.

6.14.2
Each Well will be identified by a name or number agreed on with the Ministry,
which will be indicated on all maps, plans and other similar records produced by
or on behalf of the Contractor.

6.15
Vertical Projection Wells

No Well may be drilled to an objective outside the vertical projection of the
boundaries of the Contract Area. Directional Wells drilled within the Contract
Area from adjacent terrain not covered by this Contract will be considered for
all purposes of this Contract as Wells drilled from territory included in the
Contract Area, and whose drilling may only be undertaken with the prior approval
of the Ministry, and on the terms and conditions the Ministry may establish. No
part of this Article intends or may be interpreted as conceding a right of
lease, license, servitude or any other right that the Contractor must obtain
from the Ministry or other Persons.
6.16
Notification of Drilling Commencement

The Contractor will notify the Ministry at least ten (10) Working Days before
drilling any Well established in an approved Annual Work Program and
corresponding Annual Budget, or before resuming work on any Well where work has
been suspended for more than six (6) months.
6.17
Construction of installations

The Contractor will build and maintain all installations necessary to properly
comply with this Contract and carry out Petroleum Operations. The Contractor
will request authorization from the Ministry and/or other applicable
governmental authorities to occupy land necessary for the exercise of
corresponding rights and obligations in accordance with this Contract. This
authorization will be ruled by the provisions of Article 6.19, the Hydrocarbons
Law, and other applicable laws of Equatorial Guinea. The Contractor will repair
all damages caused by such circumstances.
6.18
Occupation of Land

6.18.1
In order to carry out Petroleum Operations, the Contractor will have the right
to:

(a)
subject to the provisions of Articles 6.17 and 6.18.2, occupy the land necessary
to carry out Petroleum Operations and connected activities, as stipulated in
items (b) and (c) of this Article, including housing of personnel;

(b)
undertake or procure the undertaking of any infrastructure work necessary in
normal technical and economic conditions for the carrying out of Petroleum
Operations and associated activities such as transport, storage of equipment,
materials and extracted substances, establishment of telecommunications
equipment and communication lines necessary to carrying out Petroleum Operations
at installations located both offshore and on land;

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(c)
realize or ensure realization of the work necessary to supply water for
personnel and installations in accordance with water supply regulations; and

(d)
extract and use or ensure the extraction and utilization of resources (other
than Hydrocarbons) from the subsoil necessary for the activities stipulated in
paragraphs (a), (b) and (c) above in accordance with applicable regulations.

6.18.2
Occupation of land as mentioned in Article 6.18.1 will become effective after
the Ministry or other appropriate governmental authority approves the request
submitted by the Contractor indicating and detailing the location of such land
and how the Contractor plans to use it, taking the following into consideration:

(a)
if the land belongs to the State, the State will grant it to the Contractor for
occupation and to build its fixed or temporary installations during the term of
this Contract for a fee and on terms to be agreed and this amount will be
considered a Petroleum Operations Cost;

(b)
if the land is private property by traditional or local right according to the
Property Registry, then (i) if the occupation is merely temporary or transitory,
or for right of way, the Contractor will reach an agreement with the relevant
property owner and the property owner will reach an agreement with any occupant,
tenant, or possessor with respect to the rental to be paid, and the resulting
amounts will be considered recoverable Petroleum Operations Costs, or (ii) if
the occupation is permanent, the Contractor will reach an agreement on matters
related to the property's acquisition with the owner in question, and such
amounts will be considered Petroleum Operations Costs;

(c)
if the Contractor and the relevant property owner or occupant, tenant, or
possessor do not reach an agreement about the matters mentioned in paragraph (b)
above, the Ministry will act as mediator between them, and if mediation fails to
produce resolution of the case, the dispute will be resolved by the courts of
Equatorial Guinea, unless recourse is had to the procedure described in
paragraph (d) below;

(d)
the State may expropriate the land, subject to prior publication of a decree of
compulsory expropriation followed by a fair and reasonable appraisal of the land
by an expert appraiser. In such event, the Contractor will compensate the
expropriated property owner in accordance with the value determined by the
expert appraiser if the State has not done so; such amounts will be considered
recoverable Petroleum Operations Costs;

(e)
relinquishment, in whole or in part, of the Contract Area, will not affect the
Contractor’s rights under Article 6.18.1 to carry out building work and
construction of installations, provided that such work and installations are
directly related to other activities of the Contractor in the remainder of the
Contract Area, as in the case of partial relinquishment, and covered by other
production sharing contracts.

6.19
Residence of personnel

No restrictions will be imposed on the entry, residence, free circulation,
employment, and repatriation of the Contractor's personnel and those of its
subcontractors, the family of such personnel, or the belongings of such
personnel and their families, provided the Contractor and its subcontractors
comply with all applicable laws, including, among others, the labor and social
legislation of Equatorial Guinea. The State commits to expediting without delay
the entry, work, or residence permits or other permits or authorizations that
may be required by the personnel of the Contractor or any subcontractor in
accordance with the Laws of Equatorial Guinea.

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6.20
Collaboration of the Ministry

The Ministry will collaborate with the Contractor and its subcontractors in
obtaining all administrative authorizations and licenses as may reasonably be
necessary for proper execution of Petroleum Operations under this Contract.
6.21
Opening a branch.

In accordance with Article 20 of the Hydrocarbons Law, the Contractor (with the
exception of the National Company) will, to the extent that it has not already
done so, open a branch of a local or foreign company in Equatorial Guinea within
six (6) months following the Effective Date, which will continue as a foreign or
local company as each member of the Contractor (with the exception of the
National Company) chooses, with its presence established in Equatorial Guinea
during the entire term of this Contract. This branch office will always be
staffed by at least one (1) representative having sufficient authority to make
decisions on behalf of the Contractor.
6.22    Offices
After approval of the first Development and Production Plan, the Technical
Operator, at the expense and responsibility of the Contractor (with the
exception of the National Company) will, to the extent that it has not already
done so, construct a prestigious building for its offices in Equatorial Guinea
using modern and permanent materials and of an appropriate size and design, as
approved by the Ministry. All costs related to such construction will be
recoverable as Petroleum Operation Costs under this Contract. Once construction
costs have been recovered by the Contractor, the property will be owned solely
by the State and the Contractor will have the right to continue to use it for
offices during the term of this Contract. When the Contractor has recovered the
costs of constructing the building, it will negotiate renting the building with
the State. This rent will be market price.

ARTICLE 7
ROYALTIES, RECOVERY OF PETROLEUM OPERATION COSTS, AND DISTRIBUTION OF PRODUCTION
7.1
Royalties

7.1.1
The Contractor will pay Royalties to the State from the first day of Production
based on the daily Total Disposable Production from a Development and Production
Area. The calculation will be determined according to the following table
applicable for each tranche:

        
Daily Total Disposable Production
Royalty
(Barrels per day)
(%)
0 to 40,000
13
%
40,000 to 80,000
14
%
80,00 to 120,000
15
%
More than 120,000
16
%

    

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7.1.2
The percentage that corresponds to the level of Production will be applied
directly. Thus, for example, for a Production level of seventy-five thousand
(75,000) Barrels per day, fourteen percent (14%) would be paid, and the Royalty
would be twelve thousand seven hundred fifty (12,750) Barrels.

7.2
Cost-Recovery Petroleum

7.2.1
After deducting Royalties, the Contractor will be entitled to up to sixty-five
percent (65%) of the Total Disposable Production remaining in any Calendar Year
for recovery of its Petroleum Operations Costs (Cost Recovery Oil).

7.2.2
The value of the portion of Total Disposable Production assigned to the
Contractor’s recovered Petroleum Operations Costs will be determined in
accordance with Article 10.

7.2.3
If, during any Calendar Year, the Petroleum Operations Costs not yet recovered
by the Contractor in accordance with this Contract exceed the value of the
maximum amount of available Cost Recovery Oil, the portion of Petroleum
Operations Costs not recovered in the Year will be carried forward to the
following Calendar Year for recovery purposes.

7.3
Net Crude Oil

The quantity of Total Disposable Production remaining every Year after deduction
of Royalties and Cost Recovery Oil will hereinafter be referred to as Net Crude
Oil, which will be shared between the State and the Contractor in the following
proportions:

Total Accumulated Production
(Million Barrels)
State Participation
 (%)

Participation of the
Contractor

Less than or equal to 90
20%
80%
More than 90 and less than or equal to 200
30%
70%
More than 200 and less than or equal to 300
40%
60%
More than 300 and less than or equal to 400
50%
50%
More than 400
60%
40%

7.4    Delivery of State's Participation
The share of the Crude Oil belonging to the State, in accordance with Articles
7.1 and 7.3, will be delivered to and accepted by the State or the Person it
designates at the Delivery Point. The Contractor will be free from all
responsibility with respect to this Crude Oil from the time it has been
delivered. However, the State may require the Contractor to purchase all or part
of the State’s share of Total Disposable Production, subject to the provisions
of Article 7.5
7.5
Price Obtained by the Contractor

7.5.1
If, in accordance with Article 7.4, the State requires the Contractor to
purchase its share of Crude Oil, the State will advise the Contractor of its
next scheduled shipment at least three (3) months in advance, and the Ministry
and the Contractor will mutually agree on the terms and conditions of the

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sale. If three (3) months’ advance notice is not given, or agreement is not
reached on the terms and conditions of the sale, the Contractor will not be
obligated to buy the Crude Oil
7.5.2
The Ministry will have the right to compare the price for its Crude Oil obtained
from the Contractor with quotations from similar markets. If it is shown that
the price obtained from the Contractor differs substantially from the quotations
in similar markets, the Ministry will have the right to evaluate the
Contractor’s sales and marketing operations, and if justified, to cancel any
contract of sale between the State and the Contractor with respect to sales
after the date on which it becomes aware of the situation, as well as also
having the right to market Crude Oil on its own, without prejudice to any right
that the State has against the Contractor.

7.6
Export of the Contractor's Share

Subject to Article 12 and the Hydrocarbons Law, each Party making up the
Contractor has the right to take, receive, and freely export its share of Net
Crude Oil and Cost Recovery Oil, provided it uses the services of an
Equatoguinean Crude Oil maritime transport company, an international company
associated with the National Company or any other local business that is able to
provide the services under conditions that are internationally competitive in
terms of price, quality, terms of payment, and availability. If such enterprises
do not exist, or cannot offer competitive terms with respect to price, quality,
terms of payment, and availability, each of the Parties making up the Contractor
will have the right to freely take, receive, and export its share of the Net
Crude Oil and Cost-Recovery Petroleum through internationally available
suppliers.
7.7
Transfer of Ownership

Ownership of the Contractor’s portion of Net Crude Oil and Cost Recovery Oil
will pass to the Contractor at the Delivery Point.

ARTICLE 8
PARTICIPATION INTERESTS
8.1
Responsibility for Petroleum Operations Costs

Subject to Article 8.2, the Parties making up the Contractor will fund, pay, and
carry all costs and expenses for Petroleum Operations under this Contract and
the Joint Operating Agreement in the proportions established in Article 1.3.
Each of the Parties that constitute the Contractor will be represented on the
operating committee under the JOA, and will have voting rights as the Agreement
provides.
8.2
Participation Interest of the State through the National Company under Chapter
XVIII of the Hydrocarbons Law.

8.2.1
The National Company's Carried-Over Interest will be carried and paid in its
totality by the Parties that make up the Contractor, with the exception of the
National Company, ("Paying Partners") in accordance with the provisions of
Article 1.3.1. After the Carry-Over Termination Point, the National Company will
totally pay all costs and obligations that arise after the Carry-Over
Termination Point that are attributable to its Participation Interest, the same
as other members of the Contractor.

8.2.2
The costs, expenses, and obligations contracted by each Paying Party in relation
to its payments and obligations for the Carried-Over Participation of the
National Company will be recoverable by

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the Paying Parties by virtue of this Contract and the Hydrocarbons Law. The
Paying Parties will recover the costs and expenses associated with the
Carried-Over Participation of the National Company only from fifty percent (50%)
of the Cost-Recovery Petroleum. The National Company is entitled to fifty
percent (50%) of the Cost-Recovery Petroleum until the Paying Partners have been
completely reimbursed for the cost of the Carried-Over Participation of the
National Company.
8.2.3
In accordance with the provision of 8.2.2, such costs will also include: travel,
stay, and maintenance of the delegation designated by the National Company.

ARTICLE 9
TAXES
9.1
Payment of Taxes

Except as otherwise provided in this Contract, the Contractor, its
subcontractors, and their respective employees, agents, consultants, and other
personnel will be subject to the Tax Law and all regulations passed in
accordance with it, as well as CEMAC (Central African Economic and Monetary
Community) and tax and customs laws of Equatorial Guinea.

ARTICLE 10
VALUATION OF CRUDE OIL
10.1
Calculation of Market Price

10.1.1
The selling price per unit of Crude Oil under this Contract will be the FOB
Market Price at the Delivery Point, expressed in Dollars per Barrel and
calculated in accordance with this Article 10.1. A Market Price will be
established for each type of Crude Oil or Crude Oil blend, according to this
Article 10.1.

10.1.2
The Market Price applicable to all liftings of Crude Oil sold to third parties
in market conditions during a Quarter will be the agreed-to sales price,
adjusted, if necessary, to reflect differences in the quality, gravity, delivery
conditions, and terms of payment.

10.1.3
Before the period when Argus Crude quotes a price for the Field from which the
Crude Oil is sold, the market price applicable to all liftings of crude oil sold
to a Contractor’s Affiliate and subsequently sold to a third party will be the
value received under the contract in market conditions with that third party,
adjusted, if necessary, to reflect differences in the quality, gravity, delivery
conditions, and terms of payment. If there is no Argus Quote for the Crude Oil
produced, the Contractor and the Ministry will meet to establish a differential
related to a marker of crude quoted in Argus to reflect the difference in
quality and the commercial differences. The meeting will take place six months
after the introduction onto the market, and all Persons constituting the
Contractor who participate in the commercialization of the Crude Oil during this
six-month period will participate in the meeting with the Ministry.

10.1.4
The market price applicable to all Crude Oil liftings sold to a Contractor's
Affiliate after a quoted price has been established for one Quarter will be
calculated by adding the average of the high and low Dated Brent quotes
according to publication in five (5) consecutive editions of the Platts Bulletin
of the crude oil market (including all corrections) after the date of the
shipment's bill of lading to the average differential between Crude Oil sold and
Dated Brent quotes that are published in Argus

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Crude for the period beginning the fifteenth (15th) day and ending the last day
of the Month of the Cargo's Marketing (inclusive). This is expressed in the
following Formula:
Price = A + B, where:
A =
average of the high and low Dated Brent quotes, according to publication in five
(5) consecutive editions of the Platts Bulletin of the Crude Oil Market
(including all corrections) after the date of the bill of lading.

B =
average differential between the quality of crude oil sold and Dated Brent
quotes published in Argus Crude for the period beginning the fifteenth (15th)
day and ending the last day of the month of the Cargo's Marketing (inclusive).

If the qualities of crude oil produced from the field do not correspond, within
tolerable limits, a 'C' adjustment will be created that takes into account the
differences associated with those qualities that do not coincide with A and B.
In this case, the Market Price formula will be amended as follows:
Price = A + B + C
If the Crude Oil used to calculate the Market Price is no longer quoted, the
Ministry and the Contractor will agree on which Crude Oil is closest to the
Crude Oil that is no longer quoted, in order to calculate the Market Price.
10.1.5
The Market Price applicable to all liftings of Crude Oil for one Quarter equals
the weighted average of the prices obtained by the Parties constituting the
Contractor, with the exception of the National Company, for Crude Oil sold and
valued in accordance with Articles 10.1.2, 10.1.3, and 10.1.4

10.1.6
The following transactions will be excluded from calculation of the Market
Price:

(a)
sales between the providers of Crude Oil and the local market; and

(b)
sales for consideration other than payment in a freely convertible currency and
sales wholly or partially made for reasons different from the usual economic
incentives involved in Crude Oil sales on the international market (such as
exchange contracts).

10.2
Disagreements about the Market Price

10.2.1
The Contractor and the Ministry will agree on the Market Price in accordance
with this Article 10; if they are unable to agree on any matter concerning the
Market Price of Crude Oil, either the Contractor or the Ministry may serve the
other with a dispute notice. Within seven (7) days of the date of the dispute
notice, the Ministry will establish a committee of two (2) Persons of which the
Minister of Mines and Hydrocarbons or his delegate will be the President, and
the other committee member will be a representative designated by the Contractor
to represent it. The committee will meet and make a decision resolving any
dispute under this Article 10 within thirty (30) days of the date of the dispute
notice. The committee will decide the controversy unanimously.

10.2.2
If the committee has not reached a unanimous decision within the aforementioned
thirty- (30-) day period, the dispute will be decided by an internationally
recognized expert named by the International Chamber of Commerce in accordance
with its Rules for Expertise (ICC Expertise Rules). The decision of the expert
will be final and binding on the Parties, and if it cannot be enforced in
accordance with the legislation of Equatorial Guinea, the only recourse will be
to arbitration under Article 26 to arrive at a definitive and binding decision.
The expert will determine the Market Price in accordance with the provisions of
this Article 10 within twenty (20) days from the date of his

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designation. The costs and expenses of the expert will be paid proportionately
by the Parties on a per capita basis and the Contractor’s share will not be cost
recoverable
10.2.3
While the determination of the Market Price for a Quarter is pending, the Market
Price provisionally applicable to a Quarter will be the Market Price of the
preceding Quarter. Any necessary adjustment will be made no later than thirty
(30) days after determination of the Market Price for the Quarter in question

10.3
Period for payment of the Market Price to the State if the Contractor
commercializes the State's Crude Oil.

Subject to Article 7.5, when the Contractor markets Crude Oil belonging to the
State for the State and the period of payment is not individually established in
a Crude Marketing Agreement with the State, within ten (10) days of each
shipment, the Contractor will provide the Ministry with full details of the
prices obtained from the sale of each shipment of State Crude Oil and will
forward to the State all amounts of such sales within fourteen (14) days of
receiving them.
10.4
Auditing the Market Price

The Ministry will have the right to audit and verify that the price obtained by
the Contractor for each shipment of Crude Oil has been the price determined in
accordance with this Contract. The Ministry will have the right to evaluate the
marketing practices of the Contractor during a period of two (2) Years from the
transaction date, and require the Contractor to pay the State for the difference
between the price actually obtained and the Market Price determined in
accordance with this Article 10. Differences with respect to the Market Price
will be resolved as established in Article 10.2.

