Novation Deed


 


Liberty Petroleum Corporation 


and


Discovery Energy
Corp. (Formerly


Santos Resource
Corp.)


 


In respect of


Option to Purchase and Sale and Purchase
Agreement


Dated


January 31, 2012


  



    	 



    	 



    

  


Table of contents


 


	Clause	 	 	Page
	1	Definitions and interpretation	1
	 	1.1	Definitions	1
	 	1.2	Interpretation	5
	2	Novation of Novated Agreement and agreement to sell and purchase	5
	 	2.1	Novation of Novated Agreement	5
	 	2.2	Agreement to sell and purchase	6
	3	Conditions	6
	 	3.1	Conditions precedent	6
	 	3.2	Responsibility	6
	4	Payment of the Purchase Price	6
	 	4.1	Payment of the Purchase Price	6
	 	4.2	Close of Escrow and release of balance of Purchase Price	7
	 	4.3	Termination	7
	5	Rights and Obligations prior to the Completion Date	7
	 	5-1	Purchaser’s Qualification prior to Completion	7
	 	5.2	Seller’s nomination of the Purchaser	8
	 	5.3	Conduct prior to Completion	8
	 	5.4	Confidential Information	9
	 	5.5	Factors relevant to pre-Completion obligations	9
	6	Completion	9
	 	6.1	Time and place of Completion	9
	 	6.2	Seller’s Completion obligations	9
	 	6.3	Payment and delivery on Completion	9
	 	6.4	Registration prior to Completion	
	7	Sale and Purchase of the License Interest	10
	 	7.1	Acquisition of the License Interest by the Purchaser	10
	 	7.2	The Purchaser may farm out	10
	 	7.3	Royalty Interest	10
	 	7.4	Reversion of License Interest to Seller	10
	8	Seller’s Warranties	11
	 	8.1	Seller’s Warranties	11
	 	8.2	Ability to claim	11
	 	8.3	Limitation on Claims	12
	 	8.4	Management of third party Claims	12
	9	Exclusion of other warranties	13
	 	9.1	Other warranties excluded	13
	 	9.2	Remedies for breach of Seller’s Warranties or Claims	14
	 	9.3	Recovered amounts	14
	10	Confidentiality	14
	 	10.1	Confidentiality before Completion	14
	 	10.2	Public announcements	15
	11	Purchaser’s Warranties	15
	12	Indemnity  and breach	15


 






    	 



    	 



    



 




	 	12.1	Seller’s indemnity	15
	 	12.2	Seller’s remedies	15
	 	12.3	Notice of breach	16
	 	12.4	Limitation on claims	16
	 	12.5	Purchaser’s indemnity	16
	13	Taxation	16
	 	13.1	GST	16
	 	13.2	Recognition of income and expenses	17
	14	Costs and expenses	17
	 	14.1	Stamp duty and registration fees	17
	 	14.2 Costs and expenses	17
	15	Merger	17
	16	Assignment	18
	17	Further assurances	18
	18	Entire agreement	18
	19	Waiver	18
	20	Notices	18
	21	Governing law and jurisdiction	19
	22	Counterparts	19
	 	 	 
	Schedule 1 - Seller’s Warranties	21
	 	
	Schedule 2 - Disclosures	23
	 	 
	Schedule 3 – Purchaser’s Warranties	24
	 	 
	Annexure A - Royalty Grant Deed	24
	 	 
	Annexure B – Six-Month Promissory Note 	25
	 	 
	Annexure C – Nine-month Promissory Note	25
	 	 
	Annexure D – Escrow Agreement	25
	 	
	Annexure E – Common Stock Leakage Agreement	25
	 	 
	Annexure F – Bidding Document	25


  



    	 



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


  


This deed is made on May 15, 2012 between
the following parties:


 


		1.	Liberty Petroleum Corporation ARBN 086 194 443,
of Suite 540, 10851 North Black Canyon Highway, Phoenix, Arizona, 85029 USA (Seller), and



 


		2.	Discovery Energy Corp. (formerly Santos Resource
Corp.), as the designate of Keith Spickelmier of Suite 1700, One Riverway Drive, Houston, Texas, 77056 USA (Purchaser).



 


Recitals


 


		A.	The Seller is the successful applicant for Petroleum
Exploration License (PEL) 512 in the State of South Australia (designated as CO2009-A).



 


		B.	The Parties entered into a Letter of Intent dated September
12, 2011, as amended by i) First Amendment to Letter Agreement effective November 4, 2011 and ii) Second Amendment to Letter Agreement
effective November 15, 2011 and as amended and restated in the First Amended and Restated Document dated December 1, 2011 and
further amended in the Santos PEL 512 Purchase Price Advance agreement dated December 28, 2011 (the “LOI”), in respect
of the matters herein agreed.



 


		C.	The LOI provides (inter alia) as follows:



 


		a)	The payment of $150,000 deposit paid by the Purchaser
to the Seller upon signing and extending the LOI (the “Option”).



 


		b)	The payment of $200,000 as an advance against the Purchase
Price paid by the Purchaser to the Seller pursuant to an agreement executed by the parties on December 28, 2011.



 


		c)	That a definitive agreement would be signed on or prior
to January 31, 2012, and



 


		d)	That the Purchaser will pay good and valuable consideration
to the Seller, including the grant to the Seller of a royalty interest in petroleum produced and sold from the License.



 


		D.	The Parties entered into the Option to Purchase and Sale
and Purchase Agreement dated January 31, 2012 (the “Novated Agreement”) to create a formal and binding agreement
between them as to the matters contemplated in the LOI.



 


		E.	The Parties have agreed to change the method by which
the Purchaser will acquire the License Interest from the Seller and in order to effect that change the Parties have agreed to
replace the Novated Agreement and enter into this Deed in full substitution of the Novated Agreement.



 


The Parties covenant as follows:


 





 






 


	1	Definitions and interpretation



 


		1.1	Definitions



 


In this Deed, including the recitals
and Schedules, the following definitions apply unless the context requires otherwise:


 


Affiliate of a specified
person means another person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or under
common control with the specified person.


