Exhibit 10.41

ISLAMIC

REPUBLIC

OF

MAURITANIA

HONOR – BROTHERHOOD –

JUSTICE

EXPLORATION AND PRODUCTION CONTRACT

BETWEEN

THE ISLAMIC REPUBLIC OF MAURITANIA

AND

KOSMOS ENERGY MAURITANIA

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INDEX

ARTICLE 1 :   DEFINITIONS

5 

 

 

 

ARTICLE 2 :   SCOPE OF APPLICATION OF THE CONTRACT

8 

 

 

 

ARTICLE 3 :   EXPLORATION AUTHORIZATION

9 

 

 

 

ARTICLE 4 :   EXPLORATION WORKS OBLIGATION

11 

 

 

 

ARTICLE 5 :   ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS

13 

 

 

 

ARTICLE 6 :   OBLIGATIONS OF THE CONTRACTOR IN THE CONDUCT OF PETROLEUM
OPERATIONS

14 

 

 

 

ARTICLE 7 :   RIGHTS OF THE CONTRACTOR IN THE CONDUCT OF PETROLEUM OPERATIONS

17 

 

 

 

ARTICLE 8 :   MONITORING OF PETROLEUM OPERATIONS AND ACTIVITY REPORTS –
CONFIDENTIALITY

18 

 

 

 

ARTICLE 9 :   APPRAISAL OF A DISCOVERY AND GRANTING OF AN EXPLOITATION
AUTHORIZATION

23 

 

 

 

ARTICLE 10 :  RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING

28 

 

 

 

ARTICLE 11 :  TAX REGIME

30 

 

 

 

ARTICLE 12 :  PERSONNEL

32 

 

 

 

ARTICLE 13 :  BONUS

33 

 

 

 

ARTICLE 14 :  PRICE AND MEASUREMENT OF HYDROCARBONS

34 

 

 

 

ARTICLE 15 :  NATURAL GAS

36 

 

 

 

ARTICLE 16 :  TRANSPORT OF HYDROCARBONS BY PIPELINES

39 

 

 

 

ARTICLE 17 :  OBLIGATION FOR SUPPLYING THE DOMESTIC MARKET

40 

 

 

 

ARTICLE 18 :  IMPORTATION AND EXPORTATION

40 

 

 

 

ARTICLE 19 :  FOREIGN EXCHANGE

41 

 

 

 

ARTICLE 20 :  BOOK-KEEPING, MONETARY UNIT, ACCOUNTING

41 

 

 

 

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ARTICLE 21 :  PARTICIPATION OF THE STATE

42 

 

 

 

ARTICLE 22 :  ASSIGNMENT

45 

 

 

 

ARTICLE 23 :  OWNERSHIP, USAGE AND ABANDONMENT OF PROPERTY

47 

 

 

 

ARTICLE 24 :  LIABILITY AND INSURANCE

49 

 

 

 

ARTICLE 25 :  TERMINATION OF THE CONTRACT

50 

 

 

 

ARTICLE 26 :  APPLICABLE LAW AND STABILIZATION OF TERMS

51 

 

 

 

ARTICLE 27 :  FORCE MAJEURE

51 

 

 

 

ARTICLE 28 :  ARBITRATION AND EXPERTISE

52 

 

 

 

ARTICLE 29 :  TERMS FOR APPLICATION OF THE CONTRACT

53 

 

 

 

ARTICLE 30 :  ENTRY INTO FORCE

55 

 

 

 

APPENDIX 1 :  EXPLORATION PERIMETER

57 

 

 

 

APPENDIX 2 :  ACCOUNTING PROCEDURE

59 

 

 

 

APPENDIX 3 :  MODEL BANK GUARANTEE

81 

 

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BETWEEN

The Islamic Republic of Mauritania (hereafter referred to as « the State »),
represented for purposes of these presents by the Minister in Charge of Crude
Hydrocarbons

ON THE ONE HAND,

AND

Kosmos Energy Mauritania, a company under the Cayman Islands laws, having its
registered headquarters at 4th Floor Century Yard, Cricket Square, PO Box 32322,
George Town, Grand Cayman KY1, 1209 (hereafter referred to as « the
Contractor »), represented herein by Andrew J. INGLIS, having all powers and
being endowed with full authority for these purposes.

ON THE OTHER HAND,

The State and the Contractor being hereafter collectively referred to as
« Parties » or individually « Party ».

WHEREAS:

The State, owner of the deposits and natural accumulations of hydrocarbons
contained in the soil and the subsoil of the national territory, wishes to
promote the discovery and the production of hydrocarbons in order to promote
economic expansion within the framework instituted by Law No. 2010-033 of 20
July 2010 containing the Crude Hydrocarbons Code as thereafter modified;

The Contractor wishes to explore and to exploit, within the framework of this
exploration-production contract and pursuant to the Crude Hydrocarbons Code, the
hydrocarbons which may be contained in the perimeter described in Appendix 1 of
this Contract, and has shown it possesses the technical and financial means
necessary for this purpose.

IT HAS BEEN AGREED AS FOLLOWS:

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ARTICLE 1 : DEFINITIONS

The terms utilized in this text have the following meaning:

1.1       « Calendar Year » means a period of twelve (12) consecutive months
commencing on the first (1st) of January and terminating on the thirty-first
(31st) of the following December.

1.2       « Contract Year » means a period of twelve (12) consecutive months
beginning on the Effective Date or the anniversary date of said Effective Date.

1.3       « Appendices » (also called Annexes) means the appendices to this
Contract consisting of:

§

The Exploration Perimeter constituting Appendix 1

§

The Accounting Procedure constituting Appendix 2

§

The model bank guarantee constituting Appendix 3

1.4       « Exploration Authorization » means the authorization referred to in
Article 3 of this Contract by which the State authorizes the Contractor to carry
out, on an exclusive basis, all works of prospection and exploration of
Hydrocarbons within the Exploration Perimeter.

1.5       « Exploitation Authorization » means the authorization granted to the
Contractor to carry out, on an exclusive basis, all works of development and of
exploitation of the deposits of Hydrocarbons within the Exploitation Perimeter.

1.6       « Barrel» means « U.S. barrel », or 42 American gallons (159 liters)
measured at the temperature of 60°F (15.6 °C) and at atmospheric pressure.

1.7       « BTU » means the British unit of energy « British Thermal Unit » in
such manner that a million BTU (MMBTU) is equal to approximately 1055 joules.

1.8       « Annual Budget » means the detailed estimate of the cost of Petroleum
Operations defined in an Annual Work Program.

1.9       « Crude Hydrocarbons Code » means Law No. 2010-033 of 20 July 2010
containing the Crude Hydrocarbons Code, its amendments and its application
texts.

1.10     « Environmental Code » means Law No. 2000-045 of 26 July 2000
containing the Environmental Code, its amendments and its application texts.

1.11     « Contractor » means collectively or individually the company(ies)
signing this Contract as well as any entity or company to which an interest
would be assigned in application of Articles 21 and 22 of this Contract.

1.12     « Contract » means this text as well as its appendices and amendments.

In the case of contradiction between the provisions of this text and those of
its appendices, the

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provisions of this text shall prevail.

1.13     « Petroleum Costs » means all the costs and expenses incurred by the
Contractor in execution of Petroleum Operations provided for in this Contract
and determined according to the Accounting Procedure, the subject of Appendix 2
to this Contract.

1.14     « Effective Date » means the date of entry into force of this Contract
such as it is defined in Article 30.

1.15     « Dollar » means the dollar of the United States of America ($).

1.16     « State » means the Islamic Republic of Mauritania.

1.17     « Gross Negligence » means imprudence or negligence of such gravity
that it raises a presumption of malicious intent on the part of the person
responsible for such action.

1.18     « Wet Gas » means Natural Gas containing a fraction of elements
becoming liquid at ambient pressure and temperature, justifying the creation of
a facility to recover such liquids.

1.19     « Natural Gas » means all gaseous hydrocarbons produced from a well,
including Wet Gas and Dry Gas which may be associated or non-associated with
liquid hydrocarbons and the residual gas which is obtained after extraction of
the liquids from Natural Gas.

1.20     « Associated Natural Gas » means the Natural Gas existing in a
reservoir in a solution with Crude Petroleum or in the form of "Gas Cap" in
contact with Crude Petroleum, and which is produced or may be produced in
association with the Crude Petroleum.

1.21     « Non-Associated Natural Gas » means Natural Gas excluding Associated
Natural Gas.

1.22     « Dry Gas »  means Natural Gas containing essentially methane, ethane
and inert gases.

1.23     « Hydrocarbons » means liquid and gaseous or solid hydrocarbons, in
particular oil sands and oil shale.

1.24     « LIBOR » means the annual interbank rate applicable for the Dollar as
published by the Financial Times, The Wall Street Journal or any other
comparable publication of reference.

1.25     « Ministry » means the Ministry in Charge of Crude Hydrocarbons.

1.26     « Minister » means the Minister in Charge of Crude Hydrocarbons.

1.27     « Operator » means the company designated in Article 6.2 here below in
charge of the conduct and the execution of Petroleum Operations or any company
which would later be substituted for it according to applicable terms.

1.28     « Petroleum Operations » means all operations of exploration,
exploitation, storage, transport and marketing of Hydrocarbons, including
therein operations of evaluation/appraisal, development, production, separation,
processing up until the Delivery Point, as well as the

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remediation of the sites to their prior condition, and, more generally, all
other operations directly or indirectly linked to the foregoing, carried out by
the Contractor within the framework of this Contract, with the exclusion of
refining and distribution of petroleum products.

1.29     « Ouguiya » means the currency of the Islamic Republic of Mauritania.

1.30     « Exploitation Perimeter » means all or part of the Exploratation
Perimeter for which the State, within the context of this Contract, grants to
the Contractor an Exploitation Authorization pursuant to the provisions of
Article 9 here below.

1.31     « Exploration Perimeter » means the surface defined in Appendix 1,
reduced, as the case may be, by relinquishments provided for in Article 3 and/or
by Exploitation Perimeters, for which the State, in the context of this
Contract, grants to the Contractor an Exploration Authorization pursuant to the
provisions of Article 2.1 here below.

1.32     « Crude Petroleum » means all liquid Hydrocarbons in the natural state
or obtained from Natural Gas by condensation or separation as well as asphalt.

1.33     « Delivery Point means:

§

For Crude Petroleum, the loading point F.O.B. of the Crude Petroleum as may be
further defined more precisely in the possible lifting agreement(s) the Parties
may enter into.

§

For Natural Gas, the Delivery Point set by common agreement between the Parties
pursuant to Article 15 of this Contract.

1.34     « Remediation Plan » means the document detailing the program of work
to be carried out by the Contractor at the expiration, the surrender or the
canceling of an Exploitation Authorization, pursuant to Article 23.2 here below.

1.35     « Annual Work Program » means the descriptive document, item by item,
of the Petroleum Operations to be carried out during the course of a Calendar
Year within the framework of this Contract prepared pursuant to the provisions
of Articles 4, 5 and 9 here below.

1.36     « Affiliated Company » means:

a)     Any company or any other entity which controls or is controlled, directly
or indirectly, by a company or entity, party to this contract, or

b)     Any company or any other entity which controls or is controlled, directly
or indirectly, by a company or entity which itself controls directly or
indirectly any company or entity, party to this contract.

For purposes of this definition, the term « control » means the direct or
indirect ownership by a

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company or any other entity of a percentage of capital stock or shares greater
than fifty percent (50%) of the voting rights at the shareholders’ meeting of
another company or entity.

1.37     « Third Party » means any natural person or legal entity other than the
State, the Contractor and the Affiliated Companies of the Contractor.

1.38     « Quarter » means a period of three (3) consecutive months beginning on
the first day of January, April, July or October of each Calendar Year.

ARTICLE 2 :  SCOPE OF APPLICATION OF THE CONTRACT

Pursuant to the Crude Hydrocarbons Code, the State hereby authorizes the
Contractor to carry out on an exclusive basis in the Exploration Perimeter
defined in Appendix 1 the appropriate and necessary Petroleum Operations within
the framework of this Contract.

2.1       This Contract is entered into for the duration of the Exploration
Authorization such as provided for in Article 3 of this Contract, including
therein its renewal periods and possible extensions, and, in the case of a
commercial discovery, for the duration of the Exploitation Authorizations which
will have been granted, such as defined in Article 9.11 here below.

2.2       This Contract shall terminate if, at the expiration of all of the
exploration phases provided for in Article 3, the Contractor has not notified
the State of its decision to develop a commercial Hydrocarbons deposit and
applied for an Exploitation Authorization relative to such deposit, pursuant to
the provisions of Article 9.5 here below.

In the event of the grant of more than one Exploitation Authorization and unless
there is an early termination, this Contract will expire upon the expiration of
the last current valid Exploitation Authorization.

2.3       The expiration, surrender or termination of this Contract for whatever
reason it may be, shall not free the Contractor from his obligations under this
Contract, which came into being prior to the time of such expiration, surrender
or termination, which obligations must be carried out by the Contractor.

2.4       The Contractor shall have the responsibility to carry out the
Petroleum Operations provided for in this Contract. For their execution he
undertakes to comply with good oilfield practice of the international petroleum
industry and to comply with norms and standards decreed by Mauritanian
regulations in matters of industrial safety, protection of the environment, and
operational techniques.

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2.5       The Contractor shall supply all the financial and technical means
necessary for the proper functioning of the Petroleum Operations and shall bear
in full all the risks linked to the execution of said Operations, and without
prejudice to the provisions of Article 21 of this Contract. The Petroleum Costs
borne by the Contractor shall be recoverable by the Contractor pursuant to the
provisions of Article 10 here below.

2.6       During the period of validity of the Contract, the production
resulting from the Petroleum Operations shall be shared between the State and
the Contractor pursuant to the provisions of Article 10 here below.

ARTICLE 3 :  EXPLORATION AUTHORIZATION

3.1       The Exploration Authorization in the Exploration Perimeter defined in
Appendix 1 shall be granted to the Contractor for a first phase of four (4)
Contract Years.

3.2       The Contractor shall have right to renewal of the Exploration
Authorization two times, for a period of three (3) Contract Years each time, if
he has fulfilled for the preceding exploration phase the work obligations
stipulated in Article 4 here below and provided that he furnishes the bank
guarantee for the renewal period pursuant to Article 4.6 here below.

3.3       In accordance with Article 21of the Crude Hydrocarbon Code, if at the
expiration of any phase of the exploration period defined in Article 3.1 or 3.2
here above, works are actually still in progress, the Contractor shall have the
right, if he submits an application duly providing supporting information, to a
special extension of such phase for a period of time not to exceed twelve (12)
months.

3.4       If the Contractor discovers one or more deposits of Hydrocarbons for
which he cannot present the declaration of commerciality prior to the end of the
third phase of the exploration period pursuant to Article 9.5 here below, by
reason of the distance of the deposit in relation to possible delivery points on
the Mauritanian territory and of the lack of infrastructure of transportation by
pipeline, or the lack of a market for the production of the Natural Gas, he may
apply for an extension of the Exploration Authorization for a maximum period of
three (3) years for deposits of Petroleum or of Wet Gas and five (5) years for
deposits of Dry Gas, the Exploration Perimeter being thus reduced to the
presumed limits of the deposit(s) in question.

3.5       In the case where such an extension is granted, the Contractor must
furnish to the Minister within sixty (60) days following the end of each
Calendar Year of the period of extension a report showing whether or not the
relevant deposit(s) is/are commercial, and, in the case of a deposit of Natural
Gas, the results of the works and studies carried out pursuant to Article 15
here below.

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3.6       For each renewal or extension, other than the extension contemplated
by Article 3.3, the Contractor must submit an application to the Minister not
later than two (2) months prior to the expiration of the current exploration
phase.

The renewals shall be granted by decree of the Minister while the extensions
shall be granted by decree of the Council of Ministers; such decrees shall take
effect starting from the date following the expiration of the preceding period.

3.7       The Contractor undertakes to relinquish to the State at least
twenty-five percent (25%) of the initial surface area of the Exploration
Perimeter at the time of each renewal of same, in such fashion as to not retain
during the second phase of the exploration period more than seventy-five percent
(75%) of the initial surface area of the Exploration Perimeter and during the
third phase of the exploration period, not more than fifty percent (50%) of the
initial surface area of the Exploration Perimeter.

3.8       For the application of Article 3.7 here above :

a)      The surfaces having previously been the subject of a voluntary
relinquishment per Article 3.9 here below and the surfaces already covered by
Exploitation Authorizations shall be deducted from the area subject to mandatory
relinquishment.

b)      The Contractor shall have the right to determine the extent, the form
and the location of the portion of the Exploration Perimeter which he intends to
keep. However, the portion relinquished must consist of a perimeter of simple
geometric form, delimited by North-South, East-West lines or by natural limits
or frontiers.  The surface relinquishment shall be made according to the land
registry grid from one of the borders of the initial or residual Exploration
Perimeter and in a contiguous fashion.

c)      The application for renewal must be accompanied by a plan containing an
indication of the Exploration Perimeter that was kept as well as a report
specifying the works carried out since the Effective Date on the relinquished
surfaces and the results obtained.

3.9       The Contractor may at any time, upon three (3) months’ notice, notify
the Minister that he is surrendering all or a portion of the Exploration
Perimeter.  In the event of a full surrender, the Exploration Authorization
shall terminate automatically on the date of said notification.  In the case of
a partial surrender, the provisions of Article 3.8 here above shall be
applicable.

In all cases, no voluntary surrender during the course of an exploration phase
shall reduce the exploration work commitments stipulated in Article 4 here below
for said phase, nor does it terminate the corresponding bank guarantee.

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3.10     Except in the case of extension pursuant to Articles 3.3 and 3.4 here
above, upon the expiration of the third phase of the exploration period, the
Contractor must relinquish the remaining surface of the Exploration Perimeter,
except for areas already comprised within Exploitation Perimeters.

Notwithstanding the preceding paragraph and pursuant to the provisions of
Article 26.2 of the Crude Hydrocarbons Code, the Exploration Authorization shall
remain in effect until Contractor submits a request for an Exploitation
Authorization in accordance with the time frames stipulated in Article 9.

