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EXHIBIT 10.59
 
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Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
 
ADDITIONAL No. 1
 
CONTRACT:
VSM-GPS-031-2011
   
PURPOSE:
BUY-SELL OF CHAZA AND GUAYUYACO CRUDE OIL
   
SELLER:
SOLANA PETROLEUM EXPLORATION COLOMBIA LIMITED.
   
BUYER:
ECOPETROL S.A
   
VALUE:
UNDETERMINED

 
The contracting parties: ECOPETROL S.A., a decentralized entity of national
order, incorporated by means of Law 165 of 1948, with Tax ID No.  899-999-068-1,
organized as a Mixed Economy Company according to the dispositions of article
No. 2 of Law 1118 of 2006, linked/related to the Ministry of Mines and Energy,
with domicile in Bogota D.C., hereinafter referred in this Additional as THE
BUYER, represented by CLAUDIA L. CASTELLANOS R, of age and domiciled in this
city, identified with citizenship card No. 63.314.635 issued in Bucaramanga, who
in capacity of VICE-PRESIDENT OF SUPPLY AND MARKETING and with authorization
contained in the Delegation Manual, acts on behalf of this Company, and on the
other hand, SOLANA PETROLEUM EXPLORATION COLOMBIA LIMITED, with Tax ID No.
830.051.027-8, hereinafter THE SELLER represented by HUGO RODRIGUEZ, identified
with citizenship card No. 3.093.980 issued in Colombia who acts in his capacity
as Legal Representative and is duly authorized to execute this Additional to
Contract VSM-GPS-031-2011,  as recorded in the attached incorporation and
representation certificate, who states that neither he nor the company he
represents are disqualified on grounds of disability or any inconsistency
according to the Constitution or the law, that might prevent them from entering
into this Additional.
 
Under the previous conditions, THE BUYER and THE SELLER together called the
Parties and individually the Party, agree to execute the Additional hereof
having considered the following:
 
 RECITALS AND REPRESENTATIONS
 
1.
That on June 27, 2005, the Agencia Nacional de Hidrocarburos and THE SELLER
entered into a Contract for the Exploration and Production of Hydrocarbons
called Chaza.

 
Page 1 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
2.
That on September 30, 2002, ECOPETROL S A and THE SELLER entered into an
Association Contract called Guayuyaco.

3.
That, THE SELLER holds 50% of the crude production resulting from field Chaza,
35% from field Guayuyaco, all percentages previously mentioned shall be after
deducting the percentage corresponding to the royalties.

4.
That on July 27 of the year two thousand eleven (2011), ECOPETROL S.A. and
SOLANA PETROLEUM EXPLORATION COLOMBIA LIMITED entered into contract
VSM-GPS-031-2011 whose purpose is the purchase of crude oil produced in the
Association Contract Guayuyaco, and the Chaza Block, hereinafter ther
“Contract”.

5.
That for purposes of the execution of this Additional, THE SELLER shall enter
into a contract with the VICE-PRESIDENCY  OF TRANSPORTATION AND LOGISTICS OF
ECOPETROL S.A. whose purpose is the transportation service of liquid
hydrocarbons in the Oleoducto Transandino – OTA.

6.
That the contract to be executed between THE SELLER and the VICE-PRESIDENCY  OF
TRANSPORTATION AND LOGISTICS OF ECOPETROL S.A. is an essential consideration for
the execution of this Additional.

7.
That considering that the date of termination for the Contract to be entered
into between THE SELLER and the VICE-PRESIDENCY OF TRANSPORTATION AND LOGISTICS
OF ECOPETROL S.A. is July 31, 2012, it is necessary to extend the term of the
Contract, and therefore this Additional No 1 is signed.

8.
That as a consequence of the execution of the mentioned transportation Contract,
the parties have considered the need to review and adjust the pricing formula,
the measurement of quality and quantity, the point of delivery of crude and the
schedule of deliveries initially defined in the original Contract.

9.
That in accordance with clause sixth-Point of Delivery, paragraph first, of
contract VSM-GPS-031-2011, “(…) Any of the Parties may propose a change or
addition of a Point of Delivery; in such case, the Parties by mutual agreement
shall define the new Point (s) of Delivery and the conditions governing them by
means of an amendment to be executed by the legal representatives of the
Parties”.

10.
That the administrator and the manager of contract VSM-GPS-031-2011, jointly
evaluated the necessity to modify the original contract by executing the
Additional No 1 hereof. Likewise, in compliance with the Procedure for
Contractor’s Performance (ECP-DAB-P-032), the latest partial performance
evaluation made to THE SELLER was presented.

11.
That for purposes of the execution of this Additional, THE BUYER previously
verified the Bulletin of Fiscal Responsibility developed and published by the
General Comptroller of the Republic, in which THE SELLER does not appear as one
of the people who have been determined by a judicial and firm decision as
fiscally responsible. Likewise, THE BUYER implemented the control mechanisms in
connection with the prevention for assets laundering and developed instruments
for the adequate implementation of the same in compliance with the Manual for
the Administration of the risk of Assets Laundering (AL) and the Financing of
Terrorism (FT).

 
Page 2 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
12.
That in accordance with the Delegations Manual to Contract of ECOPETROL S A, the
Vice-President of Supply and Marketing is competent entity to enter into this
Additional.

13.
That THE BUYER in its budget expenses has the respective budget availability for
the execution of the Additional contained hereof.