ARTICLE 11
BONUSES AND SURFACE LEASES
11.1
Contract signing bonus

The Contractor will pay the State a signing bonus of two million five hundred
thousand Dollars ($2.5MM) within thirty (30) days of the Effective Date.
11.2
Discovery Bonus

On the date the Contractor notifies the Ministry for the first time that it
considers a Discovery to be a Commercial Discovery in compliance with the
provisions of Article 5.4, the Contractor will pay the State the sum of five
million Dollars ($5MM).
11.3
Production Bonuses

The Contractor will pay the State the following amounts as Production Bonuses:
(a)
three million Dollars ($3MM) on the date Production of Crude Oil begins from a
Development and Production Area;

(b)
three million Dollars ($3MM) when daily Production from a Development and
Production Area first averages twenty thousand (20,000) Barrels per day for a
period of sixty (60) consecutive days;

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(c)
five million Dollars ($5MM) when daily Production from a Development and
Production Area first averages forty thousand (40,000) Barrels per day for a
period of sixty (60) consecutive days;

(d)
five million Dollars ($5MM) when daily Production from a Development and
Production Area first averages sixty thousand (60,000) Barrels per day for a
period of sixty (60) consecutive days;

(e)
five million Dollars ($5MM) when daily Production from a Development and
Production Area first averages one hundred twenty thousand (120,000) Barrels per
day for a period of sixty (60) consecutive days; and

These payments will be made within thirty (30) days of the date that the
obligation is generated.
11.4
Surface leasing

11.4.1
The Contractor will pay the State the following annual surface lease amounts:

(a)
one Dollar fifty cents ($1.50) annually per hectare of the Contract Area, or
part thereof, during the Initial Exploration Period, the Extension Periods, or
any extension of them; or

(b)
two Dollars ($2.00) annually per hectare for each Development and Production
Area, for each Calendar Year or part thereof, during the term of the relevant
Development and Production Period.

11.4.2
For the Year in which this Contract is signed, the surface lease payment
established in Article 11.4.1(a) will be prorated from the Effective Date
through 31 December of such Year and will be paid within thirty (30) days after
the Effective Date. For succeeding Years, the surface lease payments established
in Article 11.4.1(a) and (b) will be paid in advance not less than thirty (30)
days before the beginning of each Calendar Year.

For the Calendar Year in which any Development and Production Area is granted,
the surface lease payment established in Article 11.4.1(a) and (b) will be
prorated from the date on which such Development and Production Plan is approved
to 31 December of that Calendar Year, and the additional sum will be paid within
thirty (30) days after the approval of the Development and Production Area. For
succeeding Calendar Years the surface lease payment established in Article
11.4.1(b) will be paid within thirty (30) calendar days after the beginning of
each Calendar Year.
11.4.3
Surface lease payments will be calculated based on the surface of the Contract
Area, and where applicable, of a Development and Production Area occupied by the
Contractor on the date these surface leases are paid. To avoid doubt, this will
exclude the surface of any relinquished areas. In the event of relinquishments
made during a Calendar Year, the Contractor will have no right to be reimbursed
for the surface lease payments already made.

ARTICLE 12
OBLIGATIONS TO SUPPLY THE NATIONAL MARKET
12.1
Obligation to supply

In accordance with the Hydrocarbons Law, the Contractor will make meeting the
needs of domestic Hydrocarbon consumption in Equatorial Guinea a priority
without the obligation to assume oil

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investment to produce a progressive increase in production for domestic
consumption. . For this purpose, and in accordance with the provisions of
Articles 86 and 87 of the Hydrocarbons Law, if the State so requests, the
Parties constituting the Contractor (other than the National Company) will sell
a portion of their Net Crude Oil and/or Net Natural Gas to the State at the
Delivery Point for internal consumption in the country. The price of Natural Gas
for internal consumption under Articles 86 and 87 of the Hydrocarbons Law will
be established in accordance with Article 49 of the Hydrocarbons Law.
12.2
Ministry Notification

No later than the first day of October of each Calendar Year, the Ministry will
notify the Parties constituting the Contractor (other than the National Company)
of the quantities of Crude Oil and/or Natural Gas that it wishes to purchase
under this Article 12 for the subsequent Calendar Year, when this right has not
been waived to ensure exportation of Natural Gas. The Crude Oil and/or Natural
Gas will be delivered to the State or to the beneficiary designated by the State
during that Calendar Year, according to procedures to be agreed on between the
Ministry and the Contractor.
12.3    Conditions under which the rights under Article 12.1 can be waived
Before submission of a Development and Production Plan under Article 5.5, the
Contractor will prepare an evaluation of reserves to determine the range of
proved and certified Natural Gas reserves in the Development and Production
Area.
In cases where long term Natural Gas sales contracts are necessary to finance
the project that is the object of the Development and Production Plan, the
Government will evaluate and report if it waives Article 12.1 with respect to
whether the reserves are sufficient to obtain this financing, The Contractor
will have no obligation to carry out the Natural Gas Development or Production
Operations if this waiver is not conceded.

ARTICLE 13
NATURAL GAS
13.1
Non-Associated Natural Gas

13.1.1
In the event of a Non-Associated Natural Gas Discovery, the Contractor will
comply with the provisions of Article 5.2. However, if the Evaluation work
program presented by the Contractor following the Discovery of Non-Associated
Natural Gas has a duration exceeding that of the Initial Exploration Period or
any of its extensions, the Contractor may request from the Ministry an extension
of the relevant Exploration Period with respect to the Evaluation Area related
to such Discovery for a period of up to four (4) Years starting from the
expiration of the Initial Exploration Period or any of its Extension Periods, as
appropriate. The Contractor will request the aforementioned extension at least
sixty (60) days before the expiration of the period in question.

13.1.2
If the Contractor considers that the Non-Associated Natural Gas Discovery does
not warrant Evaluation or further Evaluation, in conformity with the provisions
of Article 5.12, the Ministry may, with ninety (90) days’ advance notice,
require the Contractor to waive all of its rights over the Evaluation Area where
the Discovery is located.

13.1.3
If after finishing the Evaluation work the Contractor does not notify the
Ministry within thirty (30) days that the Non-Associated Natural Gas Discovery
is not a Commercial Discovery, whether (i) as an autonomous discovery, or (ii)
together with potential but undrilled accumulations in the Contract

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Area during the Extended Exploration Period, or (iii) together with Natural Gas
discovered but not developed in a nearby area, the Ministry may, with ninety
(90) days’ advance notice, require the Contractor to waive all of its rights
over the Evaluation Area. In case of a Commercial Discovery, the Contractor will
be obligated to comply with the provisions of Article 5.5 and those of Article
73 of the Hydrocarbons Law.
13.1.4
If the Contractor is required to waive its rights under Article 13.1.2 or
Article 13.1.3, it will be understood that the Contractor waives all its rights
to the Hydrocarbons that this Non-Associated Natural Gas Discovery may produce,
and the State will be empowered to carry out or have carried out all the
Petroleum Operations relating to this Discovery, without compensation or
indemnification to the Contractor, provided, however, that such work will not
prejudice execution of the Contractor's other Petroleum Operations.

13.2
Associated Natural Gas

13.2.1
In the event that a Discovery of Crude Oil is considered to be a Commercial
Discovery, the Contractor will state in the report referred to in Article 5.3
whether it considers that the Production of Associated Natural Gas is likely to
exceed the quantities necessary for the requirements of Petroleum Operations
relating to the Production of Crude Oil (including reinjection operations), and
whether it considers that such excess is capable of being produced in commercial
quantities. If the Contractor has informed the Ministry of the excess, the
Ministry and the Contractor will jointly assess the possible markets and uses
for this excess Associated Natural Gas.

13.2.2
In the event the Contractor should decide that Development of the excess
Associated Natural Gas is justified, the Contractor will indicate all additional
facilities necessary for the Development and Production of the excess in the
Development and Production Plan, and its estimate of the related costs. The
Contractor will then proceed with Development and Production of the excess in
accordance with the Development and Production Plan presented to and approved by
the Ministry under Article 5.5. A similar procedure will be applied if the sale
or marketing of Associated Natural Gas is agreed on during the Production of a
Field.

13.2.3
If the Contractor does not consider exploitation of the excess Associated
Natural Gas justified and if the State at any time wishes to utilize it, the
Ministry will notify the Contractor of the State's wish, in which event:

(a)
the Contractor will put all or part of the excess Associated Natural Gas that
the State wishes to ship at the State's disposal free of charge at the outlet of
the separation facilities of Crude Oil and Associated Natural Gas.

(b)
the State will be responsible for the resulting costs, responsibilities, and
operations in all the additional installations of Crude Oil and Associated
Natural Gas that are not included in the Contractor’s Development and Production
Plan or all the additional installations and those already existing, including
additional installations for the gathering, treatment, compression and
transport; and

(c)
construction of the installations mentioned in item (b), together with the
recuperation of this excess on the part of the State, will be carried out in
accordance with generally accepted practices of the international petroleum
industry, without holding back or reducing the Contractor's uncompensated
production under the approved Development and Production Plan.

13.2.4
In no case may the operations carried out by the State with this Associated
Natural Gas interfere with the Contractor's Petroleum Operations.

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13.1.5
Any excess Associated Natural Gas that is not used in accordance with Articles
13.2.1, 13.2.2, and 13.2.3 will be reinjected by the Contractor in accordance
with Article 6.14. Flaring of this Associated Natural Gas will be permitted only
in accordance with the Hydrocarbons Act and will be subject to the approval of
the Ministry. The Contractor may flare Associated Natural Gas without the
approval of the Ministry in an emergency, provided all necessary efforts are
made to reduce and extinguish the flaring of this Natural Gas as soon as it is
commercially practical. Except in the case of gas flaring in an emergency or in
connection with a short-term test, the Ministry has the right to collect
(“offtake”), free of charge, in the wellhead or in the gas and oil separator all
Natural Gas that would otherwise be flared or reinjected by the Contractor,
being that the State will pay the costs resulting from such collection
(“Offtake”) under the terms of Article 13.2.3.

13.3
Provisions common to Associated and Non-Associated Natural Gas

13.3.1
Each Party that makes up the Contractor will take, receive, and dispose of its
right to the production of Natural Gas in accordance with the provisions of this
Contract and the Hydrocarbons Law. Under the Hydrocarbons Law, the Ministry and
the Contractor agree that in the case of Natural Gas Production, they will
negotiate and agree separately on the sale and commercialization of Natural Gas.

13.3.2
The sales price of any Natural Gas to be sold on the domestic market will be
determined by the Ministry in accordance with the Hydrocarbons Law. The sales
price of any Natural Gas to be sold outside the national market will be that
agreed between the Ministry and the Contractor to the extent permitted by
applicable competition or antitrust laws. If required, the Ministry and the
Contractor will proceed in good faith to negotiate a gas sales contract,

13.3.3
For the purposes of Articles 7.3 and 11.3, the quantities of Natural Gas
available after deducting the quantities reinjected, flared, or necessary for
the execution of oil operations will be expressed in number of barrels of Crude
Oil, based on the equivalent energy content in BTU adjusted monthly by a
commercially appropriate factor relating the price of Natural Gas to the price
of Crude Oil in accordance with the provisions of Article 10.1, unless the
Ministry and the Contractor reach a different agreement.

13.3.4
The provisions of Article 7.2 with respect to cost recovery will be applied with
the necessary adjustments to the production of Natural Gas.

13.3.5
The amount of Natural Gas produced and retained in the Contract Area that is
surplus after the Contractor has taken the portion corresponding to Petroleum
Operations Cost Recovery in accordance with Article 13.3.4 will be known as Net
Natural Gas.

13.3.6
The stipulations of this Contract applicable to Crude Oil will apply to Natural
Gas, with the necessary adjustments, except where this Contract provides
otherwise, including the [Parties'] right to freely withdraw, receive, and
export their portion of Natural Gas and Natural Gas withdrawn as Petroleum
Operations Cost Recovery, subject to Articles 12.1 and 13.3.4. To avoid doubt,
the provisions of Article 13.3 will prevail when there is some kind of
contradiction with other terms of this Contract.

13.3.7
Notwithstanding other provisions in this Article 13, in the case of a Natural
Gas Discovery that is not commercial under the terms established in this
Contract, the Contractor and the Ministry will reasonably undertake to agree on
terms applicable to the development of the Natural Gas Discovery including
Royalty percentages, cost recovery, and benefit-sharing that allow the
Contractor to develop the Natural Gas Discovery in a commercially reasonable and
viable manner.

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ARTICLE 14
CUSTOMS REGULATIONS
14.1
Customs exemptions provided in this Contract

14.1.1
In tandem with Articles 63 and 64 of the Hydrocarbons Law, the Contractor will
be permitted to import, re-export, and export, subject to Article 14.5, all
goods, materials, machinery, equipment, and consumer goods directly necessary to
properly carry out Petroleum Operations in its own name or in the name of its
subcontractors or other Persons acting on its behalf, freely and exempt from all
Customs duties, taxes, and fees that are not charges for the necessary services
to administer Customs regulations.

14.1.2
For purposes of this Contract. the advantages the Contractor will enjoy under
this Contract include, among others, the following exemptions:

(a)
All materials, products, machinery, equipment, and tools destined exclusively
and effectively dedicated directly to Petroleum Operations and intended to be
re-exported at the end of their use will be treated as imported under the
conditions provided in the CEMAC Customs Code, as implemented by the Customs
legislation of Equatorial Guinea. Importation in compliance with the standards
governing Temporary Admission (TA) or Temporary Importation (TI) will be
whichever is the case for the Contractor, when importation is for the Contractor
or its subcontractors and Persons acting on their behalf, and any authorization
necessary for those ends will be immediately conceded and extended by the
corresponding Customs authorities;

(b)
Admission with exemption from all taxes and/or Customs duties of all material,
products, machinery, equipment, and tools totally used and consumed in
Equatorial Guinea, exclusively and effectively dedicated to the Operations of
prospecting, Exploration, Development, and Production of Hydrocarbons under this
Contract.

This exemption applies to imports made directly by the Contractor, its
subcontractors, and Persons acting on their behalf, on condition that a
certificate of end use is issued.
14.1.3
Except for the exemptions established in the preceding paragraphs of this
Article 14, and the items referred to in Article 14.1.4 that are exemptions the
Government can concede under the law, all goods, material, products, machinery,
tools, and equipment imported or exported by the Contractor are subject to taxes
and/or Customs duties, in accordance with provisions of the Customs legislation
in force in Equatorial Guinea.

14.1.4
The Contractor will follow procedures for obtaining those exemptions provided in
Decree 134/2015 of 2 November 2015. The Government will concede these exemptions
as the law allows for purposes of importing all goods, materials, machinery,
equipment, and consumer goods directly necessary to carry out Petroleum
Operations in the Contractor's name or in the name of its subcontractors or
other Persons acting on behalf of the Contractor or its subcontractors, in such
a way that the importation of those items is free and exempt from all Customs
duties, taxes, and fees that are not charges for the necessary services to
administer Customs regulations.

14.2
Petroleum export rights

Subject to the provisions of Article 12, the Contractor, its clients, and its
transporters will have the right to export at any time the quantities of Cost
Recovery Petroleum and Net Crude Oil belonging to the Contractor from the
Delivery Point selected for those purposes free and clear of any Customs

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duties, taxes, and fees that are not charges for the necessary services to
administer Customs regulations.
The Parties shall meet to analyze and agree the application of the new
obligations deriving from CEMAC regulations regarding customs tax of
Hydrocarbons exportation.
14.3
Export of goods and materials that were not transferred to the State

In compliance with the Customs obligations established in this Contract and
regulations in force, the Contractor, its subcontractors and Persons acting on
their behalf may re-export, free of taxes, import duties, and fees that are not
charges for the necessary services to administer Customs regulations, goods
imported within the framework of this Contract when they are no longer necessary
for Petroleum Operations, provided their ownership has not been transferred to
the State in accordance with the terms of this Contract
14.4
Customs documentation

All imports, exports and re-exports carried out under this Contract will be
subject to the formalities required by the Customs Authorities with respect to
documentation.
14.5
Exclusion of penalties and fines from Petroleum Operations Costs

If the Contractor, or its subcontractors, representatives, or agents are
considered responsible for payment of fines, penalties, or other legal
obligations for any failure to comply with the laws that address the use and
enjoyment by the Contractor of the advantages stated in this Article 14, the
fines, penalties, and other legal obligations will be excluded from the
Contractor's Petroleum Operations Costs.
14.6
Imports and exports by foreign personnel

Subject to Article 14.5, foreign personnel assigned to work in Equatorial Guinea
on behalf of the Contractor or its subcontractors, and their families, will be
allowed to import their personal effects and domestic articles in bulk shipments
free of any kind of Customs encumbrance, tax and fee that are not charges for
the necessary services to administer Customs regulations during the first year
of their initial entry into Equatorial Guinea, and afterward, every two years.
Shipments for later resale are not considered personal effects. Personal effects
and domestic articles that have been exempted from Customs duties on importation
and fees will also be exempt from Customs duties on exportation and fees when
subsequently exported.

ARTICLE 15
CURRENCIES
15.1
Exchange control laws

The Contractor and the Ministry mutually recognize that the applicable exchange
control laws in force in Equatorial Guinea have the purpose of guaranteeing that
the companies and personnel who work in the country, within the periods
provided, comply with their obligations to pay taxes and other local payment
commitments, and the Contractor, its subcontractors and all Persons acting on
their behalf must comply with all exchange control laws of Equatorial Guinea
that apply to them. However, so long as they meet their respective payment and
tax obligations under this Contract and

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the laws of Equatorial Guinea, they will have the following rights and benefits
with respect to the Petroleum Operations during the term of this Contract:
(a)
subject to compliance with the Retention Minimum, to collect, retain, or dispose
of any proceeds outside Equatorial Guinea and the territory of another CEMAC
Member State, including any proceeds from the sale of its or their share of
Hydrocarbons to entities that are resident or not, including payment required by
the State for Production, to be made in foreign currency and into bank accounts
outside the territory of the CEMAC Member States;

(b)
to pay foreign subcontractors and expatriate employees of the Contractor outside
of Equatorial Guinea, after deduction of the relevant taxes in Equatorial
Guinea. For this purpose, the Contractor may freely open and use bank accounts
in Dollars or in other currencies in banks of its choice in Equatorial Guinea
and abroad. Notwithstanding the foregoing, while this Contract is in force the
Contractor and each of its subcontractors carrying out Petroleum Operations in
Equatorial Guinea will open and maintain one or more bank accounts in a banking
institution authorized to operate in Equatorial Guinea the minimum balance of
which will be, in the case of the Contractor, an amount equivalent to the
Retention Minimum, and in the case of the subcontractors, the minimum amount set
by the Ministry from time to time for all subcontractors working in Equatorial
Guinea;

(c)
subject to compliance with the Retention Minimum, to transfer to accounts
domiciled abroad those funds the Contractor or its subcontractors have imported
into Equatorial Guinea, those the Petroleum Operations have generated, or that
the sale or lease of goods or performance of services have provided under this
Contract, including all surplus funds from their accounts domiciled in
Equatorial Guinea;

(d)
to obtain loans abroad and perform whatever capital operations are necessary to
carry out the activities that are the objects of this Contract, including the
Affiliates, under reasonable market conditions, including the rate of interest
and terms of repayment, that must be reported to the Ministry;

(e)
to collect and maintain abroad all the funds acquired or borrowed abroad, and to
freely dispose of them, limited to the amounts that exceed the requirement of
funds for their operations in Equatorial Guinea;

(f)
subject to compliance with the Retention Minimum, transfer any profits,
dividends, or income resulting from their investment obtained and deposited in
any bank account in Equatorial Guinea, as well as all surplus funds from the
accounts domiciled in Equatorial Guinea to the bank accounts outside the
territory of the CEMAC Member States; and

(g)
subject to compliance with the Retention Minimum, free movement of funds they
own, according to the laws of Equatorial Guinea.