ARTICLE 4 :  EXPLORATION WORKS OBLIGATION

4.1       During the first phase of the exploration period of four (4) Contract
Years defined in Article 3.1 here above, the Contractor undertakes to carry out
the following work:

§

Acquire two thousand (2000) sq km 3D seismic;

§

Reprocess the existing seimic data acquired by the prvious operator in Contract
Area, subject to Contrator receiving such data from the Ministry.

Said works must commence within the twelve (12) months following the Effective
Date.

4.2       During the second phase of the exploration period of three (3)
Contract Years defined in Article 3.2 here above, the Contractor undertakes to
carry out the Drilling of one (1) Exploration well to a depth of two thousand
five hundred (2500) meters below the mud line.

§

Said works must commence within the six (6) months following the start of the
phase in question.

4.3       During the third phase of the exploration period of three (3) Contract
Years defined in Article 3.2 here above, the Contractor undertakes to carry out
the Drilling of one (1) Exploration well to a depth of two thousand five hundred
(2500) meters below mud line.

Said works must commence within the three (3) months following the start of the
phase in question.

4.4       Each of the above-cited wells shall be carried out up to the minimum
depth set forth here above, or to a lesser depth, upon authorization of the
Minister, if the pursuit of the well, carried out according to good oilfield
practices in the international petroleum industry, is impractical for

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one or another of the following reasons:

a)   The basement is encountered at a depth that is less than the minimum depth
referred to above;

b)   The pursuit of the well presents a manifest danger by reason of the
existence of an abnormal stratum pressure ;

c)   Rock formations are encountered, the hardness of which does not allow the
practical advancement of the well carried out with the appropriate means of
equipment;

d)   Petroliferous formations are encountered which in order to cross through
requires for their protection the laying of casings, preventing the attainment
of the above-cited minimum depth.

In each of the cases cited here above, the Contractor shall inform the Minister
and shall be authorized to suspend the well and said well shall be deemed to
have been drilled to the minimum depth referred to above.

4.5       If the Contractor, either during the course of the first phase of the
exploration period, or during the course of the second phase of the exploration
period, defined respectively in Articles 3.1 and 3.2 here above, carries out a
number of exploration wells greater than the minimum commitments stipulated
respectively in Articles 4.1 and 4.2 here above for said phase, the excess wells
may be carried over to the following phase(s) of the exploration period and
shall be deducted from the minimum work commitments stipulated for said
phase(s).

For purposes of the application of Articles 4.1 to 4.5 here above, the wells
carried out in the context of a program for evaluation of a discovery shall not
be considered to be exploration wells, and, in the case of a discovery of
Hydrocarbons, only one well per discovery shall be deemed to be an exploration
well.

4.6       Within the thirty (30) days following the Effective Date, the
Contractor must remit to the Minister a bank guarantee issued by an
international bank of first order, pursuant to Appendix 3 of  four million
Dollars ($4,000,000) covering his minimum work commitments for the first phase
of the exploration period defined in Article 4.1 here above.  The guarantee will
increase to seven million Dollars ($ 7,000,000) if the Contractor does not
achieve the acquisition within six (6) months of the Effective Date.

In the case of renewal of the Exploration Authorization, the Contractor also
must remit to the Minister, within the thirty (30) days following receipt of the
decree from the Minister granting the renewal, a bank guarantee issued by an
international bank of first order, pursuant to Appendix 3 of twenty-two million
Dollars ($22,000,000) for the second Phase of the

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exploration period and of twenty-two million Dollars ($22,000,000) for the third
Phase of the exploration period.

If on expiration of any phase of the exploration period or in the case of total
or partial surrender or termination of the Contract, the exploration works have
not reached the minimum commitments of this Article 4, the Minister shall have
the right to call the guarantee for an amount equal to the amount of the
guarantee after deduction of the estimated cost of the minimum work actually
carried out.

Such cost shall be calculated on a lump-sum basis in utilizing the following
unit costs:

a)       three thousand five hundred Dollars ($3500) per square kilometer;

b)       twenty-two million Dollars ($22,000,000) per exploration well.

Once the payment is made, the Contractor shall be deemed to have fulfilled his
minimum exploration work obligations per Article 4 of this Contract; the
Contractor may, except in the event of cancellation of the Exploration
Authorization for a major failure in performance of this Contract, continue to
benefit from the provisions of said Contract and, in the case of an acceptable
application, obtain the renewal of the Exploration Authorization.

ARTICLE 5 :  PRESENTATION  AND APPROVAL OF ANNUAL WORK PROGRAMS

5.1       Not later than (2) months after the Effective Date, the Contractor
shall prepare and submit to the Ministry for approval an Annual Work Program,
detailed item by item, including therein the corresponding Annual Budget for all
of the Exploration Perimeter, specifying the Petroleum Operations relating to
the period running from the Effective Date to the following 31 December.

Thereafter, not later than (3) months prior to the start of each Calendar Year,
the Contractor shall prepare and submit to the Ministry for approval an Annual
Work Program, detailed item by item, including therein the corresponding Annual
Budget for all of the Exploration Perimeter, then, if applicable, for the
Exploitation Perimeter(s), in specifying the Petroleum Operations which he
proposes to carry out over the course of the following Calendar Year.

Each Annual Work Program and corresponding Annual Budget shall be itemized
between the different activities of exploration, and if applicable, of appraisal
for each discovery, of development and of production for each commercial
deposit.

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5.2       If the Ministry deems that revisions or modifications to the Annual
Work Program and to the corresponding Annual Budget are necessary and
appropriate, it must so notify the Contractor in writing with all supporting
documentation deemed appropriate within a time period of sixty (60) days
following their receipt.  In such case, the Ministry and the Contractor shall
meet as soon as possible in order to study the revisions or modifications
requested and establish by common agreement the Annual Work Program and the
corresponding Annual Budget in their definitive form, according to good oilfield
practice in the international petroleum industry.   The date of adoption of the
Annual Work Program and of the corresponding Annual Budget shall be the
above-cited mutually agreed date.

In the absence of notification by the Ministry to the Contractor of his wish for
revision or modification within the time period of the above-referenced sixty
(60) days, said Annual Work Program and corresponding Annual Budget shall be
deemed accepted by the Ministry upon the date of expiration of said time period.

In all cases, each operation of the Annual Work Program, for which the Ministry
has not requested revision or modification, must be carried out by the
Contractor within the time periods set forth.

5.3       The Parties accept that the results obtained during the course of the
works taking place, or that special circumstances may justify changes to an
Annual Work Program and to the corresponding Budget.  In such case, after
notification to the Ministry, the Contractor may make such changes provided that
the fundamental objectives of said Annual Work Program are not modified.

ARTICLE 6 : OBLIGATIONS OF THE CONTRACTOR IN THE CONDUCT OF PETROLEUM OPERATIONS

6.1       Without prejudice to the provisions of Article 21 here below, the
Contractor must furnish all necessary funds and purchase or rent all tools,
equipment and construction supplies that are indispensable for the execution of
Petroleum Operations.  The Contractor is responsible for the preparation and the
execution of the Annual Work Programs which are to be carried out in the most
appropriate manner in compliance with good oilfield practice in the
international petroleum industry.

6.2       Upon the Effective Date of this Contract, Kosmos Energy Mauritania is
designated as Operator and shall be responsible for the conduct and the
execution of the Petroleum Operations.  The Operator, in the name of and on the
behalf of the Contractor, shall communicate to the

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Minister all reports and information referred to in this Contract. Any change of
Operator contemplated by the entities of the Contractor must receive the prior
approval of the Minister, which approval shall not be withheld without
reasonable justification provided therefor.

6.3      The Operator must maintain during the term of the Contract in
Mauritania, a branch which shall in particular be staffed with a responsible
person having authority for the conduct of the Petroleum Operations and to whom
any notification with regard to this Contract can be sent.

6.4       The Contractor must during the course of the Petroleum Operations take
all necessary measures for the protection of the environment.

He must in particular, for any Petroleum Operation subject to prior
authorization according to the Environmental Code, submit to the Minister,
depending on the case, the studies or notices of environmental impact required
for this type of operation, carry out the measures and comply with restrictions
set forth in the environmental management plan, furnish the declarations and
submit himself to the oversight provided for in the Environmental Code

The Contractor must moreover take all reasonable measures according to good
oilfield practice in the international petroleum industry in order to:

a)   Ensure that all of the facilities and equipment utilized for purposes of
the Petroleum Operations be at all times in good repair and in conformity with
the applicable norms, including therein those which result from international
conventions ratified by the Islamic Republic of Mauritania and relative to the
prevention of pollution;

b)   avoid losses and dumping:

-  of Hydrocarbons, including the flaring of Natural Gas, (with the exception of
the cases provided for in Article 40 of the law instituting the Crude
Hydrocarbons Code, under penalty of a fine which shall be later be determined by
a decree taken by the Council of Ministers and which shall not under any
circumstances exceed twenty (20) per cent of the then current market price of
Natural Gas in Mauritania),

The above-cited fine shall not be considered a recoverable Petroleum Cost nor a
deductible charge.

c)   DOES NOT APPLY.

d)   Store the Hydrocarbons produced in the facilities and receptacles
constructed for this purpose ;

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e)   Without prejudice to the provisions of Article 23.2 here below, dismantle
facilities which are no longer necessary to the Petroleum Operations and return
the sites to their original condition;

f)   and, generally, prevent pollution of the soil and of the subsoil, of the
water and of the atmosphere, as well as prevent harm to fauna and flora.

6.5       The Contractor must, during the course of the Petroleum Operations,
take all necessary measures to ensure the safety and protect the health of
persons according to good oilfield practices in the international petroleum
industry and the Mauritanian regulations in force, and in particular to put into
place:

a)   Appropriate means for prevention, rapid response and handling of risks,
including the risks of blow-out;

b)   Measures for information, training and means adapted to the risks
encountered, including therein individual protective equipment, fire-fighting
materials as well as means of first-aid and prompt evacuation of victims.

6.6       All works and facilities set up by the Contractor under this Contract
must, according to the nature and circumstances, be constructed, shown with
markers and sign posts and equipped in such fashion as to allow at any time and
in complete safety free passage within the Exploration Perimeter and the
Exploitation Perimeter(s).

6.7       While carrying out his right of construction, to execute works, and to
maintain all facilities necessary for the purposes of this Contract, the
Contractor should not occupy lands situated less than five hundred (500) meters
away from any religious buildings, whether cultural or not, burial grounds,
walled enclosures, courts and gardens, dwelling places, groups of dwelling
places, villages, built-up areas, wells, springs , reservoirs, roads, routes,
railways, water conduits, pipelines, works of public utility, civil engineering
works, without the prior consent of the Minister. The Contractor shall be
required to repair any damages which his works may have caused to occur.

6.8       The Contractor commits to granting preference to Mauritanian
enterprises and products, on equivalent conditions in terms of price, quantity,
quality, terms for payment and timeframe of delivery, and to require his
subcontractors to make a similar commitment

All contracts of supply, construction or service of a value greater than seven
hundred fifty thousand (750,000) Dollars where works of exploration/appraisal
are concerned and one million five hundred thousand ($1,500,000) Dollars where
works of development/exploitation are concerned, must be the subject of a call
for bids from Mauritanian and foreign bidders,

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unless there is a prior consent from the Minister.

Copies of such contracts entered into during the course of each Quarter shall be
sent to the Minister within the thirty (30) days following the end of the
relevant Quarter.

6.9       The Contractor undertakes to grant preference, on equivalent economic
terms, in the purchase of goods necessary for the Petroleum Operations, taking
into account rental terms and any other lease arrangements and to require from
his subcontractors a similar commitment.

To this end, every Annual Budget referred to in Article 5 must specify all the
draft rental contracts of an annual value greater than seven hundred fifty
thousand (750,000) Dollars.

6.10     Without prejudice to the obligation and responsibility of the
Contractor in respect of protecting the environment, the Parties agree to
collaborate to support the management of environemental risks in a precuationary
manner.  To this end, the Contractor agrees to contibute to the financing of the
Environmental Committee by the payment of an amount of one hundred thousand
Dollars ($100,000) per Calendar Year during the validity of the Exploration
Authorization, and, starting from the granting of an Exploitation Authorization,
an amount of three hundred fifty thousand Dollars ($350,000) per Calendar Year,
and, starting from first commercial production from an Exploitation
Authorization, an amount of seven hundred thousand Dollars ($700,000) per
Calendar Year. The above-cited payments shall be considered to be recoverable
Petroleum Costs with respect to the provisions of Article 10.2 here above and as
deductible charges on the Industrial and Commercial Income Tax in conformity
with Article 82 of the Crude Hydrocarbons Code.  Contractor shall have the right
to be represented on the Environmental Committee for the duration of this
Contract and shall appoint one (1) representative for this purpose.

ARTICLE 7 :  RIGHTS OF THE CONTRACTOR IN THE CONDUCT OF PETROLEUM OPERATIONS

7.1       The Contractor has the exclusive right to carry out Petroleum
Operations inside of the Exploration Perimeter or any Exploitation Perimeter
resulting therefrom, as long as the Petroleum Operations are in conformity with
the terms and conditions of this Contract, of the Crude Hydrocarbons Code as
well as with the provisions of the laws and regulations in force in

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Mauritania, and that they are executed according to good oilfield practice in
the international petroleum industry.

7.2       For purposes of the execution of the Petroleum Operations, the
Contractor shall benefit from the rights set forth in Article 54 of the Crude
Hydrocarbons Code.

7.3       The costs, compensation payments, and in general all charges resulting
from occupation of lands referred to in Articles 55 to 57 of the Crude
Hydrocarbons Code shall be at the expense of the Contractor and shall be
recoverable as Petroleum Costs pursuant to the provisions of Article 10.2 here
below.

7.4       The expiration of an Exploration Authorization or of an Exploitation
Authorization, or the obligatory or voluntary relinquishment, partial or total
of an Exploration Perimeter or of an Exploitation Perimeter has no effect with
regard to the rights resulting from Article 7.2 here above for the Contractor,
on works and facilities executed in application of the provisions of this
Article 7, provided that said works and facilities continue to be utilized in
the framework of the Contractor’s activity on the portion kept or on other
exploration or exploitation perimeters in Mauritania.

7.5       Subject to the provisions of Articles 6.8 and 6.9 here above, the
Contractor has freedom of choice concerning suppliers and subcontractors and
shall benefit from the customs regime set forth in Article 18 of this Contract.

7.6       Unless there are provisions to the contrary in the Contract, no
restriction shall be set upon the entry, the stay, freedom of movement,
employment and repatriation of persons and their families as well as their
goods, for the employees of the Contractor and those of his subcontractors,
subject to compliance with employment legislation and regulations as well as
social laws in force in Mauritania.

The Ministry shall facilitate the delivery to the Contractor, as well as to his
agents, to his subcontractors and to their families, all administrative
authorizations which may possibly be required in relation with the Petroleum
Operations carried out in the framework of this Contract, including entry and
exit visas.

ARTICLE 8 :  MONITORING OF PETROLEUM OPERATIONS AND ACTIVITY REPORTS –
CONFIDENTIALITY

8.1       The Petroleum Operations shall be subject to monitoring by the
Ministry pursuant to the

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provisions of Title VIII of the Crude Hydrocarbons Code.  The duly mandated
representatives of the Ministry shall in particular have the right to monitor
the Petroleum Operations, to inspect facilities, equipment, materials, and to
audit said procedures, norms, records and books pertaining to the Petroleum
Operations.  Said such representatives shall make every effort not to disrupt
the normal conduct of Contractor’s operations.

In order to allow the exercise of the rights referred to here above, the
Contractor shall furnish to the representatives of the Ministry and to the other
agents of the State in charge of the supervision of Petroleum Operations
reasonable assistance in the matter of means of transport and of lodging.  The
reasonable expenses for transport and lodging directly linked to monitoring and
inspection shall be at the expense of the Contractor.  Such expenses shall be
considered as recoverable Petroleum Costs according to the provisions of Article
10.2 of this Contract and as deductible charges for purposes of the calculation
of Industrial and Commercial Income Tax.

8.2       The Contractor shall keep the Ministry regularly informed of the
status of the Petroleum Operations. He must in particular supply the Ministry
with the following programs and information:

a)   A work program for any geological or geophysical campaign, at least thirty
(30) days before the beginning of the campaign in question and specifying in
particular its location, its objectives, the techniques and equipment utilized,
the name and address of the enterprise which will carry out the work, the
starting date and the projected duration, the number of kilometers of seismic
lines, the estimated costs and the safety measures put into place if the usage
of explosives is contemplated.

b)   A work program for any well, at least thirty (30) days before the spudding
of the well in question and specifying in particular its precise location, a
detailed description of the works contemplated, including the well techniques
and the associated operations, its depth, its geological objective, the start
date and the projected duration, the estimated costs of the program, a summary
of the geological and geophysical data which prompted the Contractor’s decision,
the name and address of the drilling contractor as well as the designation of
the well site, the name and address of all other subcontractors recruited for
such operation, and the safety measures envisioned.

c)   An advance notice of thirty (30) days concerning any abandonment of a
producing well and forty-eight (48) hours when it concerns a non-producing well.

d)   An advance notice of forty-eight (48) hours concerning any suspension of
drilling or resumption of drilling after a suspension of greater than thirty
(30) days.

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Any accident involving a stoppage of work or material damage or death occurring
in the framework of the Petroleum Operations must be immediately notified to the
Minister and not later than within twenty-four (24) hours.

8.3       The Ministry may require from Contractor the execution, at the expense
of the latter, of all work necessary to ensure safety and hygiene within the
framework of the Petroleum Operations, pursuant to Article 6.5 here above.

8.4       The Ministry shall have access to all original data resulting from
Petroleum Operations undertaken by the Contractor within the Exploration
Perimeter and Exploitation Perimeter(s) such as geological, geophysical,
petrophysical, drilling, reports concerning commencement of exploitation and all
other reports generally required for the Petroleum Operations.