14.
That in accordance with the provisions contained in the Contracting Manual of
THE BUYER and having analyzed the nature and manner of implementing the
performance of the Parties on the occasion of this Additional to the sales of
crude oil, the Authorized Officer has classified the risk as low, and therefore
dispenses the need to require a guarantee from THE SELLER.

 
15.
That considering the contractual planning, the areas of Labor Relations, the
Unit of Risks Management, the Corporate Unit for Budget and Financial Analysis
and the Accounting and Tax Coordination of ECOPETROL S.A. were consulted, in
order to avoid any labor, tax, environmental, and other risks that may be
generated for the Company as a result of the execution and implementation of
this Additional.

 
16.
That in compliance with the guidelines for the prevention of Assets Laundering
and the Financing of Terrorism adopted by THE BUYER, the Legal Representative of
THE SELLER represents under the seriousness of oath and subject to the sanctions
of the Colombian Criminal Code:

 
 
I.
That my funds (or the funds of the entity I represent) are generated in legal
activities and are linked to the normal development of my activities (or
activities inherent to the corporate purpose of the company represented), and
otherwise, said funds do not come from any illegal activity as contemplated in
the Colombian Criminal Code or in any regulation that substitutes, adds or
amends it.

 
II.
That I (or the entity I represent) have not made any transactions or operations
destined to illegal activities as contemplated in the Colombian Criminal Code or
in any regulation that substitutes, adds or amends it, or in favor of persons in
connection with said activities.

 
III.
That the funds committed in the contract VSM-GPS-031-2011 or in the legal
relation with THE BUYER do not come from any illegal activity as contemplated in
the Colombian Criminal Code or in any regulation that substitutes, adds or
amends it.

 
Page 3 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
 
IV.
That in the execution of the contract VSM-GPS-031-2011 or in the legal relation
with THE BUYER, I will not contract or have any relations with any third parties
that carry out operations or whose funds are coming from illegal activities as
contemplated in the Colombian Criminal Code or in any regulation that
substitutes, adds or amends it.

 
V.
That the entity I represent complies with all regulations on prevention and
control to assets laundering and the financing of terrorism) AL/FT) as may be
applicable (as the case might be), having implemented the policies, procedures
and mechanisms for the prevention and control to AL/FT derived from said legal
provisions. A model of certification is attached in annex 1.

 
VI.
That neither I, nor the entity I represent, nor its shareholders, associates or
partners that directly or indirectly hold FIVE PER CENT (5%) or more of the
corporate capital, contribution or participation, or its legal representatives
and members of the Board of Directors are in the international listings related
to Colombia in accordance with international law (United Nations listings) or in
the OFAC listings, being THE BUYER authorized to conduct the verifications as
deemed pertinent and to terminate any commercial or legal relationship if proved
that any of such persons are found in said listings. A model of certification is
attached in annex 2.

 
VII.
That there are no investigations or criminal proceedings for any offenses of
willful misconduct against me or against the entity I represent, its
shareholders or partners, that directly or indirectly hold FIVE PER CENT (5%) or
more of the corporate capital, contributions or participation, or its legal
representatives and its members of the Board of Directors, being THE BUYER
authorized to make the verifications as deemed pertinent in data bases or in
local or international public information or tot terminate any commercial or
legal relationship if proved that against any of such persons there are
investigations or proceedings or the existence of information in said public
data bases that may place THE BUYER in front of a legal or reputational risk.

 
VIII.
That in the event of occurrence of any of the circumstances described in the two
paragraphs above, the commitment is to communicate it immediately to THE BUYER.

 
IX.
That with the signature of this document, it is understood that, both me as well
as the natural or legal person represented, grant our informed consent, and
therefore, authorize THE BUYER to communicate to the local authorities or the
authorities of any of the countries in which THE BUYER conducts operations, on
any of the situations described in this document, as well as to provide to the
competent authorities of such countries all the personal, public and private
information, as required from me or the natural or legal person represented; and
likewise for THE BUYER to make the reports to the competent authorities as
considered pertinent in accordance with its regulations and manuals in
connection with its system of prevention and/or management the risk of assets
laundering and the financing of terrorism, waving it from any responsibility for
such action.

 
X.
That all the documentation and information provided for entering into and
execution of the contract or legal business with THE BUYER is true and accurate,
being THE BUYER authorized to make any verifications as deemed pertinent and to
terminate the contract or legal business if proved or becomes aware otherwise.

 
Page 4 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
 
XI.
That no other natural or legal person has any non-legitimate interest in the
contract or legal business that motivates the subscription of the statement
hereof.

 
XII.
That I am aware, represent and accept that THE BUYER has the legal obligation to
request any clarifications as deemed pertinent in the event of circumstances
based on which THE BUYER may have reasonable doubts concerning my operations or
the operations of the natural or legal person I represent, as well as the origin
of our assets, in which case we are committed to provide the respective
clarifications. If these are not satisfactory under THE BUYER’S criteria, we
authorize to terminate the commercial or legal relation.