  



    	Page | 1



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


Bidding Document means
the document submitted by the Seller to the Minister as Application No. CO2009-A, a copy of which is attached as Annexure G
to this Deed;


 


Business Day means a
day on which banks are open for general banking business in Houston, Texas;


 


Claim means, in relation
to any person, a claim, action, proceeding, judgment, damage, loss, cost, expense or liability incurred by or to or made or recovered
by or against the person, however arising and whether present, unascertained, immediate, future or contingent;


 


Common Stock Leakage Agreement
means the investor contract, the form of which is attached as Annexure E, entered into between the Public Company and the Seller
or its designees, as a condition precedent for the issuance of the Public Company common stock under this Deed;


 


Completion means completion
by the parties of the sale and purchase evidenced by this Deed;


 


Completion Date means
that date, after the satisfaction of the conditions precedent in clause 3.1, and receipt by the Escrow Agent of all items pursuant
to Clauses 4.1 and


4.2 hereof, that the Escrow Agent
closes the escrow and releases the Licensed Interest


and ancillary documents to the
Purchaser, and the Purchase Price to the Seller, or such other date as the Seller and the Purchaser may agree;


 


Corporations Law means
the Texas Business Organizations Code;


 


Data Room means the
offices of Robert Kamon located in Cisco, Texas to which the Purchaser has had access to information and materials relating
to the License Interest;


 


Data Room Documentation means
all documentation contained in the Data Room or listed in the data room index provided to the Purchaser or its representatives
and answers to any questions supplied by Seller, and includes supplementary data and information provided to the Purchaser or its
representatives up to and including the date of this Deed;


 


Disclosures means an item
of information, communication or disclosure contained in the categories of information referred to in Schedule 2;


 


Disclosure Material means
all written or electronic information and data prepared by Seller, its Affiliates or any of its representatives in connection with
the transactions contemplated by this Deed:


 


		(a)	contained in the Data Room; or



 


		(b)	provided to the Purchaser, its Affiliates, representatives,
advisers or employees by Seller up to the Effective Date;



 


Dollar ($) means the currency
of the United States of America;


 


Effective Date means January
31, 2012;


 


End Date
means December 31, 2012 unless extended by further written agreement between the parties;


 


Escrow Agent mean Purchaser’s
attorney, Randall W. Heinrich, Attorney At Law at Gillis, Paris & Heinrich, PLLC, 8 Greenway Plaza, Suite 818 Houston, Texas
77046, acting as the Escrow Agent for this transaction;


  



    	Page | 2



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 





 


Escrow
Agreement means the documented arrangement with the Escrow Agent, the form of which is set out in Annexure D hereto;


 


Government Agency means
any government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority,
tribunal, agency or entity;


 


GST means any tax or government
impost in the nature of a tax on the supply of goods and services, real property or any other thing imposed by the Commonwealth
of Australia;


 


Interest Rate means
the rate per annum determined by Seller (and agreed by the Purchaser) to be the arithmetic mean during the
applicable interest period of one month term London Interbank Offer Rates (LIBOR rates) for US$ as published on the first
Business Day of each month by the Financial Times of London and referred to as the Interbank Fixing Rate, plus an additional
3% per annum;


 


License means the
Petroleum Exploration License (PEL) 512 to be granted to the Seller or to the Purchaser or the Purchaser’s nominee
under the Petroleum Legislation in South Australia in satisfaction of Seller’s application No. CO2009A for PEL


512 or any other license granted
under the Petroleum Legislation in place or as a result of


PEL 512;


 


License Interest means
all legal and beneficial interests in, and title to, the License;


 


Minister means the Minister
of the Government of the State of South Australia responsible under and for the Petroleum Legislation;


 


NASD: OTCBB means the
Over The Counter Bulletin Board Market;


 


Native Title Act Deed means
the deed under section 31 of the Native Title Act 1993 (SA) to be entered into by the Seller or the Purchaser or the Purchaser’s
nominee with the Minister and the Native Title Claimant;


 


Novated Agreement means
the Option to Purchase and Sale and Purchase Agreement dated January 31, 2012 between the Seller and the Purchaser;


 


Operator means the Purchaser;


 


Option means the exclusive
option for the Purchaser to buy the License Interest from Seller, as granted by the Seller to the Purchaser under the terms of
the LOI and the Novated Agreement, but as now varied under the terms of this Deed;


 


Option Assignment means
the agreement dated January 10, 2012 entered into by the Purchaser and Keith Spickelmier under which Keith Spickelmier assigned
the LOI to the Purchaser and under which the Purchaser accepted such assignment and assumed all of Keith Spickelmier’s obligations
and liabilities under the LOI;


 


Parent Entity has the
meaning given to that term in the Corporations Law;


 


Petroleum has the meaning
given to that term under the Petroleum Legislation;


 


Petroleum Legislation means
the Petroleum and Geothermal Energy Act 2000 (SA) as well as all regulations, administrative directions and determinations
made under that Act;


  



    	Page | 3



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


Promissory Notes means
the two documents of indebtedness being delivered by the Purchaser to the Seller the forms of which are attached as Annexures
B and C to this Deed;


 


Public Company means the
Purchaser, a company listed with the United States Securities Exchange Commission whose common stock is traded on the NASD:OTCBB
under the symbol DENR ;


 


Purchase Price means $1,550,000,
payable in cash and promissory notes, and twelve million (12,000,000) shares of Public Company common stock payable as set out
in Clause 4 below;


 


Purchaser’s Warranties
means the representations and warranties set out in Schedule 3;


 


Qualification means the
process referred to in clause 3.1(a) whereby the Purchaser and/or its nominee is approved by the Minister as being the applicant
for the License in place of the Seller;


 


Royalty Grant Deed means
the document whereby the Purchaser grants and assigns the Royalty Interest to the Seller as part consideration for the purchase
of the License Interest, substantially in the form set out in Annexure A to this Deed;


 


Royalty Interest means
an interest in the Wellhead Value of all Petroleum sold from the


License, as more particularly
described in the Royalty Grant Deed;


 


Security Interest means:


 


		(a)	any interest or power:



 


		(1)	reserved in or over any interest in the License including,
without limitation, any retention of title; or



 


		(2)	created or otherwise arising in or over any interest
in the License under a bill of sale, mortgage, charge, lien, pledge, trust or power,



 


by way of security for the payment
of debt or any other monetary obligation or the performance of any other obligation and whether existing or agreed to be granted
or created but does not include any claim, royalties or interest under the Petroleum Legislation; and


 


		(b)	any production payment, royalty, override, net profit
interest or other contractual obligation in respect of the License;



 


Seller’s Warranties
means the representations and warranties of the Seller set out in


Schedule 1;


 


Subsidiary Entity has
the meaning given to that term in the Corporations Law;


 


Tax includes any income
tax, land tax, sales tax, payroll tax, fringe benefits tax, group tax, profit tax, property tax, customs duties, excise duties,
franking deficits tax, stamp duty, petroleum resource rent tax, resource super profits tax, GST, value added tax, bank accounts
debits tax, financial institutions duty or any other taxes or duties which have been or are assessed or imposed by any Government
Agency or statutory body (including fines, additional tax, interest or penalties);


 


Wellhead Value has the
meaning given to that term in the Royalty Grant Deed;


 



    	Page | 4



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 





 


		1.2	Interpretation



 


Headings are for convenience only and do not affect
interpretation. The following rules apply unless the context requires otherwise:


 


		(a)	The singular includes the plural and conversely.



