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Exhibit 10.4
 
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CONTRACT: 
VSM-GPS-XXX-2011

 
PURPOSE:
PURCHASE AND SALE OF CRUDE OIL CHAZA, SANTANA AND GUAYUYACO

 
SELLER: 
SOLANA PETROLEUM EXPLORATION COLOMBIA LIMITED

 
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, attached to the Ministry of Mines and Energy, with
domicile in Bogota D.C., whose Corporate By-laws are contained in Public Deed
No. 5314 of December 14, 2007 granted in Notary Second of the Notaries Circle of
Bogotá D C and registered in the Chamber of Commerce of Bogotá D. C.,
hereinafter referred in this Contract 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 JULIÁN GARCÍA SALCEDO, identified with citizenship card
No. 19.421.914  issued in Bogotá, who acts in his capacity as Legal
Representative and is duly authorized to execute this Contract 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 Contract.
 
Under the previous conditions, both THE BUYER and THE SELLER, jointly known as
the Parties and individually as the Party, agree to execute the Contract herein
taking into consideration 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.

2.
That on September 30, 2002, Ecopetrol S A and THE SELLER entered into an
Association Contract called Guayuyaco.

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

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

4.
That for purposes of the execution of this Contract, THE BUYER previously
verified the Bulletin of Fiscal Responsibility developed and published by the
General Comptroller of the Republic of Colombia, 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 of assets laundering and developed
the instruments for the adequate implementation of the same in compliance with
the Policy for Prevention of Assets Laundering (AL) and the Financing of
Terrorism (FT).

 
5.
That in accordance with the provisions in the Delegations Manual of the Company,
the Vice-President of Supply and Marketing is the competent person to enter into
this Contract.

6.
That THE BUYER in its budget expenses has the respective budget availability for
the execution of the Contract hereof.

 
7.
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 Contract, the Authorized
Officer has classified the risk as low, and therefore dispenses the need to
require a bond from THE SELLER.

 
8.
That considering the contractual planning, the areas of Labor Relations Risk,
Coordination of Risks, Coordination of Budget and 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 Ecopetrol as a result
of the execution and implementation of this Amendment.

 
9.
That in compliance with the Policy 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.

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

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III.
That the funds committed in the contract or 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.

 
IV.
That in the execution of the contract or 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.

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

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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.

 
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. PURPOSE AND VOLUMES: THE BUYER undertakes the obligation to
acquire and pay 100% of all the crude oil owned by THE SELLER produced in the
Risk Shared Contract (CPR-Santana), the Association Contract Guayuyaco and
produced in the “Chaza” Block, and THE SELLER on the other hand undertakes the
obligation to sell and deliver 100% of the crude oil of its property pursuant
with CLAUSE SEVENTH of the delivery program. This Contract does not include the
volume of crude corresponding to royalties.
 
For purposes of this Contract, one barrel is equivalent to one hundred fifty
eight point nine hundred eighty eight (158.988) liters.
 
FIRST PARAGRAPH: DESTINATION OF THE CRUDE OIL. THE BUYER shall destine the crude
purchased for export through the port of Tumaco. THE BUYER, upon prior written
notice to THE SELLER may additionally: i) destine the crude of this Contract for
export through other ports and/or ii) use it for refinery.
 
CLAUSE SECOND. PRICE: The price to be paid for the crude oil of this Contract,
placed in the Delivery Point (s) indicated in clause sixth of this document
shall be established as indicated hereunder 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
Orito Station:

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

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Crude Price = WTI – Marker Discount +/- Adjustment for Quality – Transportation
(Site of Delivery/Port of Loading) – Transportation Tax – Handling and
Commercialization Fee.
 
Each of the above terms is defined as follows:
 
WTI: Corresponds to the arithmetic average of the daily quote of the West Texas
Intermediate crude, WTI NYMEX, in dollars per barrel of the month of deliveries.
 
Marker Discount: Corresponds to the average discount of export of THE BUYER of
South Blend Crude by the Port of Tumaco negotiated for the month after the month
of delivery of crude. If no exports are made and therefore no export discounts
are negotiated for the month of deliveries, it shall correspond to the parties
to apply as Marker Discount the average export discount negotiated for the
following month in which the export is made. THE BUYER shall report this
discount. The reference quality of the South Blend Crude is 29.3° API and 0.62%
Sulfur (S), and the same shall be monthly updated with real average data of the
exports made by THE BUYER by the Port of Tumaco.
 