15.2
Freedom of exchange

The expatriate employees of the Contractor and its subcontractors will be free
to exchange and transfer to their country of origin, in accordance with the
regulations in force in Equatorial Guinea, the savings that result from their
salaries as well as any contribution to their retirement or social services paid
for or to these employees, provided they have complied with their tax
obligations in Equatorial Guinea.
15.3    Notifications

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The Contractor and its subcontractors will deliver to a report to the Ministry
of Finance and Budgets, within forty-five (45) days of the end of each Quarter,
detailing all foreign currency transactions made during the preceding Quarter,
including any transactions directly related to Petroleum Operations in accounts
opened abroad, and realized in accordance with the provisions of Article 15.1.

ARTICLE 16
BOOKS, ACCOUNTS, AUDITS, AND PAYMENTS
16.1
Maintaining Records and Books

16.1.1
The Contractor will at all times maintain at its offices in Equatorial Guinea
the original records and books of Petroleum Operations in accordance with all
applicable regulations and the Accounting Procedure.

16.1.2
All records and books will be maintained in the Spanish and English languages
and be denominated in Dollars. They will be backed up by detailed documents that
show the receipts and expenses of the Contractor under this Contract. These
records and books will be used to determine the Contractor's Gross Revenues,
Petroleum Operations Costs and net profits, and to establish the Contractor’s
Income Tax and other payment obligations. The records and books will also
include the Contractor’s accounts showing sales of Hydrocarbons.

16.2
Presentation of accounts

Within ninety (90) days after the end of a Calendar Year, the Contractor will
present detailed accounts to the Ministry showing the Petroleum Operations Costs
that the Contractor has incurred during the Calendar Year. The Contractor may
request the approval of the Ministry for an additional extension of up to thirty
(30) days; this approval will not be unreasonably denied or delayed. The
accounts will be certified by an independent external auditor acceptable to the
Ministry and the Contractor. The expenses of the auditor will be paid by the
Contractor and will be considered Petroleum Operating Costs.
16.3
Auditing by the Ministry

16.3.1
After notifying the Contractor, the Ministry may have experts of its choice or
its own agents examine and audit any records and books relating to Petroleum
Operations. The Ministry has a period of three (3) years from the date the
Contractor presents its records and books to the Ministry in accordance with
Article 16.2, to conduct examinations or audits with respect to that Calendar
Year and submit its objections to the Contractor for any contradictions or
errors found during the examinations or audits.

16.3.2
The Contractor will provide to the Persons designated by the Ministry any
necessary assistance for the foregoing purpose and facilitate the performance of
his or her duties. The Contractor will pay all reasonable costs incurred during
these reviews and audits, and these will be recoverable as Petroleum Operations
Costs. However, any costs incurred for the audit and inspection of accounting
books and records outside of Equatorial Guinea due to the Contractor’s
non-compliance with this Article 16 will be at the expense of the Contractor and
will not be recoverable as a Petroleum Operations Cost or deductible for tax
purposes.

16.3.3
In case of disagreement between the Ministry and the Contractor about the
results of any examination or audit, the dispute will be determined by an
internationally recognized expert appointed by the

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International Chamber of Commerce in accordance with its Rules for Expertise
(ICC Expertise Rules). The decision of the expert will be final and binding on
the Parties, and if it cannot be enforced in accordance with the legislation of
Equatorial Guinea, the only recourse will be to arbitration under Article 26 to
arrive at a definitive and binding decision.. Unless otherwise determined by the
expert, the costs and expenses of the expert will be met proportionately by the
Parties on a per capita basis and the Contractor's share will not be a Petroleum
Operations Cost.
16.4
Application of Article 16 to other audits

The provisions of Article 16 will apply to Income Tax, Royalty payments, and to
any other obligation established in this Contract.
16.5
Currency and accounts for payments

16.5.1
Unless the Contract stipulates otherwise, all payments between the Parties will
be made in Dollars. Subject to Article 16.4.2, when the Party receiving the
payment is the State, payments will be made to the General Treasury of the
State, and when the receiving Party is the Contractor, payments will be made to
the bank account designated by the Contractor and reported to the Ministry.

16.5.2
All amounts paid to the Ministry in accordance with the Law and this Contract
will be deposited in the accounts belonging wholly to the State and will be
reported to the Contractor.

16.6
Coordination of payments and late payments

Unless decided otherwise, all payments in accordance with this Contract will be
made within thirty (30) days following the date on which the obligation to make
the payment arises. In case of default, the amount owed will accrue interest
compounded monthly at the rate of LIBOR plus two percent (2%) per annum.

ARTICLE 17
TRANSFERS, ASSIGNMENTS, AND CHANGES OF CONTROL
17.1
Transfer to an Equatoguinean Affiliate

Within two (2) Calendar Years following the Effective Date, to the extent that
they have not already done so, each of the Parties comprising the Contractor
(other than the National Company), will, comply with Article 120 of OHADA and
Equatorial Guinea law applicable to the Hydrocarbons sector and will incorporate
an Affiliate under the laws of Equatorial Guinea and will assign all of its
rights and obligations in and under this Contract, the Joint Operating Agreement
and any other agreement relating to Petroleum Operations to this Affiliate.
After this transfer, all of the rights and obligations of the Parties that
constitute the Contractor under this Contract, the Joint Operating Agreement,
and any other agreements relating to Petroleum Operations will be assumed by the
Affiliate(s). Any assignment or transfer under this Article 17.1 will not be
subject to the provisions of Articles 17.2, 17.3, and 17.5. The aforementioned
assignment or transfer will not affect any parent company or bank guarantee
provided in accordance with this Contract.
Notwithstanding the obligation of the Contractor to incorporate an Affiliate in
accordance with the paragraph above which carries as a consequence the
obligation to pay dividend tax, the Parties agree to grant a tax exemption on
dividend tax for 3 years beginning on the date on which the Contractor has fully
recovered all of its historical costs.

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17.2
Assignment, Transfer, Change of Control

17.2.1
The assignment, transfer, encumbrance, or other disposition of the rights and/or
obligations of a Party constituting the Contractor will require the prior
consent of the Ministry Any request for authorization will be accompanied by all
information related to the assignment, transfer, encumbrance, or other
disposition, including all legal instruments, in final draft form, to be used to
carry out the proposed transaction, the identity of all parties to the
transaction, the estimated value of the transaction, and whether the
consideration is payable in kind, securities, cash, or other form. Such
assignment, transfer, encumbrance, or other disposition, except those addressed
in Article 17.2.4 (a), (b), or (c), will be subject to the payment of a
non-recoverable, non-deductible fee and compliance with other reasonable
requirements established in the authorization granted by the Ministry. The
assignee and the assignor will be jointly and severally liable for the payment
of such fee and for meeting any other requirements. The fee will be mutually
agreed upon by the Parties and the Ministry. The assignment, transfer,
encumbrance, or other disposition of the rights and/or obligations of a Party
constituting the Contractor in accordance with Articles 17.2.4 (a) and 17.2.4
(c) will not be liable to any Tax.

17.2.2
All assignees must:

(i)
have the technical and financial capacity to comply with its obligations in
accordance with this Contract:

(ii)
in relation to the interest assigned, accept and assume all of the terms and
conditions of this Contract, the Joint Operating Agreement, and any other
agreements relating to Petroleum Operations; and

(iii)
be an entity that the Ministry and each of the Parties constituting the
Contractor can legally do business with, and be incorporated in Equatorial
Guinea.

17.2.3
All profits resulting from any assignment, transfer, or other disposition of any
rights and/or obligations under this Contract, regardless of the type and
location of the transaction, will be subject to taxation in accordance with the
Tax Law of Equatorial Guinea.

17.2.4
In accordance with Article 104 of the Hydrocarbons Law and Article 168 of the
Petroleum Regulations, each of the Parties that constitute the Contractor will
have the right to sell, concede, transfer, assign, or in any other way dispose
of all or part of its rights and interests in the Contract:

(a)
to a wholly owned Affiliate;

(b)
to the beneficiary provided in Article 17.1;

(c)
to any of the partners only constituting the Contractor, with the prior consent
in writing of the Ministry that cannot be denied or delayed without
justification; or

(d)
to third parties, subject to the prior consent in writing of the Ministry that
cannot be denied or delayed without justification.

17.3
Change of Control

For the purposes of this Article 17, the transfer of ownership of more than
fifty percent (50%) of the net equity of any Party constituting the Contractor
(other than the National Company) or a similar transfer that results in a change
of Control will be considered an assignment of contractual rights under this
Contract and consequently, subject to the terms and conditions of this Article
17, except in cases of transferring ownership of the shares of a wholly owned
Affiliate by any Party constituting the Contractor (except the National
Company), in which case there is no change of Control.

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17.4
Third-party financing

As established in Article 106 of the Hydrocarbons Law, recourse by any Party
constituting the Contractor to third-party funding that involves assignment of
the rights that Party has to its portion of the Hydrocarbons under this Contract
is not permitted without the prior consent of the Ministry, which will be
notified of the terms of that financing. Financing by an Affiliate will not be
considered third-party financing.
17.5
The National Company's first right of refusal

When any assignment, transfer, or other disposition of any right under this
Contract is anticipated that is not to a wholly owned Affiliate, the
transferring Party will notify the National Company in writing as soon as
possible. The National Company will then have the right to buy the participation
under this Contract from the transferring Party that has been offered for the
assignment, transfer, or disposition on the same terms and conditions that have
been offered in good faith to the transferee. Lack of affirmative response
within forty-five (45) days after reception of the notification will be
interpreted as the decision not to make the buy, and will terminate the right
with respect to the transaction that is the object of the notification. This
right exists in addition to any first right of refusal conceded to the National
Company under the terms of the Joint Operating Agreement.

ARTICLE 18
INDEMNIFICATION, LIABILITY, AND INSURANCE
18.1
Liability and indemnification

18.1.1
The Contractor will be responsible to third parties under the legislation of
Equatorial Guinea and other jurisdictions in which it operates for damages
caused by the Contractor, its Affiliates, its subcontractors, and their
respective directors, officers, employees, and any other Person who acts on
their behalf in carrying out Petroleum Operations. The Contractor will
indemnify, hold harmless, and compensate any Person, including the State, for
any damage or loss that the Contractor, its Affiliates, its subcontractors and
their respective directors, officers, employees, agents, or consultants, and any
other Person acting on their behalf may cause to such Person or their property
in carrying out Petroleum Operations. All costs incurred under this Article 18.1
caused by the negligence or willful misconduct of the Contractor, its
Affiliates, its subcontractors or their respective directors, officers,
employees, agents or consultants or any other Persons acting on their behalf
will not be cost recoverable as Petroleum Operations Costs. All costs not
generated by Negligence or willful misconduct will be recoverable as Petroleum
Operations Costs and that recovery will be understood as being consistent with
the interpretation and application of the Petroleum Regulations.

18.1.2
The Contractor will assume all liability, and exempt the State from any
liability, in respect of any and all claims, obligations, losses, expenses
(including attorneys’ fees), damages or costs of any nature resulting from the
violation of any intellectual property rights of any kind caused by the
Contractor, its Affiliates, or subcontractors as a result of or in relation to
carrying out Petroleum Operations, regardless of the nature of the violation or
of the way in which it may occur.

18.1.3 The State accepts that the Contractor will not be responsible to the
State for losses or reduction of benefits, taxes, liens, fees, or other revenues
as a result of carrying out Petroleum Operations, unless it is shown that the
loss or reduction was the necessary consequence of an action or omission by the
Contractor noncompliant with the Contract or the applicable legislation, owing
to the Contractor's negligence or willful misconduct, and that the generation of
that loss or reduction should have been foreseen at the time of that action or
omission,

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18.2
Joint and several liability

Where the Contractor is constituted of more than one Person, the liabilities and
obligations of such Persons under this Contract will be joint and several,
except for their obligations and liabilities in relation to all taxation levied
on their income.
18.3
Insurance

18.3.1 Every Person that constitutes the Contractor will obtain and during the
term of this Contract, maintain in full force and effect, insurance for
Petroleum Operations of such type and in such amount as is customary and prudent
in accordance with generally accepted practice of the international petroleum
industry, and whose terms and conditions of coverage will be communicated to the
Ministry within thirty (30) days after the Effective Date. Without prejudice to
the generality of the foregoing provisions, this insurance will cover:
(a)
any damage or loss to the assets used in Petroleum Operations;

(b)
pollution caused in the course of Petroleum Operations;

(c)
damages or losses to the property, or damage, bodily injury, or death suffered
by any Person in the course of Petroleum Operations;

(d)
the cost of clean-up operations and salvage following an accident or upon
dismantlement; and

(e)
the Contractor’s liability for its employees involved in Petroleum Operations.

The members of the Contractor, with the exception of the National Company, will
pay the insurance costs with respect to any interests or insured assets
associated with a Contract Area subject to the Participation Interests of the
National Company only during the period in which the Participation Interest is
paid by the members of the Contractor.

18.3.2
The Contractor will require its subcontractors to carry insurance of the type
and amount of coverage consistent with the generally accepted practices of the
international petroleum industry.

18.3.3
The Contractor will place the insurance required under this Article 18.3.1 in
accordance with Decree 56/2007 addressing insurance in the petroleum industry,
provided the Equatoguinean insurance brokers and insurance companies that the
Contractor uses in accordance with Decree 56/2007 are considered competent
according to its criteria that they have the same financial solidity as the
insurance brokers and companies available on the international market and that
offer coverage at comparable prices.

ARTICLE 19
TITLE TO GOODS, EQUIPMENT, AND DATA
19.1
Title to and use of the installations

19.1.1
All installations, facilities, goods, equipment, materials, or land acquired by
the Contractor for Petroleum Operations will become property of the State from
the point at which their costs are fully recovered by the Contractor.
Nevertheless, the Contractor may continue using these installations, facilities,
goods, equipment, materials, or land to carry out Petroleum Operations for the
duration of this Contract and in accordance with the Hydrocarbons Law by a
payment agreement negotiated and decided between the Contractor and the
Ministry, if the Ministry does not waive the payment agreement for the
Contractor. This payment will not be considered a Petroleum Operations Cost. The
Contractor and the Ministry will agree on the mode and conditions of the
installation, goods, equipment, materials, or land, the Contractor retaining the
responsibility of ensuring that maintenance

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in good condition and good working order is guaranteed for use by the
Contractor, normal wear and tear excepted. In any case, upon termination,
rescission, or cancellation of this Contract, for any reason whatsoever, in
relation to all or part of the Contract Area, the ownership of said
installations, facilities, goods, equipment, materials, or land, and including
those whose costs have not been fully recovered, and any other items acquired
and used for Petroleum Operations will become the sole property of the State and
will be conveyed directly to it. With respect to tax deductibility, the change
in property will not be taken into account for taxation purposes until the goods
are fully amortized or until termination of the contract.
19.1.2
Regardless whether the Contractor has recovered the relevant costs in accordance
with this Contract, the State has the right to use the facilities, goods,
equipment, materials, or land for its own purposes, provided that such use does
not interfere with the Contractor’s Petroleum Operations.

19.1.3
The Contractor will not sell, assign, transfer, or otherwise dispose of these
facilities, goods, equipment, materials, or land to any other Persons without
prior approval from the Ministry.

19.1.4
The provisions of this Article 19.1 will not apply to any leased equipment, or
to the Contractor’s equipment that is not charged to Petroleum Operations as a
Petroleum Operations Cost.

19.1.5
If the Ministry does not wish to use any of the facilities, goods, equipment and
materials referred to in this Article 19.1, it has the right to ask the
Contractor to remove them at the Contractor’s own expense, and the Contractor
will carry out any dismantling operations of these facilities, goods, equipment,
and materials in accordance with this Contract and the Hydrocarbons Law, and
based on the time established and conditions specified in the approved
dismantling plan. When a Reserve Fund has been created, the Contractor will use
it to pay for dismantling the installation. When a Reserve Fund has not been
created, the cost of dismantling will be subject to tax deduction and
recoverable as a Petroleum Operations Cost.

19.2
Ownership of Information

All data, technical information, and interpretations obtained, acquired, or
derived as a result of Petroleum Operations will be the sole property of the
State. However, the Contractor may retain copies of all these materials while
this Contract is in force only, including, among others, geological,
geophysical, petrophysical and engineering reports, Well reports, termination
reports, samples, and any other information that the Contractor may have
obtained or compiled during the term of this Contract. The Contractor will
forward the data, technical information, and interpretations to the Ministry as
soon as they are acquired, derived, or compiled and will also provide the
Ministry on an annual basis with a report that itemizes all data, technical
information, and interpretations that have been assembled during the Year.
Unless previously provided, at the termination of this Contract or at any time
of relinquishment, the Contractor will return to the Ministry all original data,
technical information and interpretations relating to the areas relinquished and
will remove all copies from the Contractor’s files, archives, computers, and
data storage mechanisms.

ARTICLE 20
CONFIDENTIALITY
20.1
Disclosure of confidential information

20.1.1
The Parties agree that while this Contract is in force, all information relating
to this Contract and the Petroleum Operations will be kept strictly confidential
and may not be divulged by any of the Parties without mutual consent, except:

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(a)
to an Affiliated Company;

(b)
to a governmental agency designated by the State or other entities or
consultants of the Ministry;

(c)
to the degree that the data and information are required to be supplied in
compliance with any applicable laws or regulations;

(d)
in conformity with the requirements of any stock exchange having jurisdiction
over a Party or its Affiliate Controlled Company ;

(e)
where any data or information forms part of the public domain, unless this
occurs as the result of noncompliance with this Contract; and

(f)
to employees, directors, officers, agents, advisors, consultants, or
subcontractors of a Party constituting the Contractor or an Affiliate; and

(g)
to potential beneficiaries of a transfer or good-faith buyers.

provided that the disclosing Party is responsible for any violation of this
Article by those Persons, and on condition that all disclosures to the Persons
referred to in items (f) and (g) mentioned above will be limited to those
Persons who are under an obligation of confidentiality similar to that contained
in this Article 20.1.
20.1.2
During an additional period of two (2) years after termination of this Contract,
only the Contractor will be obligated to comply with the above provisions.

20.2
Patents and intellectual property rights of the Contractor

The State will not reveal to any third parties information pertinent to the
Contractor’s proprietary technology that is protected by patents or contractual
agreements, or which the State has received under license for a period of two
(2) Years after termination of this Contract.
20.3
Continuation of obligations

Any Party ceasing to own a Participation Interest in this Contract during the
term of this Contract will nonetheless remain bound by the obligations of
confidentiality stipulated in this Article 20.
20.4
Disclosure of confidential information by the State and the Ministry

In order to explore and exploit areas adjoining or related to the Contract Area,
the State and the Ministry may, notwithstanding what is stated in this Article
20, disclose to any third parties all data and information relating to part or
parts of the Contract Area and Petroleum Operations under this Contract.