 
Based on the above, the Parties,
 
AGREE
 
CLAUSE FIRST. Modify CLAUSE SECOND. PRICE of the contract VSM-GPS-031-2011,
which shall be as follows:
 
“CLAUSE SECOND. PRICE: The price to be paid for the crude oil of this Contract,
placed at the Delivery Point (s) indicated in clause sixth of this document
shall be established as the monthly average corresponding to the month of the
delivery of crude oil for the different components which comprise the following
formula(s):
 
A. For crude oil exported as Southblend by the port of Tumaco and received at
the Tumaco Plant:
 

 
Crude Price =
Marker – Port Operation Fee – Commercialization Fee

 
Each of the above terms are defined as follows:
 
Marker: Corresponds to the average export price of THE BUYER of the South Blend
Mix by the Port of Tumaco negotiated for the month of crude deliveries. The
price reported by THE BUYER will be the value reviewed and approved by the
Management of International Commerce of ECOPETROL S.A. The reference quality of
the South Blend mix is 29.3° API and 0.62% Sulfur (S).
 
Port Operation Fee: Corresponds to a value of cero point seventy sixteen cents
of US dollars per barrel (US$/Bl 0.7016), which covers the loading operation
from the reception of the product at the port to the delivery by the line to the
platform or Mono-buoy, respectively.
 
Page 5 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
Commercialization Fee: Corresponds to the value of one dollar and fifty cents of
US dollars per barrel (US$/Bl 1,50).
 
 
B.
For crude exported as “Oriente” crude through Ecuador:

 

 
Crude Price =
Marker – Transportation (Site of Delivery /Loading Port) –Transportation
Tax  –Commercialization Fee

 
Each of the above terms is defined as follows:
 
Marker: Corresponds to the real weighted average price of exports made by THE
BUYER of Crude Oriente through the port of Balao.
 
Transportation (Site of Delivery /Loading Port): It is determined as the sum of
the following rates:
 
TRANSPORT SYSTEM
APPROVING RESOLUTION
 APPROVED
 RATE
(USD/Bl)
 Orito – San Miguel (OSO)
124572
2.262
 La Ye - Orito (OMO)
124560
0.5192

 
 
•
Additionally, the fee charged by PETROECUADOR for crude transportation between
San Miguel and the port of Balao.

 
Transportation Tax: It is determined according to the provisions in Article 52
of the Petroleum Code of Colombia for transportation systems indicated in the
previous point. For the Ecuador trench the respective tax, if applicable, shall
be taken into account from the delivery site to the loading port.
 
Commercialization Fee: Corresponds to the value of one dollar and fifty cents of
US dollars per barrel (US$/Bl 1.5).
 
 
C.
For crude oil delivered at the DINA Station for export by the port of Coveñas or
for refining:

 
Page 6 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 

 
Crude Price  =
 Marker +/- Adjustment for Quality – Transportation (Site of Delivery/Port of
Loading) – Transportation Tax –Commercialization Fee – Port Operation Fee.

 
Each of the above terms is defined as follows:
 
Marker: Corresponds to the average price of export of Grupo Empresarial of
export crude mix Vasconia by the Port of Coveñas negotiated for the month of
delivery. THE BUYER shall report this value. The quality reference for Vasconia
crude is 24.8° API and 0.97 % Sulphur (S).  In case the Grupo Empresarial
Ecopetrol does not make any exports in the month of deliveries, the marker
discount shall correspond to the average export discount of Crude export mix
Vasconia reported by Argus and Platts for the month minus 1 of deliveries. THE
BUYER shall report this value monthly.
 
Adjustment for Quality: Monthly compared in terms of API and sulfur %  the
marker qualities and crude purchased, applying bonuses or penalties to the price
depending on whether or not the quality is better or worse than the marker, as
follows:
 
 
·
Correction for API: +/- 0.53 US$/Unit of API or prorated by fraction. Price
adjustments shall be positive for API gravities of crude above the reference
value for marker crude and negative for lower gravities.

 
 
·
Correction for sulfur: +/- 1,98 US$/Unit of % of sulfur in weight or prorated by
fraction. Price adjustments shall be positive for percentages of sulfur in the
crude below the reference value for marker crude and negative for higher values.

 
The mentioned adjustments for quality (Gravity API and Sulfur) shall be made
only if the average daily deliveries of crude owned by THE SELLER (In volume) is
higher than 10% of the daily average of total exports of Vasconia Mix of
ECOPETROL S.A. by the port of Coveñas for the month of deliveries.
 
Transportation (Site of Delivery/Port of Loading): This is determined as the sum
of the fees established by the Ministry of Mines and Energy for pipelines
between Tenay and Coveñas. The transportation fees for pipelines are updated at
the beginning of each year by the “Phi” Factor as indicated by the Ministry of
Mines and Energy. The applicable fees for the year 2011 are:
 
 
Section
 
Base100% Fee Year 2011
 MME US$/Bl
 
Tenay – Vasconia
    1.4163  
Vasconia – Coveñas ODC
    1.60  
Total Transportation
    3.0163  

 
Page 7of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
Transportation Tax: It is determined according to the provisions in Article 52
of the Petroleum Code of Colombia (or the regulation that modifies it) for
transportation systems indicated in the previous point based on the following
detail:
 
Section
 
Fee MME US$/Bl
   
% Transportation Tax
   
Transportation Tax US$/Bl
 
Tenay – Vasconia
    1.4163       6 %     0.085  
Vasconia – Coveñas ODC
    1.60       6 %     0.096  
Total Tax
    3.0163               0.181  

 
Commercialization Fee: Corresponds to the value of one dollar and fifty cents of
US dollars per barrel (US$/Bl 1.5).
 