Adjustment for Quality: Shall be established in accordance with the provisions
in the Fifth Paragraph of this numeral.
 
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 the Orito Station and the Port of Tumaco. 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
MME Fee 100% Base Fee
 US$/Bl
Orito - Tumaco
2.9141
Total Transportation
2.9141

 
The fee above shall be modified after approval of the new fee for the system
based on the methodology for establishing fees as defined by the Ministry of
Mines and Energy in Resolutions 124386 and 124547 of 2010 or those regulations
amending, adding or superseding it. To do this, THE BUYER shall notify THE
SELLER about the new fee approved.
 
Port Operation Fee: Corresponds to an amount of fifty five USD per barrel
(US$/BI 0.55) which covers the loading operation from the reception of product
in the terminal until delivered by the line to the platform or Mono-buoy
respectively. The fee amount is presently under review by the Vice-presidency of
Transportation, therefore, it may be updated and shall be in force once it is
established in firm and made official to all third parties. THE BUYER shall
notify THE SELLER about the new approved fee.
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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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 based on the following detail:
 
Section
MME US$/BI Fee
% Transportation Tax
US$/BI Transportation Tax
Orito - Tumaco
2.9141
2%
0.0583
Total Transportation Tax
   
    0.0583

 
Handling and Commercialization Fee: Corresponds to the value of one dollar and
fifty cents of US dollars per barrel (US$/Bl 1.5) to cover expenses related to
refining and/or export of crude such as: administration, commercialization fee,
insurances, bonds, hedging of risks related to market variations and operational
risks.
 

 
B.
For crude oil exported as Southblend by the port of Tumaco and received at the
Santana Station:

 
Crude Price = WTI – Marker Discount +/- Adjustment for Quality – Transportation
(Site of Delivery/Port of Loading) – Transportation Tax – Handling and
Commercialization Fee.
 
Each of the above terms is defined as follows:
 
WTI: Corresponds to the arithmetic average of the daily quote of the West Texas
Intermediate crude, WTI NYMEX, in dollars per barrel of the month of deliveries.
 
Marker Discount: Corresponds to the average discount of export of THE BUYER of
South Blend Crude by the Port of Tumaco negotiated for the month after the month
of delivery of crude. If no exports are made and therefore no export discounts
are negotiated for the month of deliveries, it shall correspond to the parties
to apply as Marker Discount the average export discount negotiated for the
following month in which the export is made. THE BUYER shall report this
discount. The reference quality of the South Blend Crude is 29.3° API and 0.62%
Sulfur (S), and the same shall be monthly updated with real average data of the
exports made by THE BUYER by the Port of Tumaco.
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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Adjustment for Quality: Shall be established in accordance with the provisions
in the Fifth Paragraph of this numeral.
 
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 the Orito  Station and the Port of Tumaco. 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
MME US$/BI 100%
Base Fee Year
 
Orito - Tumaco
2.9141
La Ye – Orito
0.2961
Total Transportation
3.2101

 
The fee above shall be modified after approval of the new fee for the system
based on the methodology for establishing fees as defined by the Ministry of
Mines and Energy in Resolutions 124386 and 124547 of 2010 or those regulations
amending, adding or superseding it. To do this, THE BUYER shall notify THE
SELLER about the new fee approved.
 
Port Operation Fee: Corresponds to an amount of fifty five USD per barrel
(US$/BI 0.55) which covers the loading operation from the reception of product
in the terminal until delivered by the line to the platform or Mono-buoy
respectively. The fee amount is presently under review by the Vice-presidency of
Transportation, therefore, it may be updated and shall be in force once it is
established in firm and made official to all third parties. THE BUYER shall
notify THE SELLER about the new approved fee.
 
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 based on the following detail:
 
Section
MME US$/BI Fee
% Transportation Tax
US$/BI Transportation Tax
Orito - Tumaco
2.8786
2%
0.0583
La Ye – Orito
0.2924
2%
0.0059
Total Tax
   
0.0642

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

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Handling and Commercialization Fee: Corresponds to the value of one dollar and
fifty cents of US dollars per barrel (US$/Bl 1.5) to cover expenses related to
refining and/or export of crude such as: administration, commercialization fee,
insurances, guarantees, hedging of risks related to market variations.
 
 
C.
For crude oil exported as “Oriente” Crude by Ecuador:

 
Crude Price = Marker Discount – Transportation (Site of Delivery/Port of
Loading) – Transportation Tax – Handling and Commercialization Fee.
 