ARTICLE 21
TERMINATION
21.1
Termination by the State

In addition to any other actions contemplated here, this Contract may be
terminated without compensation to the Contractor on any of the following
grounds:
(a)
substantial noncompliance by the Contractor (not attributable to any act or
omission of the State or to any Person representing the State) with any of the
provisions of this Contract or the Hydrocarbons Law;

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(b)
delay by the Contractor (not attributable to any act or omission of the State or
to any Person representing the State) in making any payment to the State over
two hundred thousand Dollars ($200.000) that exceeds three (3) months, provided
that the State has delivered written notice to the Contractor in the week before
the expiry of such three (3) month period and that within thirty (30) days of
such written notice such payment by the Contractor remains outstanding;

(c)
suspension of Development Operations on a Field for six (6) consecutive months,
except when that suspension (i) has been approved by the Ministry in advance, or
(ii) is due to an act or omission on the part of the State or of any Person
representing the State, or (iii) results from Force Majeure;

(d)
if, after beginning Production of a Field, its exploitation is suspended for at
least three (3) consecutive months, without prior authorization from the
Ministry, except when such suspension (i) is due to an act or omission on the
part of the State or of a Person representing the State, or (ii) results from
Force Majeure;

(e)
when the Contractor fails to comply within the prescribed time period with an
arbitration award in accordance with the provisions of Article 26, and the
failure to comply is not attributable to any act or omission of the State or to
any Person representing the State;

(f)
when a Well is drilled to an objective beyond the vertical planes of the limits
of the Contract Area without the prior consent of the Ministry;

(g)
serious noncompliance with this Contract stemming from activities that are
illegal or contrary to national or international law (not attributable to any
act or omission of the State or to any Person representing the State);

(h)
in accordance with Article 2.3; or

(i)
with respect to one or more members of the Contractor, when that member of the
Contractor, for reasons different from any action of the government that does
not allow proper funding for this member, is declared bankrupt, or in
liquidation as a result of financial insolvency, or enters into judicial or
financial arrangements of insolvency with its creditors generally, except when
the Contractor can provide the State with a new financial guarantee that is
acceptable to the Ministry, at its sole discretion, and that guarantees the
capacity of that Party to fulfill its obligations under this Contract. In this
case, the other members of the Contractor may continue to constitute part of the
Contract.

21.2
Notification of termination and grace period

21.2.1
The Ministry may declare this Contract terminated only after having served the
Contractor with formal notice by registered mail, asking it to remedy the
situation or noncompliance in question, and if the situation or noncompliance in
question can be remedied, asking that the Contractor remedy it within thirty
(30) Working Days from receipt of notice regarding payments due under Article
21.1(b) or within ninety (90) Working Days from receipt of such notice for all
other remediable situations or violation. Otherwise, the effective termination
date of this Contract will be the date the Contractor receives the
abovementioned notice.

21.2.2
If the Contractor fails to comply with the notice within the period prescribed
by Article 21.2.1 or fails to show within this period that it has begun to
remedy the situation or noncompliance in question, and is promptly and
diligently continuing to do so, the Ministry may pronounce ipso jure the
termination of this Contract.

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21.3
Termination against one Party

The Ministry may terminate this Contract for one of the Parties constituting the
Contractor, if the circumstances established in Article 21.1 apply only to that
Party in the manner established in Article 21.2.
21.4
In cases of termination of the Contract decided by Article 21.1 c, d, e, or i,
the National Company will have the option of continuing the Petroleum Operations
in the Contract Area for a period of one (1) Year, presenting the corresponding
Work and Budget Program. At the end of this period, the Ministry will be
informed of its decision whether to continue the Petroleum Operations; if not,
it will relinquish the Block and deliver it to the State. For purposes of this
Article, the Technical Operator will deliver to the National Company all
technical information about the block, including testimony, files, seismic
information, data and reservoir studies, reports and information about all the
Wells.

ARTICLE 22
UNITIZATION
22.1
Obligation to unitize

If a Hydrocarbons deposit located within the Contract Area extends beyond that
area, the Contractor must carry out all Development and Production of this
Hydrocarbons deposit, in accordance with the Hydrocarbons Law. The Contractor
will exert all reasonable efforts to reach a mutually acceptable unitization
agreement and program with all other affected Persons.
22.1
Suspension of obligations

If the Petroleum Operations that are the object of this Contract are suspended
for negotiations arising over a unitization situation for a specific Discovery,
the provisions of Article 5.3 for this Discovery will be extended for a period
of time equal to the duration of the suspension.

ARTICLE 23
NATIONAL CONTENT AND SOCIAL PROGRAMS
23.1
National content regulations

The Contractor will comply with the National Content Regulations promulgated by
the Ministry in Ministerial Order 1/2014 of 26 September 2014, complying with
the obligations established in this Article 23. For all nonmaterial contracts,
the Contractor, without the obligation to bid and without obtaining the approval
of the Ministry (whose approval is considered granted by the Hydrocarbons Law ):

a)
before awarding a services contract, the Contractor will notify the Ministry of
its need for these services;

b)
The Ministry will provide a list of national companies to the Contractor; The
Contractor will support the Ministry by including the national companies on the
list among those the Contractor considers competent in the biddings required in
the framework of this Contract;

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c)
in awarding the contracts, the Contractor will give preference to the national
companies identified on the list that the Ministry delivers in accordance with
Article 23.1(b), as specified in Decree 127/2004. If the Contractor does not
consider these companies competent, the contract may be awarded to a foreign
company, in accordance with Articles 12 and 13 of Ministerial Order 1/2014. The
Contractor will notify the Ministry of the disqualification of any of the
national companies, if necessary, describing the procedure that resulted in the
disqualification.

d)
the foreign company winning the bid for the services contract will be notified
by the Contractor of the conditions specified in Article 23.1(c).

e)
the Contractor will deliver to the Ministry at the end of July and January of
each calendar Year a list of subcontractors who have delivered services in
Equatorial Guinea during the previous period;

f)
in the contracts that imply delivery of services or supply of goods in
Equatorial Guinea, the Contractor will include clauses that obligate the
subcontractors to comply with the provisions of Ministerial Order 1/2014;

g)
the Contractor will organize workshops to raise awareness in the national
companies about the requirements of the Technical Operator in service provision
matters;

h)
the Contractor will notify the Ministry, which will inform all the other
competent authorities, about the job vacancies and new positions for the
execution of works in Equatorial Guinea;

i)
at the beginning of Development and Production Operations, the Contractor will
submit to the Ministry and agree to a plan to hire national employees and train
them, which includes assignments for their professional development in the
offices of the Technical Operator with the possibility of joining the Technical
Operations Team of Equatorial Guinea to achieve reasonable and feasible
nationalization goals, and sending updated information to the Ministry on the
implementation of that plan at the end of July and January of each subsequent
year; and

j)
the Contractor will send the Ministry a description of the mechanisms used to
evaluate the national employees.

23.2
Employment and training of Equatoguineans

23.2.1
At the beginning of Development and Production Operations in Block EG-24, the
Technical Operator will ensure priority of employment for qualified
Equatoguinean personnel at all levels of its organization, according to the
following table and according to the aptitudes of the employees. For the
purposes of the employment obligations under this Article, technicians nominated
by the National Company will be employed as secondees to the Technical Operator
provided that they have the required capacity and experience. The Technical
Operator will train or contribute to the training of this personnel so that they
can meet the requirements of any available position related to Petroleum
Operations, including supervisory positions. Nevertheless, the Technical
Operator will only have to employ the number of personnel necessary to carry out
Petroleum Operations in a prudent and profitable manner.

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POSITIONS
Percentage of national employees
Percentage of expatriate employees
Total number of employees
70%
30%
Technical and professional positions(Geologists and Engineers, Legal, Financial,
Safety, Health, and Environment)
60%
40%
Supervisory and management positions
50%
50%
Technicians who work offshore (including Safety, Health, and Environment)
85%
15%
Support and administrative services
100%
0%

23.2.2 During the period in force of this Contract, the Parties comprising the
Contractor (other than the National Company) will spend (i) a minimum of one
hundred fifty thousand Dollars ($150,000) per Calendar Year during the
Exploration Period; and (ii) a minimum of three hundred thousand Dollars
($300,000) per Calendar Year during the Development and Production Period, to
provide a mutually agreed number of Ministry and National Company personnel with
practical training at institutions abroad, chosen by the Ministry, that include
training in the areas of earth sciences, engineering, technology, accounting,
economics and other related fields of oil and gas exploration and exploitation.

Additionally, during the term of this Contract, the Parties constituting the
Contractor will transfer to the Ministry (i) two hundred thousand Dollars
($200,000) per Calendar Year during the Exploration Period, and (ii) three
hundred and fifty thousand Dollars ($350,000) per Calendar Year during the
Development and Production Period; the Ministry will use these sums at its sole
discretion to educate and train Equatoguinean personnel selected by the Ministry
at universities, colleges, or other training institutions selected by the
Ministry and for other general training and educational purposes.

Moreover, once the Development and Production Plan is approved, the Contractor
will provide continuous training for periods of 12 months in the form of service
commissions to professional technicians of the Ministry in the installations of
the Technical Operator in Malabo and London (UK) (two technicians in each
location). Procedures and remuneration for the service commissions or
Internships will be subject to an agreement between the Technical Operator and
the Ministry.

23.2.3 If the Contractor funds any social projects outside those approved in an
Annual Budget, the costs will not be recoverable as Petroleum Operations Costs.

23.2.4 Given that Equatoguinean civil society is a part of the National Content
in oil and gas contracts, the Contractor will contribute to and cooperate with
nongovernmental organizations in beneficial works of social development, sports
activities, and health programs to fight and prevent disease, as well as other
non-profit activities. The type of projects the Contractor contributes to, and
the amounts the Contractor contributes, will be at the sole discretion of the
Contractor. When these

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contributions have been separately approved beforehand by the Ministry, they
will be recoverable as Petroleum Operations Costs.

National Technology Institute, or its successor entity

23.3.1    During the period in force of this Contract, the Contractor will give
the National Institute of Technology:

a)
one hundred and fifty thousand Dollars ($150,000.00) per Calendar Year during
the Exploration Period; and

b) three hundred thousand Dollars ($300,000.00) per Calendar Year during the
period in which the Contractor is producing Hydrocarbons in a Development and
Production Area.

23.3.2
During the period in which the Contractor is producing Hydrocarbons in a
Development and Production Area , the Contractor will provide all reasonable
assistance as may be requested by the Ministry from time to time with the
implementation and development of the National Technology Institute to train and
develop mid- and upper-level personnel in the petroleum industry of Equatorial
Guinea, in accordance with the Hydrocarbons Law, and to the degree permitted by
the laws applicable to the members of the Contractor or its Affiliates.

23.4
Social Programs

23.4.1
During the period in force of this Contract, the Contractor will spend on Social
Programs in Equatorial Guinea:

(a)
one hundred and fifty thousand dollars ($150,000.00) per Calendar Year during
the Period of Exploration; and

(b)
two hundred and fifty thousand Dollars ($250,000.00) per Calendar Year during
the Development and Production Period.

23.4.2 Support for the Creation of a Ministry of Mines and Hydrocarbons Database
During the period in force of this Contract, the Contractor will spend on
creation of a Ministry of Mines and Hydrocarbons Database:
A)
one hundred fifty thousand Dollars ($150,000) per Calendar Year during the
Period of Exploration;

B)
three hundred thousand dollars ($300,000) per Calendar Year during the
Development and Production Period.

23.5
All of the preceding costs under this Article 23 are recoverable as Petroleum
Operations Costs in accordance with the provisions of this Contract, except the
costs referred to in Article 23.2.3.

23.6
Costs and Travel Expenses

Ophir Energy will cover all Costs and Expenses including technicians' honoraria
and travel expenses (as here defined) of the Technical and Legal Assessments
identified by the State in writing (the State's consultants) and any value added
tax and any other applicable tax to be paid for the services provided by the
State’s consultants in relation to this Contract. Travel expenses mean the
reasonable and good-faith expenses of the Ministry's representatives and State
consultants, including airline tickets, accommodation, maintenance and other
travel-related expenses.

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The Ministry will have the consultants send all invoices to the Ministry for
review and approval. In turn, the Ministry will send the approved invoices to
the company for payment. The Parties agree that all approved and paid invoices
will be recoverable costs under this Contract as Petroleum Operations Costs.

ARTICLE 24
DISMANTLING
24.1
Relinquishment or dismantlement

24.1.1
Subject to the provisions of Article 2.5.2, the Contractor may, at any time,
relinquish and/or abandon any part of the Contract Area or any well not included
in a Field, provided that the Ministry has been given at least three (3) months’
notice, so long as the Contractor has complied with all of its obligations under
this Contract and has provided the Ministry, in a detailed manner, all
information on the condition of any deposit, facilities, and equipment in that
area, as well as any plan for the disposal or dismantling of those facilities
and equipment, including all technical and financial information. All
dismantling operations will be carried out in accordance with the Hydrocarbons
Law.

24.1.2
The dismantling of a Field by the Contractor and the corresponding dismantling
plan will require prior authorization from the Ministry in accordance with the
Hydrocarbons Law. The Contractor will prepare and deliver to the Ministry a plan
for the dismantling of all Wells, facilities, and equipment, the rehabilitation
of the landscape and the continuation of oil operations, if applicable, in
accordance with the Hydrocarbons Law.

24.1.3
Unless the Ministry decides to maintain the facilities and equipment in order to
continue Petroleum Operations in accordance with Article 24.3.3, the Contractor
is obligated to completely dismantle all Fields located in the Contract Area at
the time of Contract termination or when a Field ceases to produce for more than
one year.

24.2
Right of the Ministry

On receiving the Ministry’s notice referred to in Article 24.1.1 or by
dismantling any Field, the Ministry will have the right to take control of any
Discovery or Field whose dismantling the Contractor proposes. If the Ministry
does not communicate its desire to take over the oil operations within three (3)
months of receiving the relevant notice, the Ministry will be considered to have
chosen not to assume the operations.
24.3
Reserve Fund

24.3.1
During the term of this Contract, the Contractor in accordance with the
generally accepted standards of the oil industry, will be responsible for
carrying out all necessary work with respect to abandonment (including removal,
appropriate disposal, recycling in an alternative or novel manner, or salvage)
of any of the Petroleum Operations’ installations, including but not limited to
platforms, artificial structures, wellhead equipment, casing, and flow lines
that are considered by the Ministry to be usable or are no longer required for
future operations. The Contractor will submit detailed plans of work for such
removal, disposal, or salvage to the Ministry for approval. Any costs incurred
by the Contractor to remove, dispose of, or save these installations will be
recoverable. For the purpose of establishing a financial mechanism to recover
such costs in advance for the life of the Field, the Contractor and the Ministry
will agree on the mechanism and modality to set aside a reserve in the
Contractor's books as part of the disbursement for Petroleum Operations that
would be considered

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as recoverable cost and used for such removal, disposal, and salvage operations
before more than two (2) years passes since the beginning of the initial
commercial production of the Field.
For the purpose of dismantling a Field, the Contractor will contribute to a
reserve fund for the estimated dismantling costs (the Reserve Fund), in
accordance with the Hydrocarbons Law and the approved dismantling plan. The
Ministry and the Contractor will establish the form for the commencement of
contributions and the institution that will keep these contributions. The
contributions will be held by an international bank having at least a Standard
and Poor’s qualification. All the contributions mentioned will be deductible for
tax purposes and will be considered as a Cost of Petroleum Operations in the
year in which they were provided.
24.3.2
If the total amount of the Reserve Fund is greater than the real dismantling
cost, the balance of the account will be attributed to the State, since the
Contractor has received Cost-Recovery Oil corresponding to the account balance.
Whatever portion of the balance for which the Contractor has not received the
corresponding Cost-Recovery Oil will be distributed to the Contractor. If the
balance of the Reserve Fund is less than the actual cost of the dismantling
operations, the Contractor will be responsible for the missing amount and may
impute such costs as Petroleum Operations Costs to future production in the
Contract Area, if any.

24.3.3
If the Ministry decides to maintain the installations and equipment in order to
continue with the Petroleum Operations after withdrawal of the Contractor, the
reserve fund that is constituted in this way, together with the corresponding
interest, will be made available to the Ministry to cover the subsequent
dismantling. The Contractor will be exempt from any additional liability for
dismantling with respect to these installations and equipment.

24.4
Continuation of the Operations

The State commits itself not to interfere with the carrying out of Petroleum
Operations in the Contract Area that the Contractor retains if the State chooses
to take over a Discovery or Field in accordance with the provisions of Article
24.2. If the Ministry asks the Contractor and the Contractor has ongoing
Petroleum Operations under this Contract in the area of State operations under
Article 2.4.2, the Contractor will be responsible for continuing all operations
for a fee and under terms that the Ministry and the Contractor agree on
24.5
Protection of the Environment

The Contractor will duly cap all Wells and dismantle all installations and
equipment to prevent pollution and damage to the environment, as well as
possible damage to the deposit, in accordance with the Hydrocarbons Law, the
other laws of Equatorial Guinea, and with generally accepted practices of the
international petroleum industry.

ARTICLE 25
APPLICABLE LAW AND STABILITY
25.1
This Contract and the Petroleum Operations carried out under this Contract will
be governed by and interpreted in accordance with the laws and regulations of
Equatorial Guinea, including the Hydrocarbons Law and the Petroleum Regulations.

25.2
In case of a Change in the Law and if, as a result of its implementation, the
Change in the Law causes a significant reduction in economic rights or a
significant increase in the economic obligations contained in or resulting from
this Contract to the detriment of the Contractor or its shareholders,

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the Parties will meet and take appropriate measures to achieve the necessary
economic balance, based on the principle that the Contractor will be
substantially restored to the same economic condition as if no change had
occurred. This restoration of the Contractor will not exceed the benefits
received by the State and by other third parties benefiting from the Change in
the Law as a result of the change.
This rule will never be construed as meaning that the Contractor is denied the
advantages from which it may benefit as a result of any new law, Decree,
standard, order, or regulation approved by the State.

ARTICLE 26
RESOLUTION OF CONFLICTS AND ARBITRATION
26.1
Resolution of disputes and notification

26.1.1
If any dispute, claim, conflict or controversy (a "Dispute") between any of the
Parties should arise from this Contract, or in relation to it, including any
question regarding noncompliance, or its existence, validity, or termination,
the Parties will take all reasonable measures to resolve the Dispute amicably. A
Dispute will be understood to have arisen if one of the Parties notifies the
other Parties, describing the nature of the Dispute and asking for a resolution
("Notification of Dispute").

26.1.2
If the Parties in question have not reached an amicable agreement within ninety
(90) days of the date of the Notification of Dispute, unless all Parties extend
the deadline, either of the Parties to the Dispute may submit the Dispute to
resolution by final and binding arbitration by means of a notification of
arbitration, and the arbitration will take place in accordance with the rules of
the International Chamber of Commerce (ICC).