 


		(b)	A gender includes all genders.



 


		(c)	If a word or phrase is defined, its other grammatical
forms have a corresponding meaning.



 


		(d)	A reference to a person, corporation, trust, partnership,
unincorporated body or other entity includes any of them.



 


		(e)	A reference to a clause, Annexure or Schedule is a reference
to a clause or annexure of or a schedule to this Deed.



 


		(f)	A reference to an agreement or document (including, without
limitation, a reference to this Deed) is to the agreement or document as amended, varied, supplemented, novated or replaced except
to the extent prohibited by this Deed or that other agreement or document.



 


		(g)	A reference to a party to this Deed or another agreement
or document includes the party’s successors and permitted substitutes or assigns (and, where applicable, the party’s
legal personal representatives).



 


		(h)	A reference to legislation or to a provision of legislation
includes a modification or re- enactment of it, a legislative provision substituted for it and a regulation or statutory instrument
issued under it.



 


		(i)	A reference to writing includes a facsimile transmission
and any means of reproducing words in a tangible and permanently visible form.



 


		(j)	A reference to title, authority, license or permit issued
under the Petroleum Legislation or any other statute includes a renewal, extension, re-issuance or variation of that instrument
and includes any other instrument issued or granted in substitution for, or pursuant or ancillary to that instrument, and any
other instrument conferring the same or similar rights previously the subject of that title, authority, licence or permit.



  





 






 


		2	Novation of Novated Agreement and agreement to sell and
purchase



 


		2.1	Novation of Novated Agreement



 


The Parties hereby agree to replace
the Novated Agreement in its entirety with this Deed, so that they enter into this Deed in complete substitution of and for the
Novated Agreement and covenant to undertake their respective obligations under this Deed in place of their respective obligations
under the Novated Agreement.


  



    	Page | 5



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		2.2	Agreement to sell and purchase



 


Subject to satisfaction of the
terms of this Deed, as between the parties, and the satisfaction


of the condition precedent in
clause 3.1(d), title to and property in the License Interest will be treated as having passed to the Purchaser with effect as of
and from the Completion Date.


  


 






 


		3	Conditions



 


		3.1	Conditions precedent



 


The obligations of the parties
in respect of Completion do not become binding unless and until:


 


		(a)	the Purchaser receives written confirmation from the
Minister that the Purchaser and/or its nominee has qualified to be the applicant for the License in the place of the Seller (“Qualification”);



 


		(b)	the Purchaser receives written confirmation from the
Minister that the Minister accepts the nomination of the Purchaser and/or the Purchaser’s nominee as the applicant for and
grantee of the License in the place of the Seller;



 


		(c)	the Purchaser or its nominee enters into the Native Title
Act Deed; and



 


		(d)	the Minister grants and issues the License to the Purchaser
or its nominee.



 


		3.2	Responsibility



 


		(a)	The conditions precedent in clause 3.1 are for the benefit
of both parties and cannot be unilaterally waived.



 


		(b)	Each party will use its reasonable endeavors to obtain
satisfaction of the conditions precedent referred to in clause 3.1.



 





 



  


		4	Payment of the Purchase Price



 


		4.1	Payment of the Purchase Price



 


Subject to the satisfaction of
the conditions precedent under clause 3.1, the Purchaser agrees to pay or grant or cause to be paid or granted the Purchase Price
to the Seller as follows:


 


		(a)	The Seller hereby acknowledges receipt from Purchaser
of and accords a Purchase Price credit for cash deposits totaling $150,000.



 


		(b)	The Seller hereby also acknowledges receipt from the
Purchaser of a Purchase Price advance cash payment of $200,000.



 


		(c)	The Seller hereby also acknowledges receipt from the
Purchaser of an additional cash payment of the sum of $200,000 within 20 Business Days following the Effective Date in accordance
with clause 4.1(c) of the Novated Agreement.



 


		(d)	Upon satisfaction of the conditions precedent in clause
3.1 (a) and (b) above, the Purchaser must deposit with the Escrow Agent the following:



  



    	Page | 6



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		(1)	certified funds in the amount of $250,000;



 


		(2)	an executed Promissory Note in the principal sum of $500,000
bearing interest at the Interest Rate, payable 6 months following the Completion Date;



 


		(3)	an executed Promissory Note in the principal sum of $250,000.00
bearing interest at the Interest Rate, payable 9 months following the Completion Date; and



 


		(4)	shares of the Public Company common stock totaling 12,000,000
shares and the accompanying Common Stock Leakage Agreement .



 


		4.2	Close of Escrow and release of balance of Purchase
Price



 


The Escrow Agent shall hold all
such materials and funds under the terms of the Escrow Agreement. Upon receipt of all of the matters, as set out in clause 4.1
above, and upon satisfaction of the condition precedent in clause 3.1(d) above, the Escrow Agent will release all such matters,
documents and funds to the relevant parties to complete the sale and purchase of the License Interest by the Purchaser.


 


		4.3	Termination



 


If, for any reason whatsoever:


 


		(a)	the conditions precedent in clause 3.1 (a), (b) and (c)
above are not satisfied on or before the End Date, and the Purchaser delivers notice to the Seller in writing that it wishes to
terminate this Deed for that reason; or



 


		(b)	the condition precedent in clause 3.1(d) is not satisfied
on or before the End Date, and the Purchaser gives notice to the Seller in writing that it wishes to terminate this Deed for that
reason,



 


then, in either of the above
circumstances, (i) the Escrow Agent will forthwith release the funds deposited under clause 4.1(d), t h e Promissory Notes, a
n d t h e shares and share assignments to the Purchaser, and (ii) within 30 Business Days, Seller must repay to the Purchaser
the funds paid or credited to it under clauses 4.1(a), 4.1(b) and 4.1(c) above.


 





 



 


		5	Rights
and obligations prior to the Completion Date



 


		5.1	Purchaser’s Qualification prior to Completion



 


		(a)	Prior to Completion, the Purchaser must submit an application
to the Minister for Qualification as the applicant for the License in place of the Seller.



 


		(b)	Each party must co-operate with the other and do all
things reasonably necessary to obtain Qualification in accordance with this clause 5.1.



 


		(c)	Without limiting the generality of paragraph (b):






 



    	Page | 7



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		(1)	each party must make all necessary and appropriate applications
and supply all necessary and appropriate information for the purpose of enabling Qualification to be obtained;



 


		(2)	no party may withdraw or procure the withdrawal of any
application made or information supplied under paragraph (c)(1);



 


		(3)	no party may take any action that would or would be likely
to prevent or hinder Qualification; and



 


		(4)	each party must supply to the others copies of all applications
made and all information supplied for the purpose of obtaining Qualification.