Each of the above terms is defined as follows:
 
Marker: Corresponds to the weighted average real price of exports made by THE
BUYER of Oriente crude by the port of Balao.
 
Transportation (Site of Delivery/Port of Loading): This is determined as the sum
of the fees:

 
•  Fee La Ye – Orito (established by the Ministry of Mines and Energy): 0,0540
USD/Bl.
 
•  Fee Orito – San Miguel (established by the Ministry of Mines and Energy):
0,1387 USD/Bl
 
•  Fee charged by PETROECUADOR  for the transportation of crude.
 
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.
 
Handling and Commercialization Fee: Corresponds to the value of one dollar and
fifty cents of US dollars per barrel (US$/Bl 1.50) to cover expenses related to
refining and/or export of crude such as: administration, commercialization fee,
insurances, bonds, hedging of risks related to market  variations.
 
 
D.
For crude oil delivered at the DINA Station for export by the port of Coveñas or
for refining:

 
Crude Price  = WTI – Marker Discount +/- Adjustment for Quality – Transportation
(Site of Delivery/Port of Loading) – Transportation Tax – Handling and
Commercialization Fee.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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Each of the above terms is defined as follows:
 
WTI: Corresponds to the arithmetic average of the daily quote of the West Texas
Intermediate crude, WTI NYMEX, in dollars per barrel of the month of deliveries.
 
Marker Discount: Corresponds to the weighted average per volume of export of
ECOPETROL group of export mix Vasconia for the month of delivery. THE BUYER
shall report this value monthly. The quality reference for Vasconia crude is
24.8° API and 0.97 % Sulphur (S).  In case 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. EL COMPRADOR shall report this value monthly.
 
Adjustment for Quality: Shall be established in accordance with the provisions
in the Fifth Paragraph of this article.
 
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 the  Orito Station and the Port of Tumaco. 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
MME US$/BI 100%
Base Fee  Year
2011 MME US$/Bl
Tenay -Vasconia
1,4163
Vasconia – Coveñas ODC
1,5471
Total Transportation
2,9634

 
The fee above shall be modified after approval of the new fee for the system
based on the methodology for establishing fees as defined by the Ministry of
Mines and Energy in Resolutions 124386 and 124547 of 2010 or those regulations
amending, adding or superseding it. To do this, THE BUYER shall notify THE
SELLER about the new fee approved.
 
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:
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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Section
MME US$/BI 100% Base Fee
% Transportation Tax
US$/BI Transportation Tax
Tenay –Vasconia
1,4163
6%
0,085
Vasconia – Coveñas ODC
1,5471
6%
0,091
Total Tax
   
0,176

 
Handling and Commercialization Fee: Corresponds to the value of one dollar and
fifty cents of US dollars per barrel (US$/Bl 1.50) to cover expenses related to
refining and/or export of crude such as: administration, commercialization fee,
insurances, guarantees, hedging of risks related to market variations.
 
FIRST PARAGRAPH: The price determined by the aforementioned formula comprises
the different costs of transportation, handling, measurement and transportation
taxes bore by THE SELLER and generated until the delivery of the crudes being
the purpose of this purchase-sale at the Delivery Point(s); therefore THE BUYER
shall not make any additional acknowledgement on such items.
 
SECOND PARAGRAPH: When the parties agree on Delivery Point(s) different from
those established in article six (6) of this document, the price formula set out
in this article 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.
 
THIRD PARAGRAPH: The reception and inspection costs in the case of stations
agreed between the parties and not operated by ECOPETROL, 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 article provided that any of the following events
occur:
 
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.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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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
amendment between THE BUYER and THE SELLER and its contents shall apply from the
day after the date in which said amendment 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
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: ADJUSTMENT FOR QUALITY. The adjustments for quality (API
Gravity and Sulfur) shall be made if the following two conditions are met:
 
 
1.
That the average of daily deliveries of crude owned by THE SELLER (in volume) be
higher than 10% of the daily average of:

 
a.
The total current of SouthBlend dispatched by the “Trasandino” Pipeline for the
month of deliveries, for the case of deliveries at Orito and Santana.

 
b.
For total exports of Vasconia Mix by the port of Coveñas for the month of
deliveries, for the case of deliveries at Dina.

 
2. 
That the quality of marker crude for the case of deliveries at Orito and
Santana, monthly updated pursuant to the provisions in this document has to be:

 
a.
Higher than 31°API or lower than 29°API and/or

 
b.
Higher than 0,7% Sulfur or lower than 0,5% Sulfur.