26.2
Headquarters and language of arbitration

The headquarters of arbitration will be New York, USA. The languages of the
arbitration proceedings, and of all orders, decisions, and the award, will be
Spanish and English. All of the arbitrators will be fluent in Spanish as well as
English.
26.3
Number and identity of the arbitrators

The arbitral tribunal will be constituted by three (3) arbitrators selected
according to the following procedure:
(a)
The claimant and respondent will each designate one arbitrator within thirty
(30) days of the date on which the request for arbitration was submitted. If
there is more than one claimant or more than one (1) respondent, then the
claimants and/or the respondents collectively will each appoint a single
arbitrator), by giving notice in writing of this designation to the other Party
or Parties to the Dispute and ICC.

(b)
If either the claimant or the respondent fails to comply with the time limit in
the preceding paragraph, ICC will appoint the arbitrator or arbitrators that
have not yet been appointed, at the request of either the claimant or the
respondent and after consulting the claimant and the respondent so far as
possible. ICC will give notice in writing of such designation or designations to
the claimant and the respondent.

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(c)
The two (2) arbitrators so designated will, within thirty (30) days of their
nomination agree on the person to be named as the President of the tribunal, and
give notice of the designation to the claimant and the respondent, and ICC.

(d)
If the two (2) arbitrators fail to agree on the person of the President of the
tribunal, ICC will name the President, at the request of either the claimant or
the respondent, and after consulting the claimant and the respondent as much as
possible. ICC, will give notice in writing of the nomination to the claimant and
the respondent.

None of the arbitrators will be a citizen of the countries of origin of any of
the Parties to the Dispute (or in the case where the Party is a company or
another entity, any country or countries of nationality of the Party, including
the country of its ultimate parent).
26.4
Rules of arbitration

The arbitration procedures initiated under this Contract will be realized under
the arbitration rules in effect for ICC on the filing date of the request for
arbitration, which rules are considered to be incorporated by reference in this
Article 26.
26.5
Binding nature of the arbitration

The arbitration award will be final and binding on the Parties and will be
immediately enforceable, subject to the remedies provided in the arbitration
rules of ICC. The Parties waive any right they may have, in any court, to refer
any question of law, and/or based on the merits. It is expressly agreed that the
arbitrators will have no authority to award aggravated, exemplary or punitive
damages
26.6
Costs of the arbitration

The costs of arbitration will be charged in accordance with the directions of
the arbitration tribunal, and failing that, will be distributed per capita among
the Parties to the Dispute. The costs of the Parties constituting the Contactor
will not be Petroleum Operations Costs, and therefore, not recoverable.
26.7
Payment of the award

Any monetary award issued will be expressed and payable in Dollars.
26.8
The arbitrators will apply Article 25.1.

ARTICLE 27
FORCE MAJEURE
27.1
Noncompliance with obligations

Any obligation or condition arising or derived from this Contract that any Party
is unable to meet, whether in whole or in part, will not be considered a
violation of or noncompliance of its obligations under this Contract if the
violation or noncompliance is caused by an event of Force Majeure, provided that
there is a direct cause-and-effect relationship between the noncompliance and
the event of Force Majeure. Notwithstanding the foregoing, all payment
obligations owed by any Party to another must be satisfied when due.

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27.2
Definition of Force Majeure

For the purposes of this Contract, an event will be considered an event of Force
Majeure if it meets the following conditions:
(a)
it temporarily or permanently prevents a Party from meeting its obligations
under this Contract;

(b)
it is unforeseeable, unavoidable and beyond the control of the Party that
declares Force Majeure; and

(c)
it does not result from the negligence or willful misconduct of the Party that
declares Force Majeure.

Such an event will include acts of God, earthquakes, inclement weather, strikes,
riots, insurrections, civil unrest, blockades, sabotage, and acts of war
(whether declared or not). The Parties agree that the term of Force Majeure will
be interpreted in accordance with the principles and practices of the
international petroleum industry.
27.3
Notice of Force Majeure

If one of the Parties is unable to comply with any obligation or condition
stipulated in this Contract due to Force Majeure, it will notify the other
Parties in writing as soon as possible, and in any event no later than fourteen
(14) days after the event in question, giving the reason for its noncompliance
and the details of the Force Majeure, as well as the affected obligation or
condition. The Party affected by the Force Majeure will exert all reasonable
efforts to remove the cause, keep the other Parties fully informed of the
situation and the current evolution of the Force Majeure event, and will
promptly notify the other Parties as soon as the Force Majeure event is over and
no longer prevents it from complying with its obligations or conditions under
this Contract.
27.4
Continuation of obligations

All obligations, other than those affected by the event of Force Majeure, will
continue to be met in accordance with this Contract
27.5
Cessation of Force Majeure

On cessation of the Force Majeure event, the relevant Party will undertake and
complete, as soon as practicable and within a time frame mutually agreed on by
the Parties, all obligations suspended because of the Force Majeure.
27.6
Continuation of Force Majeure

When a Force Majeure situation lasts more than ninety (90) days, the Parties
will consult to examine the situation and implications for Petroleum Operations,
in order to establish the appropriate course of action to comply with
contractual obligations in the circumstances of the Force Majeure. In such case,
the period of this Contract will be extended by the same amount of time that the
Force Majeure has lasted.

ARTICLE 28
ASSISTANCE AND NOTIFICATIONS

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28.1
Assistance of the Ministry

28.1.1
The Ministry will facilitate, within the limits of its authority, and in
accordance with the rules and procedures in effect in Equatorial Guinea, the
performance of the Contractor’s activities by granting it all permits, licenses,
and access rights that are reasonably necessary for the purposes of Petroleum
Operations, and by making available to it all necessary services with respect to
Petroleum Operations in Equatorial Guinea.

28.1.2
The Ministry will also facilitate and assist the Contractor, within its
authority, and in accordance with the rules and procedures in effect in
Equatorial Guinea, in obtaining all permits, licenses, or rights not directly
related to Petroleum Operations, but that the Contractor may reasonably require
for the purposes of meeting its obligations under this Contract.

28.2
Notifications and other communications

All notices, approvals, or other communications authorized or required between
the Parties by any of the provisions of this Contract will be in writing (in
Spanish and English), addressed to the Parties and delivered in person by
courier service or by any electronic means of transmitting written
communications that provides written confirmation of complete transmission. For
purposes of this Contract, oral communication does not constitute notice or
approval, and e-mail addresses and telephone numbers for the Parties are listed
below as a matter of convenience only. A notification or approval given under
any provision of this Contract will be considered delivered only when actually
received by the Party to whom such notice or approval is directed, and the time
for such Party to deliver any communication in response to such originating
notice or approval will run from the date the originating notice or approval is
received. Each Party will have the right to change its address at any time
and/or designate another Person or address that copies of all such notifications
or approvals be directed to by notification in writing of this change to all
other Parties.
For the State:

MINISTRY OF MINES AND HYDROCARBONS
Carretera Autovía Malabo II
Malabo, Bioko Norte
República de Guinea Ecuatorial
To the attention of: His Excellency, the Minister of Mines and Hydrocarbons
Copy to the attention of: Director General of Hydrocarbons
Telephone:
+ (240) 09-3567, 09-3405

Fax:
+ (240) 09-3353

For the National Company:

GUINEA ECUATORIAL DE PETRÓLEOS
Calle
Apartado Postal 965
Malabo
Guinea Ecuatorial
To the attention of the Director General
Telephone:
+ (240) 09-6769

Fax:
+ (240) 09-6692

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For Ophir Equatorial Guinea (EG-24) Limited
OPHIR EQUATORIAL GUINEA (EG-24) LIMITED
123 Victoria Street
London, SW1E 6DE
UK
To the attention of the General Counsel
Telephone:
+(44) 20 7811 2400

Fax:
+(44) 20 7811 2421

ARTICLE 29
MISCELLANEOUS
29.1
Amendments

This Contract may only be amended in writing and by mutual agreement between the
Parties; any amendments made in contravention of this provision will not be
valid.
29.2
No Association

This Contract will not be interpreted to create an association, joint venture,
or partnership between the Parties or to impose any partnership obligations or
responsibilities of association on the Parties.
29.3
Entirety of agreement

With respect to the subjects it addresses, this Contract (i) constitutes the
entire agreement of the Parties and (ii) supersedes all previous agreements and
negotiations between the Parties.
29.4
Exemptions or waivers

If one Party exonerates any other Party from one or several instances of
noncompliance with the stipulations of this Contract, such exoneration will not
be interpreted or have the effect of exonerating the same Party from past or
future noncompliance, whether similar or different. Unless expressly provided
otherwise in this Contract, no Party will be considered to have waived,
eliminated, or modified any of its rights under this Contract unless the Party
has expressly stated, in writing, that it waives, eliminates, or modifies that
right.
29.5
Conflict of interest

29.5.1
Each of the Parties constituting the Contractor commits itself to avoiding any
conflict of interest between its own interests (including the interests of
Affiliates) and the interests of the other Parties in connection with activities
contemplated under this Contract.

29.5.2
In the event of any conflict between the principal document of this Contract and
its Annexes, the principal document will prevail. In the event of any conflict
between this Contract and the Hydrocarbons Law, the Hydrocarbons Law will
prevail.

29.6
Commercial transaction

This Contract is entered into by the State as a commercial transaction, and is
of a commercial nature.

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ARTICLE 30
INTERPRETATION
30.1
The table of contents, headings, and subheadings used in this Contract are for
convenience only and should not be interpreted as having any substantive
significance or as indicating that all of the provisions of this Contract
relating to any topic are to be found in any particular Article.

30.2
Any reference to the singular implies reference to the plural, and vice versa.

30.3
Any reference to the masculine gender includes a reference to the feminine
gender, and vice versa.

30.4
Unless otherwise stipulated, reference to an Article or an Annex means an
Article or Annex of this Contract.

30.5
The words includes and including mean includes and including without limiting
the generality of the description preceding the term and are used in an
illustrative and not limiting sense.

30.6
Any reference to a Person will be interpreted as including a reference to its
successors, authorized transferees, and authorized transferors.

30.7
Any reference to a law or standard will be interpreted as a reference to such
law or standard as it may have been or may be amended or repromulgated from time
to time, or any subordinate legislation made or standard created, or may from
time to time be created, under such law or standard.

30.8
Reference to this Contract or part thereof or any other document will be
interpreted as a reference to it as it may be amended, supplemented, renewed, or
replaced from time to time.

ARTICLE 31
EFFECTIVE DATE
The State will immediately take all necessary measures to formalize approval of
this Contract by means of an Act by which it will have legal validity equivalent
to a Law and establishing that this Contract has the force of law. This Contract
will become effective on the date the Contractor receives notification in
writing of its ratification by the President of Equatorial Guinea.

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IN WITNESS WHEREOF, the Parties have signed this Contract in __
(_________________) originals in Spanish, and __ (_________________) originals
in English. In case of any conflict, the text in Spanish will prevail.

THE REPUBLIC OF EQUATORIAL GUINEA
THE MINISTER OF MINES AND HYDROCARBONS
Signature:
 
/s/ Gabriel Mbaga Obiang Lima
Name: His Excellency
 
Gabriel Mbaga Obiang Lima
Position: Minister of Mines and Hydrocarbons
 
Minister of Mines and Hydrocarbons

GUINEA ECUATORIAL DE PETRÓLEOS
Signature:
 
/s/ Antonio Oburu Ondo
Name:
 
Antonio Oburu Ondo
Title: Director General
 
Director General

OPHIR EQUATORIAL GUINEA (EG-24) LIMITED
Signature:
 
/s/ Nick Cooper
Name:
 
Nick Cooper
Title: Chief Executive Officer
 
Director

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ANNEX A
CONTRACT AREA

This Annex is an integral part of this Contract between the Republic of
Equatorial Guinea and the Contractor.

On the Effective Date, the initial Contract Area covered an estimated area of
3,537 (three thousand five hundred and thirty seven) square kilometers (km)2 or
353,700 (three hundred fifty three thousand seven hundred)) hectares for the
purposes of Article 11.4.

The Contract Area is described on the map provided in Annex B. The points
indicated on that map are defined below, by reference to the Greenwich meridian
and their geographic coordinates:

Point
X (UTM)
Y (UTM)
Lat (DD)
Long (DD)
Lat (DMS)
Long (DMS)
1
448556.76
221068.24
2.000000
8.537418
2° 0' 0" N
8° 32' 14.704" E
2
472198.00
221063.11
2.000000
8.750000
2° 0' 0" N
8° 45' 0" E
3
472194.05
193430.04
1.750000
8.750000
1° 45' 0" N
8° 45' 0" E
4
472192.40
180534.63
1.633333
8.750000
1° 38' 0" N
8° 45' 0" E
5
478226.13
180534.25
1.633336
8.804245
1° 38' 0" N
8° 48' 15.282" E
6
500000.00
180532.90
1.633333
9.000000
1° 38' 0" N
9° 0' 0" E
7
501544.86
180532.90
1.633333
9.013889
1° 38' 0" N
9° 0' 50" E
8
494827.74
165795.50
1.500000
8.953502
1° 30' 0" N
8° 57' 12.609" E
9
482231.09
138163.32
1.250000
8.840278
1° 15' 0" N
8° 50' 25" E
10
472187.74
138164.10
1.250000
8.750000
1° 15' 0" N
8° 45' 0" E
11
444374.96
138168.07
1.250000
8.500000
1° 15' 0" N
8° 30' 0" E
12
430041.20
138171.15
1.250000
8.371162
1° 15' 0" N
8° 22' 16.183" E
13
431025.72
143329.35
1.296667
8.380000
1° 17' 48" N
8° 22' 48" E
14
433501.01
155180.73
1.403889
8.402223
1° 24' 14" N
8° 24' 8.003" E
15
436327.01
165803.78
1.500000
8.427602
1° 30' 0" N
8° 25' 39.366" E
16
440615.00
181922.45
1.645833
8.466111
1° 38' 45" N
8° 27' 58" E
17
443157.90
193435.93
1.750000
8.488944
1° 45' 0" N
8° 29' 20.2" E
18
444389.09
199010.41
1.800435
8.500000
1° 48' 1.565" N
8° 30' 0" E
19
444853.14
201111.48
1.819444
8.504167
1° 49' 10" N
8° 30' 15" E
20
446709.59
211396.94
1.912500
8.520833
1° 54' 45" N
8° 31' 15" E
21
447810.88
217163.09
1.964669
8.530721
1° 57' 52.807" N
8° 31' 50.595" E

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ANNEX B
MAP OF THE CONTRACT AREA
This Annex is attached to this Contract between the Republic of Equatorial
Guinea and the Contractor and forms an integral part of it.
This map is included for illustrative purposes only and in the event of any
discrepancy or conflict, the Contract Area will be defined by the geographical
co-ordinates specified in Annex A.
BLOCK EG-24
eg24pscengimage1.gif [eg24pscengimage1.gif]

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ANNEX C
ACCOUNTING PROCEDURE
This Annex forms an integral part of the Contract between the Republic of
Equatorial Guinea and the Contractor. Annex C follows this page.

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ARTICLE 1
GENERAL PROVISIONS
1.1
OBJECT

The object of this Accounting Procedure is to establish equitable criteria and
methods of calculation and accounting applicable to the provisions of the
Contract, and in particular, to:
(a)
classify and define Petroleum Operations Costs; and

(b)
prescribe the form for preparing and submitting the financial statements of the
Contractor in accordance with accounting principles in effect in Equatorial
Guinea.

1.2
INTERPRETATION

For purposes of this Accounting Procedure, the terms used here and defined in
the Contract will have the same meaning when used in this Accounting Procedure.
In the event of any discrepancy or conflict between the provisions of this
Accounting Procedure and any other provisions of the Contract, the provisions of
the Contract will prevail.
1.3
ACCOUNTING RECORDS AND FORMS

1.3.1
In accordance with the provisions of Article 16.1 of the Contract, the
Contractor will maintain in its office in Equatorial Guinea original, complete,
true, and correct accounts, books, and records of the Production and disposition
of Hydrocarbons, and all costs and expenses under the Contract, as well as all
other records and data necessary or proper for the settlement of accounts in
accordance with the laws of Equatorial Guinea, generally accepted accounting
procedures, and generally accepted practices in the international petroleum
industry and in accordance with the chart of accounts agreed to in conformance
with Article 1.3.2 below

1.3.2
Within sixty (60) days from the Effective Date, the Contractor will submit to
and discuss with the Ministry a proposed outline for the chart of accounts and
the books, records, and reports in accordance with generally accepted standards
and consistent with normal petroleum industry procedures and practices.

Within sixty (60) days of receiving the above proposal, the Ministry will either
provide notification of its approval of the proposal, or request in writing that
revisions be made.
Within one hundred eighty (180) days after the Effective Date, the Contractor
and the Ministry will agree on the scheme for the chart of accounts, books,
records, and reports that will describe the basis of the procedures and
accounting system to be developed and used in accordance with this Accounting
Procedure. Following the agreement, the Contractor will immediately prepare and
provide the Ministry with formal copies of the detailed and complete chart of
accounts and manuals related to the procedures, and a list of the records and
information to be posted, recorded, reported, and that will be monitored under
the Contract
1.3.3
In addition to the generality of the foregoing, the Contractor will submit to
the Ministry, at regular intervals, statements relating to the Petroleum
Operations, including, but not limited to, the following:

(a)
monthly Production statement;

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(b)
quarterly statement of Production value and prices;

(c)
statement of Petroleum Operations Costs;

(d)
annual statement of Petroleum Operations Cost not yet recovered;

(e)
Production participation statement;

(f)
annual end-of-year statement;

(g)
Annual Budget quarterly tracking statement;

(h)
statement of tangible goods subject to depreciation, and

(i)
quarterly statement of goods, materials, and property whose ownership is
expected to be transferred to the State within three (3) months following the
report, owing to total recuperation of their cost.

1.3.4
All reports and statements will be prepared in accordance with the Contract, the
laws of Equatorial Guinea and any approved regulations conforming to them, and
in accordance with generally accepted practices of the international petroleum
industry.

Within forty-five days of the close of the economic year, the Contractor will
present to the Ministry the budget implementation as well as the annual accounts
(the balance sheet, the cash flow statement, and the income statement). The
internal audit report will be attached for the trustworthiness of the
information.
1.4
LANGUAGE AND UNIT OF ACCOUNT

Unless otherwise agreed, all accounts, records, books and reports will be
prepared and maintained in Spanish and English and will be expressed in Dollars.
Additionally, Contractor may maintain accounts and records in other languages
and currencies for information purposes only.
1.5
VERIFICATION AND AUDIT RIGHTS OF THE STATE

1.5.1
When the Ministry exercises its audit right under Article 16.3 of the Contract,
it will provide notice to the Contractor at least sixty (60) days in advance of
that audit, which will take place during regular business hours. The Contractor
will make available to the Ministry all accounts, books, records, invoices, cash
vouchers, debit notes, price lists, or any other documentation referring to
Petroleum Operations. Furthermore, the auditors will have the right, in
connection with such audit, to visit and inspect, at reasonable times, any of
the Contractor’s sites, plants, facilities, warehouses, and offices that affect
Petroleum Operations directly or indirectly, and to interview personnel
associated with those Operations.