 


		(d)	Upon Qualification, the parties shall, as between themselves,
treat the condition precedent in clause 3.1(a) as being fully satisfied.



 


		(e)	The Purchaser must, upon receiving confirmation of its
or its nominee’s Qualification as the applicant for the License, promptly give the Seller Notice of Qualification and provide
the Seller with a copy of the evidence of such Qualification.



 


		5.2	Seller’s nomination of the Purchaser



 


Forthwith and in any event within
5 days after the Seller receives the Purchaser’s Notice of Qualification under clause 5.1(e), the Seller must notify the
Minister in writing that the Seller nominates the Purchaser or the Purchaser’s nominee as the applicant for and grantee of
the License in place of the Seller.


 


		5.3	Conduct prior to Completion



 


The Seller is responsible for
the administration of the License Interest until the date that the Purchaser receives confirmation that the condition precedent
in clause 3.1( b) has been satisfied. Prior to that date, except as expressly disclosed in this Deed or consented to by the Purchaser,
the Seller must inform and consult with the Purchaser on all material matters relating to the License Interest. In particular,
but without prejudice to the generality of the foregoing:


 


		(a)	the Seller must not create any Security Interest over
any of the License Interest or dispose of any of its interest in any of the License Interest; and



 


		(b)	the Seller must provide to the Purchaser copies of all
material notices received by it from the Minister or any other party in respect of the License Interest.



 


After that date and prior to the
Completion Date, each party must use its best endeavors to cooperate with the other party in the administration of the License
Interest and not unreasonably withhold or delay any consent, which may be required under this clause 5.3. A party will be taken
to have given its consent for the purposes of this clause 5.3, if that party does not, within a period of time that is reasonable
in the context of the matter to which the consent relates, notify the other party that it refuses its
consent. In this clause 5.3, a reasonable period of time means within 96 hours after a party is notified of a proposed action.


 



    	Page | 8



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		5.4	Confidential Information



 


Any information obtained by the
Purchaser by reason of clause 5.3 is deemed to be “Confidential Information” and after the Effective Date is subject
to the terms of clause 9.


 


		5.5	Factors relevant to pre-Completion obligations



 


In complying with their respective
obligations under clause 5.3, each party is not required to do or allow to be done anything, which would, in the other party’s
reasonable opinion:


 


		(a)	unreasonably disrupt or adversely impact the License
Interest;



 


		(b)	breach any obligations (including obligations of confidentiality)
that a party owes to any third party or under any law or regulations; or



 


		(c)	materially prejudice the likelihood of Completion occurring.



 





 






 


		6	Completion



 


		6.1	Time and place of Completion



 


Completion of the sale and purchase
of the License Interest will take place on the Completion Date at the offices of the Seller at Suite 540, 10851 North Black Canyon
Highway, Phoenix, Arizona, USA or at any other place as the Seller and the Purchaser may agree in writing. T h e parties may alternatively
elect to effect Completion by execution of counterpart signatures remotely.


 


		6.2	Seller’s Completion obligations



 


On the Completion Date, the Seller
must deliver to the Purchaser:


 


		(a)	any document reasonably required by the Purchaser to
vest full possession and benefit of the License and the License Interest in the Purchaser;



 


		(b)	the originals of all instruments, title documents, contract
documents and other records relating to the License; and



 


		(c)	a copy of the Royalty Grant Deed executed by Seller.



 


		6.3	Payment and delivery on Completion



 


On the Completion Date and subject
to the timely and proper performance by the Seller of the obligations on its part to be performed under clause 6.2, the Purchaser
must:


 


		(a)	pay to the Seller the balance of the Purchase Price in
cash and stock value in accordance with clause 4.1; and



 


		(b)	a copy of the Royalty Grant Deed executed by the Purchaser.



 



    	Page | 9



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		7	Sale and Purchase of the License Interest



 


		7.1	Acquisition of the License Interest by the Purchaser



 


		(a)	The Purchaser will be entitled to acquire the License
Interest from the Seller by:



 


		(i)	paying the Purchase Price to the Seller;



 


		(ii)	committing to the guaranteed work program and the total
guaranteed expenditure subject to which the License has been or will be granted as set out in the Bidding Document without variation
or extension, unless application for such variation or extension is approved prior in writing by the Seller or unless the Purchaser
has reasonable excuse for such variation or extension due to a force majeure circumstance (the “Guaranteed Work Program”);
and



 


		(iii)	granting the Royalty Interest to the Seller by execution
of the Royalty Grant Deed; and



 


		(b)	subject to Completion, the Purchaser agrees to assume
all of the obligations and liabilities arising in relation to the License including all work and expenditure obligations in respect
of the Guaranteed Work Program on and from the Completion Date.



 


		7.2	The Purchaser may farm out



 


The Purchaser may assign, in
whole or in part, to one or more parties, any of its rights under this Deed to enable it to satisfy the License commitments or
any other obligation under this Deed or otherwise provided that any such assignee assumes the assigned part of the Purchaser’s
obligations and liabilities under this Deed, and the Seller agrees to do all acts, matters or things required by the Purchaser
to give effect to the acquisition of such an interest by a third party.


 


		7.3	Royalty Interest



 


Subject to Completion, the Purchaser
is deemed to have granted to the Seller the Royalty Interest pursuant to the Royalty Grant Deed. The Royalty Interest will be enduring
and will continue until the whole of the License has been relinquished or terminated. The Royalty Interest will apply in the event
the License is relinquished and then a new license is granted to the Purchaser during a one-year period. To the extent that the
Purchaser wishes to assign, sell or otherwise dispose of its interest in the License to a third party the Purchaser must ensure
that that third party purchaser takes its interest subject to the Royalty Interest.


 


		7.4	Reversion of License Interest to the Seller



 


If the Purchaser fails in any
material way to perform the Guaranteed Work Program and the Purchaser has failed to obtain a variation of the Guaranteed Work Program
from the Minister or the relevant Government Agency to:


 


		(a)	a waiver of the breach; or



 


		(b)	an extension of time to rectify such breach,



  



    	Page | 10



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


then the Seller is entitled
to request that the Purchaser transfers the License Interest back to the Seller. Prior to exercising such right of reversion, the
Seller agrees to issue a Notice to the Purchaser requesting that the Purchaser remedies the default within 90 days after the date
of the Notice. If the Purchaser fails to remedy the default within this period, the Seller may exercise its right of reversion
by further Notice to the Purchaser. Forthwith upon receiving such Notice the Purchaser agrees to execute and deliver a transfer
of the License Interest to the Seller and execute and deliver such other documents reasonably required by the Seller to vest full
possession and benefit of the License Interest in the Seller. In such event, the Purchaser also agrees to indemnify the Seller
against and hold the Seller harmless from all claims arising in respect of works performed by the Purchaser prior to the date of
such reversion. Any variation to the Guaranteed Work Program that reduces the aggregate investment commitment or extends the initial
term beyond six months requires consent from the Seller, which cannot be unreasonably withheld.