Port Operation Fee: Corresponds to a value of cero point fifty nine eighty one
cents of US dollars per barrel (US$/Bl 0.5981) which covers the loading
operation from the reception of the product at the port to the delivery by the
line to the platform or Mono-buoy, respectively.
 
FIRST PARAGRAPH: The price determined by the aforementioned formula comprises
the different costs generated until the delivery of the crudes being the purpose
of this Contract at the Delivery Point(s); therefore THE BUYER shall not make
any additional disount on the aforementioned items.
 
SECOND PARAGRAPH: When the parties agree on delivery point(s) different from
those established in clause sixth (6th), the price formula set out in this
clause shall be modified in the transportation item, taking into account the
fees and transportation tax of crude for the pipeline in force between the
delivery point(s) and the export port that applies. Additionally, the marker
shall be modified as the case may be by previous  agreement between the Parties.
 
THIRD PARAGRAPH: The reception and inspection costs in the case of stations
agreed between the parties and not operated by ECOPETROL S A, shall be
recognized directly by THE SELLER to the respective operating company. THE BUYER
shall not make any additional acknowledgment on said items.
 
FOURTH PARAGRAPH: PRICE RENEGOTIATION. The parties may request a review of the
price established in this clause provided that any of the following events
occur:
 
Page 8 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
a) A change of more or less two (2) API grades in the quality of crude oil
produced in the  field/area/block contracted.
 
b) A change of more or less two (2) API grades in the quaity of Marker Crude
during three (3)  consecutive months . In this event the request for review
shall be made during the following month to the period of three (3) consecutive
months.
 
c) In the event the Marker Crude disappears and it becomes necessary to define a
new Marker.
 
The Parties shall have a term of thirty (30) business days to negotiate. In case
of reaching an agreement, this shall be stated for the record by signing an
Additional between THE BUYER and THE SELLER and its contents shall apply from
the day after the date in which said Additional is executed.
 
If, at the end of thirty (30) business days there is not an agreement, THE BUYER
or THE SELLER may inform to the other, its intention to terminate the Contract
VSM-GPS-031-2011 pursuant to clause Twenty Second of this Contract.
 
The termination is not a waiver for the Parties to fulfill the obligations that
may have been caused.
 
FIFTH PARAGRAPH: API and Sulfur coefficients of adjustments for quality referred
to in this clause shall be reviewed each year after the signature of the
Contract hereof. Any changes in the coefficients shall be stated for the record
by signing an Additional between THE BUYER and THE SELLER and its contents shall
apply from the day after the date in which said Additional is executed.
 
SIXTH PARAGRAPH: QUALITY SPECIFICATIONS. THE BUYER shall certify the quality of
crude received on the site of delivery as indicated in clause sixth and the
following quality specifications shall be fulfilled:
 
 
 Field/Contract
 ° API
 Minimum
 SULFUR (% en
    peso)
 Maximum
 BSW (% en
  volumen)
 Maximum
 SALT 
  (Lb/1000Bls)    
 Maximum
 Santana and Guayuyaco
29.0°
0.7
0.5
20.0
 Chaza
29.0°
0.41
0.5
20.0

 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
 
1.
The crude density shall be determined by the laboratory method ASTM-D-1298
(Method to determine density, specific density (specific Gravity) or API Gravity
or crude and liquid petroleum products by the Hydrometer method).

 
2.
The water and content sediment, BSW, shall be determined by the methods:

Water in suspension ASTM-D4377 “Method to determine water in crude oils by
potentiometric titration Karl Fisher and
Sediments ASTM-D473 “Method to determine sediments in crude and fuel oils by
extraction”,
For content of water and sediments in crude individual maximum values shall be
accepted of: 0.5% in volume for water and 0.01% in volume for sediments.
 
3.
The sulfur content shall be determined by the method ASTM-D4294 “Method to
determine sulfur in crude and oil products by dispersive energy of X rays of
spectrometry of fluorescence”.

 
4.
The salt content shall be determined by the method ASTM-D3230 “Method to
determine salt in crudes by the electrometric method”.

 
When specifications of BSW, Salt and sulfur herein indicated are not within the
allowed margin,
THE BUYER reserves the right to receive crude oils and buy them with an adjusted
price, Corrections for BSW and Salt shall be applied according to the following
tables:
 
BSW Content
% in Volume
Correction (US$/Barrel)
Assumed by
0.51 to 0.80
0.10
THE SELLER
0.81 to 1.00
0.20
THE SELLER
1.01 to 1.20
0.30
THE SELLER
1.21 to 1.50
0.40
THE SELLER
>than 1.51
Rejected
 
 Salt Content
Libras por cada mil Barriles
Correction  (US$/Barril)
Assumed by
20.1 to 30.0
0.160
THE SELLER
30.1 to 40.0
0.180
THE SELLER
40.1 to 60.0
0.200
THE SELLER
60.1 to 80.0
0.220
THE SELLER
80.1 to 100.0
0.240
THE SELLER
>than 100.0
Rejected
 

 
Page 10 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606

 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
It is understood that THE SELLER shall make its best efforts to deliver the
crude oils being the purpose of this Contract VSM-GPS-031-2011 with the BSW and
Salt contents within the parameters agreed. These corrections shall be applied
to daily deliveries for each batch delivered.
 