8.5       The Contractor commits to furnishing to the Ministry the following
periodic reports:

a)   Daily reports on drilling activities;

b)   Weekly reports on geophysical works;

c)   Starting from the date of granting of an Exploitation Authorization, within
fifteen (15) days following the end of each Quarter, a detailed report on
development activities;

d)   Starting from the start-up of production, within fifteen (15) days
following the end of each month, an exploitation report specifying in particular
each of the quantities of Hydrocarbons produced, utilized in Petroleum
Operations, stored, lost or flared, and sold, during the course of the preceding
month as well as an estimate of each of the quantities in question for the
current month.  With regard to Hydrocarbons sold, the report shall specify for
each sale the identity of the buyer, the quantity sold and the price obtained;

e)   Within the fifteen (15) days following the end of each Quarter, a report
relative to Petroleum Operations carried out during the Quarter elapsed,
containing in particular a description of the Petroleum Operations carried out
and a detailed statement of the Petroleum Costs incurred, categorized in
particular by Exploration Perimeter / Exploitation Perimeter and by type;

f)   Within the three (3) months following the end of each Calendar Year, a
report relative to the Petroleum Operations carried out during the Calendar Year
elapsed, as well as a detailed statement of Petroleum Costs incurred,
categorized in particular by Exploration Perimeter / Exploitation Perimeter and
by type and a statement of the personnel employed by the Contractor, indicating
the number of employees, their nationality, their duties, the

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total amount of the salaries as well as a report on medical care and instruction
given to them.

g)   Any other report generally required within the framework of Petroleum
Operations.

8.6       Moreover, the following reports, data and documents shall be furnished
to the Ministry during the month following their drafting or their being
obtained:

a)   Two (2) copies of the geological reports made in the framework of
exploration ;

b)   Two (2) copies of geophysical reports made in the framework of
exploration.  The Ministry shall have access to the originals of all recordings
made (magnetic tapes or other format) and may, upon request, obtain copies;

c)   Two (2) copies of reports of commencement and termination of drilling for
each of the wells drilled;

d)   Two (2) copies of all measures, tests, and well loggings recorded during
the course of drilling (drilling termination reports);

e)   Two (2) copies of each report of analyses (petrography, biostratigraphy,
geochemistry or other) carried out on the core samples, the cuttings or fluids
sampled in each one of the wells drilled, including therein raw data and
supporting items with media for copying photos pertaining thereto;

f)   A representative portion of the core samples taken, well cuttings taken
from each well as well as fluid samples collected during the production tests
shall also be supplied within reasonable periods of time.

g)   Moreover, the Contractor may freely export core samples taken, drill
cuttings taken and fluids produced;

h)   And in a general fashion, two (2) copies of all other reports generally
required for Petroleum Operations.

Reports, studies and other results referred to in this Article 8.6, as well as
those referred to in Article 8.5 here above, shall be supplied in a suitable
medium in digital and/or hard copy.

8.7       The Parties undertake to consider as confidential and to not
communicate to Third Parties or to publish, except with the prior consent of the
Minister, data and information of a technical nature related to the Petroleum
Operations and which would not already be in the public domain, for the entire
duration of the Contract.

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In the case of relinquishment of a surface area or surrender of a perimeter ,
the Contractor undertakes to consider as confidential and to not communicate to
Third Parties or to publish, except with the prior consent of the Minister, the
data and information relating to the perimeter in question and which would not
already be in the public domain.

After the surrender, termination or expiration of the Contract, the Contractor
undertakes to consider as confidential and to not communicate to Third Parties
or to publish, except with the prior consent of the Minister, the data and
information relating to Petroleum Operations and which would not already be in
the public domain.

8.8       Notwithstanding the provisions of Article 8.7, the State may
communicate the data and information:

a)   To all suppliers of services and professional consultants providing
services in the framework of the monitoring of Petroleum Operations, after
obtaining a similar commitment of confidentiality;

b)   To any bank, institution or financial establishment with which an entity of
the State solicits or obtains financing, after obtaining a similar commitment of
confidentiality;

c)   In the framework of any contentious proceeding in a legal, administrative
or arbitrational matter.

8.9       Notwithstanding the provisions of Article 8.7, the Contractor may
communicate the data and information:

a)   To any Affiliated Company bound by a similar commitment of confidentiality;

b)   To any suppliers of services and professional consultants providing
services in the framework of Petroleum Operations, after obtaining a similar
commitment of confidentiality;

c)   To any company with a bona fide interest in the carrying out of a possible
assignment, after obtaining from such company a commitment to keep confidential
such information and to utilize it only for the purposes of such assignment;

d)   To any bank or financial establishment with which an entity of the
Contractor solicits or obtains financing, after obtaining a similar commitment
of confidentiality;

e)   When and to the extent that the regulations of a recognized stock exchange
require the information;

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f)   Within the framework of any contentious proceeding in a legal,
administrative or arbitrational matter.

8.10     The Contractor must report to the Minister the soonest possible any
information relative to mineral substances encountered during the Petroleum
Operations.

8.11     The Contractor must participate in the implementation of the Extractive
Industries Transparency Initiative (EITI) pursuant to Article 98 of the Crude
Hydrocarbons Code.

ARTICLE 9 :  APPRAISAL OF A DISCOVERY AND GRANTING OF AN EXPLOITATION
AUTHORIZATION

9.1       If the Contractor discovers Hydrocarbons in the Exploration Perimeter,
he must so notify the Minister in writing the soonest possible and carry out,
pursuant to good oilfield practice in the international petroleum industry, the
necessary tests.  Within the thirty (30) days following the provisional closure
or abandonment of the discovery well, the Contractor must submit to the Minister
a report giving all information pertaining to such discovery and formulating
recommendations of the Contractor as to whether or not to pursue his appraisal.

9.2       If the Contractor wishes to undertake the appraisal works of the
above-cited discovery, he must diligently submit to the Minister for approval
the appraisal work program, the timetable for execution and the estimate of the
corresponding budget, not later than six (6) months following the date of the
notification of the discovery referred to in Article 9.1 here above.

The Contractor must then commence with maximum diligence the appraisal work
pursuant to the program drawn up, it being understood that the provisions of
Articles 5.2 and 5.3 here above shall apply to said program.

9.3       Within the three (3) months following the completion of the appraisal
works, and not later than thirty (30) days prior to the expiration of the third
phase of the exploration period defined in Article 3.2, as may be extended
pursuant to the provisions of Articles 3.3 and 3.4 here above, the Contractor
shall submit to the Minister a detailed report giving all the technical and
economic information relative to the deposit so discovered and appraised, and
establishing the commercial character or not of the said discovery.  Such report
shall in particular include the following information:  the geological and
petrophysical, characteristics, and the estimated delimitation of the deposit;
the results of the production tests carried out, the nature, properties and
volume of Hydrocarbons which it contains, a preliminary technical and economic
study on the placement of the deposit into production.

9.4       Any quantity of Hydrocarbons produced from a discovery before the
discovery has been declared commercial, if it is not utilized for the
carrying-out of the Petroleum Operations, or

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lost, shall be subject to the provisions of Article 10 of this Contract.

9.5       A deposit considered by the Contractor to be commercially exploitable
gives him the right to an Exploitation Authorization. In such case, the
Contractor shall submit to the Minister, within the three (3) months following
the submission of the report referred to in Article 9.3 here above, and not
later than thirty (30) days prior to the expiration of the third phase of the
exploration period defined in Article 3.2, possibly extended pursuant to the
provisions of Articles 3.3 and 3.4 here above, an application for an
Exploitation Authorization. Said application shall specify the lateral and
stratigraphic delimitation of the Exploitation Perimeter, which shall cover only
the presumed limits of the deposit discovered and appraised in the Exploration
Perimeter then currently valid and shall be accompanied by technical
justifications necessary for said delimitation. The above-cited application for
an Exploitation Authorization shall be accompanied by a detailed development and
production program, including in particular for the deposit in question :

a)   An estimate of the recoverable reserves, proven and probable and of the
corresponding production profile, as well as a study of the methods of recovery
of hydrocarbons and development of natural gas;

b)   A description of the works and facilities required to put the field into
production, such as number of wells, facilities required for production,
separation, processing, storage and transport of Hydrocarbons;

c)   A program and a schedule for carrying out the said works and facilities,
including startup date for production ;

d)   An estimate of development investments and exploitation costs itemized for
each year as well as an economic study confirming the commercial character of
the deposit ;

e)   The methods for financing such investments by each one of the entities
making up the Contractor ;

f)   An environmental impact study of the development project, carried out by
the Contractor pursuant to the provisions of the Environmental Code.

g)   An outline of a Rehabilitation Plan to return the sites to their original
condition at the end of exploitation.

The Minister may propose revisions or modifications to the development and
production program referred to above, as well as to the Exploitation Perimeter
applied for, in notifying the Contractor thereof with all justifying supporting
data deemed appropriate, within the ninety (90)

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days following receipt of the said program.  The provisions of Article 5.2 here
above shall apply to said program with regard to its adoption.

When the results acquired during the course of development justify changes to
the development and production program, said program may be modified in
utilizing the same procedure as that referred to here above for its initial
adoption.

9.6       The Exploitation Authorization shall be granted by the Minister within
forty-five (45) days following the date of adoption by the Parties of the
development and production program.  The granting of an Exploitation
Authorization entails ipso facto the cancellation of the Exploration
Authorization inside of the Exploitation Perimeter; however, the Exploration
Authorization continues to be valid outside that perimeter until its expiration
date, without the minimum exploration work obligation referred to in Article 4
above for the subject phase of the exploration period being modified.

9.7       If the Contractor makes several commercial discoveries within the
Exploration Perimeter, each of such will give rise, in accordance with Articles
9.5 and 9.6 here above, to a separate Exploitation Authorization corresponding
to an Exploitation Perimeter.

9.8       If in the course of work subsequent to the grant of an Exploitation
Authorization, it appears that the deposit has an extension greater than that
initially provided for in Article 9.5 here above, the Minister shall grant to
the Contractor, within the framework of the Exploitation Authorization already
granted, the additional portion, provided that the extension is an integral part
of the currently valid Exploration Perimeter and that the Contractor supplies
the technical justifications for the extension applied for.

If it appears that the deposit has an extension less than that initially
provided for, the Minister may require the Contractor to relinquish the exterior
portion(s) of the boundaries of the deposit.

9.9       In the event that a deposit extends beyond the boundaries of the
currently valid Exploration Perimeter, the Minister may require the Contractor
to exploit such deposit together with the holder of the adjacent perimeter
following the provisions of Article 53 of the Crude Hydrocarbons Code. Within
the twelve (12) months following the written request of the Minister, the
Contractor must submit to him, for approval, a draft development and production
program of the relevant deposit drawn up in agreement with the holder of the
adjacent perimeter.

In the case where the deposit extends over one or more other perimeters which
are not under contract, the process of extension of the contractual perimeter
may be undertaken, pursuant to the provisions of the Crude Hydrocarbons Code.

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9.10     The Contractor must start up the development operations including the
necessary studies, not later than six (6) months following the date of granting
of the Exploitation Authorization referred to in Article 9.6 here above and must
pursue them with the maximum diligence. The Contractor undertakes to carry out
the development and production operations according to good oilfield practice in
the international petroleum industry, making it possible to ensure the optimum
recovery of Hydrocarbons contained in the deposit. The Contractor undertakes to
proceed as soon as possible with studies of assisted recovery in consultation
with the Ministry and to utilize such processes if, in the estimation of
Contractor, such processes will lead under the economic conditions to an
improvement of the rate of recovery.

9.11     The duration of the exploitation period during which the Contractor is
authorized to ensure the production of a deposit declared to be commercial is
set at twenty-five (25) years if the exploitation is for deposits of Crude
Petroleum and thirty (30) years if the exploitation is for deposits of Dry Gas,
starting from the date of granting of the corresponding Exploitation
Authorization.

Upon the expiration of the initial period of exploitation defined here above,
the Exploitation Authorization may be renewed for an additional maximum period
of ten (10) years upon an application by Contractor providing supporting
information submitted to the Minister at least one (1) year prior to said
expiration, provided that the Contractor has fulfilled all his contractual
obligations during the initial exploitation period and that he proves that
additional commercial production from the Exploitation Perimeter remains
possible during the additional period applied for.

9.12     For any deposit having given rise to the granting of an Exploitation
Authorization, the Contractor must, without prejudice to the provisions of
Article 21 here below, carry out at his own expense all appropriate and
necessary Petroleum Operations to place the deposit into exploitation, in
conformity with the adopted development and production program.

However if the Contractor believes, on the basis of technical knowledge acquired
on such deposit, and can make the accounting proof during the course of the
development and production program or during the course of exploitation that
producing from such deposit cannot be, or can no longer be, commercially
profitable, even though the discovery well and the appraisal works have led to
the granting of an Exploitation Authorization pursuant to this Contract, the
Minister undertakes to not obligate the Contractor to pursue the works and to

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explore with the Contractor, to the extent possible, technical and economic
improvements which would permit the Contractor to consider the profitable
exploitation of said deposit.  In the case where the Contractor decides not to
pursue the exploitation works and if the Minister asks him to, the Contractor
shall surrender the relevant Exploitation Authorization and the rights which are
attached thereto.

9.13     The Contractor may at any time, subject to so notifying the Minister in
writing with an advance notice of at least six (6) months, surrender totally or
in part an Exploitation Authorization, provided that he has satisfied all
obligations provided for in this Contract.

9.14     The Contractor undertakes for the duration of the Exploitation
Authorizations to produce annually quantities of Hydrocarbons from each deposit
according to generally accepted norms in the international petroleum industry in
taking principally into consideration the rules for the proper conservation of
deposits and the optimal recovery of the reserves of Hydrocarbons under economic
conditions for the duration of the relevant Exploitation Authorizations.

9.15     The ceasing of production of a deposit for a duration greater than six
(6) consecutive months, decided upon by the Contractor without the consent of
the Minister, may lead to the cancellation of this Contract within the terms set
forth in Article 25 here below.

9.16     The Minister may place the Contractor on notice by registered letter
with return receipt to remedy the following shortcomings within a time period of
three (3) months, if the latter, without duly justified reasons:

a)   Has not submitted an appraisal work program for said discovery within the
time period referred in Article 9.2 here above ;

b)   Has not carried out the appraisal works of said discovery in conformity
with the appraisal program  referred to in Article 9.2 here above ;

c)   Or has not submitted an application for an Exploitation Authorization
within the time period referred to in Article 9.5 here above.

If the Contractor has not remedied the above shortcomings within the mentioned
time period, the Minister may then demand that he relinquish immediately and
without compensation all his rights within the presumed boundaries of said
discovery, including the Hydrocarbons which could be produced from it.

The State may then carry out all works of appraisal, development and production
of such discovery upon condition however that it does not cause damage to the
performance of the

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Petroleum Operations of the Contractor in the Exploration Perimeter or any
Exploitation Perimeter governed by the Contract.

ARTICLE 10 :  RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING

10.1     From the commencement of regular Hydrocarbons production carried out
pursuant to an Exploitation Authorization or an early production authorization,
that production shall be shared and sold in accordance with the provisions
hereafter.

10.2     For the recovery of Petroleum Costs, the Contractor shall freely retain
each Quarter, and for each Exploitation Authorization, a share of total
production equal to fifty-five percent (55%) for Crude Petroleum and sixty-two
percent (62%) for Dry Gas, calculated on total production which is not utilized
for Petroleum Operations, nor wasted, or, if applicable, a lower percentage of
production, or only a lower percentage which would be necessary and would
suffice.

The value of the share of total production allocated for the petroleum cost
recovery of the Contractor as defined in the preceding subparagraph, shall be
calculated in accordance with the provisions of Articles 14 and 15 here below.

In the course of a Calendar Year, should the Petroleum Costs not yet recovered
by the Contractor pursuant to the provisions of this Article 10.2 exceed the
equivalent in value of fifty-five percent (55%) with respect to Crude Petroleum
and sixty-two percent (62%) with respect to Dry Gas, of the total production
calculated as indicated here above, the excess which cannot be recovered for the
Calendar Year under consideration shall be carried forward to the following
Calendar Year(s) until full recovery of Petroleum Costs or the termination of
this Contract.  The recovery of Petroleum Costs for any Quarter shall be
scheduled in the order stipulated in the Accounting Procedure.

10.3     The volume of Hydrocarbons, related to each Exploitation Authorization,
which remains for each Quarter after the Contractor has taken from total
production the share necessary to the recovery of Petroleum Costs under the
provisions of Article 10.2 here above, shall be shared between the State and the
Contractor in the following manner, in the ratio of the applicable figure for
the ratio “R” defined as follows:

Value of « R »

    

Share of the State

    

Share of the
Contractor

 

Less than 1

 

31 

%  

69 

%

Greater than or equal to 1 and less than 1.5

 

33 

%  

67 

%

Greater than or equal to 1.5 and less than 2

 

35 

%  

65 

%

Greater than or equal to 2 and less than 2.5

 

37 

%  

63 

%

Greater than or equal to 2.5 and less than 3

 

39 

%  

61 

%

Greater than or equal to 3

 

42 

%  

58 

%

 

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For the application of this Article, the ratio « R » means to the ratio of
« Cumulative Net Revenue » of Contractor over « Cumulative Investments » in the
relevant Exploitation Perimeter, where:

« Cumulative Net Revenue » means the sum, calculated from the Effective Date
until the end of the preceding Quarter, of the value of Hydrocarbons obtained by
Contractor pursuant to the provisions of Articles 10.2 and 10.3 here above ;
less the Exploitation Petroleum Costs incurred by the Contractor, as such are
defined and determined under the provisions of the Accounting Procedure. 

« Cumulative Investments » means the sum, from the Effective Date up until the
end of the preceding Quarter, of the Exploration Petroleum Costs and the
Development Petroleum Costs incurred by the Contractor as defined and determined
under the provisions of the Accounting Procedure.

10.4     The State may receive its share of production defined in Article 10.3
here above, either in kind, or in cash.

10.5     If the State wishes to receive in kind all of part of its share of
production defined in Article 10.3 here above, the Minister shall advise the
Contractor in writing not less than ninety (90) days prior to the commencement
of the relevant Quarter and specify the exact quantity it wishes to receive in
kind during said Quarter and the modalities of delivery, which must be specified
in the lifting contract.

For this purpose, it is agreed that the Contractor shall not commit to the sale
of a part of the State production, for a term which exceeds one hundred and
eighty (180) days, unless he shall have obtained the written consent of the
Minister.

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10.6     If the State wishes to receive in cash all or part of its share of
production specified in Article 10.3 here above, or if the Minister has failed
to notify the Contractor of its decision to take a portion of the State’s
production in kind in accordance with Article 10.5 here above, the Contractor is
obligated to sell the State share of production which the State wishes to take
in cash during the relevant Quarter, and to proceed with the liftings of such
share in the course of such Quarter, and to pay the State within thirty (30)
days following each lifting, an amount equal to the quantity corresponding to
the portion of the State production share, multiplied by the sale price F.O.B.,
after deduction of the costs attributable to such sales.