 
If the two previous conditions are met, it shall be compared monthly in terms of
API and % of sulfur the qualities of the marker, monthly updated as set out in
this document, and the crude being the purpose of this purchase-sale, applying
bonuses or penalties to the price if better or worse quality than the marker is
delivered as follows:

 
·     Correction for API: +/- 0.53 US$/Unit of API or proportionally by
fraction. Price adjustments shall be positive for API gravities of crude above
the reference value for marker crude and negative for lower gravities.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
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·     Correction for sulfur: +/- 1,98  US$/Unit of % of sulfur in weight or
proportionally by fraction. Price adjustments shall be positive for percentage
of sulfur in the crude below the reference value for marker crude and negative
for higher values.
 
SIXTH 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 amendment between THE BUYER and THE SELLER and its contents shall
apply from the day after the date in which said amendment 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
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.
 
SEVENTH 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
° API
Minimum
SULFUR (% in weight)
Maximum
BSW (% in volume) Maximum
SALT (Lb/1000Bls)    Maximum
Santana and Guayuyaco
29.0°
0.7
0.5
20.0
Chaza
29.6°
0.41
0.5
20.0

 
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”.

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

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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. In these cases the crude price shall be adjusted as
follows:
 
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
> 1.51
Rejected
 
Salt Content
Lbs per thousand Barrels
Correction
(US$/Barrel)
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
> 100.0
Rejected
 

 
It is understood that THE SELLER shall make its best efforts to deliver the
crude oils being the purpose of this contract with the BSW and Salt contents
within the parameters agreed in the previous tables. 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/Amendment signed by
the parties. In case an agreement is not reached, THE BUYER may reject the
crude.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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EIGHTH 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 the Contract hereof.
 
The amount of reimbursable expenses shall not be part of the value of the
Contract. 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 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.
 
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) calendar 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.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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In case THE SELLER does not 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: 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.
 
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.
 
THIRD 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 FOURTH. TERM OF THE CONTRACT: The validity of the Contract shall begin
with the subscription of the same and shall comprise the term execution and
liquidation.
 
The term of the Contract shall commence with the fulfillment of the requirement
of execution set forth in clause Fifteenth and will conclude on June 30th, two
thousand twelve (2012).
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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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 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., attached herein as Annex 4. In case of amendments,
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.
 
FIRST PARAGRAPH: MEASURMENT OF VOLUME. The volume shall be calculated a 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 .
 
SECOND PARAGRAPH: MEASUREMENT OF QUALITY. The measurment of quality shall allow
the real determination of the characteristics of the crude being the purpose of
the Contract hereof. 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 Second 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..
 
When deemed appropriate, any of the parties may appoint an independent inspector
to certify the quality and quantity at the point of delivery defined in CLAUSE
SIXTH, 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.
 
 
Página 16 de 5
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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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 Eighth of clause Second.
 
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 the inlet flange to the crude oil receipt tank(s)
of SANTANA station, municipality of Puerto Asis, in the LACT UNIT/LAFERT UNIT,
property of the CPR_SANTANA joint operation, the Dina Station tanks and/or the
Orito Station tanks, with measurement of tanks and/or flow meter, following the
procedures established in clause Fifth of the document hereof.
 
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 Point, along
with the costs associated to the delivery of the crude oil, will be borne by THE
SELLER.
 
FIRST PARAGRAPH: 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.
 
SECOND PARAGRAPH: The volumes to be received at each of the stations established
in this clause will be determined on a monthly basis according to the
transportation official schedule established by THE BUYER.
 
CLAUSE SEVENTH. SCHEDULE OF DELIVERIES: THE SELLER shall deliver to THE BUYER at
the latest on the fifth (5) calendar day of each month a schedule of the
estimated production and deliveries for the following quarter. THE BUYER will
have five (5) business days to inform THE SELLER the total or partial acceptance
of the presented program. If THE SELLER do not receive response of THE BUYER,
within the set forth term, it will be understood that it has been fully
accepted. In case of partial acceptance of the delivery schedule, THE SELLER may
dispose and/or sell the crude oil not accepted. Taking into a account that the
previous information is a basic premise for the planning process of THE BUYER,
THE BUYER may refrain from receiving the crude oil 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
modifications and adjustments to the delivery schedules, being sufficient a
formal communication between the same.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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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.
 
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 overcome, 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 amendment executed by the Parties for such
purpose.
 
CLAUSE EIGHTH. INDUSTRIAL SAFETY – HSE: THE SELLER is bound to keep in force
hygiene, industrial safety and occupational health programs for the
transportation operation of the Crude to the Point(s) of Delivery.
 