The Contractor will make every effort to provide records and accounts from any
of its Affiliates or other Persons necessary to support their charges.
For charges made based on units of time, the Contractor will see that its
Affiliate(s) present a report of an internationally recognized independent
accounting firm certifying that the charges invoiced by the Affiliate represent
a reasonable assignment, complete and accurate charges to Petroleum Operations,
excluding any element of profit and duplication of costs, and that apply
consistently to all activities of the Affiliate. If the Ministry does not
conduct an audit within the time stipulated in accordance with Article 16.3 of
the Contract, the Contractor’s accounts, books and records will be considered
correct and final.

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1.5.2
Any audit exceptions will be made in writing and reported to the Contractor
within ninety (90) days of completion of the corresponding audit. Failure to
give such exception by the Ministry will be considered an acknowledgement of the
accuracy of the Contractor's books and accounts.

1.5.3
If the Contractor fails to respond to any notice of exception under Article
1.5.2 within ninety (90) days of receipt of such notice, the results of the
audit will be considered valid and accepted by the Contractor. After that period
of time, the Ministry’s exception will prevail.

1.5.4
Any adjustments resulting from an audit will be promptly applied to the
Contractor's accounts; any adjustments to payments due will also be effected
promptly.

1.5.5
If the Contractor and the Ministry are unable to reach final agreement on the
proposed audit adjustments they will resolve the dispute in accordance with the
provisions of Article 16.3.3 of this Contract.

While audit-related issues are still outstanding, the Contractor will preserve
any relevant documents and allow the Ministry access to them until the issue is
finally resolved.
1.6
CURRENCY EXCHANGE RATES

The exchange rate will be determined monthly, based on the arithmetic average of
the closing buy and sell rates for the Dollar against the CFA (Communauté
Financière Africaine, or African Financial Community) currency unit for the
month, as published by the Bank of Central African States (BEAC).
The exchange rate of the preceding calendar month will be used for exchange
transactions and for the purpose of determining the counter value of Dollars in
the Equatoguinean currency unit for the next month.
1.7
ACCOUNTING BASIS

All books and accounts will be prepared on an accrual accounting basis. Revenues
will be posted to the accounting period in which they were earned, without any
need to recognize whether a given transaction results in a disbursement or cash
receipt. Expenses and costs will be regarded as incurred, in the case of
physical items, during the accounting period in which the relevant title is
transferred to the Contractor and in the case of services, during the accounting
period in which the services are provided. Nevertheless, allocation of
accountable revenues and expenditures will be carried out according to the
Accrual Accounting Principle contemplated in the General Accounting Plan of
Equatorial Guinea, within the framework of OHADA.
1.8
REVIEW OF ACCOUNTING PROCEDURE

By mutual agreement, the Ministry and the Contractor may periodically review
this Accounting Procedure at the request of one of the Parties.
ARTICLE 2
GENERAL CLASSIFICATION OF PETROLEUM COSTS

All costs related to Petroleum Operations will be classified in accordance with
their end use Classification criteria will be included in the approved Annual
Work Program and Annual Budget for the Calendar Year in which the expenditure is
made. All Petroleum Operations Costs will be classified, defined, and allocated
as stated below.
2.1
EXPLORATION COSTS

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Any and all direct, general, and administrative costs incurred during
Hydrocarbon Exploration and Appraisal activities in an area that is part of the
Contract Area, including but not limited to:
(a)
surveys and aerial, geophysical, geochemical, paleontological, geological,
topographical, and seismic studies and their interpretation;

(b)
core hole drilling;

(c)
any labor, materials, supplies, and services used in drilling Exploration Wells
and Evaluation Wells;

(d)
any facilities used solely in support of the purposes described in paragraphs
(a), (b), and (c) above, including access roads and acquired geological and
geophysical data, all separately identified; and

(e)
any other cost incurred in the Exploration and Evaluation of Hydrocarbons after
the Effective Date but prior to the date of approval of a Development and
Production Plan with respect to the relevant Field and not covered under
Articles 2.2, 2.3, and 2.4 below.

2.2
DEVELOPMENT AND PRODUCTION COSTS

Development and Production Costs are all approved direct, general, and
administrative costs incurred during Development and Production activities,
including, among others, the following:
(a)
drilling Wells defined as Development Wells for purposes of producing from a
Commercial Field, whether these Wells turn out to be dry or productive by
nature, and drilling Wells for the injection of water or gas to enhance
Hydrocarbon recovery;

(b)
completing Wells by way of installation of casing or equipment or otherwise
after a Well has been drilled for the purpose of bringing the Well into use as a
Development Well or a Well for the injection of water or gas to enhance
Hydrocarbon recovery;

(c)
transportation and installation of tank storage facilities, pipelines, flow
lines, production and treatment units, wellhead equipment, subsurface equipment,
enhanced recovery systems, offshore platforms, export terminals and piers,
harbors, and related facilities, and access roads for development activities;
and

(d)
engineering and design studies for facilities referred to in item (c).

2.3
OPERATIONS OR PRODUCTION COSTS

Any general, administrative and service costs, and any other Petroleum
Operations Costs incurred from the approval date of any relevant Development and
Production Plan, and from the beginning of depositing funds for the Reserve
Fund.
2.4
COMMERCIALIZATION COSTS

Any costs incurred to export Hydrocarbons to the Delivery Point.
2.5
ASSIGNMENT OF GENERAL AND ADMINISTRATIVE COSTS

With the exception of general and administration costs incurred in Equatorial
Guinea that can be directly assigned to the Annual Budget, the general and
administration expenditures incurred by the Contractor outside the national
territory with respect to Petroleum Operations will be determined in

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accordance with the sliding scale set out below, based on total Petroleum
Operations Costs actually incurred during the Year and duly justified by the
Contractor and approved by the Ministry:
(a)
Before commercial Production:

Up to five million Dollars
$
5,000,000

4.0
%
Next seven million Dollars
$
7,000,000

2.0
%
Next ten million Dollars
$
10,000,000

1.0
%
Remaining balance
 
0.5
%

(b)
From commercial Production:

All Petroleum Operations Costs        
Up to five million Dollars
$
5,000,000

2.0
%
Next seven million Dollars
$
7,000,000

1.0
%
Next ten million Dollars
$
10,000,000

0.5
%
Remaining balance
 
0.25
%

2.6
Except as provided otherwise in the Contract, approved Petroleum Operation Costs
described in Articles 2.1 to 2.5 of this Accounting Procedure will be
recoverable by the Contractor in accordance with Article 7.2 of the Contract.

2.7
RECOVERY OF INTEREST

Subject to and in accordance with the Hydrocarbons Law, any interest on loans
obtained by the Contractor from Affiliated Companies will not be recoverable as
a Petroleum Operations Cost, nor will it be deductible for tax purposes when
estimating any Income Tax liabilities of the Contractor, unless that interest
has been approved by the Ministry. Any interest on loans obtained by the
Contractor from Persons other than Affiliated Companies for investments in
Petroleum Operations will not be recoverable as a Petroleum Operations Cost but
will be deductible for tax purposes when estimating any Income Tax liabilities
of the Contractor, provided that the rate of interest and the terms of repayment
have been approved by the Ministry in advance.
2.8
NONRECOVERABLE COSTS

Costs that are not recoverable as Petroleum Operations Costs will include the
following:
(a)
signing bonus paid by the Contractor;

(b)
all Discovery bonuses paid by the Contractor;

(c)
all Production bonuses paid by the Contractor;

(d)
surface leases paid to the State;

(e)
interest on loans as provided by Article 2.7 of this Accounting Procedure;

(f)
any unapproved cost overruns exceeding the limits of Article 4.4 of this
Contract;

(g)
all payments made to the State for failure to meet minimum Exploration work
obligations in accordance with Article 3 of the Contract;

(h)
all fines and sanctions incurred for violating the laws and regulations of
Equatorial Guinea;

(i)
all donations to the State or other similar expenses, unless otherwise agreed;

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(j)
the State’s audit and inspection expenses incurred as a result of the failure to
keep original documents in the Contractor’s offices in Equatorial Guinea;

(k)
all sanctions imposed on the Contractor under the Hydrocarbons Law or otherwise;
and

(l)
costs related to assignments made by the Contractor to any of its Affiliates or
other Persons.

(m)
Income tax and minimum rates charged for government services, other than Customs
fees or the cost of charges for services such as costs paid by the Contractor
under Article 6.8;

(n)
costs incurred to remediate damages, including pollution, caused by the
Negligence or willful misconduct of the Contractor; and

(o)
costs incurred by the Contractor before signing the Contract, except those costs
associated with negotiating the Contract, that will be considered historical
costs and recoverable in accordance with the present Contract.

2.9
INSURANCE AND CLAIMS

Petroleum Operations Costs will include premiums paid for required and approved
insurance in accordance with the Contract. All expenses incurred and paid by the
Contractor for any insurance claim, minus any costs recovered by the Contractor
by means of insurance claims, will be included and recoverable as Petroleum
Operations Costs.
These Petroleum Operations Costs will be recoverable and deductible as tax
expenses provided the Contractor has duly withheld withholding tax at source.
2.10
INVENTORY ACCOUNTING

All costs of articles bought for inventory will be recoverable from the Calendar
Year in which the materials and equipment were used in Petroleum Operations in
the Contract Area.
ARTICLE3
OTHER CLASSIFICATION OF COSTS AND EXPENDITURES
(Accounting methods to estimate Income Tax liability)
During any Calendar Year in which Oil Operations occur, the Costs of Oil
Operations will include the following:
3.1
CAPITAL COSTS

All capital costs for the current Calendar Year will be classified as Tangible
(subject to depreciation) and Intangible.
3.1.1
TANGIBLE CAPITAL COSTS

Tangible Capital Costs are those which are not intangible capital costs incurred
to make the purchase of any asset related to Oil Operations that usually have a
working life of more than one (1) Year; these assets will be subject to annual
depreciation in accordance with the provisions stipulated in these Accounting
Procedures. Tangible Capital Costs include the following:
(a)
for Development Wells: the costs of material and equipment employed in the
culmination process (equipment for the well bottom, fixed production pipes,
production packagers, valves, wellhead equipment, subsoil machinery for
elevation, pumping rods, surface pumps,

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discharge cables, collection equipment, delivery pipes, fixed Christmas tree
with its valves, oil pipes and gas pipes, fixed material and equipment, docks,
anchors, buoys, facilities and equipment for processing of hydrocarbons,
secondary recovery systems, reinjection compressors, water pumps and their
pipes);
(b)
for all purchase of goods and equipment: the real cost of the asset (excluding
transport), the construction cost of platforms outside of the Contract Area, the
cost of power generation equipment and the cost of facilities on land;

(c)
for the purchase of movable goods: automotive machinery (vehicles, tractors,
tugs, tools, lighters, etc.), construction machinery and equipment (office
furniture and equipment, among others);

(d)
for construction purposes: the cost of construction of houses and residential
facilities, offices, warehouses, workshops, energy plants, storage facilities
and access roads for development activities, the cost of quays and anchors, the
treatment plant and machinery, the secondary recovery system, the gas plants and
steam systems; and

(e)
drilling and production facilities and platforms.

With the exception of the land acquired by the Contractor, all the goods
mentioned here will depreciate in accordance with Article 3.2 of the Accounting
Procedure.
3.1.2
INTANGIBLE CAPITAL COSTS

The intangible capital costs will be the ongoing costs incurred in the purchase
of movable goods and services directly related to Oil Operations and will be
recognised as expenses at the moment they are incurred. These costs/expenses
will include the following:
(a)
the costs of aeromagnetic, airborne gravimetry, topographical, geological,
geophysical and geochemical studies, costs of interpretation and
reinterpretation of technical data, labour required for exploration and similar
costs:

(b)
drilling costs of Exploration Wells and Evaluation Wells: costs of services
provided to drill Development and Evaluation wells, chemical products, leasing
costs (of helicopters, lighters, boats, tugs etc.), transport, warehousing
facilities, accommodation, technical services for mud control, Well geology,
controlled directional drilling of Wells, diving service, mud control, Well
geology tests, hardening and related costs;

(c)
drilling costs of Development Wells such as mobilisation and demobilisation of
platforms and drilling equipment, drilling contracts and hire of platforms and
drilling equipment, labour for platform facilities and infrastructure, fuel,
water, drivers, drill bits, drilling tubes, hire of equipment, production test
equipment, Christmas tree for production and mud tests and components, chemical
products, hire costs (of helicopters, lighters, boats, tugs, etc.), transport,
warehousing facilities, accommodation, technical services for mud control, Well
location geology, directional drilling of Wells, diving service, production and
evaluation test, culmination and supervision;

(d)
the acquisition or purchase costs of goods and services such as transport costs,
operating costs, verification of equipment, costs of on site installation,
maintenance costs and fuel costs;

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(e)
general services (electrical registers, vertical seismic profile [VSP], mud
control, sample collection, Well geology tests, hardening, production test,
supervision and similar costs), delineation services, all leasing of heavy
engineering machinery and other expenses incurred abroad;

(f)
materials, reconstruction of access roads and other types of roads and other
intangible goods for construction, public services and construction support; and

(g)
other Exploration Costs, auxiliary or temporary installations with a working
life of less than one (1) Year.

3.2
DEPRECIATION OF TANGIBLE CAPITAL COSTS

Depreciation will be calculated from the Calendar Year in which the asset is
brought into service, allowing a full Year of depreciation during the initial
Calendar Year. For the purposes of estimating liability with respect to Income
Tax, depreciation will be calculated using the linear method over five (5)
Years.
3.3
NON-CAPITAL COSTS

Non-capital costs will be classified as follows:
3.3.1
COSTS DEDUCTIBLE BY THE CONTRACTOR

For the purposes of Income Tax, costs deductible by the Contractor will include
the following:
(a)
general and administrative expenses (staff salaries, insurance payments, labour,
office technical services and other similar services, material services, public
relations, expenses abroad related to Oil Operations in Equatorial Guinea
determined in accordance with Article 2.5 of the Accounting Procedure);

(b)
labour, materials and services used indirectly in Development Drill operations,
viability studies for the production of Crude Oil or Natural Gas fields,
secondary recovery operations, warehousing, handling, transport and delivery
operations, Natural Gas Well operations, transport and delivery of Natural Gas,
services for treatment of Natural Gas, environmental protection measures and all
other maintenance activities indirectly related to the Oil Operations.

3.3.2
COSTS NOT DEDUCTIBLE BY THE CONTRACTOR

For the purposes of Income Tax, the following Contractor costs will not be
deductible:
(a)
Bonus paid by Contractor for agreement of Contract;

(b)
Discovery bonuses paid by the Contractor;

(c)
Production bonuses paid by the Contractor;

(d)
surface leases paid to the State;

(e)
any unapproved excess cost that exceeds the limits established by Article 4.4 of
the Contract;

(f)
interest on loans, in accordance with Article 2.7 of this Accounting Procedure;

(g)
any payment made to the State for breach of the minimum obligations of
Exploration work in accordance with the provisions of Article 3 of the Contract;

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(h)
any fine or penalty imposed for infringement of any laws or regulations,
including the laws and regulations of Equatorial Guinea;

(i)
any amounts that exceed the limits established in relation to the depreciation
of tangible assets;

(j)
any donation to the State or other similar expenses unless otherwise agreed;

(k)
the costs of auditing and State inspection incurred due to failure to keep
original documents at the office of the Contractor in Equatorial Guinea;

(l)
any penalty imposed on the Contractor in accordance with the Law of Hydrocarbons
or otherwise;

(m)
costs related to transfers made by the Contractor to any of its Affiliates or
other Persons.

ARTICLE 4
BASIS FOR CALCULATION OF INCOME TAX
4.1
PRACTICAL DETERMINATION OF TAXABLE INCOME

To determine the taxable income and to calculate liability with respect to the
annual Income Tax of each member of the Contractor, the following will be
considered:

Taxable income = [(1)] - {[(2)+(3)+(4)]+[(5)+(6)+(7)+(8)]}.
(1)
Gross annual income (including gifts)

(2)
Gifts

(3)
State Share of net Hydrocarbons

(4)
National Company share of Hydrocarbons based on interest owed or with payment
obligations in the Contract under Article 8

(5)
Deductible intangible capital costs

(6)
Depreciation of tangible capital costs

(7)
Non-capital deductible costs

(8)
Losses authorised and certified by the Ministry corresponding to previous
Calendar Years.

Points (2), (3) and (4) will include the sum paid by each member of the
Contractor to the State or to the National Company for their purchase of the
portion of State Hydrocarbons (Articles 7.1 and 7.4) or of the portion of
Hydrocarbons corresponding to the Participation Interest of the National Company
as a member of the Contractor (Article 8) or its sale by the State or the
National Petroleum Company.
Points (5), (6), (7) and (8) will include the costs paid by each member of the
Contractor which were attributed to payment of the share of another member of
the Contractor Participation Interest, including participation of the National
Company under Article 8.
4.2
PRINCIPLE OF TAX TREATMENT OF DEFICIT IN A FINANCIAL YEAR

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In the event of a deficit occurring during a Calendar Year, that deficit will be
treated as a charge on the following Calendar Year and will be deducted from the
profit recorded during the said Calendar Year; in the event that this profit is
not sufficient to fully offset the deduction, any excess deficit (certified by
the Ministry) will be transferred successively to the profit for the following
Calendar Year.
ARTICLE 5
RECORDS AND VALUATION OF ASSETS
5.1
RECORDS

The Contractor will keep correct, exact and detailed records of all goods used
for Oil Operations according to the Contract and in accordance with generally
accepted practice in the international oil industry.
5.2
INVENTORIES AFTER INITIAL PRODUCTION

Within one hundred and eighty (180) days following the start of production in a
Field, the Contractor will prepare an initial inventory (which will be included
as part of the status of materials required in accordance with Article 6 of this
Accounting Procedure) of all goods to be used for Oil Operations and their value
recorded in the Contractor's books.
5.3
INVENTORIES IN SUBSEQUENT OPERATIONS

Following preparation of the initial inventory of the goods, the inventories of
goods used in Oil Operations as per the contract will be made at regular
intervals but at a minimum once every five (5) Calendar Years.
The Contractor will notify the Ministry at least thirty (30) days in advance of
its intention to conduct the said inventory and the Ministry will have the right
to be represented when the said inventory is taken. The Contractor must clearly
state the principles on which valuation of the inventory has been based and will
provide the Ministry with a full report of this inventory within a period of
ninety (90) days from conclusion thereof.
ARTICLE 6
STATEMENTS AND RECORDS
6.1
FINANCIAL STATEMENTS AND TAX REPORTS TO BE SUPPLIED BY THE CONTRACTOR

The Contractor must present detailed accounts indicating the Costs of Oil
Operations incurred by the Contractor during the previous Calendar Year. These
accounts must be submitted to the Ministry within a period of ninety (90) days
calculated from the end of the Calendar Year and will be certified by an
independent auditor accepted by the Parties. This period may be extended by an
additional thirty (30) days at the request of the Contractor and with the
approval of the Ministry and this consent must not be refused or delayed without
reasonable justification.
Income Tax statements must be duly completed with the detailed information
required to facilitate full comprehension by the tax authorities of Equatorial
Guinea, including:
(a)
details of depreciation;

(b)
details of fixed assets;

(c)
statistics and details of Production and export;

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(d)
all tax reports specified in the Contract; and

(e)
detailed information on deductible expenses to estimate the tax obligations in
accordance with the Tax Law.