The Minister shall be entitled to request the settling of the sales of the State
share of production effected by the Contractor either in Dollars or in any other
convertible currency in which the transaction took place.

ARTICLE 11 : TAX REGIME

11.1      Each of the entities which make up the Contractor shall be subject to
the Industrial and Commercial Income Tax levied on the net profits earned in
relation to the Petroleum Operations in accordance with Articles 66 to 74 of the
Crude Hydrocarbons Code and the provisions of the Accounting Procedure found in
Annex 2 of this Contract.

The rate of this tax is set at twenty-seven percent (27%) for the entire
duration of the Contract such as defined in Article 2.2 here above.

For the purposes of setting the amount of the  Industrial and Commercial Income
Tax, the value of Hydrocarbons sold by the Contractor under Articles 10.2 and
10.3 here above to be included in net taxable profit shall be established  in
accordance with the provisions of Article 14 here below.

11.2     Without prejudice to the provisions of Article 21 here below, the
Contractor shall pay to the State the following surface rentals:

a)   two Dollars ($2) per square kilometer and per year during the first phase
of the exploration period ;

b)   three Dollars ($3) per square kilometer and per year during the second
phase of the exploration period ;

c)   four Dollars ($4) per square kilometer and per year during the third phase
of the exploration period and during any extension provided for in Articles 3.3
and 3.4 here above;

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d)   one hundred seventy Dollars ($170) per square kilometer and per year during
the validity of the Exploitation Authorization.

The surface rentals referred to in paragraphs a), b) and c) here above shall be
paid in advance and per year, not later than the first day of each Contract
Year, for the entire Contract Year, according to the extent of the Exploration
Perimeter held by the Contractor upon the due date of said rentals.

The surface rental relative to an Exploitation Authorization shall be paid in
advance and per year, at the beginning of each Calendar Year following the
granting of the Exploitation Authorization or for the Calendar Year of said
grant, within thirty (30) days of the date of the grant, prorated over time for
the remaining duration of the current Calendar Year, according to the extent of
the Exploitation Perimeter upon such date.

In the case of relinquishment of the surface during the course of a Calendar
Year or during the course of an event of Force Majeure, the Contractor shall
have no right to any reimbursement of surface rentals already paid.

The amounts referred to in this Article 11.2 are not considered recoverable
Petroleum Costs under the provisions of Article 10.2 here above, nor are they
considered as deductible costs for setting the basis of the Industrial and
Commercial Income Tax in accordance with Article 76 of the Crude Hydrocarbons
Code.

11.3     The Contractor shall be subject to taxes and fees as well as to
withholdings at source and other tax obligations applicable to contractors
pursuant to Title VI of the Crude Hydrocarbons Code.

11.4     The subcontractors of the Contractor as well as the personnel of the
Contractor and of his subcontractors shall be subject to the generally
applicable tax provisions, subject to the provisions of Title VI of the Crude
Hydrocarbons Code which are applicable to them.

11.5    The shareholders of the entities making up the Contractor and their
Affiliated Companies shall benefit from the exemptions provided for in Article
86 of Title VI of the Crude Hydrocarbons Code.

11.6     Except for taxes, fees and dues provided in Title VI of the Crude
Hydrocarbons Code, for special taxes related to the utilization of drinking
water or of irrigation water provided for in Article 6 .4 here above, for the
surface rentals provided for in Article 11.2 here above, for the bonuses
provided for in Article 13 here below andfor the payment referred to in Article
12.2 here below, the Contractor shall not be subject to any tax, fees,
royalties, payments and

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contributions of any nature whatsoever, be they national, regional or municipal,
either in effect now or in the future, which may burden the Petroleum
Operations, and of any revenue derived therefrom or more generally, the
property, the activities or action of the Contractor, including its facility,
its money transfers, and its operation in implementation of this contract,
provided, however, that these exemptions are only applicable to Petroleum
Operations.

Pursuant to Article 83-2º of the Crude Hydrocarbons Code, the rendering of
services directly related to Petroleum Operations shall, in particular, be
subject to VAT at the rate of zero, when the service rendered, the right
transferred or the item rented are reused or exploited in Mauritania, pursuant
to Article 177 B of the General Tax Code.

The foregoing exemptions in this Article do not cover services actually rendered
to Contractor by public Mauritanian administrations and local governmental
departments or units.  However, the tariffs levied in such cases on the
Contractor, its subcontractors, transporters, customers and agents must be
reasonable in relation to the services rendered and must not exceed the tariffs
generally applicable for these same services by the same public Mauritanian
administrations and local governmental departments or units.   The cost of these
services shall be considered recoverable Petroleum Costs in accordance with
Article 10.2 of this Contract.

ARTICLE 12 :  PERSONNEL

12.1     From the beginning of the Petroleum Operations, the Contractor
undertakes to ensure the employment on a priority basis, with equal
qualification, of Mauritanian personnel and to contribute to the training of
such personnel, in order to allow their accession to all employment as qualified
workers, supervisors, management, engineers and directors.

To this end, the Contractor shall establish in agreement with the Ministry at
the end of each Calendar Year, a recruitment plan of Mauritanian personnel and a
plan for training and skills improvement in order to attain a greater and
greater participation of Mauritanian personnel in the Petroleum Operations.

12.2     The Contractor must also contribute to the training and skills
improvement of the agents of the Ministry and to the other purposes referred to
in Article 80 of the Crude Hydrocarbons Code, according to a plan established by
the Ministry at the end of each Calendar Year.

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To this end, the Contractor shall pay to the State, for said training and job
skills improvement plan, an amount of three hundred thousand Dollars ($300,000)
per Calendar Year during the validity of the Exploration Authorization, and,
starting from the granting of an Exploitation Authorization, an amount of six
hundred thousand Dollars ($600,000) per Calendar Year. The above-cited payments
shall be considered to be nonrecoverable Petroleum Costs with respect to the
provisions of Article 10.2 here above but as deductible charges on the
Industrial and Commercial Income Tax in conformity with Article 82 of the Crude
Hydrocarbons Code.

ARTICLE 13 : BONUSES

13.1     The Contractor shall pay to the State a signature bonus in the amount
of four million Dollars ($4,000,000) within the thirty (30) days following the
Effective Date.

13.2     Moreover, the Contractor shall pay to the State the following
production bonuses:

a)   six million Dollars ($6,000,000) when the regular commercial production of
Hydrocarbons extracted from the Exploitation Perimeter(s) reaches for the first
time an average rate equal to twenty-five thousand (25,000) Barrels of Crude
Petroleum per day during a period of thirty (30) consecutive days;

b)   eight million Dollars ($8,000,000) when the regular commercial production
of Hydrocarbons extracted from the Exploitation Perimeter(s) reaches for the
first time an average rate equal to fifty thousand (50,000) Barrels of Crude
Petroleum per day for a period of thirty (30) consecutive days;

c)   tweleve million Dollars ($12,000,000) when the regular commercial
production of Hydrocarbons extracted from the Exploitation Perimeter(s) reaches
for the first time an average rate equal to one hundred thousand (100,000)
Barrels of Crude Petroleum per day for a period of thirty (30) consecutive
days ;

d)   twenty million Dollars ($20,000,000) when the regular commercial production
of Hydrocarbons extracted from the Exploitation Perimeter(s) reaches for the
first time an average rate equal to one hundred fifty thousand (150,000) Barrels
of Crude Petroleum per day for a period of thirty (30) consecutive days.

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Each of the sums referred to in paragraphs a), b), c) and d) here above shall be
paid within the thirty (30) days following the above-cited period of reference.

13.3     The sums referred to in Articles 13.1 and 13.2 here above shall not be
considered as recoverable Petroleum Costs with respect to the provisions of
Article 10.2 here above, nor considered to be deductible charges for the
determination of the Industrial and Commercial Income Tax  pursuant to Article
79 of the Crude Hydrocarbons Code.

ARTICLE 14 : PRICE AND MEASUREMENT OF HYDROCARBONS

14.1     The unitary market price of the Crude Petroleum used in consideration
for purposes of Articles 10 and 11 here above shall be the “Market Price” F.O.B.
the Delivery Point, expressed in Dollars per Barrel, as determined here below
for each Quarter.

A Market Price shall be established for each type of Crude Petroleum or blend of
Crude Petroleums.

14.2    The Market Price applicable to Crude Petroleum lifted in the course of a
Quarter shall be calculated at the end of each Quarter under consideration, and
shall be equal to the weighted average of prevailing prices obtained by the
Contractor and the State in the course of their sale of Crude Petroleum to Third
Parties in the course of the Quarter under consideration, adjusted as
appropriate to reflect differentials in quality and density, and on the terms of
F.O.B. delivery and payment terms provided the quantity sold in such manner to
Third Parties in the course of the Quarter under consideration corresponds to no
less than thirty percent (30%) of the total of the volumes of Crude Petroleum
extracted from the Exploitation Perimeters existing under this Contract, taken
as a whole, and sold in the course of the said Quarter.

14.3     If such Third Party sales do not take place during the Quarter under
consideration, or if they constitute less than thirty percent of the total of
the quantities of Crude Petroleum of the Exploitation Perimeter granted under
the present Contract taken as a whole and sold in the course of the said
Quarter, the Market Price shall be arrived at by comparison with the « Current
International Market Price » for the Quarter under consideration of the
qualities of Crude Petroleum produced in Mauritania and in neighboring producing
countries, taking into account differentials of quality, density, transport and
terms of payment.

« Current International Market Price »  shall be a reference price based on
Dated Brent prices, as such are published in “Platt’s Crude Oil Marketwire” or
similar internationally recognized

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publication, averaged for the month(s) during which sales were made and adjusted
for differences in quality, API  gravity, terms of FOB delivery and payment
terms.  If Dated Brent is replaced by another internationally recognized
reference crude, the published quotes of the replacement crude shall be used
instead.

14.4     In particular the following transactions are not taken into account in
calculating the Market Price of the Crude Petroleum:

a)   Sales in which the buyer is an Affiliated Company of the seller as well as
sales between entities making up the Contractor;

b)   Sales which include some consideration other than payment in
freely-convertible currency or sales attributable in whole or in part to
motivations other than the usual economic incentives attached to sales of Crude
Petroleum on the international market (such as barter contracts, sales from
government to government or to governmental units).

14.5     A committee presided over by the Minister or his delegate and including
other representatives of the State and those of the Contractor shall meet at the
request of its president, at the end of each Quarter, to establish, according to
the stipulations of this Article 14, the Market Price of the Crude Petroleum
produced, applicable to the Quarter elapsed. The decisions of the committee
shall be by unanimous vote.

If no agreement can be reached by the committee on a decision within a time
period of thirty (30) days after the end of the relevant Quarter, the Market
Price of the Crude Petroleum produced shall be definitively determined by an
expert of international reputation, appointed by agreement of the Parties, or,
if such agreement is not reached, by the International Centre for Expertise of
the International Chamber of Commerce.  The expert shall establish the price
according to the stipulations of this Article 14 within a time period of twenty
(20) days after his appointment.  The costs of expertise shall be shared equally
between the Parties.

14.6     While awaiting the determination of the price, the Market Price
provisionally applicable to a Quarter shall be the Market Price of the preceding
Quarter.  Any necessary adjustment shall be made not later than thirty (30) days
after the determination of the Market Price for the Quarter under consideration.

14.7     The Contractor shall measure all the Hydrocarbons produced after
extraction of water and connected substances, in utilizing, with the consent of
the Ministry, the instruments and procedures in conformity with the methods in
force in the international petroleum industry.  The Ministry shall have the
right to examine such measures and to check the instruments and

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procedures utilized.

If during the course of exploitation the Contractor wishes to modify such
instruments and procedures, he must obtain the prior consent of the Ministry.

If, during the course of an inspection carried out by the Ministry, it is
verified that the measuring instruments are inaccurate and exceed the acceptable
tolerances, and that this condition of fact is confirmed by an independent
expert, the inaccuracy in question shall be considered as having existed for
half of the period since the preceding inspection, unless a different period is
demonstrated.  The accounting of the Petroleum Costs and the shares of
production and liftings of the Parties shall be the subject of appropriate
adjustments within thirty (30) days following receipt of the expert’s report.

14.8     For Dry Gas, the provisions of this Article 14 shall apply mutatis
mutandis, subject to the provisions of Article 15 here below.

ARTICLE 15 :  NATURAL GAS

Non-Associated Natural Gas

15.1     In the case where a discovery referred to in Article 9.1 here above
concerns a deposit of Non-Associated Natural Gas which the Contractor has
undertaken to appraise pursuant to Article 9.2 here above, the Minister and the
Contractor shall jointly carry out, in parallel with the appraisal works of the
discovery in question, a market study intended to evaluate the possible market
outlets for such Natural Gas, both on the local and the export markets, as well
as the means necessary for its marketing, and shall consider the possibility of
a joint marketing of their shares of production.  The study shall in particular
determine the quantities for which sale on the local market can be assured as a
fuel or as a raw material, the facilities and arrangements necessary for the
sale of such Natural Gas to the utilizing enterprises or to the entity of the
State in charge of its distribution, as well as the discounted price which shall
be determined pursuant to the principles set forth in Article 15.8 here below.

For purposes of evaluating the commercial value of the discovery of the
Non-Associated Natural Gas, the Contractor shall have the right pursuant to
Article 3.4 here above to an extension of his Exploration Authorization.

If following the appraisal of a discovery of Non-Associated Natural Gas, it is
shown that the development requires specific economic terms in order to make it
economically viable in the opinion of each of the two Parties, the Parties may
agree, on an exceptional basis, on said terms.

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15.2     At the end of appraisal works, in the case where the Parties should
decide to jointly exploit such Natural Gas in order to supply the local market,
or in the case where the Contractor should decide to exploit it for export, the
latter shall submit, prior to the end of the Exploration Authorization, an
application for an Exploitation Authorization which the Minister shall grant
within the terms set forth in Article 9.6 here above.

The Contractor shall then proceed with the development and the production of
such Natural Gas pursuant to the development and production program submitted to
the Minister and approved by the latter within the terms provided for in Article
9.5.  The provisions of this Contract applicable to Crude Petroleum shall apply
mutatis mutandis to the Natural Gas, subject to the special provisions provided
for in Articles 15.7 to 15.9 here below.

In the case where the production is intended in whole or in part for the local
market, a supply contract shall be entered into, under the supervision of the
Minister, between the Contractor and the enterprise of the State responsible for
the distribution of the gas.  The Contract shall define the obligations of the
parties in the matter of delivery and lifting of the commercial gas and may
contain a clause obligating the purchaser to pay a portion of the price in the
event of a default in the lifting of the contractual quantities.

15.3     If an appraisal program or application for an Exploitation
Authorization has not been submitted within the time periods allowed for in
Articles 9.2 and 9.5 here above, the surface comprising the extent of the
deposit of Non-Associated Natural Gas shall be, upon the request of the
Minister, relinquished to the State, which shall be able to undertake for its
own account all works of placement into exploitation of the deposit in question.

Associated Natural Gas

15.4     In the event of a discovery of a commercially exploitable deposit of
Crude Petroleum containing Associated Natural Gas, the Contractor shall indicate
in the report provided for in Article 9.3 here above whether he considers that
the production of such Associated Natural Gas is likely to exceed the quantities
necessary for the purposes of Petroleum Operations relative to the production of
Crude Petroleum, including therein the operations of reinjection, and whether it
considers that such excess is likely to be produced in marketable
quantities.  In the case where the Contractor will have advised the Minister of
such an excess amount, the Parties shall jointly evaluate the possible markets
for such excess amount, both on the local and the export markets, including
therein the possibility of a joint marketing of their shares of production of
such excess

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amount as well as the means necessary for its marketing.

In the case where the Parties should agree to exploit the excess amount of the
Associated Natural Gas, or in the case where the Contractor should decide to
exploit such amount for export, the Contractor shall indicate in the development
and production program referred to in Article 9.5 here above the additional
facilities necessary for the development and exploitation of such excess amount
and his estimate of the costs pertaining thereto.

The Contractor must then proceed with the development and the exploitation of
such excess amount pursuant to the development and production program submitted
and approved by the Minister within the terms set forth in Article 9.5 here
above, and the provisions of this Contract applicable to the Crude Petroleum
shall apply mutatis mutandis to the excess quantity of Natural Gas, subject to
the special provisions set forth in Articles 15.7 to 15.9 here below.

A similar procedure to that described in the paragraph here above shall be
followed if the marketing of the Associated Natural Gas is decided upon during
the course of the exploitation of a deposit.

15.5     In the case where the Contractor should decide not to exploit the
excess amount of Associated Natural Gas and if the State should at any time
desire to utilize it, the Minister shall so advise the Contractor, in which
case:

a)   The Contractor shall freely place at the disposal of the State all or a
portion of the excess amount which the State desires to lift, at the exit point
of the separation facilities;

b)   The State shall be responsible for the collection, the processing,
compression and transport of such excess amount from the above-mentioned
separation facilities, and shall bear all additional costs pertaining thereto;

c)   The construction of the facilities necessary for the operations referred to
in paragraph b) here above, as well as the lifting of the excess amount by the
State, shall be accomplished pursuant to good oilfield practices in the
international petroleum industry and in such a manner so as not to impede
production, lifting and transport of the Crude Petroleum by the Contractor.

15.6     Any excess amount of Associated Natural Gas which is not utilized
within the framework of Articles 15.4 and 15.5 here above must be reinjected by
the Contractor, unless Contractor technically demonstrates that such reinjection
would result in a reduction of maximum oil recovery, in which case Contactor
shall be authorized to flare said excess and shall be subject to

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the penalty provided for in Article 6.4.

Common Provisions

15.7     The Contractor shall have the right to dispose of his share of
production of Natural Gas, pursuant to the provisions of this Contract. He shall
also have the right to proceed with the separation of liquids of all Natural Gas
produced, and to transport, store, as well as to sell on the local or export
market his share of the liquid Hydrocarbons thus separated, which Hydrocarbons
shall be considered as Crude Petroleum for purposes of their sharing between the
Parties according to Article 10 here above.