 





 






 


		8	Seller’s
Warranties



 


		8.1	Seller’s Warranties



 


The Seller represents and warrants
to the Purchaser that as at the date of this Deed, and as at Completion (unless otherwise stipulated), each of the statements made
in Schedule 1 is accurate.


 


		8.2	Ability to claim



 


Except with respect to obligations
under clause 10, the Seller will not be liable to the Purchaser for any Claim under the Seller’s Warranties, for any breach
of this Deed or otherwise:


 


		(a)	unless the Purchaser has given Notice to the Seller
setting out full details of the Claim (including without limitation, reasonable details of the fact, circumstance or event giving
rise to the Claim, the nature of the Claim and, to the extent that it is able to do so, the Purchaser’s calculation of the
loss suffered by it) as soon as reasonably practicable after the Purchaser becomes aware of the fact, matter or circumstance on
which the Claim is based, and in any event within 12 months after Completion;



 


		(b)	if the amount finally adjudicated or agreed against the
Seller in respect of that Claim is less than $10,000;



 


		(c)	if the aggregate amount of Claims made is less than $10,000;



 


		(d)	to the extent that the Claim is based on any fact, matter
or circumstance:



 


		(1)	contained in the Disclosures;



 


		(2)	contained in this Deed; or



 


		(3)	which is or was within the actual knowledge of the Purchaser;



 





		(e)	if the Claim arises or is increased directly as a result
of any act or omission of or on behalf of the Seller in the ordinary course of business (and subject to the Seller complying with
its obligations under clause 5.1) and where the Purchaser has consented to that act or omission under clause 5.1;






 



    	Page | 11



    	 



    

  





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		(f)	if compensation in respect of the Claim is recoverable
by the Purchaser under or out of the proceeds of any insurance (or insurance that existed at Completion that the Purchaser has
failed to maintain) or the Purchaser has rights of recovery against a third party and recovery is made;



 


		(g)	to the extent that the Claim relates to any liabilities
that is part of the Disclosures;



 


		(h)	to the extent that the Claim has arisen as a result of
or in connection with any act or omission by the Purchaser, any Affiliate of the Purchaser or any person acting, or purporting
to act on behalf of the Purchaser or any Affiliate of the Purchaser after Completion; or



 


		(i)	to the extent that the subject of the Claim has been
or is made good or is otherwise compensated for without cost to the Purchaser or any Affiliate of the Purchaser.



 


		8.3	Limitation on Claims



 


With respect to obligations under clause 8.2:


 


		(a)	the maximum aggregate amount the Purchaser may recover
from the Seller in relation to this Deed is an amount equal to $4,050,000; and



 


		(b)	in no circumstances will the Seller be liable to the
Purchaser for any indirect loss, economic loss, loss of profits or consequential loss or damage whatsoever, however arising.



 


		8.4	Management of third party Claims



 


		(a)	If a claim by a third party against the Purchaser (actual
or threatened) may potentially give rise to a Claim by the Purchaser against the Seller for a breach of one of the Seller’s
Warranties but not otherwise, the Purchaser must notify the Seller in writing of such claim as soon as reasonably practicable.



 


		(b)	Within 20 Business Days after receiving a Notice from
the Purchaser under paragraph (a) above, the Seller may consult with the Purchaser to ascertain what steps, if any, are reasonable
and appropriate to resolve the third party claim.



 


		(c)	If the Seller wishes to make an offer for or agree to
settlement of any third party claim on behalf of the Purchaser, the Seller must first consult with the Purchaser. If the Purchaser
opposes the course of action, Seller cannot proceed with it and the liability of the Seller with respect to the third party claim
is limited to the amount or amounts that would have been payable by the Seller under the terms of the proposed offer and settlement
proposal.



 


		(d)	If the Seller does not wish to dispute (or to continue
to dispute) the third party claim on behalf of the Purchaser, the Purchaser must first consult with the Seller before making any
offer for or agreeing to any settlement of such a claim.



 



    	Page | 12



    	 



    

 











	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 




 


		(e)	Subject to paragraph (f), any breach of this clause 8.4
which materially compromises the Seller’s ability to dispute or conduct or direct the conduct of any dispute, proceeding,
objection, or appeal will result in the Seller being relieved from any liability whatsoever to the Purchaser with respect to the
Claim for breach of the Seller’s Warranties.



 


		(f)	Nothing in this clause 8.4 requires the Purchaser to
do anything that would have a material adverse effect on the Purchaser’s existing business.



 





 



  


		9	Exclusion
of other warranties



 


		9.1	Other warranties excluded



 


		(a)	For the avoidance of doubt and without limiting paragraphs
(b), (c) and (d) below, the Purchaser acknowledges that the Seller makes no warranties or representations (express or implied)
in relation to the License Interest, the Disclosures or Disclosure Materials, except the Seller’s Warranties. In particular,
and without limiting in any way the generality of the foregoing, the Purchaser expressly acknowledges that Seller gives no warranty
and no representation is made by the Seller in relation to:



 


		(i)	any geological, geophysical, engineering, economic, fiscal
or other interpretations, opinions, forecasts or evaluations by Seller, Affiliates of the Seller or any other person;



 


		(ii)	future matters, including future or forecast costs, revenue
or profits; 



 


		(iii)	reserves or life of fields;



 


		(iv)	markets; or



 


		(v)	the accuracy, reliability or completeness of any information
or material provided to the Purchaser in connection with the License Interest or the transaction contemplated by this Deed.



 


		(b )	In
consideration of the Seller entering into this Deed, the Purchaser represents and warrants to the Seller as at the date of this
Deed, and as at Completion, that the Purchaser has relied on its own investigations in relation to the License Interest and has
not relied on any statement (written or oral) or other conduct by or on behalf of the Seller relating to those things except the
Seller’s Warranties and, in particular, the Purchaser acknowledges that it:



 


		(i)	has had, whether directly or indirectly, access to the
Data Room containing information about the License Interest; and



 


		(ii)	has had been afforded the opportunity to make requests
for further information relevant to the License Interest and such information has been supplied,



 


			and that this information and access has been granted by the Seller to enable the Purchaser
                                                                               to make its own investigations and form its own views and to rely on those investigations and views in entering into this
                                                                               Deed, which investigations and views it has relied upon.



 



    	Page | 13



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		(c)	The Purchaser agrees that to the extent that it has actual
or constructive knowledge of the subject matter of the Seller’s Warranties, any breach of the Seller’s Warranties
will not be enforceable against the Seller to the extent it is shown that the Purchaser knew of inaccuracy, error or omission
at the date of this Deed.