In case the crude deliveries exceed the maximum values of table (1.51 % BSW and
100 pounds per thousand barrels of slat), and if THE BUYER decides to choose the
reception of crude, the Parties shall agree on the value of the corresponding
correction which shall be stated for the record in a Minutes/Additional signed
by the parties. In case an agreement is not reached, THE BUYER may reject the
crude.
 
SEVENTH PARAGRAPH: Reimbursable Expenses: Reimbursable expenses shall not be
higher than forty million pesos (COP$40,000,000) before VAT and THE BUYER shall
have to previously authorize and approve them. This shall include only and
exclusively the cost of the independent inspector referred to in Paragraph
Second of clause Fifth of Contract VSM-GPS-031-2011.

The amount of reimbursable expenses shall not be part of the value of Contract
VSM-GPS-031-2011. The handling of reimbursable expenses shall be made in
accordance with the current procedures that THE BUYER has for this kind of
expenses (annex 3).”
 
CLAUSE SECOND: Modify CLÁUSULA THIRD. INVOICING AND PAYMENT of contract
VSM-GPS-031-2011, which shall be as follows:
 
“CLAUSE THIRD. INVOICING AND PAYMENT: THE SELLER shall invoice and charge THE
BUYER the value of the crude sold according to the terms of this document, at
the Planning and Supply Management Office in Bogotá, within the first ten (10)
business days of the month, after the month of the delivery of crude to THE
BUYER. Within the first seven (7) calendar days of the month after the
deliveries, THE BUYER shall provide THE SELLER the information the latter may
require to make the corresponding invoice. Invoices shall be filed at the
Planning and Supply Management Offices of THE BUYER in Bogotá and its date of
presentation valid for the payment shall be the date of reception at the
accounts payable office of THE BUYER in Bogotá. The invoicing shall be made
based on the net volumes, free of water and sediment, corrected at sixty (60)
Fahrenheit degrees received at the Delivery Point. For invoice approval it is
necessary to present the official forms Table No 4 and/or Form No. 9SH from the
Ministry of Mines and Energy.   Provisional Table No 4 and forms may be
accepted, but quarterly, THE SELLER shall submit to THE BUYER copy of Tables No
4 and/or Form No. 9SH of the previous quarter duly filled in and signed by the
Ministry of Mines and Energy.
 
Considering the authorization of payments in foreign exchange stated in article
51 of External Resolution Number 8 of 2000 of the Board of Directors of the
Central Bank, which provides that the purchase-sales of crude oil and natural
gas produced in the country may be paid in foreign exchange by THE BUYER and all
other entities engaged in the industrial activity of refining oil, the invoicing
made by THE SELLER for the provision of crude to THE BUYER shall be made  in
dollars of the United States of America.
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606

 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
In all cases payment shall be made thirty (30) calendar days after the filing of
the invoices duly filled in, and after any legal withholdings, if applicable.
THE SELLER shall communicate to THE BUYER in advance, and in writing, the bank
account in which the respective payment shall be made.
 
FIRST PARAGRAPH: THE BUYER shall have a period of ten (10) business days,
counted as of the reception of the invoices for the sale of crude oil, to review
or object them. In case of any objections on the invoices, the date of reception
shall be the date of filing of the new invoice. THE BUYER shall inform THE
SELLER within the term established of any invoice objected, so that it may be
adjusted and corrected, clearly specifying the items to be adjusted or corrected
and the corresponding motives. THE SELLER shall respond any objection within ten
(10) business days after reception of the same, counted as of the time in which
THE BUYER submits to THE SELLER all documents supporting the objection, unless
the Parties determine by common agreement to extend this term, if the complexity
of the objection or any other circumstance thus requires so.
 
In case THE SELLER fails to respond the objection within the term described, the
objection shall be understood as accepted by THE SELLER. If THE SELLER resolves
the objection in favor of THE BUYER, it shall be understood that there was no
payment obligation on the invoice originally filed, being the purpose of the
objection. If THE SELLER resolves the objection in its favor, THE BUYER shall be
obliged to pay the amount unpaid. In order to resolve any discrepancy, each of
the Parties shall submit to the other Party copy of the documents, which
originated the invoice and the objection. In the event THE BUYER is in
disagreement with the decision of THE SELLER, the former may apply the
provisions in clause seventeenth of this document.
 
SECOND PARAGRAPH: For deliveries made for export through the Port of Tumaco, the
invoicing shall be based on the final volumes invoiced in the previous month or
the last month in which deliveries have been made in each point, afterwards and
after completion of the volumetric compensation and the publication of the
results the respective adjustment shall be made.
 
THIRD PARAGRAPH: In case of any unjustified delay in the payment of invoices not
objected on time by THE BUYER, in accordance with the provisions in the first
paragraph of this article, THE BUYER shall recognize to THE SELLER, as interest
payable in pesos, the highest interest rate authorized by the Superintendence of
Finance during the default days effectively elapsed.
 
Page 12 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
In order to calculate the late interests, the amount of the overdue invoice(s)
in dollars shall be first converted to Colombian pesos at the market
representative exchange rate, on their date of issuance, as per certification of
the Superintendence of Finance of Colombia.
 
THE BUYER shall pay the invoices charging late interests thirty (30) calendar
days after their reception by THE BUYER.
 
Both THE BUYER and THE SELLER understand that the invoices issued as well as the
Contract hereof shall be a writ of execution and THE BUYER and SELLER expressly
wave any private or judicial requirements to file as default.
 