15.8     For purposes of this Contract, the Market Price of the Natural Gas,
expressed in Dollars per million of BTU, shall be equal:

a)   To the price obtained from buyers with regard to export sales of Natural
Gas to Third Parties;

b)   With regard to sales on the local market of the Natural Gas as a fuel, to a
price to be mutually agreed upon between the Minister or the national entity in
charge of the distribution of gas on the local market, and the Contractor, on
the basis in particular of the market rate of a fuel substitute for Natural Gas.

15.9     For purposes of the application of Articles 10.2, 10.3 and 13.2  here
above, the quantities of Natural Gas available after deduction of quantities
reinjected, flared and those utilized for purposes of the Petroleum Operations
shall be expressed in number of Barrels of Crude Petroleum such that one hundred
sixty-five (165) cubic meters of Natural Gas measured at a temperature of 15.6°C
and at an atmospheric pressure of 1.01325 bars are deemed to be equal to one (1)
Barrel of Crude Petroleum, except as otherwise agreed between the Parties.

ARTICLE 16 : TRANSPORT OF HYDROCARBONS BY PIPELINES

16.1     The Contractor shall have the right, for the validity term of the
Contract and within the terms defined in Title V of the Crude Hydrocarbons Code,
to process and transport within its own facilities inside of the territory of
Mauritania and to cause to be processed and transported, while retaining
ownership, the products resulting from its exploitation activities or its share
of such products, to points of storage, processing, lifting, or gross
consumption.

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16.2     In the case where agreements having as their purpose to permit or to
facilitate transport by pipelines of Hydrocarbons through other states should
come to be agreed upon between such states and the Mauritanian State, the latter
shall grant to the Contractor without discrimination all the benefits which
could result from the execution of such agreements..

16.3     Within the framework of its transport operations, the Contractor shall
benefit from the rights and shall be subject to the obligations provided for in
Title V of the Crude Hydrocarbons Code.

ARTICLE 17 : OBLIGATION FOR SUPPLYING THE DOMESTIC MARKET

17.1     The Contractor has the obligation of participating in meeting the needs
of domestic consumption of Hydrocarbons, except for exports of petroleum
products, pursuant to the provisions of Article 41 of the Crude Hydrocarbons
Code.

17.2     The Minister shall notify the Contractor in writing, not later than the
1st of October of each Calendar Year, the quantities of Hydrocarbons which the
State chooses to purchase pursuant to this Article, during the course of the
following Calendar Year.  The deliveries shall be made, to the State or to the
person designated by the Minister, by quantities and at regular time intervals
during the course of said Year, according to terms set by agreement of the
parties.

17.3     The price of the Hydrocarbons so sold by the Contractor to the State
shall be the Market Price established according to the provisions of Articles 14
and 15.8 here above; it shall be payable to the Contractor in Dollars within
sixty (60) days from the date of delivery.  A sales contract shall be entered
into between the State and the Contractor which shall establish payment
procedures and pertaining guarantees.

ARTICLE 18 : IMPORTATION AND EXPORTATION

18.1     The Contractor shall have the right to import into Mauritania, for its
account or for that of its subcontractors, all merchandise, materials, machines,
equipment, spare parts and consumable materials necessary for the proper
execution of Petroleum Operations and specified in a customs list established by
the Ministry, upon the proposal of the Contractor, pursuant to Article 92 of the
Crude Hydrocarbons Code.

It is understood that the Contractor and his subcontractors undertake to proceed
with the importing defined here above only to the extent that said materials and
equipment are not

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available in Mauritania upon equivalent conditions in terms of price, quantity,
quality, terms of payment and time period for delivery.

18.2     The imports and re-exports of the Contractor and of his subcontractors
are subject to the customs regime set forth in Articles 90 to 96 of the Crude
Hydrocarbons Code.

18.3     The Contractor, his clients and their transporters shall have, for the
duration of the Contract, the right to freely export at the point of exportation
chosen for such purpose, free of all customs duties and taxes and at any time
whatsoeverand pursuant to the provisions of the Crude Hydrocarbons Code, the
portion of Hydrocarbons to which the Contractor is entitled according to the
provisions of the Contract, after deduction of all deliveries made to the State
pursuant to Article 17. However, the Contractor undertakes, at the request of
the State, not to sell the Hydrocarbons produced in Mauritania to countries
declared hostile to the State.

ARTICLE 19 :  FOREIGN EXCHANGE

19.1     The Contractor shall benefit from the rights and is subject to the
obligations provided for in Title VII of the Crude Hydrocarbons Code in matters
of control of foreign exchange and of protection of investments.

ARTICLE 20 :  BOOK-KEEPING, MONETARY UNIT, ACCOUNTING

20.1     The records and books of account of the Contractor shall be kept
according to the accounting rules generally utilized in the international
petroleum industry, pursuant to the regulations in force and with the Accounting
Procedure defined in Appendix 2 of this Contract.

20.2     The records and books of account shall be kept in the English language
and denominated in Dollars. They shall be fully supported by detailed
documentation proving the expenses and receipts of the Contractor with respect
to this Contract.

Such records and books of account shall be utilized in particular to determine
Petroleum Costs, and the net profits of the Contractor subject to the Industrial
and Commercial Income Tax pursuant to Articles 66 et seq of the Crude
Hydrocarbons Code. They must contain the accounts of the Contractor highlighting
the sales of Hydrocarbons under the terms of this Contract.

For informational purposes, the accounting of profits and balance sheets shall
be kept in Ouguiyas.

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20.3    The originals of the records and accounting books referred to in Article
20.1 here above can be kept at the central headquarters of the Contractor, up
until the Contractor is granted the first Exploitation Authorization, with at
least one copy in Mauritania. Starting from the month during the course of which
such Exploitation Authorization is granted to the Contractor, the originals of
said records and accounting books as well as the supporting documents pertaining
thereto shall be kept in Mauritania.

20.4    The Minister, after having informed the Contractor in writing, may cause
to have the records and books of account relative to the Petroleum Operations
examined and verified by auditors of his choice or by his own agents, according
to the terms specified in the Accounting Procedure.  He shall have a period of
three (3) years following the end of a given Calendar Year to carry out the
examinations or verifications concerning said Calendar Year and present to the
Contractor his objections for any contradictions or errors noted at the time of
such examinations or verifications.  The Parties may agree to extend this time
period by one additional year if special circumstances so justify it.

For Petroleum Costs incurred before the first year of production of
Hydrocarbons, the time period of verification and of rectification is extended
to the end of the second Calendar Year following the Calendar Year during which
the first lifting of Hydrocarbons takes place.

The Contractor is required to furnish all necessary assistance to persons
appointed by the Minister for this purpose and to facilitate the services they
are rendering.  The reasonable expenses for examination and of verification
shall be reimbursed to the State by the Contractor and shall be considered to be
recoverable Petroleum Costs according to the provisions of Article 10.2 here
above.

20.5     The sums due to the State or to the Contractor shall be payable in
Dollars or in a convertible currency chosen by common agreement between the
Parties.

In the event of a delay in payment, the sums due shall bear interest at the
LIBOR rate +5% starting from the day that they should have been paid up until
their payment, with monthly compounding of interest if the payment is more than
thirty (30) days late.

ARTICLE 21 :  PARTICIPATION OF THE STATE

21.1     The State shall acquire on the Effective Date, through the National
Enterprise (Société Mauritanienne des Hydrocarbures et de Patrimoine Minier -
SMHPM) referred to in Article 6 of the Crude Hydrocarbons Code, a carried
interest of ten percent (10%) in the rights and obligations of the Contractor in
the Exploration Perimeter.  The entities of the Contractor, other than the
National Enterprise, shall finance the share of the latter in all Petroleum
Costs corresponding to the exploration Petroleum Operations including

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therein the evaluation/appraisal of discoveries made in the Exploration
Perimeter, during the entire duration of the Exploration Authorization which is
the subject of Article 3 here above.

Additionally, to assist the National Enterprise with capacity building the
Contractor, other than the National Enterprise, will advance to the National
Enterprise, for each Calendar Year during the exploration period until first
production is achieved from an Exploration Perimeter, an annual amount of two
hundred thousand Dollars ($200,000) reimbursable by the National Enterprise in
the event there is exploitation from the the Exploration Perimeter.  The
Contractor will not be subject to any tax or charge of any nature on account of
this reimbursemnet or any gaains resulting therefrom.  The method of
reimbursement of these amounts will be specified in the JOA.

The National Enterprise, as an entity of the Contractor, shall benefit on
account of and pro rata to its participation from the same rights and benefits
and is subject to the same obligations as the other members of the Contractor,
subject to the provisions of this Article 21.

21.2     The State shall have the option to acquire, through the National
Enterprise, a participation in the Petroleum Operations in any Exploitation
Perimeter resulting from the Exploration Perimeter within the limits indicated
in Article 21.3 here below.

In such case, the National Enterprise shall be the beneficiary, on account of
and pro rata to its participation, of the same rights and subject to the same
obligations as those of the Contractor defined in this Contract, subject to the
provisions of this Article 21.

In order to avoid any ambiguity, the participation of the State in the
Exploration Perimeter shall continue to be carried by the entities of the
Contractor pursuant to the provisions of Article 21.1 here above.

21.3     In the case of the exercise by the State of the option of participation
in an Exploitation Perimeter mentioned in Article 21.2 here above, such
participation may not be less than ten percent (10% ) and may not exceed
eighteen percent ( 18%).

21.4     Not later than six (6) months starting from the date of the grant of an
Exploitation Authorization, the Minister must notify the Contractor in writing
of the decision of the State to exercise its option of participation in
specifying the percentage chosen within the limit set forth in Article 21.3 here
above.

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Said participation shall take effect starting from the date of receipt of
notification of the exercise of the option of the State.

In order to avoid any ambiguity, the State shall have no participation in
Petroleum Operations in any Exploitation Perimeter from the Exploration
Perimeter if he does not exercise the option mentioned in Article 21.2 here
above.

21.5     Starting from the effective date of its participation, which is the
subject of Articles 21.2 to 21.4 here above, the State shall finance the
Petroleum Costs in the relevant Exploitation Perimeter pro rata to its
participation.

The State shall reimburse to the entities of the Contractor, other than the
National Enterprise, pursuant to Article 21.6 here below, pro rata to its
participation, the Petroleum Costs not yet recovered relative to said
Exploitation Perimeter and incurred since the Effective Date (with the exclusion
of exploitation Petroleum Costs (OPEX) and financing costs), up until the date
of receipt of notification referred to in Article 21.4 here above.

The Contractor shall not be subject to any tax of any type whatsoever, by reason
of such reimbursements or possible added value pertaining thereto.

21.6     The State shall assign and shall continue to assign to the Contractor
thirty percent (30%) of the share of production to which it is entitled from its
participation and as recovery of Petroleum Costs pursuant to Article 10.2 here
above and the Accounting Procedure constituting Appendix 2, until the cumulative
value of such transfers or reimbursements, appraised according to the provisions
of Articles 14 and 15 here above, is equal to one hundred fifteen percent (115%)
of the Petroleum Costs prior to the Effective Date of the participation and
referred to in the second paragraph of Article 21.5 here above.

21.7     In order to remove any ambiguity, the reimbursement of the exploration
Petroleum Costs stipulated in Articles 21.5 and 21 .6 here above, does not in
any way include the sums paid by the Contractor with respect to Article 13 of
this Contract.

21.8     The reimbursements which will be made by the State with respect to the
provisions of Articles 21.5 and 21.6 here above, shall be paid in kind by the
State which shall transfer to the entities of the Contractor, other than the
National Enterprise, each Quarter at the Delivery Point the percentage of its
quarterly share of production of Hydrocarbons

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stipulated in said Articles.

However, the State reserves the option to make said reimbursements in Dollars
for which the payment in full must take place within a time period of ninety
(90) days starting from the effective date of the participation referred to in
Article 21.4 here above.

In the event that the payment of all said reimbursements within the time periods
provided here above does not take place, the reimbursement in kind such as
referred to in Articles 21.5 and 21.6 here above shall apply.

21.9     The practical methods of participation of the State stipulated in
Article 21.1 here above as well as the rules and obligations of the entities of
the Contractor, including therein the National Enterprise, shall be determined
in an association contract (JOA), substantially conforming to the AIPN model
JOA, which shall be entered into between these entities and shall enter into
force not later than ninety (90) days starting from the Effective Date.  Said
association contract (JOA) shall be amended as necessary and in particular to
take into account, if applicable, the exercise by the State of its
participation, which is the subject of Article 21.2 here above.

21.10   The National Enterprise, on the one hand, and the other entities making
up the Contractor on the other hand, shall not be jointly and severally liable
for the obligations resulting from this Contract vis-a-vis the State. The
National Enterprise shall be individually responsible vis-à-vis the State for
its obligations such as provided in this Contract.  Any default of the National
Enterprise to execute any of its obligations shall not be considered as a
default of the other entities making up the Contractor and shall in no event be
invoked by the State in order to cancel this Contract. The association of the
National Enterprise to the Contractor, shall not under any circumstance cause
void nor affect the rights of the other entities constituting the Contractor to
have recourse to the arbitration clause provided in Article 28 here below.

ARTICLE 22 :  ASSIGNMENT

22.1     The rights and obligations resulting from this Contract may not be
assigned to a Third Party, wholly or in part, by any of the entities making up
the Contractor, without the prior approval of the Minister.

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If within the three (3) months following notification to the Minister of a
proposed assignment accompanied by the necessary information to prove the
technical and financial means of the assignee as well as the terms and
conditions of assignment, the Minister has not given notice of his opposition
with reasonable justification, such assignment shall be deemed to have been
approved by the Minister.

Starting from the date of approval, the assignee shall acquire the status of a
member of the Contractor and must satisfy the obligations imposed upon the
Contractor by this Contract.

Each of the entities making up the Contractor may freely and at any time assign
all or a portion of its interests under the Contract to an Affiliated Company or
to another entity of the Contractor provided that the Minister is notified
beforehand.

22.2     Likewise, the Contractor, or any entity of the Contractor, shall be
required to submit for prior approval of the Minister:

a)   Any plan which would be likely to lead, in particular through a new
allocation of capital stock, to a change of the direct control of the Contractor
or of an entity comprising the Contractor. In particular the following shall be
considered as elements of control of the Contractor, or of an entity comprising
the Contractor:  a change in the allocation of capital stock, the nationality of
the majority shareholders, as well as the statutory provisions relative to the
registered office and the rights and obligations attached to the company shares
with respect to the majority required at the shareholder meetings.  However, the
transfers of company shares to Affiliated Companies may be freely made subject
to prior declaration to the Minister for information and application of the
provisions of Article 24.4 here below, if applicable.  As for transfer of
company shares to Third Parties, transfers shall not be subject to the approval
of the Minister unless they result in the transfer of greater than thirty
percent (30%) of the capital of the enterprise.

b)   Any plan to pledge as security property and facilities earmarked for
Petroleum Operations.

The plans referred to in paragraphs a) and b) shall be notified to the
Minister.  If within a time period of three (3) months, the Minister has not
notified the Contractor or one of the entities in question of his opposition
with reasonable justification to said plans, the plans shall be deemed approved.

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22.3     When the Contractor is made up of several entities, it shall furnish to
the Minister, within the month following its signature, a copy of the
association agreement (JOA) binding the entities and of all modifications which
could be made to said agreement, in specifying the name of the enterprise
appointed as Operator for the Petroleum Operations. Any change of Operator shall
be submitted to the approval of the Minister, pursuant to the provisions of
Article 6.2 here above.

22.4     The transfers made in violation of the provisions of this Article 22
shall be null and void.

ARTICLE 23 : OWNERSHIP, USAGE AND ABANDONMENT OF PROPERTY

23.1    The Contractor shall be the owner of property, moveable and immoveable,
which he will have acquired for purposes of the Petroleum Operations, and shall
retain the full usage thereof, as well as the right to export them or to
transfer them to Third Parties during the entire term of the Contract, provided
that the State may acquire for free, at the request of the Minister, all or a
portion of the property belonging to the Contractor which will have been
utilized for the Petroleum Operations and for which the acquisition costs will
have been fully recovered pursuant to Article 10 here above in the following
cases:

a)   Upon expiration, surrender or termination of this Contract ;

b)   In the event of surrender or of expiration of an Exploitation
Authorization, with regard to the works and facilities situated in the
Exploitation Perimeter and the equipment earmarked exclusively for Petroleum
Operations in the Exploitation Perimeter in question, unless the Contractor
wishes to utilize such property for the Petroleum Operations in other
Exploitation Perimeters resulting from the Exploration Perimeter.

23.2     Upon the expiration, surrender or termination of any Exploitation
Authorization, the Contractor must proceed with all operations necessary to
rehabilitate its original condition in conformity with a Remediation Plan drawn
up and financed within the following terms:

a)   No less than ninety (90) days after the commencement of commercial
production pursaunt to an  approved development program for a deposit, the
Contractor shall prepare and submit to the Minister for approval a Remediation
Plan of the site, in conformity with good oilfield practices of the
international petroleum industry, which he proposes to carry out at the end of
production operations, as well as the corresponding budget.  Each Calendar Year
the Contractor shall incorporate into the Remediation Plan the necessary
revisions to take into account the changes of technical and financial
parameters. The revised

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Remediation Plan shall become the new Remediation Plan which shall be taken into
account for the calculation of the payments on the sequestered account ;

b)   The Remediation Plan shall include a detailed description of the works of
removal and/or of securing of infrastructure such as the platforms, the storage
facilities, the wells, pipes, gathering lines, etc., necessary for the
protection of the environment and of persons;

c)   The Minister may, in consultation with the Minister in charge of the
Environment, propose revisions or modifications to the Remediation Plan,
notifying the Contractor thereof in writing with all appropriate justifying
supporting information, within the ninety (90) days following receipt of said
Plan. The provisions of Article 5.2 here above shall apply to said Plan with
regard to its adoption.  When the results acquired during the course of
exploitation justify changes to the Remediation Plan, said Plan and the
corresponding budget may be modified in conformity with the adoption procedure
described here before;

d)   For purposes of financing the operations set forth in the Remediation Plan,
the Contractor shall open, as of the adoption of this Plan, a sequestered
account with a top tier international banking establishment acceptable to the
Minister, which he will fund starting from the Quarter following the adoption of
the Remediation Plan via annual payments of amounts and according to a schedule,
based on an amortization of the unit of production basis or otherwise determined
in agreement with the Minister ;

e)   The funds paid into the sequestered account shall be treated as recoverable
Petroleum Costs according to the terms set forth in Article 10.2 here above, and
shall be considered to be deductible charges for the determination of the tax on
industrial and commercial profits.  Such funds, as well as the interest received
on the sequestered account, shall be earmarked exclusively for the payment of
expenses linked to the operations of the Remediation Plan ;

f)   The Contractor shall notify the Minister, with an advance notice of one
hundred eighty (180) days, of his intention to start up the operations set forth
in the Remediation Plan, unless the Minister notifies Contractor within thirty
(30) days following the above-cited opinion that:

(i) the exploitation of the deposit of the Exploitation Perimeter in question
shall be pursued by the State or by a Third Party, or

(ii) the State wishes to retain the facilities for justifiable reasons.