 


		(d)	To the extent permitted by law, the Purchaser irrevocably
waives any right it may have to bring an action in respect of any contravention of Arizona Revised Statutes Title 10, the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any other federal securities laws, any state blue sky
laws, or other legislation whatsoever in respect of any statement, representation, conduct or omission by or on behalf of the
Seller, its Related Entities or any Affiliates which is not expressly contained in this Deed.



 


		(e)	Subject to any law whatsoever to the contrary and except
as provided in the Seller’s Warranties, all terms, conditions, warranties and statements, whether express, implied, written,
oral, collateral, statutory or otherwise are excluded and the Seller disclaims all liability in relation to these to the maximum
extent permitted by law.



 


		9.2	Remedies for breach of Seller’s Warranties or
Claims



 


			Except in circumstances where breach of any of the Seller’s Warranties will or may
                                                                               result in the Purchaser not receiving full possession and benefit to the License, free of Security Interests, the Purchaser
                                                                               acknowledges that the sole remedy for a breach of any of the Seller’s Warranties or for any other claim in respect of
                                                                               the subject matter of this Deed whatsoever is damages and it shall not be entitled to defer Completion or rescind
                                                                               or terminate this Deed.



 


		9.3	Recovered amounts



 


			If after the Seller has made a payment to the Purchaser pursuant to a Claim under the
                                                                               Seller’s Warranties, the Purchaser receives a payment or benefit in relation to the fact, matter or circumstances to
                                                                               which the Claim relates, the Purchaser must repay to the Seller the amount received from the Seller or if less, the payment
                                                                               or benefit received by the Purchaser. Any such amounts repaid to the Seller pursuant to this clause will be deemed to
                                                                               increase the Purchase Price payable by the Purchaser under this Deed.



 





 



 


		10	Confidentiality



 


 


		10.1	Confidentiality before Completion



 


			Until a public announcement is made after Completion in accordance with clause 10.2, each
                                                                             party must keep confidential any information about the existence and terms of the Novated Agreement and this Deed and any
                                                                             draft of the Novated Agreement and this Deed, or any information obtained under this Deed or prior to entering into this
                                                                             Deed, and must not disclose any such information to any person except:



 


		(a)	any Affiliate of the party that has a clear need to use
that information;



 


		(b)	any director, officer, employee, financier or adviser
of the party, or of an associated entity of the party, who has a clear need to use that information;



 



    	Page | 14



    	 



    

  


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		(c)	pursuant to any applicable law, or to any regulatory
body or Government Agency, or pursuant to the rules of any stock exchange; or



 


		(d)	to the extent necessary to obtain any consent or approval
contemplated by this Deed or the financing of the transaction contemplated herein.



 


		10.2	Public announcements



 


		(a)	No party will make any public announcement or statement
concerning this Deed or Completion without the prior approval of the other party (such approval not to be unreasonably withheld).
The parties must in good faith agree at or before Completion the form or forms of press announcements or public statements that
they will each make.



 


		(b)	Paragraph (a) above does not apply to any disclosure
which is required pursuant to any applicable law, or to any regulatory body or Government Agency, or pursuant to the rules of
any stock exchange, in which event the disclosing party must seek the other party’s approval of the content of the disclosure
and give the other party at least 48 hours prior Notice of the required disclosure. The parties will use all reasonable endeavors
to agree the terms of the disclosure. Consent of the other party will not be unreasonably withheld.



 


		(c)	Seller hereby acknowledges that the Purchaser will be
required to file a Current Report on Form 8-K with the United States Securities Exchange Commission shortly after the execution
of this Deed that will report on the same.



 





 



 


		11	Purchaser’s
Warranties



 


			The Purchaser represents and warrants to the Seller that, as at the date of this Deed and as
                                                                                at Completion, each of the Purchaser’s Warranties is accurate.



  


 






 


		12	Indemnity
and breach



  


		12.1	Seller’s indemnity



 


			The Purchaser must indemnify and keep indemnified the Seller against any Claim suffered or
                                                                             incurred by t h e Seller, which arises from (and any costs, charges or expenses incurred by the Seller in connection with)
                                                                             any breach of, or default under this Deed by the Purchaser.



  


		12.2	Seller’s remedies



 


			Subject to clause 12.3, if the Purchaser fails to comply with any term of this Deed, without
                                                                             limiting the remedies available to t h e Seller, the Seller may do any or all of the following:



 


		(a)	terminate this Deed;



 


		(b)	sue the Purchaser for breach; or



 


		(c)	without further Notice to the Purchaser, retain the Purchase
Price or resell the License Interest by any means t h e Seller determines and claim and recover from the Purchaser any amount
by which the proceeds of such sale (less all incidental expenses) is less than the Purchase Price.



 



    	Page | 15



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		12.3	Notice of breach



 


			The Seller will not take any action described in clause 12.2 unless t h e Seller has first
                                                                             given Notice to the Purchaser setting out full details of the default requesting that the Purchaser remedies the default with
                                                                             30 days after the date of the Notice and the Purchaser fails to remedy the default within that period.



 


		12.4	Limitation on claims



 


			With respect to obligations under clause 12.1:



 


		(a)	the maximum aggregate amount the Seller may recover from
the Purchaser in relation to this Deed is an amount equal to the Purchase Price; and



 


		(b)	in no circumstances will the Purchaser be liable to Seller
for any indirect loss, economic loss, loss of profits or consequential loss or damage whatsoever, however arising.



 


		12.5	Purchaser’s indemnity



 


			Subject to the limitations in clauses 8 and 9, the Seller must indemnify, and keep
                                                                             indemnified, the Purchaser against any Claim suffered or incurred by the Purchaser which arises from (and any costs, charges
                                                                             or expenses incurred by the Purchaser in connection with) any breach of, or default under, this Deed by the Seller.



 


		13	Taxation






 


		13.1	GST



 


			The Seller and the Purchaser agree that the supply of the License Interest by the Seller to
                                                                                                        the Purchaser is the supply of a going concern and is for  consideration, provided however that if for any reason GST is
                                                                                                        deemed applicable to the Purchase Price by any body competent to do so the Purchaser shall be liable for the payment of such
                                                                                                        GST.



 


			In all cases, the following principles apply when determining the amount payable (the
                                                                             “Payment") for anything supplied pursuant to this Deed:



 


		(a)	If GST is payable in relation to the supply the amount
payable will be the consideration specified in this Deed plus GST (if any).



 


		(b)	If the Payment is determined by reference to any liability
or cost incurred by a party (the Payee), the relevant amount is the actual amount incurred by the Payee less the amount
of any GST input tax credit the Payee is entitled to claim in respect of that liability.