FOURTH PARAGRAPH: In case THE SELLER is interested in any factoring with the
invoices issued in connection with this Commercial Offer, the option in first
instance shall be offered to THE BUYER.”

 
CLAUSE THIRD: Modify CLAUSE FOURTH. TERM of the Contract VSM-GPS-031-2011, which
shall be as follows:
 
“CLAUSE FOURTH. TERM OF THE CONTRACT: The term of the Contract shall commence
with the fulfillment of the requirement of its perfection and shall comprise the
term of execution and the liquidation.
 
The term of execution of the Contract shall be counted upon compliance with the
requirement for execution set forth in clause Fifteenth and shall terminate on
july 31st of two thousand twelve (2012).
 
The parties shall carry out the respective minutes of iquidation within a term
of four (4) months counted as of the date of termination of the term of
execution of the Contract.
 
In case THE SELLER fails to attend the liquidation, or if there is no agreement
on the content of the same within the term previously mentioned, THE SELLER
expressly authorizes THE BUYER to proceed and carry out the unilateral
liquidation in a term of two (2) months.”
 
CLAUSE FOURTH: Modify CLAUSE FIFTH. INSPECTION AND MEASUREMENT of contract
VSM-GPS-031-2011, which shall be as follows:
 
Page 13 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
“CLAUSE FIFTH. INSPECTION AND MEASUREMENT.  The  volume and quality shall be
measured at the Delivery Point (s) defined in clause Sixth, and shall be
conducted following the operational procedures established in the Measurement
Manual of ECOPETROL S.A. (hereinafter the “MMH”), attached herein as Annex 4. In
case of Additionals, additions or suppressions to the MMH, THE BUYER shall
notify THE SELLER of such changes, which shall be mandatory since its
notification. Qualified personnel shall conduct the measurements of volume and
quality. THE BUYER’S or its associates stations or departments where the crude
oil is received, shall certify the volume and quality (API, BSW and Salt) of the
crude oil received daily at said locations. In the case of deliveries in Tumaco,
whose volumes and quality are determined through volumetric compensation, the
measurement for sulfur content shall also be conducted.
 
FIRST PARAGRAPH: MEASURMENT OF VOLUME. The final volume to be purchased shall be
calculated as Net Standard Volume (NSV) and shall be understood as the total
volume of all oil liquids excluding sediment and water (BSW) at a standard
temperature of 60º F. The measurment may be conducted with static or dynamic
measurment applying the methods described in the MMH. The volume upon which the
crude delivered by THE SELLER at the inlet flange in the Plant of Tumaco will be
calculated shall be the resulting volume after the application of the volumetric
compensation and sent by the Vice-presidency of Transportation and Logistics.
For crudes delivered at the inlet flange to the tanks of the Orito Station for
crude exported as Oriente Crude for Ecuador and for crudes delivered at the Dina
Station it shall be made according to the invoicing and payment Clause.
 
SECOND PARAGRAPH: MEASUREMENT OF QUALITY. The measurment of quality shall allow
the real determination of the characteristics of the crude being the purpose o
fthe Contract hereto. A representative sample shall be taken for its
determination as described in the MMH, Chapters 8, 9, 10 and 14, and shall be
used to establish the deviations which may affect the price of the crude oil.
 
The sulfur content of crude oil(s) for billing purposes will be the value
reported by the Colombian Petroleum Institute (CPI) in accordance with the
analysis made each semester by that  institute performed for each crude oil. THE
BUYER will update this information each semester to be delivered to THE SELLER.
In the event that such sulfur content analysis is not available, the sulfur
content for billing purposes will be the one established in the Sixth Paragraph
of clause First of this document, which will be in force until the CPI performs
a new analysis, which will be informed to THE SELLER by THE BUYER. From the day
following the receipt by THE SELLER of the analysis performed by CPI, the sulfur
content for billing purposes will be the one established by THE BUYER in such
report. When any of the parties considers appropriate, may request the
performance by CPI of a new analysis of sulfur contents.
 
Page 14 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
THIRD PARAGRAPH: SULFUR CONTENT FOR CRUDE DELIVERED AT THE TUMACO PLANT: For
crude delivered at the Tumaco Plant for export South Blend Mix, the sulfur
content shall be measured at the inlet points of each crude to the respective
mix stream, in this case, the sulfur content shall be rewarded or punished in
accordance with the standards of the volumetric compensation calculated by the
Vice-presidency of Transportation and Logistics.
 
When deemed appropriate, any of the parties may appoint an independent inspector
to certify the quality and quantity and verify the capacity of the tanks or the
calibration of the measurement and volume instruments. The costs of such
analysis or inspections will be shared equally between THE BUYER and THE SELLER.

 
THE SELLER shall be in charge of making the payment of the independent
inspector. THE BUYER shall pay THE SELLER one half of its share corresponding to
the billing(s) of the independent inspector as a reimbursable expense pursuant
to Paragraph Seventh of clause First.”
 
CLAUSE FIFTH: Modify CLAUSE SIXTH. POINT(S) OF DELIVERY of contract
VSM-GPS-031-2011, which shall be as follows:
 
“CLAUSE SIXTH. POINT (S) OF DELIVERY: THE BUYER and THE SELLER agree that the
Delivery Point(s) and the transfer of the crude oil property right, purpose of
this sales agreement will be: i) the inlet flange to the tanks at the Tumaco
Plant for crude exported as South Blend by Tumaco, ii) the inlet flange for
unloading tankers at the Dina Station for crude purchased for export by the port
of Coveñas or for refining. In all these points, the delivery shall be made of
the measurement of the tanks and/or flow meter in accordance with the procedures
set out in clause fifth of contract VSM-GPS-031-2011.
 