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In the two cases cited in i) and ii) here above, the sequestered account shall
be transferred to  the successor responsible party and Contractor is relieved of
all liability with regard to the Remediation Plan and the sequestered account
pertaining to the deposit in question;

g)   In the case where the expenses necessary for the execution of the
Rehabilitation Plan are greater than the amount available in the sequestered
account, the excess amount shall be entirely at the expense of the Contractor;

h)   The Contractor shall pay to the State upon completion of Rehabilitation
Plan any residual amount of the sequestered account not utilized for the
carrying out of the Rehabilitation Plan and which will have been recovered under
this Article 10.2 here above.

ARTICLE 24 : LIABILITY AND INSURANCE

24.1     The Contractor shall indemnify and hold harmless any person, including
the State, for any damage or loss that the Contractor, his employees or his
subcontractors and their employees may cause to the person, property or rights
of other persons, by reason of or during Petroleum Operations.

In the event the liability of the State is implicated by reason of or during the
course of Petroleum Operations, the Minister must so advise the Contractor, who
shall conduct the defense in this regard and shall indemnfiy the State for any
sum which the latter is required to pay or any expense pertaining thereto which
he has borne or which is incurred subseqent of a claim.

24.2     The Contractor shall obtain and maintain in force, and shall cause his
subcontractors to obtain and to maintain in force, all insurance coverages
relative to Petroleum Operations of the type and amounts in use in the
international petroleum industry, in particular (a) general third party
liability coverage, (b) coverage for environmental risks pertaining to the
Petroleum Operations, (c) coverage for employee work-related accidents, (d) any
other insurance coverage required by the regulations in force.

The insurance coverages in question shall be obtained from top tier insurance
companies pursuant to the applicable regulations.

The Contractor shall provide the Minister with certifications proving the
obtaining of insurance coverage and the maintenance in force of the above-cited
insurance coverages.

24.3     When the Contractor is made up of several entities, the obligations and
responsibilities of the latter under this Contract shall be, without prejudice
to the provisions of Article 21 here above,

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joint and several with the exception of their obligations pertaining to the
Industrial and Commercial Income Tax.

24.4     If one of the entities of the Contractor assigns all or a portion of
his rights and obligations in connection with this Contract to an Affiliated
Company, whenever the latter displays a lower level of financial and technical
qualification, the parent company shall submit for the approval of the Minister
a commitment guaranteeing the proper execution of the obligations arising from
this Contract.

ARTICLE 25 :  TERMINATION OF THE CONTRACT

25.1     This Contract may be terminated, without compensation, in any of the
following cases:

a)   Serious and/or continued violation by the Contractor of the provisions of
this Contract, of the Crude Hydrocarbons Code, or of the regulations in force
applicable to the Contractor;

b)   Failure to remit a bank guarantee pursuant to Article 4.6 here above; 

c)   Delay of more than three (3) months of a payment due to the State;

d)   Cessation of development works of a deposit for six (6) consecutive months
without the consent of the Minister;

e)   After the startup of production on a deposit, cessation of his exploitation
for a period of greater than six (6) months, decided upon by the Contractor
without the consent of the Minister;

f)   Non-execution by the Contractor within the time period prescribed by an
arbitral award rendered pursuant to the provisions of Article 28 here below;

g)   Bankruptcy, receivership or liquidation of the property of the Contractor.

25.2     Except for the case set forth in subparagraph g) here above, the
Minister may only pronounce the forfeiture provided for in Article 25.1 here
above after having placed the Contractor on notice, by registered letter with
return receipt, to remedy the violation in question within the allowed time
period specified in the notice from the time of receipt of such.

25.3     If there is a failure by the Contractor to remedy the violation which
was the subject of the termination notice within the time period allowed, the
termination of this Contract may be pronounced.

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Any dispute as to the justification of the termination of the Contract
pronounced by the Minister is open to recourse to arbitration pursuant to the
provisions of Article 28 here below. In such a case, the Contract shall remain
in force until an arbitral award confirms the justifiability of such
termination, in which case the Contract will definitively terminate.

The termination of this Contract shall automatically entail the withdrawal of
the Exploration Authorization and of the currently valid Exploitation
Authorizations.

ARTICLE 26 : APPLICABLE LAW AND STABILIZATION OF TERMS

26.1     This Contract is governed by the laws and regulations of the Islamic
Republic of Mauritania, supplemented by general principles of the laws of
international commerce.

26.2     The Contractor shall be subject at all times to the laws and
regulations in force in the Islamic Republic of Mauritania.

26.3     No legislative or regulatory provision occurring after the Effective
Date of the Contract may be applied to the Contractor which would have as a
direct or an indirect effect to diminish the rights of the Contractor or to
increase his obligations under this Contract and the legislation and regulations
in force upon the Effective Date of this Contract, without the prior agreement
of the Parties.

However, it is agreed that the Contractor cannot, with reference to the
preceding paragraph, oppose the application of the legislative and regulatory
provisions which are generally applicable, adopted after the Effective Date of
the Contract, in the matter of safety of persons and of protection of the
environment or employment law

ARTICLE 27 :  FORCE MAJEURE

27.1     Any obligation resulting from this Contract which would be totally or
partially impossible for a Party to carry out, other than payments for which it
is responsible to pay, shall not be considered to be a violation of this
Contract if said non-execution results from a case of Force Majeure, provided
however that there is a direct link of cause and effect between impediment and
the case of Force Majeure invoked.

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27.2     For purposes of this Contract the following should be understood to be
a case of Force Majeure :  any event which is unforeseeable, irresistible or
outside of the will of the Party invoking it, such as earthquake, accidents,
strike, guerilla actions, acts of terrorism, blockade, riot, insurrection, civil
unrest, sabotage, acts of war, the Contractor being subject to any law,
regulation, or any other cause outside of his control and which has as a result
of delaying or rendering momentarily impossible the execution of all or a
portion of his obligations.  The intention of the Parties is that the term Force
Majeure be given the interpretation the most in conformity with the principles
and customs of international law and with the practices of the international
petroleum industry.

27.3     When a Party considers itself prevented from carrying out any of its
obligations by reason of a case of Force Majeure, it must immediately so notify
the other Party in writing specifying the elements of the type to establish the
case of Force Majeure and to take, in agreement with the other Party, all
appropriate and necessary provisions in order to allow a return to the normal
execution of obligations affected by the Force Majeure after the case of Force
Majeure ceases.

The obligations, other than those affected by the Force Majeure, must continue
to be fulfilled pursuant to the provisions of this Contract.

27.4     If, following a case of Force Majeure, the execution of any of the
obligations of this Contract was delayed, the duration of the delay resulting
therefrom, increased by the delay which may be necessary for the repair of all
damage caused by the case of Force Majeure, shall be added to the time period
stipulated in this Contract for the execution of said obligation as well as to
the duration of the currently valid Exploration Authorization and of any
Exploitation Authorizations.

ARTICLE 28 : ARBITRATION AND EXPERTISE

28.1     In the event of a dispute between the State and the Contractor
concerning the interpretation or the application of the provisions of this
Contract, the Parties shall make good faith effort to resolve such dispute
amicably.

With regard to the Market Price, the provisions of Article 14.5 here above shall
apply.

The Parties may also agree to submit any other dispute of a technical nature to
an expert appointed by common agreement or by the International Centre for
Expertise of the International Chamber of Commerce (“ICC”).

If, within a time period of ninety (90) days starting from the date of
notification of a dispute, the Parties are not able to reach an amicable
solution or following the proposal of an expert, said dispute shall be submitted
at the request of the most diligent Party to the ICC for arbitration

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following the rules set by the Rules of Arbitration of the ICC.

28.2     The location of the arbitration shall be Paris (France). The languages
utilized during the proceedings shall be the French and English languages and
the applicable law shall be the Mauritanian law, as well as the rules and
customs of applicable international law in the matter.

The arbitrational court shall be made up of three (3) arbitrators.  No
arbitrator shall be a national of the countries of which the Parties are
nationals.

The award of the court is rendered on a definitive and irrevocable basis.  It is
binding upon the Parties and is immediately executory.

The expenses of arbitration shall be borne in equal part by the Parties, subject
to the decision of the court concerning their allocation.

The Parties formally and without reservation waive any right to attack such
award, to impede its recognition and its execution by any means whatsoever.

28.3     The Parties shall conform to any protective measures ordered by the
arbitrational court.  Without prejudice to the power of the arbitrational court
to recommend protective measures, each Party may solicit provisional or
protective measures in application of the pre-arbitration emergency procedure
rules of the ICC.

28.4     The introduction of an arbitrational procedure shall entail the
suspension of the contractual provisions with respect to the subject of the
dispute, but shall leave in place all other rights and obligations of the
Parties with respect to this Contract.

28.5     Without prejudice to the provisions of Article 21 here above, the costs
and expert fees referred to in Article 28.1 here above shall be borne by the
Contractor up until the grant of the first Exploitation Authorization and
thereafter half by each of the Parties. Such costs shall be considered as
recoverable Petroleum Costs with regard to Article 10 of this Contract.

ARTICLE 29 : TERMS FOR APPLICATION OF THE CONTRACT

29.1     The Parties agree to cooperate in all ways possible in order to achieve
the objectives of this Contract.

The State shall facilitate the Contractor in the exercise of his activities in
granting to him all permits, authorizations, licenses and access rights
necessary for the carrying out of the Petroleum Operations, and in placing at
his disposal all appropriate services to said Operations of the Contractor , of
his employees and agents on national territory.

Any application for the above-cited permits, authorizations, licenses and rights
shall be

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submitted to the Minister who shall transmit it, if applicable to the relevant
Ministries and entities, and shall ensure its follow-up.  Such applications may
not be refused without a legitimate reason and shall be diligently handled in a
manner so as to not unduly delay the Petroleum Operations.

29.2     All notices or other communications related to this Contract must be
sent in writing and shall be considered to have been validly made from the time
they are, hand delivered against receipt, to the qualified representative of the
concerned Party at the place of its principal establishment in Mauritania, or
delivered in a stamped envelope, by registered mail with return receipt, or sent
by telecopy confirmed by letter, and after confirmation of receipt by the
recipient, at the address chosen by them and deemed authentic indicated here
below :

For the Ministry :

Department of Crude Hydrocarbons

BP : 4921

Nouakchott- Mauritania

TEL/FAX : +222 524 43 07

For the Contractor :

Kosmos Energy Mauritania

c/o Wilmington Trust

4th Floor, Century Yard

Cricket Square, Hutchins Dr.

Elgin Avenue, George Town

Grand Cayman KY1-1209

Cayman Islands

Telephone       :  +1-345-814-6703

FAX                :  +1-345-527-2105

Attention         :   Andrew Johnson

Email: mauritanianotifications@kosmosenergy.com

With Copy to:

Kosmos Energy Mauritania

c/o Kosmos Energy, LLC.

Attention: General Counsel

8176 Park Lane, Suite 500

Dallas, TX 75231

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Fax:       +1 214-445-9705

Email: KosmosGeneralCounsel@kosmosenergy.com

The notices shall be considered as having been made upon the date of
confirmation of the receipt.

29.3     The State and the Contractor may at any time change their authorized
representatives or choice of domicile mentioned in Article 29.2 here above,
subject to having so notified with an advance notice of at least ten (10) days.

29.4     This Contract may not be modified except by common agreement of the
Parties and by the execution of an approved amendment entering into force within
the terms provided in Article 30 here below.

29.5     Any waiver by the State of the execution of an obligation of the
Contractor must be done in writing and signed by the Minister, and no possible
waiver can be considered as a precedent if the State declines to act upon any of
its rights which are recognized by this Contract.

29.6     Titles appearing in this Contract are inserted for purposes of
convenience and of reference and in no way shall define, nor limit, nor describe
the scope or the purpose of the provisions of the Contract.

29.7     Appendices 1, 2 and 3 attached hereto are an integral part of this
Contract.  However, in the event of conflict, the provisions of this Contract
shall prevail over those of the Appendices.

ARTICLE 30 : ENTRY INTO FORCE

Once signed by the Parties, this Contract shall be approved by decree made in
the Council of Ministers and shall enter into force upon the date of publication
of the said decree in the Official Journal, said date being designated under the
name Effective Date and rendering said Contract binding upon the Parties.

In witness whereof, the Parties have signed this Contract in two (2) original
copies.

Nouakchott, on           11 OCT 2016            

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FOR

    

FOR

 

 

 

THE ISLAMIC REPUBLIC

 

THE CONTRACTOR

 

 

 

OF MAURITANIA

 

 

 

 

 

THE MINISTER OF PETROLEUM,

 

PRESIDENT DIRECTEUR GENERAL

 

 

 

ENERGY AND MINES

 

KOSMOS ENERGY MAURITANIA

 

 

 

/s/ Mohamed Abdel Vetah

 

/s/ Andrew G. Inglis

Mohamed ABDEL VETAH

 

Andrew G. INGLIS

 

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APPENDIX 1 : EXPLORATION PERIMETER

Attached and being an integral part of the Contract between the Islamic Republic
of Mauritania and the Contractor.

On the Effective Date, the initial Exploration Perimeter includes a surface area
deemed to be equal to four thousand three hundred (4,300) km²,

Such Exploration Perimeter is represented on the attached map with the indicated
coordinates.

MAP OF THE EXPLORATION PERIMETER

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Picture 1 [kos20161231ex10412a5b5001.jpg]

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APPENDIX 2 : ACCOUNTING PROCEDURE

Attached to and an integral part of the Contract between the Islamic Republic of
Mauritania and Contractor.

ARTICLE 1:  GENERAL PROVISIONS

1.1       Purpose

The purpose of this Accounting Procedure is to set the rules and methods of
accounting for the verification of Petroleum Costs to provide for their recovery
and for the purpose of sharing production in accordance with Article 10 of the
Contract, as well as the rules to determine net profits of the Contractor for
purposes of calculating the tax on industrial and commercial profits.

1.2       Statements

The accounts, books and registers of the Contractor shall be maintained
consistent with the rules of the applicable accounting plan in Mauritania and
the practices and methods in use in the international petroleum industry.

Pursuant to the provisions of Article 20.2 of the Contract, the accounts, books
and registers of the Contractor shall be kept in the English language using the
Dollar as the unit of account.

Anytime, whenever it is necessary to convert into Dollars expenses and revenue
paid or received in any other currency, these currencies shall be valued on the
basis of the rate of exchange quoted on the foreign-exchange market of Paris, in
accordance with terms determined by mutual agreement.

1.3       Interpretation

The definitions of words which appear in this Appendix 2 are the same as those
of the corresponding words as they appear in the Contract.

The word « Contractor », has the meaning given to it by the Contract, and may
sometimes refer to the Operator when the Contractor is made up of several
entities and when Petroleum Operations are conducted by the Operator on behalf
of all these entities, or sometimes the reference is to each of these entities
whenever the obligation of each individual entity is being addressed.

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ARTICLE 2:  ACCOUNTING FOR PETROLEUM COSTS

2.1       General rules and principles.  Classes and groupings

2.1.1    The Contractor shall at all times keep books of account specially
reserved and organized for the booking of Petroleum Costs ; they shall detail
the expenses actually incurred by it and giving rise to recovery consistent with
the provisions of the Contract and of this Appendix, the recovered Petroleum
Costs, progressively as the production intended for such purpose becomes
available, as well as the amounts which must be properly deducted or which have
the effect of reducing  the Petroleum Costs.

2.1.2    The accounting of Petroleum Costs must highlight at all times and for
each Exploration Perimeter and for each Exploitation Perimeter derived
therefrom :

§

The full amount of the Petroleum Costs paid by Contractor from Effective Date;

§

The full amount of the Petroleum Costs recovered;

§

The amounts which diminish or otherwise are a deduction from Petroleum Costs and
the type of operations related to these amounts;

§

The balance of Petroleum Costs not yet recovered.

2.1.3    The accounting for Petroleum Costs shall comprise as debit entries all
expenses actually incurred and directly related to Petroleum Operations in
accordance with the Contract and the provisions of this Appendix, and considered
chargeable to Petroleum Costs.

These expenses which have been actually incurred must:

§

Be actually incurred by Contractor ;

§

Be necessary to the proper carrying out of Petroleum Operations ;

§

Be properly incurred and supported by items and documents which allow an
effective audit by the Ministry.

2.1.4    The accounting for Petroleum Costs shall include as credit entries the
amount of recovered Petroleum Costs as and when this recovery takes place, and
as and when the amounts are collected, the revenue and miscellaneous products
which are to be deducted from or operate to diminish the Petroleum Costs.

2.1.5    The original text of contracts, invoices and other documents which
support the Petroleum Costs must be available for examination by the Ministry
and produced whenever it requests it.

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2.1.6       Petroleum Costs are recovered in accordance with the following:

a)       The priority order arranged by the type of costs:

§

Exploitation Petroleum Costs ;

§

Development Petroleum Costs ;

§

Exploration Petroleum Costs;

As these categories of Petroleum Costs are defined in Articles 3.2, 3.3 and 3.4
of this Appendix.

b)       Priority based on geographic considerations:

§

Petroleum Costs incurred in an Exploitation Perimeter shall be the first to be
recovered from the production extracted from that perimeter consistent with the
order of priorities stipulated in paragraph a) here above ;

§

Petroleum Costs incurred outside of an Exploitation Perimeter shall be recovered
in second priority from the production extracted from that perimeter consistent
with the priority order specified in paragraph a) here above.