 


		(c)	If the Payment is a reimbursement or indemnification
of a loss determined by reference to revenue earned less costs incurred, the revenue will be the revenue earned net of GST and
the costs will be determined in accordance with paragraph (b) above.



 



    	Page | 16



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		13.2	Recognition of income and expenses



 


		The	Seller and Purchaser agree that:



 


		(a)	the Seller will recognize the income and expenditures
attributable to the License Interest for Tax (excluding Petroleum Resource Rent Tax) purposes for the period up to and including
the Completion Date; and



 


		(b)	the Purchaser will recognize the income and expenditures
attributable to the License Interest after the Completion Date for Tax (excluding Petroleum Resource Rent Tax) purposes.



 


The Seller and the Purchaser
agree to file all Tax (excluding Petroleum Resource Rent Tax) returns on this basis.


 





 






 


		14	Costs
and expenses



 


		14.1	Stamp duty and registration fees



 


		(a)	The Purchaser must pay:



 


		(1)	any stamp duty; and



 


		(2)	all registration fees under the Petroleum Legislation,



 


in respect of the execution,
delivery and performance of this Deed, or any other agreement or document entered into or signed in order to effect the transactions
contemplated by this Deed, except the Royalty Grant Deed which is the Seller’s responsibility.


 


		(b)	The Purchaser agrees to proceed diligently and expeditiously
to submit all documents associated with the sale and purchase evidenced by this Deed required to be submitted for stamping for
an assessment of stamp duty and will keep the Seller apprised of progress in that regard.



 


		14.2	Costs and expenses



 


Subject to clause 14.1, each party
must pay its own costs and expenses in respect of the negotiation, preparation, execution and delivery of this Deed and of any
other agreement or document entered into or signed in order to effect the transactions contemplated by this Deed.


 


 






 


		15	Merger



 


The rights and obligations
of the parties will not merge on the completion of any transaction contemplated by this Deed. They will survive the execution and
delivery of any assignment or other document entered into for the purpose of implementing any such transaction.


 



    	Page | 17



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


		16	Assignment



 


The rights and obligations
of the Purchaser under this Deed may be assigned, encumbered or otherwise disposed of, with the prior written consent of the Seller,
which cannot be unreasonably withheld.


 





 






 


		17	Further
assurances



 


Each party agrees to do all
such things and execute all such deeds, instruments, transfers or other documents as may be necessary or desirable to give full
effect to the provisions of this Deed and the transactions contemplated by it.


 





 



  


		18	Entire
agreement



 


This Deed contains the entire
agreement between the parties with respect to its subject matter and supersedes all prior agreements and understandings between
the parties in connection with it.


 


 






 


		19	Waiver



 


No failure to exercise or any
delay in exercising any right, power or remedy by a party operates as a waiver. A single or partial exercise of any right, power
or remedy does not preclude any other or further exercise of that or any other right, power or remedy. A waiver is not valid or
binding on the party granting that waiver unless made in writing.


 





 






 


		20	Notices



 


Any
notice, demand, consent or other communication (a “Notice") given or made under this Deed:


 


		(a)	must be in writing and signed by a person duly authorized
by the sender;



 


		(b)	must, if communicated by posting or faxing, be acknowledged
by electronic mail sent on the day that such faxing or posting occurs;



 


		(c)	must be delivered to the intended recipient by prepaid
post (or, if posted to an address in another country, by registered airmail) or by hand or fax to the address or fax number below
or the address or fax number last notified by the intended recipient to the sender:



 


		(1)	Liberty Petroleum Corporation:



 


Suite 540, 10851 North Black Canyon Highway


Phoenix, Arizona, 85029 USA


Attention:       Mr.
Lane Franks


Fax No:          +1
602 864-6690


Email:            lane@libertypetroleumcorporation.com


 



    	Page | 18



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 





 


		(2)	Discovery Energy Corp.:



 


Suite 1700, One Riverway Drive,


Houston, Texas, 77056 USA


Attention:        Mr.
Michael Dahlke


Fax No:           +1
713 622-1937


Email:             mdd@discoveryenergy.com


 


		(d)	will be taken to be duly given or made:



 


		(1)	in the case of delivery in person, when delivered;



 


		(2)	in the case of delivery by post 2 Business Days after
the date of posting (if posted to an address in the same country) or 7 Business Days after the date of posting (if posted to an
address in another country);



 


		(3)	in the case of fax, on receipt by the sender of a
transmission control report from the dispatching machine showing the relevant number of pages and the correct destination fax
machine number and indicating that the transmission had been made without error,



 


but if the result
is that a Notice would be taken to be given or made on a day which is not a Business Day in the place to which the Notice is
sent or is later than 4.00pm (local time) it will be taken to have been duly given or made at the commencement of business on
the next Business Day in that place.


 


		21	Governing law and jurisdiction



 


THE LAW OF THE STATE OF
TEXAS GOVERNS THIS DEED AND EACH PARTY SUBMITS TO THE N O N- EXCLUSIVE JURISDICTION OF THE COURTS OF THAT STATE AND THOSE COURTS
EMPOWERED TO HEAR APPEALS THEREFROM IN CONNECTION WITH ALL MATTERS CONCERNING THIS DEED.


 





 






 


		22	Counterparts



 


This
Deed may be executed in any number of counterparts. All counterparts will be taken to constitute one instrument. Any signature
page of a counterpart may be detached without impairing the legal effect of the signature thereon and attached to another counterpart
identical in form but having attached to it one or more additional signature pages executed by the other party.










  



    	Page | 19



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


Executed
by the parties as a deed:


 


By


Liberty Petroleum Corporation


 


	Witness	 	Authorized signatory
	 	 	 
	/s/ Trudy Conner	 	/s/ Lane Franks
	Trudy Conner	 	Lane Franks, President
	10851 N. BLACK CANYON HWY,
    

SUITE 540

PHOENIX,
    AZ 85029 	 	 
	Name and address (please print)	 	Name (please print)




 


By





Discovery
Energy Corp.


 


	Witness	 	Authorized signatory
	 	 	 
	/s/ Glen Harris	 	/s/ Keith McKenzie
	Glen Harris	 	Keith McKenzie, CEO
	Name and address (please print)	 	Name (please print)




 



    	Page | 20



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


Schedule 1 - Seller’s Warranties


 


		1	Corporate standing of Seller



 


		1.1	The Seller is duly incorporated and validly exists
under the law of its place of incorporation.



 


		1.2	The Seller has full corporate power and authority
to own and sell the License Interest.






 


		1.3	The Seller is solvent and no receiver has been appointed
over any part of the Seller’s License Interest and no such appointment has been threatened.



 


		1.4	The Seller is not in liquidation or under official
management and no proceedings have been brought or threatened for the purpose of winding-up the Seller or placing it under official
management.