THE SELLER transfers to THE BUYER the crude oil property right at the Delivery
Point(s). THE SELLER guarantees at the moment of delivery that the crude oil is
free of any liens or financial claims by any government entity of any level, or
of any natural or legal person of private law, in every respect, including those
arising from taxes, rates, contributions, participation or royalties, domain
limitation or any other judicial or extrajudicial measure that may restrict or
limit the use or availability of the crude oil by THE BUYER. The costs
associated with the transportation of the crude oil to the Delivery Points,
along with the costs associated to the delivery of the crude oil, will be borne
by THE SELLER.
 
PARÁGRAFO PRIMERO: Any of the Parties may propose a change or addition of a
Point of Delivery; in such case, the Parties by mutual agreement shall define
the new Point (s) of Delivery and the conditions governing them by means of an
Additional to be executed by the legal representatives of the Parties.
 
Page 15 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
SECOND PARAGRAPH: The volumes to be received at the station established in this
clause will be determined on a monthly basis in accordance with the official
transportation schedule established by THE BUYER.”
 
CLAUSE SIXTH: Modify CLAUSE SEVENTH. SCHEDULE OF DELIVERIES of contract
VSM-GPS-031-2011, which shall be as follows:
 
“CLAUSE SEVENTH. SCHEDULE OF DELIVERIES: For deliveries at the inlet flange to
the tanks of Tumaco Plant for crude exported as South Blend, the parties
acknowledge and accept that the schedule of deliveries established by virtues of
the contract hereof is subject to the commitments agreed in the transportation
contract entered into by THE SELLER and the VICE-PRESIDENCY OF TRANSPORTATION
AND LOGISTICS OF ECOPETROL S A, and of which the Regulations for Operation and
Transportation is part of said contract. In consequence, THE SELLER shall make
the nomination of crude oil to be transported and delivered pursuant to the
terms and conditions defined in clause 8 of the Manual of the Transporter of
Pipelines of Ecopetrol. Likewise, the volumes to be received by THE BUYER shall
be those approved by the TRANSPORTER pursuant to clause 8 numeral 8.4.1., of the
Manual of the Transporter of Pipelines of Ecopetrol.
 
For deliveries at the inlet flange to the tanks of the Orito Station for crude
exported as Oriente Crude through Ecuador as well as in the line of unloading of
tanker s of the Dina Station for crude bought for export by the port of Coveñas
or for refining, THE SELLER shall deliver to THE BUYER at the latest on the
fifth (5th) calendar day of each month an estimated schedule of production and
deliveries for the following quarter. THE BUYER shall have five (5) business
days to report to THE SELLER the final or partial acceptance of the schedule
presented. If THE SELLER does not receive any ansuwer from THE BUYER, within the
term indicated, it shall be understood in its totality the schedule of
deliveries. In case of partial acceptance of the schedule of deliveries, THE
SELLER may dispose of and/or sell the crude not accepted.  Considering that the
previous information is a basic premise for THE BUYER’S planning process, THE
BUYER may refrain from receiving the crude in case THE SELLER fails to provide
the schedule within the term indicated. Depending on the operation and
restriction to the transportation in truck-tankers the Parties may agree on any
modifications and adjustments to the delivery plan, for which a written
communication between the parties shall be sufficient.
 
THE SELLER is bound to supply and keep track of the information of production on
the field, liquidation of royalties, shipment by tank truck and/or pipelines,
and indicate the participation and the property right on each, and the official
receipt of the receiving station. For this purpose, THE SELLER shall send to THE
BUYER on a daily basis the information requested, through THE BUYER’S volumetric
integrator, which is available at THE BUYER’S web site. Copy of the Users Manual
is attached herein as Annex 5.
 
Page 16 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
In the event that within the agreed term THE BUYER cannot receive at the
Delivery Point(s) the total amount of crude oil, THE SELLER will be informed
with at least three (3) calendar days in advance, and as soon as the contingency
is solved, THE BUYER will inform the date to resume the receiving.
 
Likewise, in the event that for reasons associated to the operation of the
filed, THE SELLER cannot deliver the crude oil to THE BUYER on any of the dates
established in the schedule, THE SELLER shall inform THE BUYER in writing with
three (3) calendar days in advance to the corresponding delivery date, and as
soon as the contingency is overcome, THE SELLER will inform the date to resume
the deliveries.
 
In case of indicating a different site for the reception of crude, the parties
shall made the adjustments set forth in the item of transportation and
transportation tax of the formulas defined in clause Second based on the higher
or lower value that transportation may have to the new Point(s) of Delivery
defined by THE BUYER, considering for such purpose the current transportation
fees at the time of occurrence of the situation. All the foregoing shall be
stated for the record in a minutes or Additional executed by the Parties for
such purpose.”
 
CLAUSE SEVENTH: This Additional does not imply a novation of the contract
VSM-GPS-031-2011, which clauses continue in force except for what was expressly
modified by this document.
 