Petroleum Costs incurred in the Exploitation Perimeters, other than that in
question shall be recovered before the Petroleum Costs incurred in the
Exploration Perimeter and in accordance with the order of priority stipulated in
subparagraph a) here above.

Each entity which makes up the Contractor is entitled to its cost recovery upon
commencement of production.

2.1.7     Accounting for Petroleum Costs must be true and accurate ; it must be
organized and the books must be kept and submitted in such manner that they can
be easily grouped together and make the relevant Petroleum Costs clearly
apparent, in particular as they relate to the following expenses:

§

exploration

§

appraisal

§

development

§

production of Crude Petroleum,

§

production of Natural Gas,

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§

transportation of Hydrocarbons and storage thereof,

§

ancillary activities, auxiliary or subordinate, and separate from them,

§

as well as the amounts paid in the sequestered account in accordance with
Article 23.2 of the Contract.

2.1.8    For each of the activities here above listed, the accounting of
Petroleum Costs must clearly show the following expenses:

a)   Related to tangible assets, in particular those which refer to the
purchase, creation, construction or carrying out of:

§

land parcels,

§

buildings (workshops, offices, storage areas, dwellings, laboratories, etc....),

§

facilities for loading and storage,

§

access roads and general infrastructure works,

§

facilities to transport Hydrocarbons (pipelines, tankers, etc.),

§

general equipment,

§

specific equipment and facilities,

§

vehicles for use of transport and civil engineering machinery,

§

materiel and tools (the normal useful life of which exceeds one year),

§

successful drilling,

§

other tangible assets.

b)   Related to intangible assets, particularly those which relate to:

§

Surface investigation of geological or geophysical nature and related to
laboratory work (studies, reprocessing, etc.),

§

Nonproductive exploration wells which are not utilized in furtherance of the
development plan,

§

Other intangible assets.

c)   Related to raw materials consumables;

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d)   Operational for functioning expenses :

Involved here are expenses of whatever nature, excepting the overhead referred
to below, and which are not accounted for in subparagraphs a) to c) above of
this Article 2.1.8, and which are directly connected to the study, progress and
the implementation of Petroleum Operations ;

e)   Non operating expenses or overhead :

Involved here are expenses borne by the Contractor related to Petroleum
Operations and connected to management or to administration of the said
operations.

2.1.9    Moreover, the accounting of Petroleum Costs must show, for each
category of expenses listed or defined in subparagraphs a) to d) of Article
2-1-8 above, all payments made to the following:

§

The Operator, for goods and services which it has itself furnished;

§

For the entities which make up the Contractor, the goods and services which they
have supplied themselves;

§

Affiliated Companies;

§

Third Parties.

2.2       Analysis of expenses and methodology for attribution

2.2.1    The principles for attribution and the usual analytical methods of the
Contractor in the matter of itemizing and of reintegrating must be applied in a
homogeneous manner, which is fair and does not discriminate against its
activities taken as a whole. They must be submitted to the Ministry on its
request.

The Contractor must inform Ministry of any change made by it in its principles
and methodology.

2.2.2    Tangible assets constructed, manufactured, created or brought about by
the Contractor in the furtherance of Petroleum Operations and dedicated to these
operations as well as their normal maintenance shall be accounted for at the
acquisition cost of construction, manufacturing, creation, or realization.

2.2.3    Equipment, materials and consumables required for Petroleum Operations
and not including those referred to above shall be:

a)   Either acquired for immediate use, subject to the time spent in transport,
and if necessary, the temporary storage by Contractor (provided they shall not
have been

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commingled with his own inventory). This equipment, materials and consumables
acquired by the Contractor shall be valued, for their charging Petroleum Costs,
at their landed price in Mauritania.

“The Landed price in Mauritania”  includes the following items, which shall be
accounted for in accordance with the analytic methodology of Contractor:

§

Purchase price less discounts and rebates,

§

Transport costs, insurance, transit costs, handling and customs (and other
possible taxes and fees) from the storage site of the vendor to that of the
Contractor or to the place they are utilized, as may be applicable,

b)   Or supplied by the Contractor from its own inventory

§

New equipment and materials other than consumables, supplied by the Contractor
from its own inventory, shall be valued for accounting purposes at the  weighted
purchase price calculated pursuant to the provisions of subparagraph a) of this
Article 2.2.3, hereafter  « net cost ».

§

Materials and equipment which are depreciable and already used supplied by the
Contractor from his own inventory or which originate from other activities he
may have had, including those of Affiliated Companies, shall be valued for
purposes of booking Petroleum Costs, in accordance with the following schedule:

·

New Material (Condition « A »): New Material, never used : 100% (one hundred
percent) of the net cost.

·

Material in good condition (Condition « B »): Material in good condition and
still utilizable for its original purpose without repair: 75% (seventy-five
percent) of the net cost of the new material as defined here above.

·

Other used material  (Condition  « C »): Material which is still utilizable for
its original purpose, but only after repair and upgrading: 50% (fifty percent)
of the  net cost of the new material as defined here above.

·

Material in poor condition (Condition « D »): Material not utilizable for its
original purpose but still usable for another purpose: 25% (twenty-five percent)
of net cost of the new material as defined here above.

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·

Junk and scrap (Condition « E »): Materials unusable and not repairable:
applicable price for junk.

2.2.3.1 The Operator does not guarantee the quality of the new material referred
to above beyond the warranty furnished by the manufacturer or seller of the
subject material.  In the event of defective new material, Contractor will do
its best to seek reimbursement or compensation from the manufacturer or the
reseller; however, the corresponding credit shall only be booked after receipt
of reimbursement for indemnification;

2.2.3.2 In the event used material referred to above is defective, the
Contractor shall credit the account of the Petroleum Costs with the amount which
it will have actually received as compensation.

2.2.3.3 Utilization of materials, equipment and facilities which are
Contractor’s own property

Materials, equipment and facilities which are Contractor’s own property and
which are temporarily put into use to carry out Petroleum Operations, shall be
charged to Petroleum Costs at a rental amount covering the following:

a)   Maintenance and repairs,

b)   A share of depreciation pro rata to the time period utilized for Petroleum
Operations, calculated by applying to the original costs (initial cost before
revaluation), a rate which shall not exceed the one provided by Article 4.2 here
below.

c)   The expenses of transport and operations and all other expenses have not
been otherwise charged.

The invoiced price shall exclude any excess cost, arising in particular from
breakdown or abnormal or inappropriate use of the same equipment and facilities
in furtherance of the Contractor’s activities which are not Petroleum
Operations.

In all events, costs charged as Petroleum Costs for use of this equipment and
facilities shall not exceed those in common usage in Mauritania by Third
Parties, nor shall they result in a cascading charge of expenses and profit
margins.

The Contractor shall maintain detailed statement of materials, equipment and
facilities which are owned by it and used in Petroleum Operations, it shall
indicate the description and serial number of each unit, the maintenance
expenses, the relevant repairs, and the dates on which each item has been
dedicated to and then withdrawn from Petroleum Operations.  This statement must
delivered to the Ministry not later than March 1st of every year.

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2.3       Operational expenses

2.3.1    Expenses of this type shall be charged to Petroleum Costs at the
Contractor’s actual cost for the charges for services involved, such as this
price appears in the Contractor’s accounts consistent with the applicable
provisions of this Appendix.  These expenses include in particular:

2.3.2    The taxes, fees and imposts due and payable in Mauritania under
applicable regulations and the provisions of the Contract and directly related
to Petroleum Operations.

Surface rentals, the BIC tax and the bonuses provided for respectively in
Articles 11 and 13 of the Contract, as well as any other charge the recovery of
which is disallowed by the provisions of this Contract or of this Appendix,
shall not be charged to Petroleum Costs.

2.3.3    Personnel expenses and environment of the personnel

2.3.3.1 Principles

To the extent that they correspond to actual work and services and that they are
not excessive with regard to the importance of the responsibilities exercised,
to the work carried out, and to the customary practices, such expenses cover all
payments made to employ and and provide benefits to personnel working in
Mauritania and hired for the conduct and execution of the Petroleum Operations
or for their supervision.  Such personnel includes persons recruited locally by
the by the Contractor and those placed at the Contractor’s disposal by the
Affiliated Companies, the other Parties or Third Parties.

Such expenses are also deductible when they are connected to fixed premises of
the Contractor abroad, when the activity of such premises is carried out
exclusively for the benefit of the Petroleum Operations of the Contractor in
Mauritania .

2.3.3.2 Expense Items

The expenses of personnel and personnel benefits shall include, on the one hand,
all sums paid or reimbursed on account of such personnel referred to here above,
under legal and regulatory texts, collective agreements, employment contracts
and the internal policies of the Contractor and, on the other hand, expenses
paid for the benefit of such personnel:

a)   Salaries and pay for active employment or holidays, overtime, bonuses and
other compensation;

b)   Employer contributions pertaining thereto resulting from legal and
regulatory texts, collective agreements and terms of employment;

c)   Expenses paid for the benefit of the personnel; these represent, in
particular:

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§

Expenses for medical and hospital assistance, social security and all other
social expenses particular to the Contractor ;

§

Expenses for transportation of employees, their families and their personal
effects, when the assumption of such expenses is provided for in the employment
contract;

§

Expenses for lodging of personnel, including therein provision of services
related thereto, when the assumption of such expenses by the employer is
provided for in the employment contract (water, gas, electricity, telephone) ;

§

Compensation paid upon the time of moving in and of departure of the salaried
personnel;

§

Expenses paid to administrative personnel rendering the following
services:  management and recruitment of local personnel, management of
expatriate personnel, personnel training, maintenance and operation of offices
and lodging, when such expenses are not included in overhead or under other
expense categories;

§

Expenses for office rental or their expense for occupancy, the expense of
collective administrative services (secretarial services, furniture, office
supplies, telephone, etc.).

2.3.3.3 Terms for booking charges

Personnel costs correspond:

§

Either to direct expenses charged to the corresponding Petroleum Costs account,

§

Or to indirect or common expenses charged to the Petroleum Costs account based
upon data fromanalytical accounting and determined pro rata to the time
dedicated to the Petroleum Operations.

2.3.4    Expenses paid by reason of the provision of services supplied by Third
Parties, the entities comprising the Contractor and the Affiliated Companies
shall include in particular:

2.3.4.1 Services rendered by Third Parties and by the Parties are booked at the
Contractor’s actual book costs, which means the price invoiced by the vendors,
including all taxes, fees, and ancillary costs, if applicable; the actual costs
shall be reduced by any rebates, discounts, kickbacks, or promotions the
Contractor may have secured either directly or indirectly.

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2.3.4.2 The technical assistance rendered to the Contractor by its Affiliated
Companies:  consisting of  services and actions for the benefit of the Petroleum
Operations and emanate from the departments and services of these Affiliated
Companies who are engaged in the following activities:

§

Geology,

§

Geophysics,

§

Engineering,

§

Drilling and production,

§

Deposits and reservoir studies,

§

Economic studies,

§

Technical contracts,

§

Laboratories,

§

Purchases and transport in transit (except for charges comprised of those
referred to in 2.2.3 here above),

§

Designs,

§

Some administrative and legal services related to studies or to well-defined or
occasional projects and which are not part of ordinary and regular business, nor
of the legal proceedings referred to in 2.3.8 below.

Technical assistance is generally the subject of service contracts entered into
between the Contractor and its Affiliated Companies.

The costs of technical assistance rendered by the Affiliated Companies are
booked at actual cost for the Affiliated Company which renders the
service.  This actual cost includes, in particular, personnel expenses, the cost
of raw materials, materials and consumables utilized, the cost of maintenance
and repair, the cost of insurance, taxes, a portion of the amortization of
general investments calculated on the original acquisition cost or of the
construction of related tangible items and of any other expenses which are
related to these services and have not been otherwise booked elsewhere.

However, the price excludes any surcharges arising from, in particular, fixed
assets or a non-regular or cyclical use of materials, facilities and equipment
at an Affiliated Company.

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In all cases, expenses related to these services must not exceed those which are
normally incurred for similar services by technical service companies and
independent laboratories.  They must not result in cascading charges from profit
margins.

Moreover, all of these services, including analytical studies, must be supported
by reports to be submitted at the request of the Ministry.  They must be the
subject of written orders issued by the Contractor, and also of itemized
invoices.

2.3.4.3 Whenever the Contractor utilizes in Petroleum Operations, materiel,
equipment or facilities which are the sole property of an entity which makes up
the Contractor, the Contractor must charge the Petroleum Costs pro rata the
usage time, and the corresponding entry must be determined in accordance with
the customary methods and the principles defined in 2.3.4.2 above.  This entry
includes, in particular:

§

A portion of the annual depreciation calculated on the original “landed
Mauritanian price” defined in 2.2.3 here above;

§

A portion of the start-up cost, of insurance coverage, of ordinary maintenance,
of financing, and of periodic checkups.

§

Warehousing costs

§

Warehousing costs and handling costs (expenses incurred for personnel and for
management of the services) are charged to Petroleum Costs pro rata the value of
the items taken out of inventory.

§

Transportation expense:  expenses of transport of personnel, of materiel or of
equipment intended and dedicated to Petroleum Operations shall be booked as
Petroleum Costs if they are not already included in the preceding paragraphs and
if they have not been accounted in actual costs.

2.3.5    Damages and waste which impact jointly-owned properties

All expenses necessary to repair and restore to working condition equipment
which has suffered damages or losses arising from fires, floods, storms, theft,
accidents or any other cause, shall be booked in accordance with the principles
defined in this Appendix.

Amounts recovered from insurance companies for these damages and losses shall be
booked as a credit to Petroleum Costs.

2.3.6    Maintenance expenses

Maintenance expenses (routine maintenance and exceptional maintenance) of the
materiel,

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equipment and facilities dedicated to Petroleum Operations shall be booked to
Petroleum Costs at actual cost.

2.3.7    Insurance premiums and expenses related to the settlement of casualty
losses shall be charged to Petroleum Costs:

a)   Premiums and expenses related to mandatory insurance and to those arising
under policies to cover the Hydrocarbons produced, the persons and the
properties dedicated to Petroleum Operations or the third-party liability
insurance of the Contractor within the purview of the said operations;

b)   Expenses incurred by the Contractor as the result of a casualty which arose
from Petroleum Operations, and those incurred in the settlement of all losses,
claims, damages and other related costs which are not covered by the insurance
policies;

c)   Expenses disbursed in settlement of losses, claims, damages or legal
proceedings which are not compensated by insurance and which do not relate to
risk which the Contractor was required to insure against.  The amounts recovered
from insurance policies and guarantees are accounted for as provided for in
Article 2.6.2 g) here below;

2.3.8    Legal costs

Petroleum Costs can be charged with expenses related to adversary legal
proceedings, investigation, and settlement of disputes and claims (requests for
reimbursement or compensation), which arise from Petroleum Operations or which
become necessary in order to protect or recover properties, including, in
particular, the fees of lawyers and experts, legal costs, investigation costs,
cost of gathering evidence, as well as amounts disbursed in settlement of the
disputes or the final settlement of any proceedings or claim.

Whenever these services are rendered by personnel of the Contractor, a
compensatory payment shall be included in the Petroleum Costs which corresponds
to time expended and costs actually incurred.  The price charged in such manner
shall not exceed that which would have been paid to Third Parties for identical
or analogous services.

2.3.9    Interest, fees, and financial charges

The following are chargeable to Petroleum Costs : interest penalties for late
payment incurred by the Contractor and related to borrowings from Third Parties
as well as advances and loans from Affiliated Companies, to the extent that
these borrowings and advances are used to finance the Petroleum Costs and
related exclusively to petroleum development operations of a commercial deposit
(excluded here are Petroleum Operations related to exploration and appraisal),
and provided they do not exceed seventy percent (70%) of the total amount of
these

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petroleum development costs.  These borrowings and advances must be submitted
for the approval of the Ministry.

In the case where such financing is secured by Affiliated Companies, the
acceptable interest rates must not exceed the rate normally charged on the
international financial markets for similar loans.

2.3.10  Foreign-exchange losses

Foreign-exchange losses related to borrowings and debts incurred by the
Contractor under this Contract are chargeable to Petroleum Costs.

2.3.11  Disbursements related to expenses, verifications and audits of the
Ministry, pursuant to the provisions of the Contract, are chargeable to
Petroleum Costs.

2.3.12  Payments related to other expenses, including payments to Third Parties
for the transport of Hydrocarbons to the Delivery Point shall be included in the
Petroleum Costs.  Involved here are all payments made or losses incurred related
to or caused by the proper execution of the Petroleum Operations, provided the
charge to Petroleum Costs is not disallowed under provisions of this Contract or
of this Appendix, and provided they are not similar to expenses which the
Ministry has disallowed and provided these expenses have received the approval
of the Ministry.  Moreover, except for contrary provisions in the law, the
Contractor is at liberty, if it wishes, to make contributions of an economic,
social, cultural or sport-related nature, with the mandatory exclusion of
financing political activities.  These contributions shall be debited to the
Petroleum Costs account.

2.4       Overhead

These expenses pertain to those Petroleum Costs which have not been otherwise
accounted for.  They pertain to:

2.4.1    Expenses incurred outside of Mauritania

The Contractor shall add a reasonable sum on account of foreign overhead
necessary to carry out the Petroleum Operations and borne by the Contractor and
its Affiliated Companies, in such amount as they reflect the cost of the
services rendered to the Petroleum Operations.

The amounts must be supported by accounting entries and copies of reports
related to the services and works carried out; if an arbitrary sharing is
utilized, there must be proof by means of supportive explanations and
presentation of the rules utilized to arrive at such.

The amounts charged are considered provisional amounts arrived at on the basis
of the Contractor’s experience, and they shall be adjusted annually in relation
to the Contractor’s real costs, but they must not exceed the following caps:

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·

Before grant of the first Exploitation Authorization : three percent (3%) of the
Petroleum Costs excluding overhead;

·

On the grant of the first Exploitation Authorization : one and one-half percent
(1.5%) of Petroleum Costs not including financial costs and overhead.

These percentages are applied to expenses, not including overhead, which are
chargeable to Petroleum Costs for the Calendar Year under consideration.

2.4.2    Expenses disbursed inside of Mauritania

These expenses cover payment related to the following activities and services:

§

General management and general secretarial services;

§

Information and communication ;

§

General administration (law department, insurance, taxes, computer services) ;

§

Accounting and budget ;

§

Internal audit.