 


		2	Due authorization



 


		2.1	The execution and delivery of this Deed has been properly
authorized by all necessary corporate action of the Seller.



 


		2.2	The Seller has full corporate power and lawful authority
to execute and deliver this Deed and to consummate and perform or cause to be performed its obligations under this Deed.



 


		2.3	This Deed constitutes a legal, valid and binding obligation
of the Seller enforceable in accordance with its terms by appropriate legal remedy.



 


		2.4	This Deed and Completion does not conflict with or
result in a breach of or default under any provision of the constitution of the Seller or any material term or provision of any
agreement or deed or any writ, order or injunction, judgment law, rule or regulation to which it is a party or is subject or by
which it is bound.



 


		3	License Interest



 


		3.1	The Seller has good title to the License Interest
and would have had in the License upon receiving full and proper Ministerial grant of the License.



 


		3.2	The Seller has legal and beneficial ownership of the
License Interest and would have had in the License upon receiving full and proper Ministerial grant of the License and the Seller’s
legal and beneficial ownership of the License Interest is and will be free and clear of all Security Interests.



 


		4	Material breach



 


To the best of the knowledge
of the Seller, the Seller has received no notice of any material breach in relation to any of its obligations under the License
or Petroleum Legislation.


 


		5	Absence of litigation



 


		5.1	To the best of the knowledge of the Seller:



 


		(a)	there is no subsisting litigation between the Seller
and any other person affecting the License or the License Interest; and



 


		(b)	as at the date of this Deed, there are no disputes,
claims or demands between the Seller and any other person which are likely to give rise to litigation affecting the License or
the License Interest.



 



    	Page | 21



    	 



    

 





	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 





 


		5.2	To the best of the knowledge of the Seller, there
is no unsatisfied judgment, order, arbitral award or decision of any court, tribunal or arbitrator against the Seller affecting
the License or the License Interest.



 


		5.3	To
the best of the knowledge of Seller, there is no suit, action or other proceeding pending or threatened before any Government
Agency or body of competent jurisdiction seeking to enjoin or restrain the consummation of the transactions contemplated by this
Deed.



 


		6	Accuracy of information



 


The information located in
the Data Room was prepared in good faith and made available to the Purchaser for the purpose of assisting it in making an assessment
of the value of the License Interest and Seller has deliberately not:


 


		(a)	omitted anything material from the Data Room or other
Disclosure Material; or



 


		(b)	included anything materially misleading in the Data
Room or other Disclosure Material.



 


		7	Environmental



 


To the best of the knowledge
of the Seller, as at the date of this Deed, the Seller has not received any Notice of any civil, criminal or administrative action,
or other proceeding or suit, under any law relating to the environment applicable to the License which is current, pending or threatened.


 


		8.	Securities Law Matters



 


The Seller (i) acknowledges
that it has received recent filings by Purchaser with the U.S. Securities and Exchange Commission regarding the business, plans,
financial condition, properties, operations and prospects of Purchaser, and that it believes that it has been and will be given
full access to all material information concerning the financial condition, properties, operations and prospects of Purchaser,
and has had an opportunity to ask such questions of, and to receive such information from, Purchaser as it has desired and to obtain
any additional information necessary to verify the accuracy of the information and data received; (ii) has such knowledge, skill
and experience in business, financial and investment matters so that it is capable of evaluating the merits and risks of an acquisition
of shares of Purchaser’s Common Stock; (iii) has reviewed its financial condition and commitments and that, based on such
review, the Seller is satisfied that it (a) has adequate means of providing for contingencies, (b) has no present or contemplated
future need to dispose of all or any of the shares of Purchaser’s Common Stock to be received to satisfy existing or contemplated
undertakings, needs or indebtedness, (c) is capable of bearing the economic risk of the ownership of such shares for the indefinite
future, and (d) has assets or sources of income which, taken together, are more than sufficient so that the Seller could bear the
loss of the entire value of the shares of Purchaser’s Common Stock to be received; (iv) is acquiring such shares solely for
its own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution
of such shares; (v) understands that the shares of Purchaser’s Common Stock to be received have not been registered under
the Securities Act of 1933 or any state securities laws and therefore such shares are “restricted” under such laws;
and (vi) has not offered or sold any portion of the shares of Purchaser’s Common Stock to be received and has no present
intention of reselling or otherwise disposing of any portion of such shares either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or non-occurrence of any predetermined event or circumstance.


 



    	Page | 22



    	 



    

 


	Discovery Energy/Liberty -  Novation Deed - Sale and Purchase Agreement
	- Confidential dated 15 May 2012
	 


 


Schedule 2 – Disclosures


 


		1	The Data Room Documentation.



 


		2	All information publicly available (by searches at public
registers or otherwise).



 


	3	All other information and data provided or communicated to the Purchaser in writing, its Related
Entities, representatives, advisers or employees by the Seller, its Related Entities, representatives, advisers or employees or
any other person, before the date of this Deed.



 



    	Page | 23



    	 



    

 


Santos/Liberty - Option to Purchase and
Sale and Purchase Agreement – Confidential dated 31 January


2012





 








 


Schedule
3 – Purchaser’s Warranties


 


		1	The Purchaser



 


		1.1	The Purchaser is duly incorporated and validly exists
under the law of its place of incorporation.



 


		1.2	The Purchaser is not insolvent and no receiver has
been appointed and no controller has any right over any part of its assets and no such appointment has been threatened.



 


		1.3	The Purchaser is not in liquidation or official management
and no proceedings have been brought or threatened for the purpose of winding- up the Purchaser or placing it under official management.



 


		2	Due authorization of Purchaser



 


		2.1	The execution and delivery of this Deed has been properly
authorized by all necessary corporate action of the Purchaser.



 


		2.2	The Purchaser has full corporate power and lawful
authority to execute and deliver this Deed and to consummate and perform or cause to be performed its obligations under this Deed.



 


		2.3	This Deed constitutes a legal, valid and binding obligation
of the Purchaser enforceable in accordance with its terms by appropriate legal remedy.



 


		2.4	This Deed and Completion does not conflict with or
result in a breach of or default under any provision of the constitution of the Purchaser or any material term or provision of
any agreement or deed or the writ, order or injunction, judgment, law, rule or regulation to which it is a party or is subject
or by which it is bound.



 



    	Page | 24



    	 



    

 


Santos/Liberty - Option to Purchase and
Sale and Purchase Agreement – Confidential dated 31 January


2012 





 











 


Annexure
A - Royalty Grant Deed


 


Annexure B – Six-Month Promissory Note 


 


Annexure C – Nine-month Promissory Note 


 


Annexure D – Escrow Agreement


 


Annexure E – Common Stock Leakage Agreement


 


Annexure F - Bidding Document


 



    	Page | 25