6.2
PRODUCTION STATEMENT

Without prejudice to the rights and obligations of the Parties as per the
Contract, from the initial date of the start of commercial Production in the
Contract Area, the Contractor will present the Ministry with a monthly
Production statement containing the information listed below separated by Field
and consolidated for the Contract Area:
(a)
the amount of Crude Oil produced and conserved;

(b)
the quality characteristics of the Crude Oil produced and conserved;

(c)
the amount of Natural Gas produced and conserved;

(d)
the quality characteristics of this Natural Gas produced and conserved;

(e)
the amounts of Crude Oil and Natural Gas used to perform drilling and Production
Operations;

(f)
the amounts of Crude Oil and Natural Gas unavoidably lost;

(g)
the amounts of Natural Gas burned off and flared;

(h)
the amounts of Hydrocarbons in existence at the start of the calendar month in
question;

(i)
the amounts of Hydrocarbons in existence at the end of the calendar month in
question;

(j)
the amounts of Natural Gas reinjected into Hydrocarbon deposits; and

(k)
the amounts of Hydrocarbons delivered and sold.

All amounts indicated in this statement will be expressed both in volume terms
(barrels of Crude Oil [bbls] and cubic metres of Natural Gas [M3]) and in weight
(metric tons [MT] and long tons [LT]).
The Production statement for each calendar month and the technical report for
each Well will be presented to the Ministry no later than thirty (30) days after
the end of the said calendar month.
6.3
STATEMENT OF THE PRODUCTION VALUE AND THE PRICE

To satisfy the purposes of Article 10 of the Contract, the Contractor will
prepare a Quarterly statement supplying detailed information about the value of
the Hydrocarbons produced, conserved and sold during each Quarter.
The statement of the value of Production will include the following information:
(a)
the amounts, prices and income received by the Contractor as a consequence of
sales of Hydrocarbons to third parties during the Quarter in question;

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(a)
the amounts, prices and income received by the Contractor as a consequence of
sales of Hydrocarbons, other than sales to third parties, during the Quarter in
question;

(c)
the value of the stocks of Hydrocarbons at the end of the Quarter preceding the
Quarter in question;

(c)
the value of all stocks of Hydrocarbons at the end of the Quarter in question;
and

(e)
the information available to the Contractor regarding the prices of competitive
Crude Oil in so far as is necessary for the purposes of Article 10 of the
Contract.

6.4
STATEMENT OF COSTS OF OIL OPERATIONS

6.4.1
Quarterly Statement

The Contractor will prepare a Quarterly Statement of Costs of Oil Operations
listing the Costs of Oil Operations incurred by the Contractor with respect to
the Contract Area, as established in this Accounting Procedure.
Each Development Cost and Production Cost will be broken down for each Field, if
relevant, and the Contractor will specify the basis for allocating shared costs.
If the Ministry is not satisfied with the breakdown indicated within the
categories, the Contractor will provide a more detailed breakdown.
All Exploration Costs must be indicated separately.
The statement of costs of Oil Operations for each Quarter will be presented to
the Ministry no later than thirty (30) days after the end of the said Quarter.
6.4.2
Annual Statement

The Contractor will prepare an Annual Statement of Costs of Oil Operations with
the following information, for the purposes of the provisions of Articles 9 and
16 of the Contract:
(a)
the Costs of Oil Operations which have not yet been recovered and are carried
over from the previous Calendar year, if they exist;

(b)
the Costs of Oil Operations of the Calendar Year in question;

(c)
the quantity and value of the Production of Hydrocarbons that the Contractor has
designated as Oil for Recovery of Costs in accordance with the provisions of
Article 7.2 of the Contract for the Calendar Year in question; and

(d)
the Costs of Oil Operations which have not yet been recovered at the end of the
Calendar Year in question.

The Annual Statement of Costs of Oil Operations must be presented to the
Ministry no later than forty-five (45) days after the end of the said Calendar
Year.
6.5
STATEMENT OF PRODUCTION SHARE

Within a period of sixty (60) days following the end of each Calendar Year, the
Contractor must present to the Ministry with respect to the said Calendar Year,
a statement of the Production share including the following data for the
purposes of Article 7 of the Contract:

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(a)
the value of all sales of Hydrocarbons made by the Contractor from the Date on
which the Contract came into Force until the end of the previous Calendar Year;

(a)
the value of all sales of Hydrocarbons made by the Contractor during the
Calendar Year in question;

(c)
the total of points (a) and (b) at the end of the Calendar Year in question;

(d)
the accumulated Costs of Oil Operations from the Date on which the Contract came
into Force until the end of the previous Calendar Year;

(e)
the Costs of Oil Operations of the Calendar Year in question;

(f)
the total of points (d)     and (e) at the end of the Calendar Year in question;

(g)
the amount and value of the Contractor's share in the Hydrocarbons; and

(h)
the amount of the State's share in the Hydrocarbons and their value if they have
been sold by the Contractor.

6.6
FINAL STATEMENT AT THE END OF THE YEAR

No later than the thirty-first (31) of March of each Calendar Year, the
Contractor must present to the Ministry a final statement of the end of the
Calendar Year and a statement of accounts corresponding to the previous Tax Year
in which the following information will be included:
(a)    accounting reconciliation of    expenses against approved Annual Budget;
(b)    accounting reconciliation of    expenses against recoverable costs; and
(c)    accounting reconciliation of    expenses against deductible costs.
6.7
STATEMENT OF ANNUAL BUDGET

The contractor will present the Ministry with a statement of the Annual Budget
in accordance with the provisions of Article 4 of the Contract. This statement
will distinguish between the Exploration Costs, the Development Costs and the
Production Costs budgeted for each Quarter and will correspond to the individual
entries for Oil Operations included in the Annual Work Programme.

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ANNEX D
GUARANTEE AGREEMENTS

This Annex consists of two Guarantee Agreements, D1 and D2, which are provided
below.

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ANNEX D.1
GUARANTEE AGREEMENT – GENERAL OBLIGATIONS

This Annex forms an integral part of the Contract between the Republic of
Equatorial Guinea and the Contractor.

This Guarantee Agreement is celebrated on this [insert day] of [insert month and
year]

BETWEEN:
(1)     [THE GUARANTOR], a company established and existing under the laws of
[insert jurisdiction] with its registered address at [insert address] (the
“Guarantor”); and

(2)    THE REPUBLIC OF EQUATORIAL GUINEA (the “State”), represented for the
purposes of this Guarantee by the Ministry of Mines and Hydrocarbons (the
“Ministry”).

WHEREAS:
the Guarantor is the parent company or affiliate of [insert name], established
in accordance with the laws of [insert jurisdiction], with its registered
address at [insert address] (the "Contractor");
the Contractor has agreed a contract to participate in production (the
"Contract") with, among others, the State with respect to the Contract Area;
the Contractor has a Participation Interest under the Contract;
the State wishes the signature and performance of the Contract by the Contractor
to be guaranteed by the Guarantor and the Guarantor wishes to provide this
Guarantee as an incentive for the State to agree the Contract and in return for
the rights and benefits acquired by the Contractor under the contract; and
the Guarantor fully understands and wishes to guarantee certain contractual
obligations of the Contractor under the Contract.
AS A RESULT, taking into account the premises established in this document and
in exchange for a provision of security, the receipt and sufficiency of which
are demonstrated by this document, the Guarantor agrees and undertakes with the
Contractor as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Except where the contrary is specifically established
or where the context demands the contrary, the terms defined in this Section 1.1
and in the introduction will have, for all purposes

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of this Guarantee Agreement, the meanings specified in this document. The
following definitions apply both to the singular and the plural form of any of
the terms defined in this document:
Guarantee Agreement
The term “Guarantee Agreement” refers to this Guarantee Agreement, as it was
originally signed and as it may, from time to time, be supplemented, modified or
amended in accordance with the provisions of this document.
Affiliate
The term “Affiliate” refers to a legal entity that Controls, or is Controlled
by, or is Controlled by an entity that Controls a Party.
Control
The term “Control” refers to direct or indirect ownership of more than fifty
(50) per cent of the voting rights of a corporation, company or other legal
entity. The terms deriving from the word “Control”, such as “Controls” and
“Controlled by" will have the same meaning.
Banking Day
The term "Banking Day" refers to any day, except a Saturday, Sunday or any other
day on which commercial banks whether in Malabo, Equatorial Guinea, or in
Houston (Texas) are authorised or obliged to remain closed.
Maximum Amount
The term “Maximum Amount” refers to the meaning stipulated in Section 3.1 of
this Guarantee Agreement.
Person
The term “Person” refers to any physical person, corporation, limited liability
company, company, participating company, association, public limited company,
trust, unincorporated organisation, or government or any government body,
authority or political subdivision.
Section 1.2. Other Terms Defined. The terms used with a capital letter which are
not otherwise defined in this Guarantee Agreement will have the same meaning as
that ascribed to them in the Contract.
ARTICLE II
DECLARATIONS OF THE GUARANTOR
Section 2.1. Declarations of the Guarantor. The Guarantor makes the following
declarations to the State:
(a) The Guarantor has been duly established and exists under the laws of its
place of establishment and enjoys all the faculties and corporate prerogatives
necessary to enter into this Guarantee Agreement and to implement and complete
all the transactions contemplated in this Agreement Guarantee.
(b) The agreement and delivery of this Agreement Guarantee and the completion of
all of the transactions contemplated within it will not come into conflict with
or constitute on the part of

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the Guarantor a violation or breach under the founding documents, articles of
association or any contract, or any other important instrument or agreement to
which the Guarantor is a party or to which the goods of the Guarantor are bound,
or any order, rule or regulation of any court, government body or organ that has
jurisdiction over the Guarantor or any of its activities or goods.
(c) This Guarantee Agreement has been duly authorised, signed and delivered by
the Guarantor and constitutes a valid and binding obligation for the Guarantor.
ARTICLE III
GUARANTEE AND AGREEMENTS
Section 3.1. Guarantee By virtue of this document, the Guarantor guarantees to
the State payment and timely compliance with all and any debts and obligations
of the Contractor with respect to the State that arises from the provisions of
the Contract or in relation to it, distinct from the obligations that derive
from the following Articles of the Contract:
(a)
3.1.1

(b)
3.1.2

(c)
3.1.4

Including the payment of any sum the Contractor has to pay to the state when
this payment is enforceable and payable; so long as, however, the liability of
the Guarantor to the State under this Guarantee does not exceed fifty million
United States dollars ($50,000,000) (the “Maximum Amount”).

Section 3.2 Claim procedure. In the event of breach by the Contractor in the
performance of any of the obligations guaranteed under this agreement, in order
to submit a claim under this Guarantee Agreement, the State or its duly
authorised attorney must notify the Guarantor in writing of the amount owed and
of the other points provided in (a) to (d) below, and the Guarantor, within a
period of ten (10) Working Days, will pay or will cause payment in immediately
available funds of the said amount as notified, in Dollars, to the bank account
or other destination in [insert jurisdiction] designated by the State and
without any compensation or reduction of this amount with respect to any claim
that the Contractor may have at the time or subsequently. The State will supply
to the Guarantor, at the address of the Guarantor included in Section 4.2, a
written notification, signed by an authorised representative of the State (the
"Notification") of breach by the Contractor with respect to its obligations
established in the Contract, specifically indicating:
(a)
the clause(s) allegedly breached,

(b)
that the Contractor has failed to make timely payment or perform in a timely
manner all or some of its obligations under the Contract,

(c)
a description of the obligations breached and the amount that the Contractor
must pay as a consequence of said breach, and

(d)
that the Contractor has not paid to the State the amount claimed, that the State
has notified the Contractor in writing of the lack of payment or breach and was
informed of the intention of the State to enforce this Guarantee Agreement.

Section 3.3 Waiver of notification, agreement of modifications. The Guarantor
waives the requirement to be notified of acceptance of this Guarantee Agreement
and of the status of indebtedness of the Contractor at any time, and expressly
agrees to any extension, renewal, modification or acceleration of the sums owed
to the State in accordance with the Contract or any of the terms thereof,
without this releasing the Guarantor of any of its responsibilities in
accordance with this Guarantee.

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Section 3.4 Absolute and unconditional guarantee. The obligations of the
Guarantor, as established in Section 3.1 above, will be a guarantee of payment
and of absolute and unconditional compliance with the obligations that should be
performed strictly in accordance with the terms of the Contract and without
respect to those defensive measures that may be available to the Contractor,
including, among others, some of the following, with or without notice to or the
consent of the Guarantor:
(a) any modification, amendment, alteration, extension, tolerance, renunciation
of the term or concession (material or otherwise) granted to the Contractor;
(b) taking or not taking measures by the State against the Contractor;
(c) any breach, omission, delay or failure by the State in enforcing,
implementing or exercising any right, power or recourse that it may have against
the Contractor;
(d) the liquidation, dissolution, sale or other disposal, voluntary or
involuntary, of all or almost all of the assets, administration of assets and
liabilities, failure, insolvency, bankruptcy, transfer to the benefit of
creditors, reorganisation, settlement, agreement with creditors or readjustment
or other similar procedures that affect the Guarantor or Contractor or any of
the respective assets of either of them, or any accusation or claim with regard
to the validity of this Guarantee Agreement in any of these procedures;
(e) any defence based on a legal incapacity of the Contractor.
Section 3.5 Non exoneration of the Guarantor. The obligations of the Guarantor
under this Guarantee will not be extinguished or affected in any way by the
following: renunciation or delivery by the Contractor of the goods or other
guarantee held or acquired in the future for the payment of any of the
obligations guaranteed by this agreement; exchange, replacement or alteration of
these goods or another guarantee; taking or ceasing to take any measure or
action against the Contractor or the Guarantor with respect to these goods or
other guarantees; or any other circumstance that could constitute a defence or
exoneration, whether legal or in equivalence, of a guarantee.
Section 3.6 Prior actions of the State. The State will not be obliged in the
first instance to demand payment or compliance from the Contractor or any other
Person or to act against any good or security delivered to the State or to
perform any other action before having direct recourse to the Guarantor.
Section 3.7 Accumulation of rights. The rights, powers and remedies of the State
under this Guarantee are cumulative and not alternate and exist in addition to
any right, power or remedy granted to the State by the law or by any other
means.
Section 3.8 Continuity of the guarantee. This Guarantee Agreement is made with
the intention of granting a continuous guarantee of payment and compliance and
will also be considered as such; additionally, it will remain in full effect and
force while the Contract or any amendment to it are current or while any
liability or obligation of the Contractor to the State continues in accordance
with the Contract.
Section 3.9 Substitution. So long as the debt guaranteed by this guarantee has
not been paid in full, the Guarantor will have no right of substitution with
respect to any good, security, guarantee or other right that the State may have.
Section 3.10. Costs. If the State makes a successful legal claim against the
Guarantor, the Guarantor agrees to pay all the costs, fees and duties, including
the reasonable legal fees, which the State may have incurred to enforce or
attempt to enforce this Guarantee Agreement following any breach by the
Guarantor, whether to enforce it through legal trial or by any other means. If,
notwithstanding, the State makes a legal claim against the Guarantor and the
Guarantor is successful, the State agrees to pay all costs, fees and duties,

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including the reasonable legal fees, which the State may have incurred to
enforce or attempt to enforce this Guarantee Agreement following any breach by
the Guarantor, whether to enforce it through legal trial or by any other means.
If the State makes a legal claim against the Guarantor and the decision favours
both the State and the Guarantor (divided decision), each party will be
responsible for its own costs, fees and duties, including the reasonable legal
fees, which each party may have incurred to enforce or attempt to enforce this
Guarantee Agreement following any breach of this Guarantee Agreement, whether to
enforce it through legal trial or by any other means.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Applicable legislation and resolution of disputes. This Guarantee
Agreement will be governed by the laws of New York (excluding the principles of
choice of applicable jurisdiction under these laws). Any dispute between the
parties to this Guarantee Agreement will be resolved in accordance with the
procedures established in the provisions on conflict resolution included in the
Contract.
Section 4.2. Notifications. All notifications and other communications to the
State or the Guarantor will be made electronically or delivered in person to
either of the parties to this document at the addresses indicated in this
Section 4.2:
All communications for the State will be sent to:
[Address of the State]
Attention: [position or name]
Fax number:    [fax number]
All communications for the Guarantor will be sent to:
Name
Address
Attention: [position or name]
Fax number:[fax number]
or to any other address or fax number that either of the parties has notified to
the other in accordance with the provisions of this Section 4.2. All
communications for the Contractor will be sent in accordance with the
notification provisions included in the Contract.
For all of the purposes of this Guarantee Agreement, a notification or
communication will be considered valid if:
(a)
it is delivered in person, (i) on the day on which it is delivered, unless this
is not a Banking Day or (ii) if it is delivered after the closing time of a
Banking Day, the notification will be considered to have been received on the
next Banking Day, and

(b)
it is delivered by fax, on the date of sending, as shown by the 'fax sent'
confirmation generated by the fax machine of the sender, unless the date of
sending and confirmation is not a Banking Day or the time of confirmation is
after the closing time for that day, in which case the notification will be
considered to have been received on the next Banking Day.