They must include services which have actually been required to advance the
Petroleum Operations and which correspond to actual services rendered in
Mauritania  by the Contractor or the Affiliated Companies.  They must not result
in cascading of of costs margins.

The amount must be actual amounts, whenever direct expenses are involved, and
they must be amounts arrived at by sharing whenever indirect expenses are
involved.  In the latter case, the rules for sharing must be clearly defined and
the amounts must be supported by analytical accounting.

2.5       Expenses not chargeable to Petroleum Costs

Payments paid in settlement of expenses, charges or costs not directly
chargeable to Petroleum Operations, and those for which the deduction or
charging for is disallowed by the provisions of the Contract or of this
Appendix, or those which are not necessary for the conduct of Petroleum
Operations, shall not be taken into account and shall not give rise to recovery.

Involved here are these types of payments:

a)   Costs of a capital increase;

b)   Expenses related to activities downstream of the Delivery Point,
particularly marketing costs;

c)   The expenses which relate to the period prior to the Effective Date;

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d)   Auditing expenses disbursed by the Contractor further to special
relationships between the entities which make up the Contractor;

e)   Expenses borne for meetings, studies and work carried out in furtherance of
the association which ties together the entities which make up the Contractor
and the purpose of which is not the proper conduct of the Petroleum Operations;

f)   Interest, late payment fees, and financial charges other than those the
chargeability of which is authorized pursuant to Article 2.3.9 of this Appendix.

g)   Foreign-exchange losses incurred other than those which are chargeable
under the provisions of this Contract.

h)   Foreign-exchange losses which constitute a loss of earnings tied to risks
related to the Contractor’s own capital and self-financing by it.

2.6       Items to be booked as a credit to Petroleum Costs

The following must be credited to the Petroleum Costs account, in particular:

2.6.1    The proceeds from the quantities of Hydrocarbons which the Contractor
takes in furtherance of the provisions of Article 10.2 of the Contract,
multiplied by the related Market Price as defined in Article 14 of the Contract.

2.6.2    All other receipts, revenues, proceeds, connected profits, whether
ancillary or accessory, directly or indirectly tied to Petroleum Operations,
including in particular those derived from:

(A) The sale of associated substances;

(B) The transport and storage of products owned by Third Parties in the
facilities dedicated to the Petroleum Operations;

(C) Reimbursements originating from insurance companies;

(D) Settlements arising out transactions or liquidations;

(E) Transfers or rentals already declared under Petroleum Costs

(F) Discounts, rebates, allowances and promotions received which have not been
charged as a deduction from the actual costs of the properties to which they
relate.

(G) Any other income or receipts similar to those listed above that are usually
deducted from Petroleum Costs.

2.7       Materiel, equipment and facilities sold by the Contractor

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2.7.1    The materials, equipment, facilities, and consumables which are not
used or are not usable shall be withdrawn from Petroleum Operations ; they must
be either downgraded or considered as « junk and waste », or bought back by the
Contractor for his own needs, or sold to Third Parties or to Affiliated
Companies.

2.7.2    In the event of adisposal to the entities which make up the Contractor
or to their Affiliated Companies, the prices shall be arrived at pursuant to the
provisions of 2-2-3.b of this Appendix, or, should they exceed those which would
be applicable under the provisions of that article, their price must be agreed
by the Parties. Whenever the use of an item of property related to Petroleum
Operations has been temporary and it does not fall under the price reduction
referred to in the above article, the said item shall be valued so that the
Petroleum Costs are debited of a net amount which is equivalent to the value of
the service rendered.

2.7.3    The sales to Third Parties of materials, equipment, facilities and
consumables shall be effected by Contractor at the best possible price.  All
reimbursements or compensation granted to a buyer for a defective piece of
equipment shall be debited to the Petroleum Costs account to the extent and at
the time such are actually paid by the Contractor.

2.7.4    Whenever an asset is used for the benefit of a Third Party or the
Contractor for activities which are not within the scope of this Contract, the
amounts due in exchange therefor must be calculated at a rate which is not less
than actual costs, unless the Ministry agrees otherwise.

ARTICLE 3:  DETERMINATION OF THE RATIO « R »

3.1       For the purpose of arriving at the value of the “R” ratio in
application of Article 10.3 of the Contract, the Petroleum Costs which impact
the calculation of Net Cumulative Revenues and of Cumulative Investments shall
be categorized and recorded separately according to the following categories.

3.2       Exploration Petroleum Costs

They are the Petroleum Costs incurred in the exploration Petroleum Operations
inside an Exploration Perimeter, included in an Annual Work Program approved
pursuant to the provisions of the Contract, and they shall include, without
limitation:

3.2.1    Geochemical, geophysical, paleontological, geological, topographical
studies and the seismic campaigning as well as studies and interpretations
related thereto.

3.2.2    Coring, exploration wells, appraisal wells and wells drilled to supply
water.

3.2.3    Labor costs, materiel, supplies and services used to service
exploration wells or appraisal wells of a discovery and which are not completed
as producers.

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3.2.4    Equipment utilized exclusively to enhance and justify the objectives
listed in Articles 3.2.1, 3.2.2 and 3.2.3 here above, including access roads and
acquired geological and geophysical information.

3.2.5    That portion of the Petroleum Costs incurred in construction of
facilities and equipment, the overhead chargeable to exploration Petroleum Costs
as such is derived from a fair allocation of the Petroleum Costs taken as a
whole (including overhead) between exploration Petroleum Costs and the Petroleum
Costs taken as a whole, with exception of overhead.

3.2.6    All the other Petroleum Costs incurred for the purpose of exploration
between the Effective Date and the startup of the commercial production of
Hydrocarbons that are not included in Article 3.3 here below.

3.3       Petroleum Costs of Development

They are the Petroleum Costs incurred in development Petroleum Operations
related to an Exploitation Authorization, and they include, without limitation:

3.3.1    Development and production wells, including water-injection wells and
gas-injection wells drilled for the purpose of enhancing recovery of
Hydrocarbons as well as those intended to sequester and conserve natural gas.

3.3.2    The wells which have been completed by setting casing or equipment
after a well has been drilled with intent to complete it as a producer well or a
water-injection well or a gas-injection well drilled for the purpose of
increasing the recovery rate of Hydrocarbons as well as those wells the purpose
of which is sequestration and conservation of natural gas.

3.3.3    The costs of equipment related to production, transport and storage to
the Delivery Point, such as pipelines, flow-lines, processing and production
units, equipment on the well-head, underwater equipment, systems to increase
recovery of Hydrocarbons, offshore platforms, production floating unit and/or
production and storage floating units (FPO and FPSO), storage facilities, export
terminals, port installations and auxiliary equipment, as well as access roads
in relation to production activities.

3.3.4    Engineering studies and design studies related to the equipment
referred to in Article 3.3.3.

3.3.5    The cost of construction, the overhead chargeable to Development Costs,
as these are calculated according to the ratio of Development Costs over total
Petroleum Costs, excluding overhead.

3.3.6    Financial charges pertaining to the financing of Development Costs are
excluded.

3.4       Exploitation Petroleum Costs

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These are the Petroleum Costs incurred in an Exploitation Perimeter consequent
to the startup of commercial Hydrocarbons production and which are neither
exploration costs nor development costs nor overhead.

Exploitation costs include more particularly the reserves built up for the
purpose of meeting losses or charges, including the reserve to fund the
Rehabilitation Plan, which reserve has been paid in full to the sequestered
account opened for the purpose of financing rehabilitation of the site works in
accordance with Article 23.2 of the Contract.

The portion of overhead which has not been allocated to either exploration or
development costs shall be included in exploitation costs.

3.5       It is understood that depreciation of assets as calculated for the
determination of taxable profits pursuant to the provisions of Article 4 here
below are not Petroleum Costs and consequently, they do not enter into the
determination of the Ratio “R”.

ARTICLE 4:  CHARGES WHICH ARE DEDUCTIBLE FOR DETERMINATION OF THE

INDUSTRIAL AND COMMERCIAL INCOME TAX

4.1       Deductible charges

In accordance with Article 70 of the Crude Hydrocarbons Code, the charges which
are deductible for the determination of the Industrial and Commercial Income Tax
are made up of the following items, within the limits prescribed by this
Accounting Procedure, and excluding those charges which are non-deductible as
specified in Title 6 of the Crude Hydrocarbons Code and of costs non-chargeable
to Petroleum as specified in Article 2.5 here above of this Appendix:

§

The exploitation Petroleum Costs, as defined in the provisions of this
Accounting Procedure ;

§

The overhead in accordance with the provisions of Article 2-4 here above of this
Appendix;

§

Depreciation of assets which make up the development Petroleum Costs in
according with the provisions of Article 4.2 below;

§

Interest, interest for late payments, and financial charges, in accordance with
the Article 2.3.9 here above ;

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§

Loss or wastage of materials and property arising out of destruction or
casualty, uncollectible debts, and compensation paid to Third Parties on account
of legal liability (unless these damages were caused by the Gross Negligence of
the Contractor) ;

§

Reserves which are reasonable and justified created for the purpose of meeting
losses or clearly defined charges which the prevailing circumstances make
probable;

§

The non-recovered portion of deficits related to previous years within a limit
of five (5) years following the fiscal year that shows a deficit.

4.2       Depreciation of fixed assets

Fixed assets of the Contractor that are required for Petroleum Operations are
depreciated according to a straight-line dereciation method.

The minimum span of the depreciation period shall be:

§

ten (10) Calendar Years for assets related to the transport of Hydrocarbons
production by pipeline;

§

five (5) Calendar Years for the other fixed assets.

The period of depreciation shall begin with the Calendar Year during which the
said fixed assets have been acquired, or from the Calendar Year during which the
fixed assets were placed into normal service if such latter year is after, pro
rata temporis, the first Calendar Year in question.

4.3       Exploration Petroleum Costs

The petroleum Exploration Costs incurred by the Contractor for the Exploration
Perimeter, including particularly the expenses of geological and geophysical
exploration studies and the expenses of exploration drilling and appraisal of a
discovery (excluding productive wells, which shall be considered assets which
fall under the provisions of Article 4.2 here above of this Appendix), are
considered charges deductible in full from the year they are entered on the
books or they may be depreciated at the rate chosen by the Contractor.

ARTICLE 5:  INVENTORIES

5.1       Frequency

The Contractor shall keep a permanent inventory in both quantity and value of
all property used in Petroleum Operations and he shall, with reasonable
frequency, and not less than once a year, proceed to take a physical inventory
as required by the Parties.

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5.2       Notification

Written notification of the intention to take a physical inventory must be sent
by the Contractor not less than ninety days (90) days prior to the commencement
of the taking of such inventory, so that the Ministry and the entities which
make up the Contractor may if they wish be represented at their own expense
during the taking of said inventory.

5.3       Information

Should the Ministry or an entity which makes up the Contractor not be
represented when an inventory is taken, such Party will remain bound by the
result of the inventory taken by the Contractor, who must furnish to said Party
a copy of the said inventory.

ARTICLE 6:  STATEMENTS OF OPERATIONS AND WORK, STATUS REPORTS

6.1       Principles

Other than the statements and supply of information provided for elsewhere, the
Contractor must submit to the Ministry under terms, conditions and timelines
indicated below, the details of its operations and works carried out as they
have been booked in its accounts, documents, reports and statements which it
must keep in relation to the Petroleum Operations.

6.2       Statement of variations in fixed assets accounting and in inventory of
materiel and consumables.

This statement must be received by the Ministry not later than the fifteenth day
(15th) day of the first month of each calendar Quarter. In particular, it shall
state, for the preceding quarter what was acquired and created by way of fixed
assets, of materiel and of consumables required for Petroleum Operations, for
each deposit, and by major categories, as well as disposal of these items
(assignments, wastage and losses, destruction, discarding and junk).

6.3       Statement of the quantities of Crude Petroleum and of Natural Gas
which have been transported during each month

Such statement must reach the Ministry not later than the fifteenth (15th) day
of each month.  For each deposit, it shall indicate the quantities of Crude
Petroleum and of Natural Gas which have been transported in the course of the
preceding month, between the field and the point of export or delivery, as well
as the identification of the pipeline utilized and the cost of transport paid,
whenever transport was carried out by Third Parties.  The statement must also
show how the products transported in such manner are shared between the Parties.

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6.4       Statement of the recovery of Petroleum Costs

This statement must reach the Ministry not later than the fifteenth (15th) day
of each month.  It shall show, for the preceding month, the breakdown of the
Petroleum Costs account and must reflect, in particular, the following:

§

The Petroleum Costs which remain to be recovered as of the end of the preceding
month;

§

The Petroleum Costs related to activities during the month in question;

§

The Petroleum Costs recovered in the course of the month indicating in
particular quantities and value of production involved for this purpose;

§

The amounts which are booked to reduce or diminish Petroleum Costs in the course
of the month in question;

§

The unrecovered Petroleum Costs as of the end of that month.

6.5       Statement of the determination of the ratio « R »

This statement must reach the Ministry not later than the fifteenth (15th) day
of the first month of each Quarter.  It shall highlight each of the factors
which enter into the determination of the “R” ratio as defined in Article 3 of
this Accounting Procedure, as well as the resulting value of the ratio, which
ratio is applicable during the subject Quarter.

6.6       Inventories of Crude Petroleum and of Natural Gas

This statement must reach the Ministry not later than the fifteenth (15th) day
of each month.  It shall specify for the preceding month and for each storage
location:

§

Inventory at the commencement of the month;

§

Addition to inventory in the course of the month;

§

Withdrawals from inventories during the course of the month;

§

Theoretical level of the inventory at the end of the month;

§

Inventory at the end of the month taken by measurement;

§

An explanation for discrepancies, if any.

6.7       Tax returns

The Contractor shall supply the Ministry with a copy of all returns which the
entities which make up the Contractor are required to file with the Tax
Administrations responsible for determining tax

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basis; and in particular, those which pertain to the BIC tax on together with
all annexes, documents, and supporting information attached thereto.

6.8       Statement of payments of taxes and fees

Not later than the fifteenth (15th) day of the first month of each Quarter, the
Contractor shall prepare and submit to the Ministry a statement showing taxes,
fees, and dues of any kind paid by it in the course of the preceding calendar
Quarter; it shall detail precisely the nature of the tax, fee and dues involved
(surface rentals, customs duties, etc.), the kind of payment involved (on
account, balances, corrections, etc.), the date and the amount of each payment,
the designation of the tax collector responsible for the collection, and other
further useful information.

6.9       Special provisions

The statements, lists, and information referred to in Articles 6.2 to 6.8 shall
be produced and submitted in accordance with printed forms issued by the
Ministry, after consultation with the Contractor.

The Ministry may, as needed, request that the Contractor furnish it with all
other statements, reports and information that the Ministry deems useful.

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APPENDIX 3:  MODEL BANK GUARANTEE

Attached and being an integral part of the Contract between the Islamic Republic
of Mauritania and the Contractor (On letterhead of the Bank)

To the Honorable Minister in Charge of Crude Hydrocarbons,

Nouakchott

Mauritania

Amount : -----

In letters : ----------------------------------------

We have been informed that, upon the date of -----, the Mauritanian State
entered into an exploration-production contract with the Contractor constituted
by the following entities:

Kosmos Energy Mauritania

----------------------------------------

Grand Cayman

----------------------------------------

Kosmos Energy Mauritania --------, address -------- is the Principal and has
been so designated here below.

Pursuant to Article 4.6  of this Contract, a bank guarantee of proper discharge
of the minimum work obligations, for work committed to the first phase of the
Exploration Period of the contract,  must be  remitted to the State.

That said, we (name of bank -------------, address ---------------) referred to
hereafter as «the Bank», upon instructions from the Principal, commit ourselves
through this Guarantee, in an irrevocable fashion, to pay to the Mauritanian
State, independently of the validity and legal merits under the Contract in
question and without raising any exception, nor objection arising from the said
Contract, upon your first demand, any amount up to the maximum amount cited
above in this letter of of guarantee, upon receipt  by ourselves of a demand for
payment duly signed and a written confirmation on your part certifying that the
Contractor has not fulfilled the minimum work obligations above-mentioned and
specifying the nature as well of the estimated cost of the work not executed.

For reasons of identification, your written demand for payment will only be
considered valid if it reaches us through the intermediary of our corresponding
bank located in Mauritania (name-------, address ----------), accompanied by a
declaration of the latter certifying that it proceeded with the verification of
your signature.

Your call is also acceptable to the extent that it is fully transmitted to us by
the bank in question by means of a telex/SWIFT confirming that it has sent us
the original by registered mail or by another courier service and that the
signature appearing there was verified by the latter.

The amount of the Guarantee shall be reduced by the amount of the expenditures
made by ________, upon receipt by the Bank of a copy of a work completion
statement signed by the Mauritanian State and attesting to said expenditures and
to the resulting new Guarantee amount, in accordance with the model in Annex A.

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Our guarantee is valid up until the --------------------------------- (provide
for 6 months after the end of the phase in question of the Exploration Period)
and shall terminate automatically and entirely if your demand for payment or the
telex/SWIFT does not reach us at the address here above by such date at the
latest, whether it is a business day or not.

All the bank fees in connection with this guarantee are at the expense of the
Principal.

This guarantee is subject to the « Uniform Rules for Demand Guarantees of the
ICC » of the International Chamber of Commerce (ICC Publication in force No.
758).

·

Signature of the authorized representative and seal of the Bank

Annex A

Model notification of expenditure and reduction of guarantee to be used

Notification of expenditure and reduction of guarantee

To the Minister in Charge of Crude Hydrocarbons

Mauritanian State

Nouakchott

Mauritania

Purpose:  Notification of expenditure and reduction of guarantee amount ref.
XXXX

Honorable Minister,

We refer to the Exploration and Production Contract signed on ____, as well as
the bank guarantee of proper discharge in the initial amount of USD ___given by
_____on _____ under reference no. _____.

On ____ the amounts expended were USD____.  Accordingly the amount of said
guarantee is reduced to ____ (numbers plus letters).

Polite closure statement

Date:

Signature of Contracting Entity

Confirmation of Principal (KOSMOS ENERGY)

"Stamp of the Minister in charge of Hydrocarbons, authorized signature

Preceded by the statement “Agreed for the reduction of the guarantee in question
in the amount of XXXX”

NAME + FUNCTION + STAMP of the Minister"

 

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