CLAUSE EIGHTH: PUBLICATION: The payment of the publication of this Additional in
the Public Contracts Newspaper (Diario Único de Contratación Pública) shall be
borne by THE SELLER and shall be a requirement for the execution of the
Additional. THE SELLER shall deliver to THE BUYER a copy of the respective
deposit within ten (10) business days after the signature of the Additional
hereof. Upon delivery of the corresponding receipt for the payment of said
rights, THE BUYER shall submit to the National Print Office of Colombia in an
original the Extract of Publication within ten (10) days after said delivery.
 
CLAUSE NINTH: TAXES: All taxes, that are caused by the execution, formalization,
implementation and termination or liquidation of this Additional with the
exception of those strictly corresponding to THE BUYER, shall be borne by THE
SELLER. THE BUYER shall carry out any withholding taxes on the accounts of THE
SELLER as set forth by law.
 
CLAUSE TENTH: The Parties agree to give to the agreements contained hereinto the
meaning of a transaction, pursuant to the provisions set forth in the
regulations in force, thus, maintaining the contractual, economic and financial
balance of the Contract VSM-GPS-031-2011.
 
Page 17 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
CLAUSE ELEVENTH: The Additional herof is perfected with subscription of the same
by the Parties.
 
In witness whereof, the Parties hereto have caused this Additional to be duly
executed in Bogotá D.C. on the 30th day of the month of January of the year two
thousand and twelve (2012), in two copies of the same content.
 
 THE SELLER
 THE BUYER
 
/s/ Hugo Rodriguez
 
HUGO RODRIGUEZ
 Legal Representative
 
 /s/ Claudia L. Castellanos R.
 
 CLAUDIA L. CASTELLANOS R. Vice-
president of Supply and Marketing

 
ANNEX 1.  Model of certification of application of AL/FT regulations for
companies obliged to adopt systems of AL/FT prevention
ANNEX 2. Certificate of shareholder’s interests for associates, shareholders or
partners holding more than five (5%) of interest in the corporate capital.
 
Page 18 of 20
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
ANNEX No. 1
 
MODEL OF CERTIFICATION OF APPLICATION OF AL/FT REGULATIONS FOR COMPANIES OBLIGED
TO ADOPT SYSTEMS OF AL/FT PREVENTION
 
OBLIGATORY ONLY FOR THOSE PARTIES THAT BY LEGAL REGULATIONS ARE OBLIGED TO ADOPT
SYSTEMS OF AL/FT PREVENTION
 
The purpose of this document is to certify to ECOPETROL S A that our entity has
a SYSTEM FOR THE PREVENTION AND CONTROL OF ASSETS LAUNDERING AND THE FINANCING
OF TERRORISM, which fully complies with the applicable Colombian regulations.
 
 
Therefore, _____________________________, in my capacity as legal representative
of SOLANA PETROLEUM EXPLORATION COLOMBIA LTD (THE ENTITY), I hereby CERTIFY
that:
 
 
1.
The ENTITY is fully complying with Colombian the applicable norms and
regulations concerning the prevention and control of assets laundering and the
financing of terrorism.

YES __                                No_____
 
 
2.
The ENTITY has appropriate policies, manuals and procedures for the prevention
and control of assets laundering and the financing of terrorism fully complying
with the applicable regulations in force.

YES __                                No_____
 
 
3.
Has the ENTITY been involved in investigations for violations to laws regarding
the assets laundering and the financing of terrorism?

YES ___                                No____
 
 
4.
Has the ENTITY been sanctioned or any of its employees or officers for
violations to laws regarding assets laundering and the financing of terrorism?

YES __                                No___
 
Report the following data of the officer or employee concerning compliance:
 
Name:
Telephone:
e-mail:
Address:
 
We manifest that we authorize ECOPETROL S A to verify and confirm the
information provided hereto directly or through the persons designed, including
the effective application of the SYSTEM OF PREVENTION AND CONTROL OF ASSETS
LAUNDERING AND THE FINANCING OF TERRORISM inside our entity.
Comments:
 
Page 19 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 
 

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[image6.jpg]
Vice-presidency of Supply and Marketing
Additional No. 1 Contract VSM-GPS-031-2011
 
ANNEX No. 2
 
Certificate of Shares Participation
Associates, Shareholders or Partners holding over five (5%) of interest in the
corporate capital
 
This certification is only requested in the case of legal persons in which,
given their nature, their shareholders, partners or associates do not appear in
the certificate of the chamber of commerce
 
I, hereby certify that the associates, shareholders or partners holding over
FIVE (5%) of interest in the corporate capital of the entity I represent are the
natural or legal persons appearing in the following list:
 
 NAME OF
 SHAREHOLDER
 PARTNER OR
ASSOCIATE
 IDENTIFICATION
 NUMBER OF SHARES
 QUOTA OR PARTS OF
 INTEREST
 PARTICIPATION IN THE
 CORPORATE CAPITAL 
 (%)
                                       

 
I hereby certify that the real beneficiaries and controllers 1
 
Name
Identification
           

 
Name of the entity:
Tax ID:
Name of Legal Representative:
Identification Number:
Signature Legal Representative:
 

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1 It is understood as “real beneficiary” or “controller” any person or group of
persons who, directly or indirectly, by himself or through any third party, by
virtue of any contract, agreement or otherwise has, with respect to any share or
quote of a company, or may have any decision capacity or control over said
company.
 
Page 20 of 20
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia Teléfono:
(571)2344606
 
 

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