CLAUSE NINTH. ADMINISTRATION AND MANAGEMENT OF THE CONTRACT: The Authorized
Official will appoint the administration and management of the Contract who will
perform the powers and obligations set forth in Manual for the administration
and management of Contracts of ECOPETROL S A, attached herein as Annex 6.
 
THE BUYER will conduct to  THE SELLER an evaluation each semester of its
performance as Contractor, pursuant to the guidelines “Contractor’s Performance
Evaluation”, which shall be provided by THE BUYER to the THE SELLER after the
Contract has been perfected.
 
 
Página 18 de 5
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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CLAUSE TENTH. ASSIGNMENT: THE SELLER shall not assign, sell or transfer the
whole or part of its rights and obligations under the Contract that may arise
upon the acceptance of the offer to any third party, without the previous
written consent of THE BUYER.
 
CLAUSE ELEVENTH. EXPIRATION: THE BUYER may declare the expiration of the
Contract and order the liquidation at any moment, when THE SELLER engage in
conducts prohibited by Article 25 of Law 40, 1993 (payment of sums of money to
profiteers, or when hiding or cooperating on behalf of any manager or delegate
of THE SELLER in the payment of any ransom money for a kidnapped person that may
be an official or employee of THE SELLER or any of its affiliates).
 
In the event of announcement of expiration of the contract, there will be no
compensation for THE SELLER, who will be made subject to the penalties and
inabilities provided in the law. The statement of lapse is a breach of the
contract. THE SELLER will announce the lapse through a resolution, and THE
SELLER will be notified timely. THE SELLER may file an appeal. THE SELLER will
have the right, subject to the corresponding deductions according to the
provisions of this document, to be paid for the part or the goods or services
received at the satisfaction of THE BUYER until the date of the administrative
act stating the expiration.
 
CLAUSE TWELFTH. FORCE MAJEURE, ACTS OF NATURE AND GROUNDS FOR EXEMPTION: The
obligations of any of the parties in connection with the acceptance of this
Offer that cannot be performed due to Force Majeure, Acts of Nature or
Exculpatory Events, whether total or partial, will be suspended during the
occurrence of the effects of such events.
 
The Party announcing the occurrence of a Force Majeure, Act of Nature or
Exculpatory Events shall inform immediately by phone the other Party about the
situation, with the date and start time, and the next day following the
occurrence of such event, in writing along with the evidence that prove the
occurrence of such event. The Party notified of the Force Majeure, Act of Nature
or Exculpatory Events, may request further information that supports such
announcement, and the affected Party shall send it within the next five business
(5) days  following the request. Any differences between the Parties in
connection with such event will be solved in accordance with the mechanisms for
dispute resolutions provided in clause Seventeenth of this document.
 
The Party announcing the occurrence of a Force Majeure, Act of Nature or
Exculpatory Events shall use their best efforts to remedy the cause that gave
rise to the announcement, and shall inform the other Party the date and time
when such event was overcome.
 
 
Página 19 de 5
 
Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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For all purposes of this Contract it is understood as Force Majeure or Act of
Nature, any event that can be qualified as such according to the Applicable Law,
which is unforeseeable and overpowering, duly proved, provided always that it is
external to the Parties and it occurs without their fault or negligence.
 
The following acts shall be considered as events of Force Majeure or Acts of
Nature: a) Epidemics, landslides, hurricanes, floods, avalanches, lightning,
fire, tsunami, shipwreck, disaster in land, air, train, water and sea
transportation that directly or indirectly contribute or result in the
impossibility of the of the parties to fulfill their obligations. b) Acts or
absence of acts of Government and the Legislative and judicial branches,
including laws, orders, regulations, decrees, rulings, judicial actions,
regulations, denial of the issuance, renewal or confirmation of permits and
licenses granted by the Government or any competent authority with jurisdiction
on production activities, treatment, picking-up, transportation, distribution
handling buy-sell of crude oils and/or products that directly or indirectly
contribute or result in the inability of any of the Parties to fulfill their
obligations, or seriously and unfairly affect the interests of one or both
Parties, or seriously affect their financial capacity. c) Acts of civil unrest
including war, blockades, insurrections, riots, and serious threat of any of the
foregoing, fully demonstrated, and actions of the armed forces in connection
with or in response to any act of civil disorder that directly or indirectly
contribute or result in the inability of any of the Parties to fulfill their
obligations.
 