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Section 4.3. Banking Days. Unless the opposite is stipulated in this Guarantee
Agreement, if a payment is to be made, a notification is to be delivered or any
other measure is to be taken under this agreement on a date which is not a
Banking Day, then this payment, notification or measure will be made, delivered
or taken on the following Banking Day and, in the case of any payment, interest
for late payment will not apply.
Section 4.4. Assignees and transferees. This Guarantee Agreement will be binding
for the Guarantor and its permitted assignees and transferees and will operate
to the benefit of the State and its permitted assignees and transferees. The
Guarantor may not transfer its obligations under this agreement without the
prior written consent of the State, on the condition that the State does not
withhold approval of a transferee if the proposed transferee possesses
consolidated net assets of not less than five (5) times the Maximum Amount. The
State may not cede, sell or transfer its rights or shares in this Guarantee
Agreement other than to an Affiliate of the State, and in the event of such a
concession, sale or transfer occurring, immediate written notification must be
sent to the Guarantor. If (i) the State or an Affiliate of the State sells,
transfers or cedes part or all of its share in the Contract to a person who is
not an Affiliate of the State or (ii) the State sells, transfers or cedes part
or all of this Affiliate of the State to a person who is not an Affiliate of the
State, then the Maximum Amount under this Guarantee Agreement will be reduced
proportionately from the date of this sale, transfer or cession and, in no
circumstances, will the Guarantor be liable to any transferee.
    Section 4.5. Guarantee to the benefit of the State. The Guarantor enters
into this Guarantee Agreement to the benefit of the State. None of the
provisions included in this agreement will be deemed to generate any right or
permit any Person to enforce or pursue any claim by virtue of this agreement or
to be, either partially or in whole, to the benefit of any Person, other than
the Guarantor, the State and their respective permitted assignees and
transferees.
Section 4.6. Duration. This Guarantee Agreement will end and cease to have force
when the first of the following dates occurs (a) the day on which the Contract
expires, or (b) the day on which the Maximum Amount under this Guarantee is
reduced to US$0 due to payment of the total amount, or (c) the day on which the
Contractor ceases to be an Affiliate of Ophir Energy. At the moment of its
cancellation or expiry, the original of this Guarantee Agreement will
immediately be returned to the Guarantor.
Section 4.7. Amendments and waivers. Any provision of this Guarantee Agreement
may be amended or waived if and only if the said amendment or waiver is made in
writing and signed by each party, the Guarantor and the State.
Section 4.8. Titles. The titles of the articles and sections of this Guarantee
Agreement have the sole purpose of contributing to its organisation and will not
affect its interpretation in any way.
Section 4.9. Partial invalidity. The lack of validity of one or more sentences,
phrases, clauses or sections of this Guarantee Agreement will not affect the
validity or enforceability of the other portions of this Guarantee Agreement or
of any of its constituent parts.
Section 4.10. No waiver, appeals. No omission or delay by the State in
exercising any right, power or privilege established in this agreement will be
considered to constitute a waiver thereof; likewise, nor will the partial
exercise of a single right, power or privilege exclude any other exercise or the
exercise of any other right, power or privilege. The appeals included in this
agreement are cumulative and do not exclude any other appeal contemplated in the
law.
Section 4.11. Integrity of the Agreement. This Guarantee Agreement constitutes
the whole agreement and commitment by the parties with respect to this issue and
replaces any prior oral and written statements in this regard; with the proviso
that, for greater security, the State and the Guarantor recognise that this
Guarantee Agreement does not have the purpose of amending and does not amend any
term or condition of the Contract.

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Section 4.12. Signature of several copies. Several examples of this Guarantee
Agreement may be signed and each of these will be considered to be an original
for any purpose. However, taken together, these copies will constitute a single
instrument. Sending the signature page of a signed copy of this Guarantee
Agreement by fax will have the same validity as manual delivery of a copy of
this signed Guarantee Agreement.
IN PROOF WHEREOF, THE PARTIES TO THIS AGREEMENT have caused this Guarantee
Agreement to be signed in their respective names and on their behalf by their
respective duly authorised officers on the date indicated on the first page
above.

(GUARANTOR)
 

By
 
 
[name]
[position]
 
 
 
 
 
 
[full name of Beneficiary]
 

By
 
 
[name]
[position]

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ANNEX D.2
GUARANTEE AGREEMENT – WORK OBLIGATIONS

This Annex forms an integral part of the Contract between the Republic of
Equatorial Guinea and the Contractor.

This Guarantee Agreement is celebrated on this [insert day] of [insert month and
year]
BETWEEN:
(1)     [THE GUARANTOR], a company established and existing under the laws of
[insert jurisdiction] with its registered address at [insert address] (the
“Guarantor”); and

(2)    THE REPUBLIC OF EQUATORIAL GUINEA (the “State”), represented for the
purposes of this Guarantee by the Ministry of Mines and Hydrocarbons (the
“Ministry”).
WHEREAS:
the Guarantor is the parent company or affiliate of [insert name], established
in accordance with the laws of [insert jurisdiction], with its registered
address at [insert address] (the "Contractor");
the Contractor has agreed a contract to participate in production (the
"Contract") with, among others, the State with respect to the Contract Area;
the Contractor has a Participation Interest under the Contract;
the State wishes the signature and performance of the Contract by the Contractor
to be guaranteed by the Guarantor and the Guarantor wishes to provide this
Guarantee as an incentive for the State to agree the Contract and in return for
the rights and benefits acquired by the Contractor under the contract; and
the Guarantor fully understands and wishes to guarantee certain contractual
obligations of the Contractor under the Contract.
AS A RESULT, taking into account the premises established in this document and
in exchange for a provision of security, the receipt and sufficiency of which
are demonstrated by this document, the Guarantor agrees and undertakes with the
Contractor as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Except where the contrary is specifically established
or where the context demands the contrary, the terms defined in this Section 1.1
and in the introduction will have, for all purposes of this Guarantee Agreement,
the meanings specified in this document. The following definitions apply both to
the singular and the plural form of any of the terms defined in this document:
Guarantee Agreement

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The term “Guarantee Agreement” refers to this Guarantee Agreement, as it was
originally signed and as it may, from time to time, be supplemented, modified or
amended in accordance with the provisions of this document.
Affiliate
The term “Affiliate” refers to a legal entity that Controls, or is Controlled
by, or is Controlled by an entity that Controls a Party.
Control
The term “Control” refers to direct or indirect ownership of more than fifty
(50) per cent of the voting rights of a corporation, company or other legal
entity. The terms deriving from the word “Control”, such as “Controls” and
“Controlled by" will have the same meaning.
Banking Day
The term "Banking Day" refers to any day, except a Saturday, Sunday or any other
day on which commercial banks whether in Malabo, Equatorial Guinea, or in
Houston (Texas) are authorised or obliged to remain closed.
Maximum Amount
The term “Maximum Amount” refers to the meaning stipulated in Section 3.1 of
this Guarantee Agreement.
Person
The term “Person” refers to any physical person, corporation, limited liability
company, company, participating company, association, public limited company,
trust, unincorporated organisation, or government or any government body,
authority or political subdivision.
Section 1.2. Other Terms Defined. The terms used with a capital letter which are
not otherwise defined in this Guarantee Agreement will have the same meaning as
that ascribed to them in the Contract.
ARTICLE II
DECLARATIONS OF THE GUARANTOR
Section 2.1. Declarations of the Guarantor. The Guarantor makes the following
declarations to the State:
(a) The Guarantor has been duly established and exists under the laws of its
place of establishment and enjoys all the faculties and corporate prerogatives
necessary to enter into this Guarantee Agreement and to implement and complete
all the transactions contemplated in this Agreement Guarantee.
(b) The agreement and delivery of this Agreement Guarantee and the completion of
all of the transactions contemplated within it will not come into conflict with
or constitute on the part of the Guarantor a violation or breach under the
founding documents, articles of association or any contract, or any other
important instrument or agreement to which the Guarantor is a party or to which
the goods of the Guarantor are bound, or any order, rule or regulation of any
court, government body or organ that has jurisdiction over the Guarantor or any
of its activities or goods.

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(c) This Guarantee Agreement has been duly authorised, signed and delivered by
the Guarantor and constitutes a valid and binding obligation for the Guarantor.
ARTICLE III
GUARANTEE AND AGREEMENTS
Section 3.1. Guarantee By virtue of this document, the Guarantor guarantees to
the State payment and timely compliance with all and any debts and obligations
of the Contractor with respect to the State that arise from the provisions of
the Contract as this obligations are defined under the Contract:
(a)
3.1.1

(b)
3.1.2

since the liability of the Guarantor with respect to the State established here
does not exceed the amounts for each period listed in the provisions of the
Contract listed above in this Section 3.1 (collective, the "Maximum Amount" for
the corresponding period covered);

and since for each of the periods covered by each of the provisions of the
Contract listed the Maximum Amount under this Guarantee Agreement will be
reduced after which the Guarantee will be notified in writing that the
Contractor has complied with some or all of the obligations guaranteed under the
corresponding provision of the Contract listed above in Section 3.1 of this
document, and this notification must be signed by an authorised signatory of the
State, which signature may not be unjustly withheld, and this will be accepted
as conclusive evidence that the events described in it occurred and that the
Maximum Amount is duly reduced. The notification will indicate the amount to
which the Amount should be reduced. The Guarantor will have the right to
consider this amount as conclusive and the Guarantee Agreement will be deemed to
be immediately reduced by this amount following receipt by the Guarantor of this
notification for the particular period applicable to the provision of the
Contract in particular. After entering the following period of the Contract and
in the event that operations must be performed under the following provision of
the Contract listed above in this Section 3.1, the Maximum Amount will be
reincorporated in the Maximum Amount required for this period of the Contract in
particular.

Section 3.2 Claim procedure. In the event of breach by the Contractor in the
performance of any of the obligations guaranteed under this agreement, in order
to submit a claim under this Guarantee Agreement, the State or its duly
authorised attorney must notify the Guarantor in writing of the amount owed and
of the other points provided in (a) to (d) below, and the Guarantor, within a
period of ten (10) Working Days, will pay or will cause payment in immediately
available funds of the said amount as notified, in Dollars, to the bank account
or other destination in [insert jurisdiction] designated by the State and
without any compensation or reduction of this amount with respect to any claim
that the Contractor may have at the time or subsequently. The State will supply
to the Guarantor, at the address of the Guarantor included in Section 4.2, a
written notification, signed by an authorised representative of the State (the
"Notification") of breach by the Contractor with respect to its obligations
established in the Contract, specifically indicating:
(a)
the clause(s) allegedly breached,

(b)
that the Contractor has failed to make timely payment or perform in a timely
manner all or some of its obligations under the Contract,

(c)
a description of the obligations breached and the amount that the Contractor
must pay as a consequence of said breach, and

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(d)
that the Contractor has not paid to the State the amount claimed, that the State
has notified the Contractor in writing of the lack of payment or breach and was
informed of the intention of the State to enforce this Guarantee Agreement.

Section 3.3 Waiver of notification, agreement of modifications. The Guarantor
waives the requirement to be notified of acceptance of this Guarantee Agreement
and of the status of indebtedness of the Contractor at any time, and expressly
agrees to any extension, renewal, modification or acceleration of the sums owed
to the State in accordance with the Contract or any of the terms thereof,
without this releasing the Guarantor of any of its responsibilities in
accordance with this Guarantee.
Section 3.4 Absolute and unconditional guarantee. The obligations of the
Guarantor, as established in Section 3.1 above, will be a an absolute and
unconditional guarantee of compliance and payment of the obligations that must
be performed strictly in accordance with the terms of the Contract and without
respect to those defensive measures that may be available to the Contractor,
including, among others, some of the following, with or without notice to or the
consent of the Guarantor:
(a) any modification, amendment, alteration, extension, tolerance, renunciation
of the term or concession (material or otherwise) granted to the Contractor;
(b) taking or not taking measures by the State against the Contractor;
(c) any breach, omission, delay or failure by the State in enforcing,
implementing or exercising any right, power or recourse that it may have against
the Contractor;
(d) the liquidation, dissolution, sale or other disposal, voluntary or
involuntary, of all or almost all of the assets, administration of assets and
liabilities, failure, insolvency, bankruptcy, transfer to the benefit of
creditors, reorganisation, settlement, agreement with creditors or readjustment
or other similar procedures that affect the Guarantor or Contractor or any of
the respective assets of either of them, or any accusation or claim with regard
to the validity of this Guarantee Agreement in any of these procedures;
(e) any defence based on a legal incapacity of the Contractor.
Section 3.5 Non exoneration of the Guarantor. The obligations of the Guarantor
under this Guarantee will not be extinguished or affected in any way by the
following: renunciation or delivery by the Contractor of the goods or other
guarantee held or acquired in the future for the payment of any of the
obligations guaranteed by this agreement; exchange, replacement or alteration of
these goods or another guarantee; taking or ceasing to take any measure or
action against the Contractor or the Guarantor with respect to these goods or
other guarantees; or any other circumstance that could constitute a defence or
exoneration, whether legal or in equivalence, of a guarantee.
Section 3.6 Prior actions of the State. The State will not be obliged in the
first instance to demand payment or compliance from the Contractor or any other
Person or to act against any good or security delivered to the State or to
perform any other action before having direct recourse to the Guarantor.
Section 3.7 Accumulation of rights. The rights, powers and remedies of the State
under this Guarantee are cumulative and not alternate and exist in addition to
any right, power or remedy granted to the State by the law or by any other
means.
Section 3.8 Continuity of the guarantee. This Guarantee Agreement is made with
the intention of granting a continuous guarantee of payment and compliance and
will also be considered as such; additionally, it will remain in full effect and
force while the Contract or any amendment to it are current or while any
liability or obligation of the Contractor to the State continues in accordance
with the Contract.

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Section 3.9 Substitution. So long as the debt guaranteed by this Guarantee has
not been paid in full, the Guarantor will have no right of substitution with
respect to any good, security, guarantee or other right that the State may have.
Section 3.10. Costs. If the State makes a successful legal claim against the
Guarantor, the Guarantor agrees to pay all the costs, fees and duties, including
the reasonable legal fees, which the State may have incurred to enforce or
attempt to enforce this Guarantee Agreement following any breach by the
Guarantor, whether to enforce it through legal trial or by any other means. If,
notwithstanding, the State makes a legal claim against the Guarantor and the
Guarantor is successful, the State agrees to pay all costs, fees and duties,
including the reasonable legal fees, which the State may have incurred to
enforce or attempt to enforce this Guarantee Agreement following any breach by
the Guarantor, whether to enforce it through legal trial or by any other means.
If the State makes a legal claim against the Guarantor and the decision favours
both the State and the Guarantor (divided decision), each party will be
responsible for its own costs, fees and duties, including the reasonable legal
fees, which each party may have incurred to enforce or attempt to enforce this
Guarantee Agreement following any breach of this Guarantee Agreement, whether to
enforce it through legal trial or by any other means.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Applicable legislation and resolution of disputes. This Guarantee
Agreement will be governed by the laws of New York (excluding the principles of
choice of applicable jurisdiction under these laws). Any dispute between the
parties to this Guarantee Agreement will be resolved in accordance with the
procedures established in the provisions on conflict resolution included in the
Contract.
Section 4.2. Notifications. All notifications and other communications to the
State or the Guarantor will be made electronically or delivered in person to
either of the parties to this document at the addresses indicated in this
Section 4.2:
All communications for the State will be sent to:
[Address of the State]
Attention: [position or name]
Fax number:    [fax number]
All communications for the Guarantor will be sent to:
Name
Address
Attention: [position or name]
Fax number:[fax number]
or to any other address or fax number that either of the parties has notified to
the other in accordance with the provisions of this Section 4.2. All
communications for the Contractor will be sent in accordance with the
notification provisions included in the Contract.
For all of the purposes of this Guarantee Agreement, a notification or
communication will be considered valid if:

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(a)
it is delivered in person, (i) on the day on which it is delivered, unless this
is not a Banking Day or (ii) if it is delivered after the closing time of a
Banking Day, the notification will be considered to have been received on the
next Banking Day, and

(b)
it is delivered by fax, on the date of sending, as shown by the 'fax sent'
confirmation generated by the fax machine of the sender, unless the date of
sending and confirmation is not a Banking Day or the time of confirmation is
after the closing time for that day, in which case the notification will be
considered to have been received on the next Banking Day.

Section 4.3. Banking Days. Unless the opposite is stipulated in this Guarantee
Agreement, if a payment is to be made, a notification is to be delivered or any
other measure is to be taken under this agreement on a date which is not a
Banking Day, then this payment, notification or measure will be made, delivered
or taken on the following Banking Day and, in the case of any payment, interest
for late payment will not apply.
Section 4.4. Assignees and transferees. This Guarantee Agreement will be binding
for the Guarantor and its permitted assignees and transferees and will operate
to the benefit of the State and its permitted assignees and transferees. The
Guarantor may not transfer its obligations under this agreement without the
prior written consent of the State, on the condition that the State does not
withhold approval of a transferee if the proposed transferee possesses
consolidated net assets of not less than five (5) times the Maximum Amount. The
State may not cede, sell or transfer its rights or shares in this Guarantee
Agreement other than to an Affiliate of the State, and in the event of such a
concession, sale or transfer occurring, immediate written notification must be
sent to the Guarantor. If (i) the State or an Affiliate of the State sells,
transfers or cedes part or all of its share in the Contract to a person who is
not an Affiliate of the State or (ii) the State sells, transfers or cedes part
or all of this Affiliate of the State to a person who is not an Affiliate of the
State, then the Maximum Amount under this Guarantee Agreement will be reduced
proportionately from the date of this sale, transfer or cession and, in no
circumstances, will the Guarantor be liable to any transferee.
Section 4.5. Guarantee to the benefit of the State. The Guarantor enters into
this Guarantee Agreement to the benefit of the State. None of the provisions
included in this agreement will be deemed to generate any right or permit any
Person to enforce or pursue any claim by virtue of this agreement or to be,
either partially or in whole, to the benefit of any Person, other than the
Guarantor, the State and their respective permitted assignees and transferees.
Section 4.6. Duration. This Guarantee Agreement will end and cease to have force
when the first of the following dates occurs (a) the day on which the Contract
expires, or (b) the day on which the Contractor ceases to be an Affiliate of
Ophir Energy. At the moment of its cancellation or expiry, the original of this
Guarantee Agreement will immediately be returned to the Guarantor.
Section 4.7. Amendments and waivers. Any provision of this Guarantee Agreement
may be amended or waived if and only if the said amendment or waiver is made in
writing and signed by each party, the Guarantor and the State.
Section 4.8. Titles. The titles of the articles and sections of this Guarantee
Agreement have the sole purpose of contributing to its organisation and will not
affect its interpretation in any way.
Section 4.9. Partial invalidity. The lack of validity of one or more sentences,
phrases, clauses or sections of this Guarantee Agreement will not affect the
validity or enforceability of the other portions of this Guarantee Agreement or
of any of its constituent parts.
Section 4.10. No waiver, appeals. No omission or delay by the State in
exercising any right, power or privilege established in this agreement will be
considered to constitute a waiver thereof; likewise, nor will the partial
exercise of a single right, power or privilege exclude any other exercise or the
exercise of any

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other right, power or privilege. The appeals included in this agreement are
cumulative and do not exclude any other appeal contemplated in the law.
Section 4.11. Integrity of the Agreement. This Guarantee Agreement constitutes
the whole agreement and commitment by the parties with respect to this issue and
replaces any prior oral and written statements in this regard; with the proviso
that, for greater security, the State and the Guarantor recognise that this
Guarantee Agreement does not have the purpose of amending and does not amend any
term or condition of the Contract.
Section 4.12. Signature of several copies. Several examples of this Guarantee
Agreement may be signed and each of these will be considered to be an original
for any purpose. However, taken together, these copies will constitute a single
instrument. Sending the signature page of a signed copy of this Guarantee
Agreement by fax will have the same validity as manual delivery of a copy of
this signed Guarantee Agreement.
IN PROOF WHEREOF, THE PARTIES TO THIS AGREEMENT have caused this Guarantee
Agreement to be signed in their respective names and on their behalf by their
respective duly authorised officers on the date indicated on the first page
above.
[GUARANTOR]
 
 
By
 
 
[name]
[position]
[full name of Beneficiary]
 

By
 
 
[name]
[position]

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