The following shall be considered as Exculpatory Events: a) the partial or total
inability to operate and function, the pipelines, the truck tankers for the
transportation of the crude oil; the connections or the facilities of any of the
Parties caused by malicious acts beyond the direct control of THE SELLER and THE
BUYER, without their fault, such as: terrorists or guerrilla attacks, sabotage,
serious disturbances of public order that may result in, directly or indirectly,
the inability of any of the parties to comply with their obligations; b)The
emergency stops of the facilities of THE SELLER or  THE BUYER c) industry
disturbance acts, including work stoppage and strike, when such acts may result
in the inability of THE BUYER to comply with their obligations, and c) industry
disturbance acts, including work stoppage and strike, when such acts may result
in the inability of THE SELLER to comply with their obligations.
 
PARAGRAPH FIRST: Under no circumstances, any changes in the financial situation
of THE BUYER or THE SELLER may be considered as Exculpatory Events under the
Contract hereof.
 
Neither THE BUYER nor THE SELLER shall be held responsible for non compliance or
partial compliance of any or all of the obligations established in this
agreement, when such failure to comply is caused by force majeure, act of nature
or exculpatory events duly proven.
 
Any Force Majeure, Acts of Nature and/or Exculpatory Events will not relieve THE
BUYER of its obligations to pay THE SELLER the invoices related to the supply of
crude oil that have been delivered by THE SELLER, according to the terms
established in this Contract.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
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The occurrence of any of the events provided in this article shall not relieve
under any circumstance to any of the Parties of the compliance with their
contractual obligations, and/or those obligations incurred prior to the
occurrence of the events mentioned in this clause.

CLAUSE THIRTEENTH. APPLICABILITY OF COLOMBIAN LAWS: This Contract is governed by
Colombian Law.
 
CLAUSE FOURTEENTH. TAXES: Each of the parties of this buy-sell represents to be
aware of and accepts all taxes and/or withholdings in accordance with the law in
force. The payment of all national, departmental and municipal taxes, fees,
contributions, quotes or similars that may arise by this Contract, but without
being limited to those incurred as a result of the entering into, formalization,
execution and termination or liquidation of the Contract hereof, arising after
the date of the signature of the same, shall be borne by the party subject to
the respective tax, who shall pay it pursuant to the law and the regulations in
force.
 
CLAUSE FIFTEENTH. PUBLICATION: THE SELLER is responsible for the payment of the
publication of the contract associated with this Offer on the Public Contracts
Newspaper (Diario Único de Contratación Pública). THE SELLER shall send to THE
BUYER a copy of the receipt corresponding to the deposit of such payment within
three (3) business days following the acceptance of the Offer. THE BUYER shall
send, in an original, to the Colombian National Printing the Sole Summary for
Publication (Extracto Único de Publicación).
 
CLAUSE SIXTEENTH. COMPLETION AND EXECUTION: The Contract hereof is perfected
upon execution of the same.
 
CLAUSE SEVENTEENTH. CONFLICT RESOLUTION: In the case of any differences,
conflicts or disputes in connection with the interpretation, execution and
application of this Contract, the Parties shall try to use the alternative
solution mechanisms for conflicts legally regulated.
 
CLAUSE EIGHTEENTH. SPANISH LANGUAGE:  This Contract is written in Spanish and is
the only form of obligation between the Parties. Any translation to any other
language will only be valid for reference purposes for the Parties, and under no
circumstance may affect the meaning and construal of the Spanish version.

CLAUSE NINETEENTH. CONTRACT VALUE:  The value of the Contract is undetermined.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
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CLAUSE TWENTIETH. CONFIDENTIALITY: For the purposes of this Contract, the Party
that discloses or reveals the information is called hereinafter the Disclosing
Party, and the party that receives the information is called the Receiving
Party. The Parties herein agree that all the information of technical,
commercial, industrial or financial nature given and interchanged or prepared by
the Parties during the development of the Contract, or that any of the Parties
may develop, receive or obtain in regards to the Contract (hereinafter
“Confidential Information” or “the information”) are subject to strict
discretion and confidentiality during the term of the Contract and three (3)
years following the expiration thereof.
 
For purposes of this Contract, it is not considered “Confidential Information”
the information that: (i) is of public knowledge at the moment of its
disclosure, or that may be of public knowledge after its disclosure through
means different that the action or omission of the Receiving Party; (ii) is
known by the Receiving Party before or at the receiving moment, or obtained
under this Offer, without such knowledge being the cause of breach of any
obligation of confidentiality; (iii) is developed by the Receiving Party
independently, or based on information or documentation received from a third
party, without this being in breach of any obligation of confidentiality; (iv)
is received or obtained in good faith, by the Receiving Party, from a third
party without this being in breach of any obligations of confidentiality; (v)
its disclosure or revelation is required to the Receiving Party by the
application of the legislation in force, administrative act, judicial order and
or by any competent government entity with jurisdiction on the Party or its
affiliates, or by the standards of any stock exchange in which the stocks of the
Parties or corporations related are registered, in the terms and to the extent
that this is required.
 
The Receiving Party may reveal the Confidential Information to their managers,
officials, employees, agents, partners, representatives or associates,
affiliates and subordinates (in general, the Representatives).
 
If any judicial or administrative authority requires that the Receiving Party,
under the law, regulations or judicial ruling delivers any part of the
Information, such Receiving Party may request the cooperation of the Disclosing
Party, and if deemed appropriate, consult with the Disclosing Party about the
measures to be taken in order to keep the confidentiality.
 
CLAUSE TWENTY-FIRST. SPECIAL OBLIGATIONS OF THE SELLER IN CONNECTION WITH THE
PREVENTION AND CONTROL OF ASSETS LAUNDERING AND THE FINANCING OF TERRORISM
(LA/FT)
 
 
a.
Fully comply with the legal provisions on prevention and control of assets
laundering and the financing of terrorism (AL/FT) as they may be applicable,
implementing with efficiency and timely the policies and procedures necessary
for such purpose.

 
 
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b.
Refrain from conducting any operations with persons or entities whose funds are
the result of illegal activities contemplated in the Colombian Criminal Code or
any regulation that substitutes, adds or amends it, or with those with serious
doubts on the origin of their funds based on public information.

 
c.
Respect and comply with the Code of Good Governance, the Policies of Integral
Responsibility and Entrepreneurial Social Responsibility of Ecopetrol, the Code
of Ethics and the policies on prevention, control and management of the risk of
assets laundering and the financing of terrorism (LA/FT) of THE BUYER. For these
purposes, THE SELLER represents to be aware of said documents.

 
d.
In those cases in which activities considered of high risk of AL/FT are carried
out, it is obliged to implement systems for the prevention of AL/FT.

 
e.
Refrain from using its operations as an instrument to hide, handle, invest or
take advantage in any manner, of money or any other goods derived from criminal
activities, or to make them appear as legal, transactions and funds related to
the same or destined to illegal activities.

 
f.
Report to the THE BUYER (Telephones 018000917045 – (57-1-2343345 – 57-1-2344092)
and denounce before the competent authorities any crimes he may be aware of
(corruption, extortion, false documentation, assets laundering, financing of
terrorism, and others), as required by article 67 of the Code of Criminal
Procedures (Law 906 of 2004 and those that amend or supersede it).

 
g.
Report to THE BUYER, any incidents or new events that may affect its image or
reputation and/or those of THE BUYER, within three (3) business days after their
occurrence in order to provide a handling with consensus of the same.

 
h.
Provide a timely response on the information requirements and the clarifications
as required by THE BUYER under the execution of the contract hereof.

CLAUSE TWENTY-SECOND EARLY TERMINATION:

22.1 THE SELLER or THE BUYER may terminate this buy-sell Contract at any time
without the obligation to indemnify the other party for any kind of damage,
provided however, that the party that wishes the early termination of the
Contract delivers to the other party a written communication ten (10) calendar
days  prior to the date in which the Contract is to be terminated.

22.2. Likewise, any of the following activities in connection with the
laundering of assets and the financing of terrorism shall be a motive for early
termination of the contract, without entitlement of any indemnity for any kind
of damage:
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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1.
When THE SELLER fails to comply with the legal provisions in connection with the
prevention and control of assets laundering and the financing of terrorism, as
they may be applicable.

 
2.
When THE SELLER or any of its shareholders, associates or partners that directly
or indirectly hold FIVE PER CENT (5%) or more of the corporate capital,
contribution or participation, appear in the international listing binding for
Colombia pursuant with international law (lists of the United Nations) or in the
OFAC lists.

 
3.
When there are against THE SELLER or any of its shareholders, associates or
partners that directly or indirectly hold FIVE PER CENT (5%) or more of the
corporate capital, contribution or participation, or their legal representatives
and their members of the Board of Directors, any investigations or criminal
proceedings for willful misconducts, or if there is public information with
respect to such persons that may place THE BUYER before a legal or reputational
risk.

 
4.
When there may be situations, which may generate for THE BUYER any reputational,
legal, operating or contagious risks in connection with assets laundering and/or
the financing of terrorism.

 
5.
When there may be situations of serious doubts on the legality of the operations
of EL THE SELLEL, the legitimacy of its funds, or that THE SELLER has conducted
transaction or operations destined to said activities or in favor of persons in
connection therewith.

 
6.
When there are errors, inconsistencies, discrepancies or falsehood in the
documentation and information provided by THE SELLER for the subscription and
execution of the Contract hereof.

 22.3  Likewise the Parties may terminate the contractual relation when the
other incurs in any of the following conducts:

 
1.
Give up without justification on any threats from armed groups outside the law.

 
2.
Receive, supply, administer, intervene, finance, transfer, keep, transport,
storage or keep money or property resulting from or destined to such groups or
collaborate and provide help to the same.

 
3.
Build, assign, rent, place at their disposal, facilitate or transfer in any
manner goods to be destined for the hiding of persons, or for the deposit or
storage of belongings of said groups.

 
4.
Stop, suspend or notoriously diminish the fulfillment of their contractual
obligations following the instructions of said groups.

 
5.
Failure to denounce any punishable acts, which may be attributable to said
groups and known as a result of the Contract.

Regarding the foregoing, it shall be considered as an act of THE SELLER l the
conduct of its agents or dependents, which he may be aware of.

CLAUSE TWENTY-THIRD. NOTICES: All notices, requests, communications or
notifications between the Parties by virtue of this Contract shall be in writing
and served at the time the corresponding document is filed in the address
indicated hereunder.
 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
Teléfono: (571)2344606
 
 
 

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THE BUYER
 
ECOPETROL S.A.
Gerencia de Planeación y Suministro
Bernardo Castro Castro
Carrera 7 No. 37-69 Piso 7, Bogotá D.C.
Teléfono (+57) 1 234 4606
Fax (+57) 1 234 4869
 
THE SELLER
 
SOLANA PETROLEUM EXPLORATION COLOMBIA LTD.
Gerencia Comercial
Calle 113 No. 7-80, piso 17
Teléfono (+57) 6585757
Fax    (+57) 2139327
 
All communications sent via facsimile shall be considered as received upon
receipt of the message of successful communication from the machine where the
delivery is originated.

CLAUSE TWENTY FOURTH. DOMICILE: For all legal purposes the domicile of the
Contract hereto shall be the city of Bogotá D.C.
 
In witness whereof, the Parties sign this Contract in D.C. on the twenty seventh
(27) day of the month of July, of the year two thousand eleven (2011), in two
(2) duplicates of the same content.
 
THE SELLER
THE BUYER
 
/s/ JULIÁN GARCÍA SALCEDO
 
/s/ CLAUDIA L. CASTELLANOS R.
JULIÁN GARCÍA SALCEDO CLAUDIA L. CASTELLANOS R.  Legal Representative
Vice-president 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
with more than five (5%) interest in the corporate capital.

 
 
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Cra. 7ª No. 37-69 Piso 5, Bogotá, D.C. Colombia
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Annex 3. 
Procedure for Reimbursable Expenses. Delivered in CD.

Annex 4. 
Manual for Hydrocarbon Measurement of (MMH) ECOPETROL S.A. Delivered in CD.

Annex 5. 
User’s Manual for the Volumetric Integrator of ECOPETROL S.A. Delivered in CD.

Annex 6. 
Manual for contract’s management and administration of ECOPETROL S.A. Delivered
in CD.

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

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ANEXO 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,    Julian Garcia                                                 , 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 x                                Noo
 
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 x                               Noo
 
3.
Has the ENTITY been involved in investigations for violations to laws regarding
the assets laundering and the financing of terrorism?

YES o                                No x
 
 
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 o                                No x
 
Report the following data of the officer or employee concerning compliance:
 
Name: 
David Hardy

Telephone: 
(+1) (403) 265- 3221 Ext. 2247

e-mail: 
davidhardy@grantierra.com

Address: 
300, 625 – 11th Avenue SW, Calgary, Alberta, Canada T2R 0E1

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

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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: 
Solana Petroleum Exploration Colombia Ltd.

Tax ID:
 

Name of Legal Representative: 
Julian Garcia

Identification Number:
 

Signature Legal Representative: 
/s/ Julian Garcia

 
Not applicable due to Solana is a branch of a foreign company and therefore has
no legal personality independent of its parent.
 

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

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